<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

             [ ] registration statement pursuant to section 12(b) or
                   (g) of the securities exchange act of 1934

                                       or

              [X] 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

            [ ] 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 333-11910


                     MAXCOM TELECOMUNICACIONES, S.A. DE C.V.
             (Exact name of Registrant as specified in its charter)

                         MAXCOM TELECOMMUNICATIONS, INC.
                 (Translation of Registrant's name into English)

                              UNITED MEXICAN STATES
                 (Jurisdiction of incorporation or organization)

                      GUILLERMO GONZALEZ CAMARENA NO. 2000
                        COLONIA CENTRO DE CIUDAD SANTA FE
                               MEXICO, D.F. 01210
                    (Address of principal executive offices)


 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT.
                                      None

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                              Senior Notes due 2007
                  Series N2 Ordinary Participation Certificates

              SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION
                     PURSUANT TO SECTION 15(D) OF THE ACT:
                     13-3/4% Series B Senior Notes Due 2007

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 shares, no par value   1,276,428
                Series B shares, no par value   1,226,372
                Series C shares, no par value   5,622,822
                Series N shares, no par value   5,622,822

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

                                    YES X   NO
                                       ---    ---

INDICATE BY CHECK MARK WHICH FINANCIAL STATEMENT ITEM THE REGISTRANT HAS ELECTED
TO FOLLOW:

                            ITEM 17       ITEM 18 X
                                    ---          ---
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<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                   ----
<S>                                                                                                <C>
PART I................................................................................................1
        ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.................................1
        ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE...............................................1
        ITEM 3. KEY INFORMATION.......................................................................1
        ITEM 4. INFORMATION ON THE COMPANY...........................................................13
        ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.........................................32
        ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES...........................................46
        ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS....................................52
        ITEM 8. FINANCIAL INFORMATION................................................................59
        ITEM 9. THE OFFER AND LISTING................................................................59
        ITEM 10.ADDITIONAL INFORMATION...............................................................60
        ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........................89
        ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES...............................89
        ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES......................................90
        ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.........90
        ITEM 15.RESERVED.............................................................................90
        ITEM 16.RESERVED.............................................................................90

PART II..............................................................................................91
        ITEM 17.FINANCIAL STATEMENTS.................................................................91
        ITEM 18.FINANCIAL STATEMENTS................................................................F-1
        ITEM 19.EXHIBITS............................................................................E-1

SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS ....................................................S-II

GLOSSARY OF TELECOMMUNICATIONS TERMS................................................................G-1
</TABLE>

            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 of
December 31, 2001 purchasing power. Amounts presented in this annual report may
not add up or may be slightly inconsistent due to rounding.

            Unless otherwise provided, 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 at December 31, 2001, which was Ps.9.1560 per
U.S.$1.00. The currency conversions should not be construed as representations
that the peso amounts actually represent such dollar amounts. Additionally,
these conversions should not be construed as representations that these peso
amounts have been or could have been converted into U.S. dollars at those or any
other rates of exchange.

            This annual report contains forward-looking statements. Statements
that are not statements of historical fact, including statements about our
beliefs and expectations are forward-looking statements. The words
"anticipates," "believes," "estimates," "expects," "forecasts," "intends,"
"plans," "predicts," "projects," "targets" and similar words are intended to
identify these statements, which necessarily involve known and unknown risks and
uncertainties. Accordingly, our actual results of operations may be different
from our current expectations, and the reader should not place undue reliance on
these forward-looking statements. Forward-looking statements speak

                                       i
<PAGE>
only as of the date they are made, and we do not undertake any obligation to
update them in light of new information or future developments.

            We will provide without charge to each person to whom this 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 Maxcom
Telecomunicaciones, S.A. de C.V., Guillermo Gonzalez Camarena No. 2000, Colonia
Centro de Ciudad Santa Fe, Mexico, D.F. 01210, attention: Director, Investor
Relations. Telephone requests may be directed to 011-52-55-5147-1125.

                                       ii
<PAGE>
                                     PART I

ITEM 1      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

            Not applicable.

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

            Not applicable.

ITEM 3.     KEY INFORMATION

A.          SELECTED FINANCIAL DATA

            The following tables present selected consolidated financial
information of Maxcom and its consolidated subsidiaries. We have derived this
information from the audited consolidated financial statements of Maxcom for the
years ended December 31, 1997, 1998, 1999, 2000 and 2001, including the audited
consolidated financial statements as of December 31, 2000 and 2001 and for the
years ended December 31, 1999, 2000 and 2001, and accompanying notes appearing
elsewhere in this annual report. This data is qualified in its entirety by
reference to, and should be read in conjunction with, such consolidated
financial statements.

            The consolidated financial statements have been prepared in
accordance with Mexican GAAP, which differs in certain significant respects from
U.S. GAAP. Pursuant to Mexican GAAP, we have prepared the 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. See note 22 to the consolidated
financial statements for a description of the principal differences, other than
inflation accounting, between Mexican GAAP and U.S. GAAP applicable to us and
for a reconciliation of our net income and stockholders' equity to U.S. GAAP.


                                       1
<PAGE>
<TABLE>
<CAPTION>
                                                                       AS OF THE YEAR ENDED DECEMBER 31,
                                             -------------------------------------------------------------------------------------
                                               1997(1)      1998(1)        1999(2)          2000            2001         2001(4)
                                             -----------  -----------    -----------     -----------    ------------   -----------
                                                                 THOUSANDS OF CONSTANT DECEMBER 31, 2001 PESOS
                                                   AND THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA(3)

<S>                                          <C>          <C>            <C>              <C>           <C>            <C>
STATEMENT OF OPERATIONS DATA:
MEXICAN GAAP
Net revenues ...............................                             Ps. 100,331     Ps. 277,780    Ps. 314,388    $   34,336
Operating costs and expenses:
   Network operating costs .................                                  49,854       112,510        150,439          16,431
   Selling, general and administrative .....                                 183,790       345,748        429,945          46,958
   Depreciation and amortization ...........                                  84,483       209,894        268,473          29,322
                                                                         -----------     -----------    ------------   -----------
        Total operating costs and expenses .                                 318,127       668,152        848,857          92,711
                                                                         -----------     -----------    ------------   -----------
Operating loss .............................                                (217,796)     (390,372)      (534,469)        (58,375)
Integral cost (income) of financing:
   Interest expense ........................                                  52,671       417,592        426,956          46,631
   Interest income .........................                                 (11,428)     (102,265)       (76,766)         (8,384)
   Gain on repurchase of debt ..............                                                             (121,249)        (13,243)
   Exchange loss (gain), net ...............                                  10,859        11,177        (90,787)         (9,916)
   Gain on net monetary position ...........                                 (22,688)      (94,069)       (82,656)         (9,028)
                                                                         -----------     -----------    ------------   -----------
        Total integral cost of financing ...                                  29,414       232,435         55,498           6,060
Nonrecurring charges .......................                                                               62,215           6,795
Other income (expense), net ................                                     151          (492)          (177)            (19)
Asset tax ..................................                                                                  751              82
                                                                         -----------     -----------    ------------   -----------
Net loss ...................................                                (247,059)     (623,299)      (653,110)        (71,331)
                                                                         ===========     ===========    ===========   ===========

Net loss per share, basic ..................                             Ps. (24.07)     Ps. (54.37)    Ps. (47.50)    $     (5.19)
Weighted-average shares outstanding ........  1,371,943    8,134,883      10,264,827     11,463,667     13,748,445      13,748,445

U.S. GAAP

Net loss ................................... Ps. (66,247) Ps. (125,568) Ps.(303,877)    Ps. (581,922)   Ps. (650,669)  $   (71,065)
Net loss per share ......................... Ps. (48.29)  Ps. (15.44)    Ps. (29.60)    Ps.   (50.76)   Ps.   (47.33)  $     (5.17)

BALANCE SHEET DATA:
MEXICAN GAAP

Cash and cash equivalents .................. Ps. 55,748   Ps. 440,562    Ps. 174,803    Ps. 1,119,478   Ps. 172,583    $    18,849
Restricted cash ............................                    2,115         21,259          593,928       186,803         20,402
Working capital(5) .........................     15,425       41,274           1,118         (66,560)       (37,818)        (4,130)
Frequency rights, net ......................    119,661      119,661         116,934         110,885        104,837         11,450
Telephone network systems and equipment, net      1,311      281,899         930,318       1,134,617      1,368,870        149,505
Preoperating expenses, net .................     71,676      219,923         282,275         252,055        221,853         24,230
Intangible assets, net .....................                                                 338,145        299,528         32,714
Rent deposits and other assets .............                                                   8,200         31,310          3,420
Total assets ...............................    263,821    1,105,434       1,526,706       3,636,578      2,508,580        273,982
Total liabilities ..........................                 239,054         910,751       3,175,391      2,699,586        294,843
Capital stock ..............................    263,821      835,372         846,000       1,203,306        976,096        106,607
Additional paid-in capital .................                  30,777          33,308         128,239        102,309         11,174
Accumulated deficit ........................                                (247,059)       (870,358)    (1,269,411)      (138,642)
                                             -----------  -----------    -----------     -----------    ------------   -----------
Shareholders' equity (deficit) .............    263,821      866,149         632,249         461,187       (191,006)       (20,861)

U.S. GAAP

Shareholders equity ........................ Ps. 191,089  Ps. 667,627    Ps. 376,909     Ps. 247,224    Ps. (402,528)  $   (43,963)

OTHER FINANCIAL DATA:
MEXICAN GAAP

EBITDA(6) ..................................                             Ps. (133,313)   Ps.(180,478)   Ps. (265,996)  $   (29,053)
Capital expenditures(7) ....................    131,700      456,673         808,991         709,209         474,299         51,802
Ratio of earnings to fixed charges(8) ......                                   (2.45)          (0.39)          (0.48)         (0.48)
Cash flow used in operating activities .....                                (145,813)       (811,740)       (336,568)       (36,759)
</TABLE>


                                       2
<PAGE>
<TABLE>
<CAPTION>
                                                                       AS OF THE YEAR ENDED DECEMBER 31,
                                             -------------------------------------------------------------------------------------
                                               1997(1)      1998(1)        1999(2)          2000            2001         2001(4)
                                             -----------  -----------    -----------     -----------    ------------   -----------
                                                                 THOUSANDS OF CONSTANT DECEMBER 31, 2001 PESOS
                                                   AND THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA(3)

<S>                                          <C>          <C>            <C>              <C>           <C>            <C>
U.S. GAAP

EBITDA(6) ................................. Ps. (67,463)  Ps.(147,146)   Ps. (133,307)   Ps. (180,473)   Ps. (288,258)  Ps. (31,483)
Cash used in operating activities .........     (54,088)      (97,679)   Ps. (232,862)   Ps. (742,528)   Ps. (363,610)  Ps. (39,715)
Cash provided by financing activities .....     183,218       893,982    Ps.  894,012    Ps. 2,572,445   Ps. (37,076)   Ps.  (4,050)
Cash used in investing activities ..........    (87,316)     (782,172)   Ps. (782,199)   Ps. (785,921)   Ps. (499,999)  Ps. (54,612)
</TABLE>


                                       3
<PAGE>
         NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

(1)      All amounts incurred in operations from February 28, 1996 (date of
         incorporation) to May 1, 1999 (commencement of operations) were
         capitalized as "preoperating expenses" under Mexican GAAP. Therefore,
         no amounts are reported in the statement of operations for those
         periods.

(2)      We commenced commercial operations on May 1, 1999. In accordance with
         Mexican GAAP, our financial statements reflect eight months of
         operations.

(3)      Pursuant to Mexican GAAP, financial data for all periods in the
         financial statements have, unless otherwise indicated, been restated in
         constant pesos as of December 31, 2001. Restatement into December 31,
         2001 pesos is made by multiplying the relevant nominal peso amount by
         the inflation index for the period between the end of the period to
         which such nominal peso amount relates and December 31, 2001. The
         inflation index used in this annual report for 1997 figures is 1.5155,
         for 1998 figures is 1.2777, for 1999 figures is 1.1376 and for 2000
         figures is 1.0440.

(4)      Peso amounts were converted to U.S. dollars at the exchange rate of
         Ps.9.1560 per U.S.$1.00 reported by the Federal Reserve Bank of New
         York as its noon buying rate for pesos on December 31, 2001. Such
         conversions are for the convenience of the reader and 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.

(5)      Working capital is defined as current assets (excluding cash and cash
         equivalents and restricted cash) less current liabilities (excluding
         current maturities of long-term debt, which includes interest payable).

(6)      EBITDA represents earnings before income and asset taxes, integral cost
         of financing, other income (expense), nonrecurring charges, and
         depreciation and amortization. We have included information concerning
         EBITDA (which is not a measure of financial performance under Mexican
         or U.S. GAAP) because we believe it is a standard financial statistic
         commonly reported and widely used by analysts and other interested
         parties. We understand that EBITDA is also used by investors as one
         measure of an issuer's ability to service or incur indebtedness. We
         also understand that EBITDA may be defined differently by other
         companies that disclose a similarly titled account. You should not
         construe EBITDA as an alternative to operating income or as a measure
         of liquidity or cash flows from operating activities.

(7)      Capital expenditures include frequency rights, telephone network
         systems and equipment, intangible assets and other assets. Investing
         activities in the consolidated statements of changes in financial
         position are net of dispositions.

(8)      Our earnings have been insufficient to cover fixed charges since we
         started incurring debt in 1998. Fixed charges include interest expense,
         capitalized interest and the portion of operating lease rental expense
         that represents the interest factor. The fixed charge coverage
         deficiency for the years ended December 31, 1999, 2000 and 2001
         amounted to Ps.264.3 million, Ps.709.1 million and Ps.658.0 million,
         respectively. Since there is no statement of operations for the years
         ended December 31, 1997 and 1998, the information has not been included
         herein.


                                       4
<PAGE>

                                 EXCHANGE RATES

            The following table sets forth, for the periods indicated, the
period-end, average, high and low noon buying rates, in each case for the
purchase of U.S. dollars, all expressed in nominal pesos per U.S. dollar. The
noon buying rate at June 27, 2002 was Ps.9.970 per U.S.$1.00.

<TABLE>
<CAPTION>
                                                                            NOON BUYING RATE(1)
                                                      ----------------------------------------------------------------
                                                       PERIOD END         AVERAGE(2)          HIGH               LOW
                                                       ----------         ----------         -------           -------
<S>                                                    <C>                <C>                <C>               <C>
1997.........................................            Ps.8.07           Ps.7.917          Ps.8.41           Ps.7.72
1998.........................................               9.90              9.152            10.63              8.04
1999.........................................               9.48              9.553            10.60              9.24
2000.........................................               9.62              9.459            10.09              9.98
2001.........................................               9.16              9.337             9.97              8.95
December 2001................................                                                   9.25              9.09
January 2002.................................                                                   9.25              9.10
February 2002................................                                                   9.17              9.05
March 2002...................................                                                   9.11              9.00
April 2002...................................                                                   9.38              9.00
May 2002.....................................                                                   9.71              9.41
</TABLE>

------------------

(1)  Source: Federal Reserve Bank of New York.

(2)  Represents the average rates for each period indicated, calculated by using
     the average of the exchange rates on the last day of each month during the
     period.


B.          CAPITALIZATION AND INDEBTEDNESS

            Not applicable.

C.          REASONS FOR OFFER AND USE OF PROCEEDS

            Not applicable.

D.          RISK FACTORS

FACTORS RELATING TO MAXCOM

We anticipate that we will have negative operating cash flow until we develop a
sufficiently large customer base

            The development of our business and the installation and expansion
of our network, services and customer base require significant expenditures. Our
planned capital expenditures for 2002 are approximately U.S.$75.5 million. These
expenditures, together with operating expenses, will adversely impact our cash
flow and profitability until an adequate customer base is established. We have
generated negative cash flows from operating activities since our incorporation
in 1996 and expect to generate insufficient cash flows to cover our fixed
charges through 2002. We cannot assure you that we will be able to establish an
adequate customer base to generate sufficient positive cash flows from our core
operations.

            If we cannot generate significant revenues, achieve and sustain
profitability or generate positive cash flows from operating activities in the
future, we will not be able to meet our debt service or working capital
requirements, and the value of our securities, as a result, would be materially
reduced.

Our auditors have indicated in their report that there is substantial doubt
about our ability to continue as a going concern under current conditions


                                       5
<PAGE>
            PricewaterhouseCoopers, in its Report of Independent Accountants
dated March 13, 2002, except for note 23 for which the date is April 30, 2002
related to our consolidated financial statements as of and for the year ended
December 31, 2001, has stated that we are highly leveraged and have suffered
recurring losses from operations that raises substantial doubt about our ability
to continue as a going concern. We believe that if our financial situation does
not improve, we will be unable to service our debt and operate as a viable
company and we may qualify for dissolution or liquidation under Mexican
corporate law.

            During 2001, our accumulated losses exceeded the equivalent of
two-thirds of our capital stock. According to the Mexican Companies Law (Ley
General de Sociedades Mercantiles), an interest party may file a claim for
dissolution and force us to liquidate our assets if the accumulated losses
exceed two-thirds of our contributed capital.

We expect to incur net losses through at least 2003

            Our cash flow from operations for the year 2001 was insufficient to
cover our fixed charges. Even with the consummation of the exchange offer and
the private equity investment, we expect to continue to incur net losses through
at least 2003.

We may need additional financing

            We may require additional financing in the future to service our
indebtedness and fund our operations. We cannot assure you that we will have
sufficient resources and that, if needed, any financing will be available in the
future or on terms acceptable to us. In addition, our ability to incur
additional indebtedness will be restricted by the terms of the indenture
governing the new notes.

We may be unable to build out our network in a timely manner or without undue
cost

            Our ability to achieve our strategic objectives will depend, in
large part, upon the successful, timely and cost-effective buildout of our
network. Factors that could affect such buildout include, among other things:

     -    our inability to obtain permits to use public rights of way;

     -    our inability to obtain future financing necessary for such buildout;

     -    unforeseen delays, costs or impediments relating to the granting of
          state and municipal permits for our buildout;

     -    delays or disruptions resulting from physical damage, power loss,
          defective equipment or the failure of third-party suppliers or
          contractors to meet their obligations in a timely and cost-effective
          manner; and

     -    regulatory and political risks relating to Mexico, such as the
          temporary seizure or permanent expropriation of assets, import and
          export controls, political instability, changes in the regulation of
          telecommunications and any future restrictions on the repatriation of
          profits or on foreign investment.

     Although we believe that our cost estimates and buildout schedule are
reasonable, we cannot assure you that the actual construction costs or time
required to complete the buildout will not substantially exceed current
estimates. Any significant cost overrun or delay could materially affect our
cash flow and our ability to repay our debt.

We depend on key personnel; if they were to leave us, we would have insufficient
qualified employees

            Our operations are managed by a small number of key management
personnel, the loss of whom could materially affect our operations. In June and
July 2000, our then chief executive, chief operating and chief marketing
officers resigned. In April 2001, our chief financial officer also resigned. We
have since appointed new officers to all these positions. The significant
turnover we have experienced among such management has affected our ability

                                       6
<PAGE>
to develop and execute our business strategies. The success of our company
depends in part upon our ability to hire and retain highly skilled and qualified
management personnel. The competition for highly qualified management personnel
in the telecommunications industry is intense and, accordingly, we cannot assure
you that we will be able to hire or retain the management personnel necessary
for our success.

We may not have sufficient administrative, operational or financial resources to
grow as rapidly as we would like

            Our expected growth will place a significant strain on our
administrative, operational and financial resources. We anticipate that
continued growth will require us to recruit and hire a substantial number of new
managerial, finance, sales and marketing, accounting and support personnel. If
we are unable to attract and retain personnel who can manage our growth
effectively, our growth may be limited and the quality of our service may be
impaired. This occurrence could adversely affect our results of operations and
financial condition.

We depend on Telmex for interconnection

            Telmex exerts significant influence on all aspects of the
telecommunications market in Mexico, including interconnection agreements. We
use Telmex's network to service virtually all of our customers. Our
interconnection agreement with Telmex expires on September 15, 2002. We cannot
assure you that once this agreement expires we will be able to obtain the
services we require from Telmex on terms and conditions that permit us to offer
services at rates that are both profitable and competitive.

Our high leverage could affect our ability to service our debt

            We are highly leveraged. In 2001, our earnings were insufficient to
cover fixed charges by an amount equal to Ps.658.0 million (U.S.$71.9 million).
On a pro forma basis after giving effect to the exchange offer and the private
equity investment consummated on April 29, 2002 and described in "Item 5.
Operating and Financial Review and Prospects -- Recent Developments," our
earnings in 2001 would have been insufficient to cover fixed charges by an
amount equal to Ps.377.3 million (U.S.$41.3 million).

            Our ability to meet our debt service requirements will depend on our
future performance, which is subject to a number of factors, many of which are
outside our control. We cannot assure you that we will generate sufficient cash
flows from operating activities to meet our debt service and working capital
requirements. In addition, our high leverage could affect our access to credit
or our ability to pursue business opportunities.

            The indenture governing the new notes issued pursuant to the
exchange offer will limit but not prohibit our incurrence of additional
indebtedness. We expect to incur additional indebtedness in the future. However,
our significant level of indebtedness may impair our ability to raise additional
indebtedness on commercially reasonable terms when required or with terms that
will not limit our ability to develop our business.

            Furthermore, our significant leverage could adversely affect:

            -     our ability to fund capital expenditures, acquisitions or
                  operating losses or to refinance existing indebtedness;

            -     our flexibility in planning for, or reacting to, changes in
                  our business and market conditions; and

            -     our ability to compete in our markets.

We are and will be subject to restrictive covenants

            The terms of the new notes, impose significant operating and
financial restrictions. These restrictions will affect, and in many respects
significantly limit or prohibit, our ability to, among other things:

            -           borrow money;

            -           pay dividends on our capital stock;


                                       7
<PAGE>
            -     purchase stock or repay subordinated indebtedness;

            -     make investments;

            -     restrict the ability of our subsidiaries to pay dividends;

            -     use assets as security in other transactions;

            -     sell assets; and

            -     consolidate or merge into other companies.

            If we do not comply with these restrictions, we could be in default
even if we are able to service our debt. If there were a default, holders of the
notes could demand immediate payment of the aggregate principal amount and
accrued interest on the notes outstanding. This could lead to our bankruptcy or
reorganization for the benefit of our creditors or to our inability to pay our
obligations.

We may not be able to finance a change of control offer

            We will be required to offer to repurchase all of the new notes if a
change of control, as such term is defined in the indenture governing the new
notes, occurs. However, it is possible that we will not have sufficient funds at
the time of the change of control to make the required repurchase.

If we do not successfully upgrade and operate accounting, billing, customer
service and management information systems, we may not be able to achieve
desired operating efficiencies

            Sophisticated information and processing systems are vital to our
operations and growth and our ability to monitor costs, render monthly invoices
for services, process customer orders, provide customer service and achieve
operating efficiencies. We intend to upgrade the accounting, information and
processing systems necessary to provide services efficiently. However, we cannot
assure you that we will be able to successfully upgrade or operate such systems
or that they will perform as expected.

Our operations are dependent upon our ability to protect our network
infrastructure

            Our operations are dependent upon our ability to protect our network
infrastructure against damage from fire, earthquakes, floods, power loss, and
similar events and to construct networks that are not vulnerable to the effects
of such events. The occurrence of a natural disaster or other unanticipated
problem at our facilities or at the sites of our switches could cause
interruptions in the services we provide. The failure of a switch would result
in the interruption of service to the customers served by that switch until
necessary repairs are effected or replacement equipment is installed. Any damage
or failure that causes interruptions in our operations could have a material
adverse effect on our business, financial condition and results of operations.

A significant portion of our revenues is represented by a small number of
customers

            In 2001, our three largest customers accounted for 23.0% of our
revenues. We believe that this customer concentration will be reduced over time
as the size of our operations grows. However, our revenues could be negatively
affected, at least in the short term, if one or more of our largest customers
cancel our service.

We could be negatively affected by the "by-pass" traffic

            Pursuant to regulations of the Federal Telecommunications Commission
(Comision Federal de Telecomunicaciones), which we refer to as "COFETEL," the
only legal way to transport international long distance calls in Mexico is
through the international settlement rate system. However, alternative ways to
route and terminate international long distance calls at a lower cost in
countries that exchange a significant amount of traffic with Mexico exist. Some
estimates show that, given the disparity between international settlement rates
and domestic interconnection rates that would be payable under an alternative
arrangement, an increasing portion of the long

                                       8
<PAGE>
distance market between Mexico and the United States is being served by entities
that "by-pass" the international settlement rate system. This practice is deemed
illegal by COFETEL.

            Maxcom complies with all relevant regulations relating to local and
long distance services and cannot confirm whether any of its high-volume
customers is engaging in "by-pass" activities. Under Mexican legislation, Maxcom
is not required to investigate whether any such high-volume customers are
engaged in "by-pass" activity. Maxcom is required, however, to obey any COFETEL
formal order to disconnect a customer deemed to be engaged in "by-pass" activity
by COFETEL.

            Mexican regulatory authorities have announced their intention to
conduct more rigorous audits of persons or companies engaging in "by-pass"
activity. In December 2000, some of the major Mexican long distance carriers
signed a cooperation agreement to combat "by-pass" in Mexico. If, as a
consequence of such actions, the regulatory authorities determine that any of
our high-volume customers are engaged in "by-pass" activity, Maxcom's revenues
could be negatively affected.

Our telecommunications network infrastructure has several vulnerabilities and
limitations

            Our telecommunications network is the source of all our revenues.
Any problem with or limitation of our network may result in a reduction in the
number of our customers and our revenues. The development and operation of our
network is subject to problems and technological risks, including:

            -     power loss;

            -     capacity limitations;

            -     software defects;

            -     breaches of security, whether by computer virus, break-in or
                  otherwise; and

            -     other factors which may cause interruptions in service or
                  reduced capacity for our customers.

            A failure to achieve current specifications for, or future upgrades
of, our network may materially and adversely affect our results of operations
and financial condition.

FACTORS RELATING TO THE MEXICAN TELECOMMUNICATIONS INDUSTRY

We face significant increasing competition, which may negatively affect our
operating margins

            The telecommunications industry in Mexico is becoming highly
competitive. We compete with our rivals primarily on the basis of features,
pricing and customer service. We face significant competition from Telmex in all
of the areas where we operate. In particular, as the former state-owned
telecommunications monopoly, Telmex has significantly greater financial and
other resources than those available to us, a nationwide network and concession
and an established customer base.

            We also face significant competition from recent entrants,
particularly in Mexico City. Some of these recent entrants may have
significantly greater financial and other resources than us. In addition, we
could face increased competition if the Mexican government grants more
concessions or if new, competing technologies are developed. Competition may
limit our ability to grow or maintain our customer base or to implement price
increases to keep pace with inflation.

If the Mexican government grants more concessions, the value of our concessions
could be severely impaired

            The telecommunications industry is regulated by the Mexican
government. Our concessions are not exclusive and the Mexican government could
grant concessions covering the same geographic regions and frequency bands to
other entrants. We cannot assure you that additional concessions to provide
services similar to

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<PAGE>
those we plan to provide will not be granted and that the value of our
concessions will not be adversely affected as a result.

We could lose our concessions if we do not comply fully with their terms

            The terms of our concessions require us to satisfy a number of
technical, buildout and financial conditions. We believe we are currently in
compliance with all of these terms. However, we cannot assure you that we will
be able to comply in the future. A failure to comply could result in the
termination of our concessions, and the Mexican government would not be required
to compensate us. If any of our concessions were to be terminated, we could be
unable to engage in our core business and we would likely be unable to repay our
indebtedness.

Fraud increases our expenses

            The fraudulent use of telecommunications networks imposes a
significant cost upon service providers, who must bear the cost of services
provided to fraudulent users. We suffer loss of revenue as a result of
fraudulent use, and also cash costs due to our obligation to reimburse carriers
for the cost of services provided to fraudulent users. Although technology has
been developed to combat this fraudulent use and we are installing it in our
operations, this technology does not eliminate fraud entirely. In addition,
since we rely on other long-distance carriers for interconnection, some of which
do not have anti-fraud technology in their network, we are particularly exposed
to this risk in our long distance service. In 2001, we incurred approximately
Ps.4.1 million in expenses for the prevention and detection of fraud.

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. While we have been installing
what we believe to be a technologically advanced fiber optic network with a
microwave overlay, we cannot assure you that this technology will not be
challenged by competition from new or improved digital or other technologies 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.

The Mexican government could temporarily seize or permanently expropriate our
assets under certain circumstances

            The Mexican government has the authority to temporarily seize all
assets related to a telecommunications concession in the event of natural
disaster, war, significant public disturbance, threats to internal peace,
economic events, and for other reasons related to national security. In
addition, the Mexican government has the statutory right to permanently
expropriate any telecommunications concession and claim any related assets for
reasons of public interest. Mexican law provides for compensation in connection
with losses and damages related to temporary seizure or expropriation. However,
we cannot assure you that the actual compensation paid would be adequate or that
such payment would be timely.

FACTORS RELATING TO MEXICO

If Mexico experiences future political and economic crises, our business could
be affected negatively

            We are a Mexican company with all of our operations in Mexico.
Accordingly, the political and economic environment within Mexico can have 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, the candidate of the National Action Party (Partido Accion
Nacional). This represents the first time in over 70 years that the
Institutional Revolutionary Party (Partido Revolucionario Institucional) has not
won the Presidency and has not secured the absolute majority of the Mexican
Congress. We cannot predict the impact that this new political landscape will
have on the Mexican economy, particularly on the growth and deregulation of the
telecommunications industry.


                                       10
<PAGE>
            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
telecommunications services.

            Crises such as these could have a material adverse effect on our
financial condition and results of operations and on the market value of our
securities.

Changes in tax or other regulations could have an adverse impact on our
financial condition

            Effective January 1, 2002, the Mexican Congress expanded the scope
of the Sales and Use Tax Law (Ley del Impuesto Especial Sobre Produccion y
Servicios), whereby, among other things, a new 10% tax was imposed on the
rendering of certain telecommunications and supplementary services. Although we
believe, based on the advice of our tax and regulatory advisors, that local and
long distance services, which are our core business, are not subject to such
special tax, we cannot assure you that the tax authorities may not interpret the
law otherwise. In such case, our operations and financial condition would be
materially and adversely affected.

            The operation of telecommunications systems in Mexico is subject to
laws and regulations administered by the Mexican Ministry of Communications and
Transportation (Secretaria de Comunicaciones y Transportes) and the Mexican
Federal Telecommunications Commission (Comision Federal de Telecomunicaciones).
These governmental agencies may take regulatory actions that could damage our
business.

Foreign ownership restrictions limit our ability to raise equity capital

            Mexican law currently provides that no more than 49% of the full
voting stock of a Mexican corporation holding a concession to provide
telecommunications services, other than cellular services, may be held by
non-Mexicans. Non-Mexicans represent 49% of our full voting stock. In addition,
Mexican authorities have mandated that our limited voting shares, which are also
referred to as neutral investment shares, may not represent more than 95% of our
capital stock.

            Under our current capital structure, we have limited flexibility to
raise equity capital from non-Mexican investors. As a result, any future sales
of equity securities, may require substantial participation by Mexicans or a
waiver or modification of Mexican foreign investment laws and regulations. We
cannot assure you that such a waiver or modification could be obtained.

We may lose money because of peso devaluations

            While our revenues are almost entirely denominated in pesos, the
majority of our obligations, and all of our long-term debt, are, and after
consummation of the exchange offer and the private equity investment, will be,
denominated in U.S. dollars. In addition, substantially all of our capital
expenditures are denominated in U.S. dollars. We are, and will be, exposed to
peso devaluation risk. The peso has devalued substantially against the U.S.
dollar in the past and may devalue significantly in the future. For example, the
noon buying rate rose from Ps.3.45 per U.S.$1.00 on December 19, 1994 to Ps.5.00
per U.S.$1.00 on December 31, 1994 and Ps.7.74 per U.S.$1.00 on December 31,
1995, representing a 124.6% devaluation of the peso relative to the U.S. dollar.
In 1998, the peso devalued 22.7% relative to the U.S. dollar.

            We do not currently have, nor do we expect to have, hedging
arrangements with respect to this risk because we do not believe them to be cost
effective for us. Further declines in the value of the peso relative to the U.S.
dollar could adversely affect our ability to meet our U.S. dollar-denominated
obligations, including the notes. In addition, any further decrease in the value
of the peso may negatively affect the value of Mexican securities such as ours.
Although the peso-to-dollar exchange rate has remained relatively stable in the
last three years, there may be significant devaluations in the future.

Developments in other countries may impact the price of our securities


                                       11
<PAGE>
            We cannot assure you that the price of our securities will not be
adversely affected by events elsewhere, especially in the United States and in
emerging market countries. Mexican financial and securities markets are, to
varying degrees, influenced by economic and market conditions in other
countries. Although economic conditions are different in each country, investor
reaction to developments in one country has had and can have significant effects
on the prices of securities of issuers in other countries, including Mexico.
Currently, the economic slow down in the United States, as well as political and
financial crisis in certain emerging markets have had a significant negative
impact on the financial and securities markets in many emerging market
countries, including Mexico. The effects of these crises may worsen, or new
crises may occur, which may negatively affect the price of our new notes and
CPOs or our financial condition and results of operations.

Our financial statements do not give you the same information as financial
statements prepared under United States accounting principles

            We prepare our financial statements in accordance with Mexican GAAP.
These principles differ in significant respects from U.S. GAAP, including in the
treatment of the amortization of frequency rights, the capitalization of
preoperating expenses, the capitalization of interest, the extinguishment of
debt, the restructuring of troubled debt and deferred income taxes and
employees' profit sharing, and in the presentation of cash flow information. In
particular, all Mexican companies must incorporate the effects of inflation
directly in their accounting records and in published financial statements. We
cannot assure you that these will be the only differences in the future. See
note 22 to the consolidated financial statements for a description of the
principal differences between Mexican GAAP and U.S. GAAP applicable to Maxcom.

You may suffer a U.S. dollar shortfall if you obtain a judgment against us or a
distribution in bankruptcy

            In the event you are awarded a judgment from a court enforcing our
U.S. dollar-denominated obligations under either our old or new notes or the
liquidation preference under our series N2 preferred stock, we will have the
right to discharge our obligations by paying you in pesos at the exchange rate
in effect on the date of payment of such judgment. Likewise, if we are declared
bankrupt, we will have the right to discharge our obligations by paying our
creditors in pesos at the exchange rate in effect on the date of the declaration
of such bankruptcy.

            The exchange rate is currently determined by the Mexican Central
Bank (Banco de Mexico) every banking day in Mexico and published the following
banking day in the Official Gazette of the Federation (Diario Oficial de la
Federacion). As a result of such currency conversion, you could face a shortfall
in U.S. dollars. No separate actions exist or are enforceable in Mexico for
compensation for any such shortfall.

            You should also be aware that in the event we are declared bankrupt
by a Mexican court or if we are subject to a bankruptcy reorganization
proceeding (concurso mercantil) in such court, our debt obligations, including
the new notes and the old notes, if any, will cease to accrue interest and
payment of any of our debt obligations would depend on the outcome of the
bankruptcy reorganization proceedings, which are often very lengthy.

We may not be able to make 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 our access to U.S. dollars to meet our
U.S. dollar obligations and could also have a material adverse effect on our
business, financial condition and results of operations. We cannot predict the
impact of any such measures on the Mexican economy.

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, was 18.6%, 12.3%, 9.0%, and 4.4% in 1998, 1999,
2000, and 2001, respectively. High inflation rates can adversely affect our
business and results of operations in the following ways:


                                       12
<PAGE>
            -     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 also 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 24.8%, 21.4%, 15.2% and 11.3% for 1998, 1999, 2000 and 2001,
respectively. Although we do not currently have any peso-denominated debt, if we
need to incur such debt in the future, it will likely be at high interest rates.

ITEM 4.     INFORMATION ON THE COMPANY

A.          HISTORY AND DEVELOPMENT OF THE COMPANY

            Maxcom Telecomunicaciones, S.A. de C.V. is a limited liability
company (sociedad anonima de capital variable) with indefinite life, organized
under the laws of Mexico on February 28, 1996. We were originally organized
under the name "Amaritel, S.A. de C.V." We changed our legal name to "Maxcom
Telecomunicaciones, S.A. de C.V." on February 9, 1999. Our legal name is also
our commercial name.

            Our principal offices are located at Guillermo Gonzalez Camarena No.
2000, Colonia Centro de Ciudad Santa Fe, Mexico, D.F. 01210 and our general
phone number is (52) 55-5147-1111. Our website address, the contents of which
are not part of, or incorporated into, this annual report, is www.maxcom.com.
Our agent in the United States is Puglisi & Associates, 850 Library Avenue,
Suite 204, P.O. Box 885, Newark, Delaware 19715.

            In February 1997, we were awarded Mexico's first competitive
wireline local and long distance telephony concession, covering the Federal
District of Mexico and over 100 cities and towns in the Gulf region for local
service and the whole nation for long distance service. This concession has a
term of 30 years. The local telephony portion of our concession was expanded in
September 1999 to cover over 80% of the Greater Mexico City area and a wider
area within the Gulf region. In September 2001, our concession was further
expanded to allow us to provide nationwide wireline local telephony service.

            In October 1997, we were awarded seven nationwide point-to-point and
three regional point-to-multipoint microwave concessions. Each of these
concessions have a term of 20 years.

            We commenced commercial operations on May 1, 1999.

            For the three years ended December 31, 2001, we invested
approximately Ps.1,992.5 million in capital expenditures, primarily for the
buildout of our infrastructure.

            For 2002, we plan to invest approximately U.S.$75.5 million in
capital expenditures, mainly to continue to build out our network. Of this
amount, we had already spent approximately Ps.59.1 million (approximately
U.S.$6.5 million) by March 31, 2002.

B.          BUSINESS OVERVIEW

            We are a growing facilities-based telecommunications company
operating in the competitive local exchange carrier market in Mexico. We are
focused on developing our network and support infrastructure required to provide
local as well as long distance and other value-added services to targeted small
and medium-sized businesses and residential customers within our concession
areas. In particular, we believe that the cities of Mexico and Puebla, where we
currently operate, and certain other cities where we are planning to operate in
accordance with our new nationwide concession, offer opportunities for growth in
telecommunications use as a result of the combination of a relatively large
population, low subscriber line penetration by international standards and


                                       13
<PAGE>
economic growth. We anticipate a large and growing demand for telephony services
in these regions. See below " -- Our markets -- Concession areas" for a fuller
description of the new nationwide concession.

            The construction of our telecommunications network is based on a
smart-build, customer-driven, modular platform that utilizes a combination of
fiber optic, copper wire and microwave transmission technology. This methodology
enables us to provide fast service to our target markets, reduces the time lag
between the incurrence of capital expenditures and the generation of revenues
and increases flexibility to accommodate a changing market environment. To
operate our network, we have constructed two central switching offices located
in Mexico City and the City of Puebla, with a 170-kilometer fiber optic link
connecting the two cities. As of December 31, 2001, we had in service two
state-of-the-art Lucent Technologies 5ESS switches. We are currently negotiating
with Lucent Technologies, Inc. and other vendors the acquisition of two
additional state-of-the-art switches that will support our future growth and
expansion.

            We believe that the combination of our smart-build network
construction strategy, our position as a customer service-oriented provider, our
focus on quality and reliability and our state-of-the-art network and systems
will allow us to benefit from the expected growth of the Mexican
telecommunications industry.

            We position ourselves as a single-source provider of
telecommunications services to our customers. In addition to our existing local,
long distance and data services, we offer value-added products such as digital
high-speed data connectivity and Internet access. We are currently expanding the
functionality of our network to offer other broadband services, such as
dedicated Internet access, private lines and web-hosting.

            In order to support our market positioning, we follow a marketing
strategy that is focused on differentiating ourselves from competitors.
According to our market research, our target customers value highly, among other
things, around-the-clock customer care availability, rapid response time and
accurate billing. A key element in this strategy is to offer superior customer
service, such as our "one-stop-shopping " feature which allows our customers to
receive their statement containing local, long distance and Internet charges in
one single invoice.

            Our new management team has significant experience in
telecommunications and marketing. Our President and Chief Executive Officer was
the former Chief Executive Officer of Iusacell, the second largest mobile
telephone company in Mexico, which we refer to as "Iusacell." Our Chief
Operating Officer has more than 10 years of experience in executive operations,
having worked with Johnson Controls and AMP. Our Chief Financial Officer has
more than 20 years of experience, which includes four years at Iusacell and 12
years at IBM. Our Chief Information Systems Officer has a wide range of
experience in telecommunications, having worked four years at Iusacell. Our
Chief Marketing Officer has a wide range of experience in marketing, having
worked 14 years for Kraft Foods. Our recently hired Chief Commercial Operations
Officer has more than six years of experience in the telecommunications
industry, having worked in similar positions with Alestra, Iusacell and Axtel.

STRATEGY

            We intend to capitalize on our competitive strengths to become a
leading telecommunications provider in Mexico. Our management team has been
executing a new strategy of growth in our existing markets and expansion in
accordance with our new nationwide concession. This strategy includes the
following components:

Capture unmet demand for telephony services

            We seek to capture unmet demand by targeting small and medium-sized
businesses and residential customers that are looking to expand their
telecommunications capacity or that do not currently receive the types of
products and services we offer. We believe that the potential for expansion in
the Mexican telecommunications market is significant given the low teledensity
rate, which was 12.7 telephone lines per 100 inhabitants as of December 31,
2000, the increasing level of competition and the development of the Mexican
economy.

Build our network on a demand-driven, modular basis

            We build our network based on customer demand. We first identify
city areas with the largest potential for new lines, which we refer to as
"clusters," in the markets that we serve through various market research
techniques. We then carry out the network buildout in tandem with increased
sales and promotional efforts targeted at customers

                                       14
<PAGE>
within the cluster. This parallel track minimizes the time lag between the
incurrence of capital expenditures and the generation of revenues, and allows a
choice of technology and construction method based on the particular needs of
the cluster. We refer to this approach as our "smart-build" strategy.

Differentiate product offerings based on features and price

            We believe that we can differentiate ourselves from competitors by
offering a variety of product features that meet the specific needs of our
customers. To that end, we seek to develop customer loyalty and brand awareness
by informing consumers about the telecommunications services that we offer and
by helping them to differentiate between the various telecommunications services
available in the market. We also seek to offer our services at prices that are
between 5% and 15% lower than the prevailing market price in order to build our
customer base. See " -- Pricing."

Deploy cost-efficient technology

            We use a cost-efficient technology to deploy our network and serve
our customers. Our current network consists of optical fiber, copper lines and
microwave technology which we deploy to particular customers based on deployment
cost, time to market, time to revenue, time to profitability, quality and
reliability in our service.

            Our technology platform allows us to provide xDSL services,
dedicated Internet access lines, POTS and ISDN services, among others. In
addition, due to additional duct capacity in our current facilities we are able
to deploy fiber-to-the-home (FTTH) services whenever customer premises equipment
technology is available at reasonable prices. Our microwave rings allow us to
reach customers throughout our market in a cost efficient manner and allow us to
build network clusters that can reach from 500 to 6,000 lines.

Capitalize on our nationwide local telephony concession

            In September 2001, our local telephony concession was expanded,
allowing us to provide service to all of Mexico. This provides us with an
opportunity to target small and medium-sized businesses and residential
customers within our new concession areas who we believe are willing to evaluate
other alternatives as they look for better service, higher reliability and lower
tariffs.

            In addition, we believe that the quality of our product and services
offerings gives us a competitive advantage in many regions within our nationwide
concession area, as experienced in the City of Puebla, where in 2001 we more
than tripled our number of lines in service and where we installed almost 40% of
new net additions according to COFETEL.

OUR MARKETS

Concession areas

            In February 1997, we were awarded Mexico's first competitive local
and long distance telephony concession, covering the Federal District of Mexico
and over 100 cities and towns in the Gulf region for local service and
nationwide for long distance service. In September 1999, we received the
approval of the SCT and COFETEL to provide local telephony services in several
municipalities contiguous to the Federal District, which are part of Mexico
City, as well as in selected additional cities in the Gulf region. In September
2001, our local service concession was expanded to cover all of Mexico. Under
our concession, we are required to start providing service to the cities of
Queretaro, Leon, Celaya, Irapuato, Silao, Aguascalientes, Guadalajara and
Monterrey by 2006.

            We commenced commercial operations in Mexico City in May 1999.
Mexico City has the nation's greatest concentration of service and manufacturing
industries and is also the center of Mexico's public and financial services
sectors. In 2001, Mexico City had a population of approximately 20.0 million
people, according to the Mexican National Institute of Statistics, Geography and
Information (Instituto Nacional de Estadistica, Geografia e Informatica).
Although Mexico City has the highest teledensity rate in Mexico, at
approximately 34.2% telephone lines per 100 inhabitants as of June 2001, we
believe that significant unmet demand for high-quality local telephony services
in Mexico City remains. As of December 31, 2001, we had 41,873 lines installed
in Mexico City.


                                       15
<PAGE>
            We also commenced commercial operations in the City of Puebla in May
1999. Puebla is the fourth largest city in Mexico, with a population of
approximately 1.4 million people as of December 31, 2001. In the City of Puebla
we have expanded our market share in local telephony service from 2.5% in 2000
to 7.7% in 2001. As of December 31, 2001, we had 36,108 lines installed, as
compared to 9,990 lines installed as of December 31, 2000. According to COFETEL,
these new lines represented 40% of all the new lines installed in the City of
Puebla during this period.

Clusters

            We have developed a comprehensive marketing strategy that starts by
identifying city areas with the largest potential for new lines, which we refer
to as "clusters." We use a variety of techniques to identify potential clusters,
including canvassing, plotting of potential clusters and database marketing.
Once a cluster is identified, a map of the geographic area is produced and the
cluster is defined. A cluster becomes the basis for network design and
deployment and for the launching of focused field sales and marketing one-on-one
efforts.

            Our cluster strategy is divided into three stages:

            -     IDENTIFY CLUSTERS through market research. Our market research
                  is designed to identify small- and medium-sized businesses and
                  residential customers. Once we identify potential customers
                  within the clusters, we design the deployment of the access
                  network to cover them. We perform a return on investment
                  analysis for each cluster to assure that the investment made
                  in such cluster meets our return benchmarks.

            -     DEPLOY CLUSTERS through the implementation of a sales plan for
                  each cluster based on our network deployment schedule. We
                  promote our services at the same time that we build our
                  network.

            -     FILL IN CLUSTERS by offering our services to all customers
                  within the cluster.

OUR NETWORK

Buildout strategy

            We build out our network on a modular basis. Once a cluster has been
identified in a joint effort by our marketing, engineering and sales
departments, we build our network in clusters varying from 500 to 6,000 lines.
To ensure the highest quality service to our customer, we install 24-gauge
copper wire and limit the distance between our backbone network and the customer
premises to four kilometers. These attributes also allow us to provide to our
customers voice and data services, such as ADSL services with bandwidth of up to
2Mbps.

            We standardize all our Lucent, AFC and Ascom equipment to assure
consistent, cost efficient, high quality service and also to enable us to use
the same access equipment for all of our services.

Network backbone

            At December 31, 2000, our network backbone consisted of one owned
170-kilometer 24 strand fiber optic link between Mexico City and the City of
Puebla with three optical regenerators at halfway points. We have the capability
with this link to transmit synchrony links, LAN network links, long distance
links and dedicated links. We have also installed a Lucent Technologies 5ESS
digital switch in each city with a total capacity of 120,000 trunks. Our switch
in Mexico City is connected to four different nodes in the city's public
switched telephone network, some by our own and some by leased fiber capacity.
Our switch in Puebla is connected to the city's public switched telephone
network by our own fiber ring. We also lease capacity to connect to long
distance networks.

            In June 2000, we finished constructing a lighted 144 strand, 57
Kilometer fiber optic ring in the City of Puebla. We also acquired six strands
of dark fiber for approximately 175 kilometers in metropolitan rings in Mexico
City and obtained an option for additional capacity in future fiber optic rings
also in Mexico City. In addition, the infrastructure is in place to provide
local telephony service to five towns located along our Mexico City-City of
Puebla fiber optic link.


                                       16
<PAGE>
            We use our own fiber optic rings to connect our microwave nodes to
the fiber rings in order to transport the telephone communications from our
customers to the telephone switch and from there back to our customers or to the
public switched telephone network. We also use this fiber to provide to our
customers dedicated links and dedicated Internet links that we connect through
our fiber and also by leased capacity to the Internet backbone.

Last-mile connectivity

            The last-mile connectivity portion of our network is comprised of a
mix of wireline and wireless access technologies. We use point-to-point
microwave transmission technology for fast deployment to clusters and single
site locations. We have point-to-point frequencies in the 15 and 23 GHz band
forming a complex microwave network throughout both Mexico City and the City of
Puebla in which collectively we have more than 400 microwave links. We use
microwave links to connect customers with more than 20 lines and to connect
clusters that cannot be immediately connected to our own fiber network. We also
have a point-to-multipoint concession for the 10.5 GHz band, covering a portion
of the Gulf region. We are testing different technologies in order to use this
concession for commercial purposes.

            We also use wireline access to provide service to clusters. Clusters
generally have an area ranging between one and six kilometers in diameter. An
average of 50 kilometers of cable plant is required to provide last-mile
connectivity within the clusters.

            We use copper wire feeder and distribution facilities placed from
the host or remote site along rights of way with a mix of aerial and underground
construction. Aerial is our preferred and most used method because of its cost
of construction advantage. Underground cable is placed using either the open
trench or directional boring methods of construction. The size of the cable is
based on the anticipated number of customers in each cluster's influence area as
forecasted by our marketing research. We also integrate fiber optic facilities
in the distribution plant to allow us to provide broadband services.

Switching

            We have a Lucent Technologies 5ESS digital switch in Mexico City and
the City of Puebla. Our switch in Mexico City is currently engineered and
equipped for 86,000 trunks, and new switches will be installed as the maximum
capacity of the existing switches is reached. Our switch in the City of Puebla
is engineered and equipped for 60,000 trunks. Each trunk can generally carry
between 1 and 3 lines, depending on whether it serves a residential or a
business customer. Our equipment capacity is scaleable at incremental costs
according to customer demand.

            The switches are capable of providing analog lines, E1 digital
lines, digital high-speed data services, centrex services and operator-assisted
services. In addition, they can provide private analog lines, private
clear-channel digital lines, data transmission and value-added services.

            Our switches also have a synchrony network that is designed to
assure a proper synchronization of every call that is made in the cities we
serve and to assure proper synchronization with the public switched telephone
network as well as any other carriers with whom we connect. We also have two
STPs (Signaling Transfer Point) in the City of Puebla and four in Mexico City to
assure the proper signaling in our interconnection with all other carriers.

Operational support systems

            We have a network operations and control center in Mexico City which
oversees, administers and provides technical support to all service areas. Our
center, which uses Hewlett Packard hardware and Lucent Technologies software
controls and monitors, among other systems, all of our network, microwave,
fiber, access equipment, data equipment, synchrony, signaling and energy
systems. Our center allows us to manage a multi-vendor network with the greatest
efficiency possible, and to identify problems early in order to utilize
available redundancy and repair the damaged part of the network.

            Our operational support systems are designed to allow us to
differentiate ourselves in the marketplace by being able to:


                                       17
<PAGE>
            -     offer a flexible, large selection of services;

            -     provide tailored service packages;

            -     quickly introduce products and services;

            -     deliver near real-time activation and disconnection;

            -     deliver a high quality of service;

            -     minimize activation errors; and

            -     provide accurate and timely billing services.

            Our information technology strategy is to implement operational
support systems possessing a high level of functionality and flexibility from
the service order to the delivery of customer invoices. The systems include the
following functional features:

            -     Spanish language support for invoices and documentation;

            -     a high degree of integration between a small number of
                  operational support systems components;

            -     flow-through of information, provisioning and service
                  activation;

            -     capabilities to monitor, manage and resolve network problems;
                  and

            -     allowance for growth on a modular scalable basis.

OUR SERVICES

            Our primary focus of service is local telephony, particularly the
provision of high-quality, flexible last-mile connectivity to small and
medium-sized businesses and residential customers. We offer long distance
service as an integrated value-added service for our local telephony customers.
We do not offer our long distance service separately from our local telephony
service.

            We currently provide value-added services such as: voice mail, speed
dialing, call waiting, call forwarding, three-way calling, call blocking, caller
identification and multi-line hunting. We also provide digital high-speed
connectivity and dial-up Internet access.

SERVICE PRODUCTS

            We seek to offer high-quality telephony service products combining
(1) prices that are between 5% and 15% below current market levels, (2) a wide
range of value-added solutions and (3) superior customer service. The following
are the service products we currently offer to our customers:

            -     LINEAMAX RESIDENCIAL. This is a service for residential
                  customers that provides a high-quality telephone line. The
                  features offered under this product include voice mail, call
                  waiting, call forwarding, three-way calling, call blocking,
                  speed dialing and unlisted numbers.

            -     LINEAMAX COMERCIAL. This service, which is offered to business
                  customers, is identical to LineaMax Residencial, except that
                  it also includes multi-line hunting.

            -     CENTRALMAX. This service provides business customers with all
                  the functions of a private branch exchange using centrex
                  technology, without having to acquire and maintain equipment.
                  The features offered under this product include call waiting,
                  call forwarding, three-way calling, direct inward dialing,
                  direct outward dialing, intercom dialing, call transfer, speed
                  dialing, call hold, call pick up,

                                       18
<PAGE>
                  outgoing call blocking, single digit access to attendant and
                  distinctive ringing. Optional solutions include voice mail,
                  music-on-hold, multi-line hunting and attendant services.

            -     LARGA DISTANCIA MAX. This service provides domestic and
                  international long distance. We do not offer our long distance
                  service separately from our local telephony service. See
                  "Supervision and Regulation of the Mexican Telecommunication
                  Industry -- Our concessions -- Long distance" for a
                  description of significant special charges we would have to
                  pay Telmex if we decide to provide long distance service to
                  customers other than our local telephony customers.

            -     TRONCALMAX DIGITAL. This service provides digital trunks for
                  business customers that need highly reliable access to and
                  from the public telephone network through their existing
                  private branch exchange. This service is sold in groups of 10,
                  20 or 30 trunks. The groups can be configured with direct
                  inward dial (DID), direct outward dial (DOD), caller
                  identification or main telephone number assignments.

            -     TRONCALMAX ANALOGICA. This service, which is offered to
                  business customers, provides connectivity to analog PBX or key
                  systems. The features available with this product are
                  multi-line hunting, caller identification and call barring.

            -     SPEEDY MAX (ADSL (256 AND 512 KBPS AND 1 AND 2 MBPS)).
                  Asymmetric digital subscriber line is a transmission service
                  that turns ordinary telephone lines into high-speed data
                  connections. It is a digital data service that provides
                  telecommuting capabilities at speeds much faster than standard
                  modems. With ADSL it is possible to have secure, dedicated
                  links to the Internet or a company's LAN at a high-speed
                  transmission.

            -     ASISTELMAX. This service, which we launched in April 2002,
                  provides basic telephone medical and home assistance to our
                  customers in case of emergency.

Beginning in the third quarter of 2002, we plan to start offering the following
service products:

            -     DIGITAL PRIVATE LINES. We expect that our private lines will
                  be highly reliable dedicated circuits between two or more
                  physical locations. They are designed to integrate voice, data
                  and video private networks over a single physical link.
                  Digital private lines are, in effect, leased lines for
                  exclusive/private use with no limitations in usage, available
                  365 days a year, with no restrictions in amount of traffic.

            -     VIRTUAL PRIVATE NETWORKS. This product provides customers with
                  several telecommunications services such as simplified
                  dialing, privacy and security of communications and control
                  calls, over national and international private networks.

            -     WEB SERVICES. Hosting web applications, domain name
                  administration, applications on demand, unified messaging
                  services and small and medium-sized business enablement
                  content.

            -     DEDICATED INTERNET ACCESS. For LAN, this product offers
                  Internet access at high speed within a clear channel access to
                  the Internet backbone.

            -     CALLING CARDS. Calling cards provide the capability to offer
                  subscribers the option of automatically billing their calls to
                  an alternate account number. This service is typically
                  provided as a convenience to subscribers that have a need to
                  place calls when they are away from their homes or offices.

            -     1-800 NUMBERS. For those customers interested in making free
                  of charge in-bound phone calls to their call centers.

            We believe that these products will help us capitalize on the
significant data applications growth expected in Mexico and help us increase our
participation in the small and medium-sized business market. In particular, we
believe that these voice and Internet services constitute an attractive set of
product services for those customers. We

                                       19
<PAGE>
believe that this portfolio of data services will complement our voice product
offerings and thus enable us to compete more effectively in the business
customer segment.

PRICING

            We generally seek to maintain our prices between 5% and 15% below
current market levels. We offer pricing plans that are simple in order to assure
customers of the integrity of the billing process. Our pricing structure rewards
long-term commitments by increasing discounts in relation to the length of the
commitment. We also provide discounts to high-usage customers that are likely to
generate a significant outflow of calls.

            We pay interconnection charges to other carriers on a per minute
basis. However, the common practice in the Mexican market is to charge customers
on a per-call basis for local service. We seek to minimize the risk associated
with this mismatch between our revenues and costs; for long holding time
customers, we have, in some cases, implemented a per minute charge plan to be
consistent with our interconnection fees that are on a per minute basis.

MARKETING AND SALES

General

            We seek to develop brand name recognition by using our corporate
name, logo and product names consistently to portray a unified image. We conduct
publicity drives within target clusters to small- and medium-sized businesses
and to residential customers. We seek to differentiate ourselves from our
competitors by our pricing, consistent quality and reliability of
first-to-market technology, one-stop shopping and speed of line activation.

Sales and distribution channels

            We focus our sales efforts within clusters using door-to-door sales
and telemarketing promotions. We promote our services primarily through
advertisements on radio, billboards, in-building promotions, press and
magazines. As we commence the deployment of our network within a cluster, we
intensify our promotion efforts through our direct sales force in such cluster.

            Our direct sales approach is to assign sales representatives or
teams to locations within a cluster or to single sites.

            As of December 31, 2001, we employed 52 internal salespeople and 237
external sales agents. We assign our sales force based on territory, product or
market segment, depending on their background and experience. The compensation
structure for our sales force is tailored to attract and retain high achievers
by providing a base salary and a bonus component. Sales commissions are paid
only after the new line is installed.

            Our sales force is recruited from other telecommunications providers
and systems integrators. In addition, we recruit highly qualified students with
engineering and systems degrees from Mexican universities. We believe that
current labor market conditions in Mexico allow us to recruit high-quality
individuals. Our sales force undergoes extensive training that covers the
industry of telecommunications, our products, our internal procedures and
markets, sales, proposal preparation and presentation skills. In its sales
effort, our sales force uses, among other things, multimedia presentation,
corporate videos and corporate and product brochures.

            In addition to our sales force, we are developing other distribution
channels, including store fronts, agents, distributors, outsourcing and
telemarketing.

Customer service

            We seek to differentiate ourselves by providing superior and
consistent customer service. Our customer service group is divided into three
areas:


                                       20
<PAGE>
            -     CENTRALIZED ANSWERING POINT. This area responds to calls to
                  our main number in Mexico City and the City of Puebla. Many
                  prospective and existing customers use our centralized
                  answering point for all types of queries, including queries
                  regarding area codes, rates, billing and line installation and
                  changes. Our hours of operation are 8:00 a.m. to 8:00 p.m. on
                  Mondays through Fridays and 9:00 a.m. to 6:00 p.m. on
                  Saturdays.

            -     WALK-IN CENTER. We have one walk-in center in Mexico City and
                  two in the City of Puebla for prospective and existing
                  customers who wish to make inquires in person regarding our
                  services. Our hours of operation are 8:00 a.m. to 8:00 p.m. on
                  Mondays through Fridays and from 9:00 a.m. to 6:00 p.m. on
                  Saturdays.

            -     CENTRALIZED TROUBLE-SHOOTING CENTER. This area responds to
                  calls to our main number in Mexico City and the City of
                  Puebla. This center is available 24 hours a day, seven days a
                  week and handles customer service problems.

            Customers may access their billing statements through our website
and link to the websites of two major Mexican banks to effect payment. In
addition, customers may pay their bills with their credit cards, at our walk-in
centers and at the branches of major Mexican banks. We also assist our customers
with new service requests and product information at our walk-in centers.

CREDIT, BILLING AND COLLECTION

            We carry out credit checks on all our potential business customers
using a leading Mexican credit bureau. Based on the result of the credit check,
we assign a credit risk rating to the business customer and, depending on the
credit risk assignment, request a deposit, bond or standby letter of credit.
Normally, for business customers with an imperfect credit history we require a
one to three-month deposit, which is calculated based on the number of lines
contracted. For high-usage customers we may require higher deposits, collect on
a prepaid or weekly basis and undertake a closer monitoring of call activity.

            For our billing process, we use an Ericsson/Hewlett-Packard billing
mediation platform and a Kenan Systems/Arbor billing platform interfaced with
our customer service system. We collect our billing data from our switches using
an X.25 data network, with magnetic tape as backup. We monitor collections and
abnormal activity and develop statistics using our Kenan Systems/Arbor billing
platform. Also, we have a state-of-the-art fraud management system developed by
Sotas, the software manufacturer.

            We perform eight billing cycles per month for our business customers
and four billing cycles per month for residential customers. We invoice
customers monthly on a staggered basis, except in instances that customers
represent a greater credit risk in which case we invoice weekly. For regular
customers we prepare and mail our bills within five days after the close of each
cycle. Customers then have twenty-one days to pay the bill after the cut off
date.

            For customers with one to three lines, if a bill is past-due for
more than two days, we call the customer and leave a reminder message on its
phone. If the bill remains unpaid for five additional days, we restrict service
to incoming calls only. If the bill remains unpaid for 30 additional days, we
suspend the service and call or visit the customer to collect or negotiate the
payment. In some cases, we forward uncollected receivables to a collection
agency or, if necessary, to a legal agency. If no payment is received, we
disconnect the line after ninety days past-due.

            For customers with more than three lines we use the same process
described above, except that we use a personalized approach instead of leaving a
phone message and we negotiate payment terms before any restriction, suspension
or disconnection of the line.

            We have initiated a Customer Relationship Management Program (also
known as CRM) to support our business growth, which is focused on customer
service, collection, training sales force and enhance marketing. Our initial
investment for this program is U.S.$3.5 million and our strategic partner in
this program is Siebel a software consulting company.

COMPETITION


                                       21
<PAGE>
            We primarily compete in the local telephony market on the basis of
customer service, value-added products and price. Our direct competitors are
wireline and fixed wireless local telephony operators, although we also face
competition indirectly from mobile wireless operators.

            We do not compete directly in the long distance market. Although we
provide long distance service, we position such service as an integrated
value-added service for our local telephony customers. As a result, we do not
offer our long distance service separately from our local telephony service. See
" -- Supervision and Regulation of the Mexican Telecommunications Industry --
Our concessions -- Long distance" for a description of significant special
charges we would have to pay Telmex if we decide to provide long distance
service to customers other than our local telephony customers.

Telmex

            Our main local telephony competitor is Telmex, the former
government-owned telecommunications monopoly. Telmex has significantly greater
financial and other resources than those available to us. In addition, Telmex
has an established customer base, which represents substantially all of the
wireline local telephony lines in Mexico. We depend on Telmex for local
interconnection.

            Our core strategy is to service underserved markets by targeting new
customers that do not currently receive the type of products and services that
we offer. In particular, our intention is to service markets with lower
teledensity rates that are also underserved by Telmex.

New entrants

            We expect to face competition in local telephony from new entrants
that have been awarded concessions and which have just begun, or are expected to
begin, commercial operations. The more significant of these entrants are
Alestra, Avantel Servicios Locales S.A. ("Avantel"), Axtel, S.A. de C.V.
("Axtel"), Megacable Telecomunicaciones de Mexico, S.A. de C.V. ("Megacable"),
Pegaso and Unefon.

            Avantel, in which MCI WorldCom Inc. is a shareholder, was awarded a
long distance service concession in 1996 and a local telephony concession in
April 1999. Avantel offers nationwide long distance services and local services
in Mexico City, Monterrey and Guadalajara.

            Alestra, in which AT&T Corp. is a shareholder, was awarded a long
distance service concession in December 1995 and a local telephony concession in
June 2000. In addition, Alestra has a point-to-point microwave frequency
concession in the 15 and 23 GHz band range, a point-to-multipoint microwave
frequency concession in the 10.5 GHz band range and a point-to-point national
wireless telecommunications concession in the 7 GHz band range. Alestra offers
nationwide long distance services in Mexico City, Monterrey and Guadalajara.

            Alestra and Avantel are using their local telephony concessions to
service primarily the corporate business segment. We believe that Avantel and
Alestra do not represent a significant risk for us in the short term. In
particular, we believe that the core business of these companies will focus on a
different business segment than ours.

            Axtel, in which Bell Canada International is a shareholder, was
awarded a nationwide local telephony and long distance concession in June 1996,
and fixed wireless local loop frequencies in the 3.4 to 3.7 GHz band in May
1998. Axtel commenced commercial services in the northern city of Monterrey in
July 1999, in Mexico City in May 2000, and in Guadalajara, Puebla, Toluca and
Leon during 2001. We believe that Axtel seeks to target both the high-level
business and residential customers due to technological capacity issues.

            Megacable was awarded a wireline local telephony concession in July
1997. In addition, it has a point-to-point microwave frequency concession in the
23 GHz band range. Megacable operates currently only in Mexico City. We believe
that Megacable will focus on providing service to large corporate customers.

            Pegaso, which recently announced that Telefonica will acquire a
majority equity stake in it, was awarded a mix of 30 and 10 MHz bandwidth
concessions in the 1.9 GHz band and PCS band concessions that cover all of


                                       22
<PAGE>
Mexico in June 1998. Pegaso offers services in Mexico City, Monterrey,
Guadalajara, Tijuana, Toluca, Ensenada, Reynosa and Nuevo Laredo. We believe
that Pegaso plans to cover the thirty-four most important cities in Mexico.

            Unefon won nationwide concessions for fixed wireless local loop
frequencies in the 3.4 to 3.7 GHz band and in the PCS 1.9 GHz band in May 1998.
Unefon began commercial operations using the 1.96 GHz band in Toluca in early
2000 and has initiated operations in Mexico City, Puebla, Monterey and
Guadalajara, among other cities, but it has not initiated services in the 3.4
GHz to 3.7 GHz band.

            We expect to face significant competition from some of these new
entrants. We believe that, having already commenced operations in Mexico City
and Puebla, we have a significant advantage over these competitors in terms of
brand name recognition, operations and line growth in those cities. These
competitors plan to provide local service in some of the cities in which we are
required to provide services in order to comply with our concession obligations.

OVERVIEW OF THE MEXICAN TELECOMMUNICATIONS INDUSTRY

General

            The telecommunications industry involves the transmission of voice,
data and video communications from point of origination to point of termination.
The Mexican telecommunications industry has been undergoing rapid change in the
last decade due to the introduction of new technologies and the construction of
additional infrastructure, as well as market liberalization, which together have
resulted in increased competition and demand for telecommunications services.

            The modernization of the Mexican telecommunications infrastructure
began in 1990 with the privatization of Telmex, the former government --
controlled telecommunications monopoly. Since privatization, Telmex and several
concessionaires have begun deploying modern fiber and wireless networks
throughout Mexico. To meet the demand for higher volume and higher quality
wireline services, new copper cables are being installed and backbones are being
replaced largely by fiber optic transmission systems that provide greater
capacity at lower cost with higher quality and reliability.

Market liberalization

            Historically, the Mexican telecommunications industry has been
dominated by Telmex. In December 1990, the Mexican government initiated the
privatization and deregulation of Telmex by selling a controlling portion of
Telmex's equity to a private consortium led by Grupo Carso, S.A. de C.V., a
Mexican conglomerate, as well as to subsidiaries of Southwestern Bell
Corporation and France Telecom S.A. Subsequently, the Mexican government opened
the wireless market by granting nine regional cellular concessions in Band "A"
in order to allow concessionaires to compete with Telmex.

            LOCAL TELEPHONY MARKET. In connection with the privatization of
Telmex in 1990, the Mexican government amended Telmex's nationwide concession,
which expires in March 2026, and granted Telmex a six-year implied monopoly over
local telephony services. The amended Telmex concession obligated Telmex to
expand and increase local telephony service at a rate of 12% per year beginning
in 1992 and to provide basic telephone service to all population centers of 500
or more inhabitants by 1995. The implied local service monopoly was eliminated
in mid-1996 when the Mexican Communications and Transportation Ministry
(Secretaria de Comunicaciones y Transportes), which we refer to as the "SCT,"
published regulations governing the licensing of local services on a competitive
basis.

            In order to promote competition in the local telephony market, the
Mexican government granted several concessions beginning in 1997, including
first the regional concession awarded to us for wireline local telephony service
and now expanded to a nationwide concession. Each wireline local telephony
concession granted by the Mexican government generally has a 30-year term, and
authorizes, among other things, the provision of local telephony services and
value-added services in a specified region of the country.

            In addition, the Mexican government does not permit the unbundling
of local loop frequencies, requiring all telephone companies wishing to offer
local telephony service to build their own last-mile connectivity in order to
reach their targeted customers.


                                       23
<PAGE>
            The Mexican government has also been conducting auctions of spectrum
frequencies in the:

            -     450 MHz, 1.9 GHz (PCS) and 3.4-3.7 GHz (fixed wireless local
                  loop) frequency bands;

            -     7, 15, 23 and 38 GHz frequency band for nationwide
                  point-to-point microwave transmission links; and

            -     10.5 GHz frequency band for regional point-to-multipoint
                  microwave transmission service.

            Four companies won nationwide concessions for fixed wireless local
loop frequencies, although one later forfeited its right for failure to pay
concession fees. In addition, six companies won concessions in the 1.9 GHz (PCS)
frequencies on either a nationwide or regional basis, although one also
forfeited its right for failure to pay concession fees. See " -- Competition."

            LONG DISTANCE TELEPHONY MARKET. In connection with the privatization
of Telmex in 1990, the Mexican government granted Telmex an exclusivity period
for long distance telephony services of six years. In August 1996, the
exclusivity period expired and competition commenced in January 1997. According
to Pyramid Research, since the expiration of the exclusivity period and the
subsequent beginning of competition, Telmex has lost 25% of the long distance
telephony market to new competitors.

            In order to promote competition among domestic and international
long distance providers, the Mexican government granted several concessions,
including the national concession awarded to us, for domestic and international
long distance services, as well as value-added services. Each concession
generally has a nationwide scope and a 30-year term, and authorizes the
provision of domestic and international long distance services and value-added
services.

            The long distance concessionaires include among others:

            -     Alestra, S. de R.L. de C.V., in which AT&T Corp. is a
                  shareholder;

            -     Avantel, S.A. de C.V., in which MCI WorldCom Inc. is a
                  shareholder;

            -     Axtel, S.A. de C.V., in which Bell Canada International is a
                  shareholder; and

            -     Iusatel, S.A. de C.V., in which Verizon and Vodafone are
                  indirect shareholders.

            International liberalization trends will likely impact the flow of
long distance telephone traffic to and from Mexico. In particular, demand for
long distance services may be stimulated by reforms of domestic
access/interconnection charges and international settlement rates and recent
international trade negotiations. As such charges decline, overall demand for
international and local services increases.

Mexican market characteristics

            POPULATION AND ECONOMIC GROWTH. According to the Economic Commission
for Latin America and the Caribbean -- CEPAL (Comision Economica para America
Latina y el Caribe), Mexico is the second largest country in Latin America in
terms of population. In 2000, Mexico had an estimated population of 97.3 million
and a population growth rate of approximately 1.3% for the period from 1995 to
2000. In 2000, 33.1% of the population was under the age of 15, 61.6% between
the ages of 15 and 65 and only 5.3% was over 65. After a decline in 1995,
Mexico's real gross domestic product has grown in the past four years, rising by
6.8% in 1997, 4.8% in 1998, 3.7% in 1999 and 6.9% in 2000. However in 2001,
according to an estimate made by Banco Nacional de Mexico S.A., the real gross
domestic product decreased by approximately 0.4%.

            UNDERSERVED TELEPHONY MARKET. In 1999, The World Bank ranked Mexico
as the 12th largest economy in the world. However, in terms of wireline
penetration, Mexico was ranked 69th in the world. This relatively low level of
wireline penetration evidences substantial unmet demand for fixed telephony
service. The following table presents telephone wirelines in service per 100
inhabitants for the United States and selected Latin American countries as of
December 31, 2000.


                                       24
<PAGE>

                           SELECTED TELEDENSITY RATES


<TABLE>
<CAPTION>
                                                                   LINES IN SERVICE PER
COUNTRY                                                             100 INHABITANTS(1)

<S>                                                                <C>
United States...................................                              68
Uruguay.........................................                              29
Argentina.......................................                              22
Chile...........................................                              22
Brazil..........................................                              19
Colombia........................................                              18
Mexico..........................................                              13
Venezuela.......................................                              11
Peru............................................                               7

</TABLE>

(1)   Source: Pyramid Research

      According to Pyramid Research, the wireline local telephony market
represents approximately 33% of Mexico's total telecommunications market, when
measured by revenues, and generated approximately U.S.$4.5 billion of revenue in
2000. The business segment represents approximately 25% of the local telephony
market, with the balance accounted for by the residential segment.

      PROJECTED GROWTH TRENDS. With the introduction of competition in the
Mexican telecommunications market, teledensity rates and line usage are expected
to increase substantially. According to Pyramid Research, between 2000 and 2004,
lines in service in Mexico are expected to increase by 6.0 million, a compound
annual growth rate of approximately 10.4%. During the same period, teledensity
rates are expected to increase from 12.7 lines per one hundred inhabitants in
2000 to 18.0 lines per one hundred inhabitants in 2004.

      According to Pyramid Research, local, domestic long distance and
international long distance services revenues are expected to experience 11.4%,
11.3% and 9.7% compound annual growth rates in 2001, 2002 and 2003,
respectively. Total local wireline telephony revenues in Mexico are expected to
increase from U.S.$4.6 billion in 2000 to U.S.$7.5 billion in 2004. This growth
is expected to result from a marked increase in the number of lines in service
and in usage and not from an increase in local service rates, which are even
expected to decrease slightly in this period due to the increasing level of
competition.

SUPERVISION AND REGULATION OF THE MEXICAN TELECOMMUNICATIONS INDUSTRY

General

      The telecommunications industry in Mexico is subject to the New
Telecommunications Law (Ley Federal de Telecomunicaciones) which was enacted in
1995. However, certain rules set forth under the General Means of Communications
Law (Ley de Vias Generales de Comunicacion), the Telecommunications Regulation
(Reglamento de Telecomunicaciones) and the rules promulgated thereunder,
generally remain effective and are referred to as the Old Telecommunications
Law.

      Under the New Telecommunications Law, the Mexican telecommunications
industry is regulated for administrative and operational matters by COFETEL
(Comision Federal de Telecomunicaciones). COFETEL was created in 1996 as an
autonomous entity from the SCT to regulate and promote the efficient development
of the telecommunications industry in Mexico. COFETEL is responsible for, among
other things:

      -     enacting regulations and technical standards for the
            telecommunications industry;

      -     ensuring that holders fulfill the terms of their concessions and
            permits;

      -     suspending operators without concessions;

      -     resolving interconnection controversies between competitors; and

                                       25
<PAGE>

      -     maintaining a registry of applicable rates.

      The SCT retains the authority to grant all concessions and permits.
COFETEL makes recommendations to the SCT on major issues, such as amending
existing telecommunications laws, allocating spectrum frequencies, granting,
transferring, renewing or revoking concessions and applying penalties for
concession violations. The SCT has final decision making power on these issues.
Once a final decision is made, COFETEL implements the related regulations.

Concessions and permits

      GENERAL. To provide public telephony services in Mexico through a public
network, a service provider must first obtain a concession from the SCT.
Pursuant to the New Telecommunications Law, concessions for public networks may
not exceed a term of 30 years, and concessions for spectrum frequencies may not
exceed a term of 20 years. Generally, concessions for public networks may be
extended for a term equivalent to the term for which the concession was
originally granted. Concessions for spectrum frequencies will be re-auctioned at
least three years prior to their expiration date. Concessions specify, among
other things:

      -     the type and technical specifications of the network, system or
            services that may be provided;

      -     the allocated spectrum frequencies, 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 the
following:

      -     installing, operating or exploiting transmission-ground stations;
            and

      -     providing telecommunications services as a reseller.

      There is no legally mandated maximum term for these permits unless
specifically stated in the permit. Under the New Telecommunications Law, a
company needs to register with COFETEL the rates for the telecommunications
services that it wishes to provide in order to be able to provide them to the
public.

      In addition, on January 1, 2002, the Mexican Congress enacted a law that
expanded the scope of the sales and use tax to include additional services,
including services provided by telecommunications companies. The new taxable
base will be at a rate of 10%. However, the scope of this tax is not clear,
because the law exempts certain services from the payment of this tax. We
believe, based on the advice of our tax and regulatory advisors, that this new
tax should not apply to the core of our business.

      OWNERSHIP RESTRICTIONS. Under the New Telecommunications Law and the
Mexican Foreign Investment Law (Ley Federal de Inversion Extranjera),
concessions may be granted only to:

      -     Mexican individuals; and

      -     Mexican corporations in which non-Mexicans own 49% or less of the
            full voting stock and that are not otherwise controlled by
            non-Mexicans.

                                       26
<PAGE>

      However, in the case of concessions for cellular communications services,
foreign investment participation may exceed 49% of the voting stock with the
prior approval of the Mexican Foreign Investment Bureau of the Mexican Ministry
of Economy (Secretaria de Economia).

      Pursuant to the Foreign Investment Law, the Mexican Ministry of Economy
may also authorize the issuance of non-voting or limited-voting stock (also
known as "neutral shares") that are not counted for purposes of determining the
foreign investment percentage of a Mexican corporation under the Mexican Foreign
Investment Law. Any share transfers resulting in a violation of these foreign
ownership requirements are invalid under Mexican law.

      TRANSFER. Concessions are transferable after the first three-year period
of the concession, if the SCT approves the transfer of the concession title, the
assignee agrees to comply with the terms of the concession and such a transfer
does not violate the foreign ownership requirements of the New
Telecommunications Law and the Mexican Foreign Investment Law.

      TERMINATION. A concession or a permit may be terminated pursuant to the
New Telecommunications Law upon the following events:

      -     expiration of its term;

      -     resignation by the concession holder or the permit holder;

      -     revocation. A concession or a permit may be revoked prior to the end
            of its term under certain circumstances, such as:

            <  failure to exercise the rights of the concession within 180 days
               of the grant;

               <  failure to provide interconnection services with other holders
                  of telecommunications concessions and permits without just
                  cause;

            <  loss of the concession or permit holder's Mexican nationality;

            <  unauthorized assignment, transfer or encumbrance of the
               concession or permit;

            <  unauthorized interruption of service;

            <  taking 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; and

               <  failure to pay to the Mexican government its fee for the
                  concession or, where applicable, its participation in the
                  revenues of the holder of the concession.


      The SCT may revoke a concession for violations in any of the circumstances
referred to in the first four instances above. Under the last four instances
above, the SCT would have to fine the concessionaire at least three times for
the same failure before moving to revoke a concession.

      -     expropriation. The Mexican government has the statutory right to
            permanently expropriate any telecommunications concession and claim
            any related assets for reasons of public interest. Under Mexican
            law, the Mexican government is obligated to compensate the owner of
            such assets in the case of a statutory expropriation. The amount of
            the compensation is to be determined by appraisers. If the party
            affected by the expropriation disagrees with the appraisal amount,
            such party may initiate judicial action against the government. In
            such a case, the relevant judicial authority will determine the
            appropriate amount of compensation to be paid. We are not aware of
            any instance in which the SCT has exercised its expropriation rights
            in connection with a telecommunications company; and

      -     dissolution or bankruptcy of the concession holder or the permit
            holder.

      TEMPORARY SEIZURE. The Mexican government, through the SCT, may also
temporarily seize all assets related to a telecommunications concession or
permit in the event of a natural disaster, war, significant public disturbance,
threats to internal peace or for economic reasons or for other reasons related
to national security. If the Mexican government temporarily seizes such assets,
except in the event of war, it must indemnify the concession

                                       27
<PAGE>
holder for all losses and damages, including lost revenues. We are not aware of
any instance in which the SCT has exercised its temporary seizure powers in
connection with a telecommunications company.

Rates for telecommunications services

      Under the Old Telecommunications Law, the SCT's approval was required for
setting the rates charged for all basic local, long distance and certain
value-added local and long distance telecommunications services. Historically,
the SCT permitted rate increases based on the cost of service, the level of
competition, the financial situation of the carrier and certain 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 also required SCT approval. Rates for private dedicated
circuit services through microwave networks and private networks through
satellites were not regulated under the Old Telecommunications Law.

      Under the New Telecommunications Law, rates for telecommunications
services (including local, cellular and long distance services) are now freely
determined by the providers of such services, except that such rates may not be
set below a service provider's long-term incremental cost.

      In addition, COFETEL is authorized to impose specific rate, quality and
service requirements on those companies determined by the Federal Antitrust
Commission (Comision Federal de Competencia) to have substantial market power
pursuant to the provisions of Mexico's antitrust statute. All rates for
telecommunications services (other than value-added services) must be registered
with COFETEL prior to becoming effective. The New Telecommunications Law
prohibits telecommunications providers from cross-subsidizing among their
services and requires that they keep separate accounting for each of their
services.

      The Mexican Antitrust Commission has found that Telmex has substantial
market power on the local, long distance and Internet and data transmission
markets, as defined under Mexico's antitrust statute. Based on this finding,
COFETEL issued a resolution in September 2000 regulating Telmex as a dominant
carrier, imposing special obligations regarding, among other things, quality of
services, tariffs and disclosure of information. Telmex has obtained a
provisional injunction against potential COFETEL actions that intend to regulate
Telmex by imposing special obligations on Telmex regarding, among other things,
quality of services, tariffs and disclosure information.

Our concessions

      LOCAL TELEPHONY. We obtained our regional wireline local telephony
concession in February 1997. In September 2001, this concession was expanded to
a nationwide concession. The concession, which is not exclusive, grants us the
right to provide business, residential and public wireline local telephony
services all over Mexico. Our wireline local telephony concession has a term of
30 years and may be renewable for up to an equivalent period provided we have
complied with all its terms.

      The concession expressly permits us to provide the following services:

      -     basic local telephony;

      -     the sale or lease of network capacity for the generation,
            transmission or reception of signs, signals, writings, images,
            voice, sounds or other information of any nature;

      -     the purchase and lease of network capacity from other carriers,
            including the lease of digital circuits;

      -     value-added services;

      -     operator services;

      -     data, video, audio and video conference services, except for cable
            or other restricted television, continuous music or digital audio;

      -     credit or debit telephone cards; and

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<PAGE>

      -     public telephony.

      The concession does not impose any limitations on the setting of our rates
other than the requirement that we file with COFETEL a notification of any rate
change prior to having it take effect.

      The concession requires us to comply with service quality specifications
and, starting in September 2001, to install infrastructure on the basis of a
yearly schedule. According to this schedule, we must install at least an
aggregate of 376,000 lines in at least 394 cities and towns in Mexico by the end
of 2006. We are currently in compliance with all the material terms of the
concession.

      The failure to comply with the terms of the concession could result in its
revocation and the loss of the Ps.12.2 million performance bond that we
previously issued to the SCT. See " -- Concessions and permits -- Termination."

      As of December 31, 2001, the level of fines, which are based on a multiple
of the Mexican minimum daily salary, ranged from Ps.84,300 to Ps.4.2 million,
depending on the nature of the infraction. In the case of multiple recurring
infractions, these fines may be doubled.

      LONG DISTANCE. We obtained our nationwide long distance concession in
February 1997, concurrently with our local telephony concession. Our nationwide
long distance concession has a term of 30 years and may be renewable for up to
an equivalent period, provided that we have complied with all its terms.

      The concession expressly permits us to provide the following services:

      -     the carrying of switched traffic between two different local calling
            areas that requires the use of a dialing prefix for its routing;

      -     the sale or lease of network capacity for the generation,
            transmission or reception of signs, signals, writings, images,
            voice, sounds or other information of any nature;

      -     the purchase and lease of network capacity from other carriers; and

      -     nationwide and international long distance telephony.

      The concession expressly prohibits the following services:

      -     those which require a concession for frequency bands of the radio
            electric spectrum for specific uses;

      -     those which require a concession to occupy and exploit geostationary
            orbital positions and satellite orbits assigned to Mexico;

      -     those which require a concession to operate radio or television
            broadcasting systems; and

      -     cable or other restricted television.

      The concession does not impose any limitations on our ability to set rates
other than the requirement that we file with COFETEL a notification of any rate
change prior to having it take effect.

      The concession requires us to comply with service quality specifications
and to install infrastructure on the basis of the schedule for our local
telephony concession. According to this schedule, we must provide nationwide
long distance service in the same locations and at the same time in geographic
areas where we provide local telephony services. Of these areas, we must provide
service in 394 cities and towns in Mexico using our own or leased infrastructure
by the end of 2006.

      We are currently in compliance with all the material terms of the
concession.

                                       29
<PAGE>

      The failure to comply with the terms of the concession could result in its
revocation and the loss of the Ps.12.2 million performance bond that we
previously issued to the SCT. As of December 31, 2001, the level of fines, which
are based on a multiple of the Mexican minimum daily salary, ranged from
Ps.84,300 to Ps.4.2 million, depending on the nature of the infraction. In the
case of multiple recurring infractions, these fines may be doubled.

      We service our long distance concession by reselling our long distance
traffic to other carriers with such capability. We currently do not intend to
provide long distance service to anyone other than our local telephony customers
(who use our own infrastructure for call origination) to avoid having to pay
significant special charges to Telmex. According to COFETEL regulations, any
long distance carrier that wishes to interconnect to Telmex's local network must
make a payment to Telmex on account of Telmex's investment to upgrade its local
infrastructure to allow long distance competition. In December 2000, Avantel and
Alestra negotiated with Telmex a one-time payment of U.S.$13.6 million as an
infrastructure development charge and an interconnection fee of U.S.$0.0053 per
minute. Telmex adjusts the infrastructure development charge at a 10% annual
rate. COFETEL has implicitly accepted that Telmex may require other long
distance carriers to make similar payments.

      According to the Mexican telecommunications regulations, all local
carriers must offer their customers the option to select the long distance
carrier of their preference; this practice is known as pre-subscription.
However, local carriers may request a waiver of this obligation from COFETEL.

      On May 27, 2002, COFETEL granted us a waiver of the pre-subscription
requirement. With this waiver, our local telephony customers who are currently
using other long distance carriers may only change, if they wish to do so, to
our long distance service. New local telephony customers must use our long
distance service. This waiver is valid for two years in Mexico and Puebla, where
we already have operations, and it is valid for five years anywhere else in
Mexico.

MICROWAVE TRANSMISSIONS.

            Point-to-point. In October 1997, we were awarded seven nationwide
point-to-point microwave concessions. These concessions cover:

      -     two consecutive frequency segments in the 15 GHz band, with a 56 MHz
            bandwidth;

      -     three consecutive frequency segments in the 23 GHz band, with a 56
            MHz bandwidth; and

      -     two consecutive frequency segments in the 23 GHz band, with a 100
            MHz bandwidth.

      These concessions, which were issued in June 1998, have a term of 20
years. COFETEL will re-auction the frequencies covered by the concessions at
least three years before the expiration date of the concessions. The concessions
require us to provide available capacity to the general public.

      These concessions do not impose any limitations on the setting of our
rates other than the requirement that we file with COFETEL a notification of any
rate change prior to having it take effect.

      Point-to-multipoint. In October 1997, we were awarded three regional
point-to-multipoint microwave concessions covering Regions 3, 5 and 8, which
include states in the north and southeast of Mexico's Gulf region in the 10.5
GHz with a 60 MHz bandwidth.

      These concessions, which were issued in April 1998, have a term of 20
years. COFETEL will re-auction the frequencies covered by the concessions at
least three years before the expiration date of the concessions. These
concessions require us to install a network and offer service to at least 30% of
the population in each region covered by the concessions by the end of the
second year after the issuance of the concession. We, together with 14 other
concessionaires, have been unable to start operations in some of our Regions
because of lack of commercially viable technological solutions and equipment for
those frequencies. COFETEL initially granted extensions until April 2000 and
later extended them to October 2001. On November 2001, we, together with 13
other concessionaires, requested that COFETEL amend our respective
point-to-multipoint concessions in our Regions in order to postpone the
installation of our network and the offering of our services until November
2002.

                                       30
<PAGE>

      These concessions do not impose any limitations on the setting of our
rates other than the requirement that we file with COFETEL a notification of any
rate change prior to having it take effect.

Interconnection

      In accordance with the Mexican telecommunications laws, all local
telecommunications carriers are required to provide interconnection to each
local, long distance and cellular carrier operating in Mexico.

      All terms of interconnection (such as point of interconnection) are
negotiated between telecommunications carriers under COFETEL's supervision.
Should telecommunications carriers be unable to agree on the terms of
interconnection (including rates) after a certain period of negotiation, either
carrier may request COFETEL to resolve any interconnection term at issue.
Telecommunications carriers are prohibited from adopting discriminatory
practices in the application of rates or any other terms of interconnection.

      LOCAL INTERCONNECTION. In November 1998, we entered into an
interconnection agreement with Telmex. This agreement calls for reciprocal
interconnection rates for local-to-local services. The interconnection rate was
Ps.0.3220 per minute for the month of December 2000 and Ps.0.1159 per minute for
the month of December 2001.

      This agreement was amended in February 1999 to incorporate a "bill and
keep" feature through September 15, 2002, provided we maintain a significant
percentage of residential users, and again in November 2000, retroactive to
March 2000, to exempt internet service provider traffic from interconnection
fees.

      Under the "bill and keep" arrangement, if the imbalance between calls
originated by Telmex and terminated by Maxcom and calls originated by Maxcom and
terminated by Telmex during a month does not exceed 70%, then no interconnection
fee amounts are payable by the net user of interconnection services. If the
imbalance exceeds 70% in any given month, the "bill and keep" feature will not
apply for that month.

      If we fail to maintain a significant percentage of residential users, then
the "bill and keep" arrangement will be terminated and asymmetrical
interconnection rates may apply. COFETEL has not yet defined what constitutes a
"significant percentage of residential users" in this case, although in local
concessions granted to Alestra and Avantel it defines it to mean that at least
50% of the customers are residential.

      Through December 31, 2001, no material interconnection fees have been
paid.

      MOBILE INTERCONNECTION. We have also signed reciprocal interconnection
agreements with Radiomovil Dipsa, S.A. de C.V., commonly known as Telcel, a
wholly-owned subsidiary of America Movil, which is a spin-off of Telmex; with
several subsidiaries of Iusacell and with Operadora Unefon, S.A. de C.V.
("Unefon") and Pegaso Comunicaciones y Sistemas, S.A. de C.V., ("Pegaso").
Telcel and Iusacell are the first and second largest mobile telephony service
providers in Mexico, respectively. Telcel is a nationwide cellular operator,
while Iusacell provides cellular mobile services in seven of the nine regions
covering central Mexico. Pegaso and Unefon are nationwide PCS mobile operators.

      The mobile to wireline interconnection fees with these carriers were
Ps.0.3220 per minute for the month of December 2000 and Ps.0.1159 per minute for
the month of December 2001. The wireline to mobile interconnection fees under
the "calling party pays" mode was Ps.1.90 per minute for December 2000 and 2001.
There is no interconnection fee for wireline to mobile interconnection outside
of the "calling party pays" mode. The interconnection agreements provide that
transit from Telmex may be used at a rate per minute which was Ps.0.0626 for the
months of December 2000 and 2001.

      LONG DISTANCE INTERCONNECTION. Long distance carriers are required to
ensure call termination by providing transit and direct or indirect
interconnection. Since we view long distance services as a complement to our
core local telephony business, we give our customers the option to use our long
distance services or those of other providers. As a result, we grant long
distance carriers the option to pick up calls at our facilities.

      As a company that provides local service, we have requested
interconnection from all long distance carriers. To date, only Telmex, Alestra
S. de R.L. de C.V. ("Alestra"), Bestel, S.A. de C.V., Operadora Protel, S.A. de
C.V. and Iusatel, S.A. de C.V., the long distance subsidiary of Grupo Iusacell,
have agreed to provide


                                       31
<PAGE>

interconnection. We have filed a complaint with COFETEL against four other long
distance carriers who have refused to provide interconnection. It is unclear
when COFETEL will rule in this issue.

      We currently provide our long distance service only to our local telephony
customers through our own network and leased facilities on a reselling basis.

C.    ORGANIZATIONAL STRUCTURE

      Maxcom has only two subsidiaries, Corporativo en Telecomunicaciones, S.A.
de C.V. and Maxcom Servicios Administrativos, S.A. de C.V., each a Mexican
limited liability company (sociedad anonima de capital variable), that provide
corporate services to Maxcom. Maxcom owns all of the capital stock of the
subsidiaries, except for one share of each, which is owned by Marco Antonio
Donjuan, the Controller of Maxcom. Mr. Donjuan's ownership is attributable to
the fact that Mexican law requires that limited liability companies have a
minimum of two stockholders.

D.    PROPERTY, PLANT AND EQUIPMENT

      We currently lease the buildings and/or the land where our operations are
carried out and our microwave transmission equipment and switching centers are
located.

      We lease space for administrative offices in Mexico City and the City of
Puebla. Our main headquarters are located in Santa Fe, Mexico City in a building
leased for a 5-year term that expires on February 26, 2007 and that is renewable
for two additional 5-year terms. This building is comprised of 115,100 square
feet. We lease an additional building in Magdalena, Mexico City, for a 15-year
term that expires on September 30, 2013. We hold one of our Lucent 5ESS switches
at that facility, which is comprised of 70,500 square feet plus parking space.
We are planning to add extra space to our Santa Fe building in 2003 in order to
support our growth and expansion and to reach an agreement to terminate the
current leasing obligation in Magdalena, except for the switching area located
on the first floor, which we intend to keep on a long term basis.

      Our offices in Puebla are leased for a 10-year renewable term that expires
on March 25, 2008. These offices in Puebla are comprised of 14,100 square feet
and hold our other Lucent Technologies 5ESS switch. We have a branch office in
Puebla that is leased for a 5-year term that expires on June 1, 2004, renewable
for one similar additional term. This building is comprised of 1,350 square
feet.

      We have a 96,900-square-foot industrial warehouse in Mexico City leased
for a 2-year term that expires on July 31, 2003, renewable for seven additional
2-year terms. In addition, we lease approximately one hundred other sites that
are used as hosts or single-site buildings and are located throughout Mexico
City and the City of Puebla. We believe that our facilities are adequate for our
present needs and are suitable for their intended purposes.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

      All peso amounts discussed in this annual report are presented in constant
December 31, 2001 pesos in accordance with Mexican GAAP, except as otherwise
indicated. 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 as of December 31, 2001. The U.S. dollar
translations provided in this annual report are solely for the convenience of
the reader and are, unless otherwise indicated, calculated utilizing the noon
buying rate at December 31, 2001, which was Ps.9.1560 per U.S.$1.00 as reported
by the Federal Reserve Bank of New York. Sums may not add due to rounding.

      The following discussion and analysis is intended to facilitate an
understanding and assessment of significant changes and trends in our historical
consolidated results of operations and financial condition and factors affecting
our financial resources. It should be read in conjunction with the audited
consolidated financial statements as of December 31, 2000 and 2001 and for the
period from May 1, 1999 to December 31, 1999 and the years ended December 31,
2000 and 2001 and related notes.

                                       32
<PAGE>

      These consolidated financial statements, which appear elsewhere in this
annual report, have been prepared in accordance with Mexican GAAP, which differs
in certain significant respects from U.S. GAAP. See note 22 to our consolidated
financial statements for a description of the principal differences between
Mexican GAAP and U.S. GAAP applicable to us. Note 22 to our financial statements
also provides a reconciliation to U.S. GAAP of our net losses for the years
ended December 31, 1999, 2000 and 2002 and of stockholders' equity as of
December 31, 1999, 2000 and 2001.

      Our financial statements have been prepared in accordance with Bulletin
B-10, "Recognition of the Effects of Inflation on Financial Information," as
amended, issued by the Mexican Institute of Public Accountants ("MIPA"), which
provides guidance for the recognition of the effects of inflation and
translation of foreign currency transactions.

      We restate our income statement to reflect the purchasing power of the
peso as of the most recent reporting date (December 31, 2001), using a
restatement factor derived from the change in the national consumer price index
from the month in which the transaction occurred to the most recent year-end.
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. 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
Mexican national consumer price index, were 12.3%, 9.0% and 4.4%, respectively.

      Bulletin B-12, issued by the MIPA, specifies the appropriate presentation
of the statement of changes in financial position when the financial statements
have been restated in constant monetary units. Bulletin B-12 identifies the
sources and applications of resources as the differences between beginning and
ending financial statement balances in constant monetary units. The Bulletin
also requires that monetary and foreign exchange gains and losses not be treated
as non-cash items in the determination of resources provided by operations.

RECENT DEVELOPMENTS

      On April 29, 2002, we consummated a debt restructuring and
recapitalization of Maxcom. The purpose was to reduce our debt service burden,
improve our liquidity and attract additional investment, in order to continue
the buildout of our infrastructure and the growth of our business. The following
actions were taken pursuant to the debt restructuring and recapitalization:

      -     Holders tendered an aggregate of U.S.$259,410,000 in principal
            amount of 13 -3/4% series B senior notes due 2007 (which we refer to
            in this Annual Report as the "old notes") in exchange for an
            aggregate of (i) U.S.$165,078,150 in principal amount of new senior
            notes (which we refer to in this Annual Report as the "new notes")
            bearing 0% interest through March 1, 2006, and 10% annual interest
            in the last year, and (ii) 26,459,820 series N2 convertible
            preferred stock, with an initial liquidation preference of
            U.S.$0.4927 per share and limited voting rights, in the form of
            Mexican Trust Certificates known as "CPOs," which represent in the
            aggregate 15.2% of our total capital stock;

      -     Existing and new shareholders invested U.S.$66.2 million and
            received preferred stock (more fully described in "Item 7. Major
            Shareholders and Related Party Transactions -- A. Major shareholders
            -- The capital restructuring") representing in the aggregate 77.0%
            of our total capital stock; and

      -     Our capital structure was restructured as more fully described in
            "Item 7. Major Shareholders and Related Party Transactions -- A.
            Major shareholders -- The capital restructuring."

      As a result of the debt restructuring, we will save U.S.$37.5 million in
interest expense on an annualized basis from the date of issuance of the new
notes through February 28, 2006. From March 1, 2006 until March 1, 2007, which
is the maturity date of the new notes, we will save U.S.$17.3 million in
interest expense.

                                       33
<PAGE>

A.    RESULTS OF OPERATIONS

OVERVIEW OF MAXCOM

      We are a growing facilities-based telecommunications company operating in
the competitive local exchange carrier market in Mexico. We are focused on
developing our network and support infrastructure required to provide local as
well as long distance and other value-added services to targeted small and
medium-sized business and residential customers within our concession areas. We
position ourselves as a single-source provider of telecommunications services to
our customers.

      We commenced commercial operations on May 1, 1999 and currently provide
last-mile connectivity to small and medium-sized business and residential
customers in Mexico City and the City of Puebla. In addition to our existing
local and long distance services, we offer value-added services such as digital
high-speed data connectivity and dial-up Internet access. We are currently
expanding the functionality of our network to offer other broadband services.

      We were incorporated in February 1996 to take advantage of business
opportunities arising out of the liberalization of Mexico's telecommunications
industry. In February 1997, we were awarded Mexico's first competitive wireline
local and long distance telephony concession, covering the Federal District of
Mexico and over 100 cities and towns in the Gulf region for local service and
the whole nation for long distance service. This concession has a term of 30
years. Our concession was expanded in September 1999 to cover over 80% of the
greater Mexico City area, and a wider area within the Gulf region. In September
2001, our wireline local telephony concession was expanded to cover all of
Mexico.

      We were also awarded seven nationwide point-to-point and three regional
point-to-multipoint microwave concessions in October 1997, each for 20 years.

DEVALUATION AND INFLATION

      On December 20, 1994, the Mexican government responded to exchange rate
pressures by increasing the upper limit of the then existing free market
peso/U.S. dollar exchange rate band by 15% and, two days later, by eliminating
the band to allow the peso to fluctuate freely against the U.S. dollar. This
resulted in a major devaluation of the peso relative to the U.S. dollar. Where
the noon buying rate had been Ps.3.45 per U.S.$1.00 on December 19, 1994, by
December 31, 1994 the noon buying rate had fallen to Ps.5.00 per U.S.$1.00,
representing a 44.9% devaluation. The peso continued to decline against the U.S.
dollar during 1995, closing at a noon buying rate of Ps.7.74 per U.S.$1.00 on
December 31, 1995, which represented a 54.8% devaluation relative to the U.S.
dollar for the year.

      The Mexican economy began to recover in 1996 and 1997, as exchange rates
stabilized, inflation decreased and real gross domestic product grew by 5.3% and
6.8%, respectively. However, the financial crises in Asia and Russia, together
with the weakness in the price of oil in 1998, which is a significant source of
revenue for the Mexican government, contributed to renewed weakness in the peso,
which devalued 22.7% relative to the U.S. dollar. From 1999 to 2000, the
peso-to-dollar exchange rate remained relatively stable. In 2001, the
peso-to-dollar exchange rate showed a slight recovery of 4.8% from Ps.9.60 on
December 31, 2000 to Ps.9.14 on December 31, 2001.

      Peso devaluations contributed to sharp increases in inflation. Inflation,
which had been 7.1% in 1994, increased to 52.0% and 27.7% in 1995 and 1996,
respectively. After a reduction to 15.7% in 1997, inflation was 18.6% in 1998.
In 1999, 2000 and 2001, the inflation rate decreased to 12.3%, 9.0% and 4.4%,
respectively.

      The general economic conditions in Mexico resulting from a devaluation of
the peso and the resulting inflation may have a negative impact on our results
of operations, primarily as a result of:

      -     the increase in the peso-carrying costs of our U.S.
            dollar-denominated debt and capital expenditure requirements;

                                       34
<PAGE>

      -     the ensuing decrease in the purchasing power of Mexican consumers,
            which results in a decrease in the demand for telephony services;
            and

      -     our inability, due to competitive pressures, to increase our prices
            in line with inflation.

CAPITALIZATION OF PREOPERATING EXPENSES

      We commenced commercial operations on May 1, 1999. As permitted under
Mexican GAAP, during our preoperating stage, we capitalized all of our general
and administrative expenses and our net integral cost of financing. Accordingly,
our financial statements do not include consolidated statements of operations
for the periods from February 28, 1996 (our date of incorporation) to April 30,
1999.

      Beginning on May 1, 1999, we were required to begin to amortize all
previously capitalized pre-operating cost. These capitalized preoperating
expenses, net, which amounted to Ps.282.3 million at December 31, 1999, Ps.252.0
million at December 31, 2000 and Ps.221.9 million at December 31, 2001, are
amortized on a straight-line basis for a period not exceeding ten years.

RESULTS OF OPERATIONS

      The following table sets forth, for the periods indicated, selected
statement of operations data calculated in accordance with Mexican GAAP and
expressed as a percentage of net revenue:
<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31
                                                     -----------------------
                                                     1999     2000     2001
                                                     ----     ----     ----
<S>                                                  <C>      <C>      <C>
Net revenues........................................ 100.0%   100.0%   100.0%
Operating cost and expenses:
   Network operating costs..........................  50%      41%      48%
   Selling, general and administrative expenses..... 183%     124%     137%
   Depreciation and amortization....................  84%      76%      85%
                                                     ----     ----     ----
     Total operating cost and expenses.............. 317%     241%     270%
Operating loss...................................... 217%     141%     170%
Integral cost of financing..........................  29%      84%      18%
Nonrecurring charges................................   0%       0%      20%
                                                     ----     ----     ----
Other expense, net..................................   0%       0%       0%
                                                     ----     ----     ----
Net loss............................................ 246%     224%     208%
                                                     ====     ====     ====
</TABLE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Net revenues

      Our net revenues primarily include monthly fees, usage fees, installation
charges, interconnection fees and the sale of telephone sets. See note 4.m. to
the consolidated financial statements included in this annual report for an
explanation of how we recognize revenues.

      Our net revenues increased 13.2% in 2001 as compared to 2000, from
Ps.277.8 million in 2000 to Ps.314.4 million in 2001. This increase was
primarily due to a 77.3% increase in the average number of lines in service from
25,222 in 2000 to 44,730 in 2001. The increase in net revenues was partially
offset by a 36.2% overall decrease in ARPUs from U.S.$105 in 2000 to U.S.$67 in
2001.

      The decrease in ARPUs was primarily due to:

      -     a significant shift in our customer mix towards residential lines,
            which carry a lower ARPU, from 35% of total lines at December 31,
            2000 to 71% at December 31, 2001; and

                                       35
<PAGE>

      -     a lower percentage of high-usage customers, who carry high ARPUs,
            but low profit margins, which resulted from the implementation of
            our strategy to shift our focus from less profitable lines.
            High-usage customers represented 55.2% of our net revenues in 2000
            as compared to 29.1% in 2001.

      These two factors were offset in part by (i) a 6% increase in the monthly
fee we charge our residential customers beginning in September 2001; and (ii)
the adoption in July 2001 of a policy whereby we generally no longer waive
installation charges to most of our residential customers.

      The following table presents a breakdown of our lines by type of customer
at December 31, 2000 and 2001 and the percentage variation:

<TABLE>
<CAPTION>
                           AT DECEMBER 31,
                      ---------------------------
                        2000      2001        %
                      ---------------------------

<S>                   <C>        <C>         <C>
Business lines ..     17,582     22,444      27.7
Residential lines      9,328     55,537     495.4
                      ------     ------     -----
Total lines .....     26,910     77,981     189.8
</TABLE>

Operating costs and expenses

      Our operating costs and expenses include:

      -     network operating costs which, until December 31, 2000, were
            comprised of long distance reselling costs, circuit leasing costs
            and interconnection costs to carriers other than Telmex and,
            thereafter, also included network technical expenses, installation
            expenses, when applicable and disconnection expenses;

      -     selling, general and administrative expenses, which primarily
            included salaries, wages and benefits; consulting fees, which
            primarily related to temporary management and consulting services,
            executive recruiting consultants and general legal and accounting
            fees; leasing costs which primarily related to our headquarters,
            warehouses, and other facilities; marketing expenses which primarily
            related to the implementation of our branding campaign, general
            advertising and promotions; and provisioning for bad debt; and

      -     depreciation and amortization mainly related to preoperating
            expenses, frequency rights, telephone network systems and equipment
            and intangibles.

      Our operating costs and expenses were Ps.848.9 million in 2001, a 27.0%
increase as compared to Ps.668.2 million in 2000. This increase was primarily
due to:

      -     the 77.3% increase in the average number of lines in 2001 as
            compared to 2000, which resulted in a Ps.17.6 million increase in
            interconnection costs, a Ps.22.3 million increase in sales
            commissions, and Ps.15.9 million increase in maintenance expenses;

      -     a Ps.59.8 million increase in one-time charges related to consulting
            and executive recruiting fees, executive compensation and incentive
            expenses and excess labor-related taxes; and

      -     Ps.41.0 million increase related to installation expenses and the
            recognition of bad debt allowance and inventory obsolescence
            reserve.

      These two factors were partially offset by a Ps.56 million decrease in
long distance reselling costs, primarily due to improved traffic management
policies.

      Depreciation and amortization increased by Ps.58.6 million, or 28%,
primarily because of a larger asset base.

                                       36
<PAGE>

Integral cost of financing

      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 cost of financing"
refers to the combined financial effects of:

      -     net interest expense and interest income;

      -     net foreign exchange gains or losses;

      -     net gains or losses on monetary position; and

      -     gain on repurchase of debt.

      Net foreign exchange gains or losses reflect the impact of changes in
foreign exchange rates on 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.

      The gain or loss on monetary position refers to the gains and losses
realized from holding net monetary assets or liabilities and reflects the impact
of inflation on monetary assets and liabilities. For example, a gain on monetary
position results from holding net monetary liabilities in pesos during periods
of inflation, as the purchasing power of the peso declines over time.

      Our integral cost of financing before the gain on repurchase of debt was
Ps.176.7 million in 2001, a 24.0% decrease as compared to Ps.232.4 million in
2000. The decrease in integral cost of financing was primarily due to a foreign
exchange gain during 2001 of Ps.90.8 million as compared to a loss of Ps.11.2
million during 2000. This gain is a consequence of the 5.0% appreciation of the
peso as compared to the U.S. dollar during 2001. In addition, we recorded a gain
of Ps.121.2 million in 2001 due to the repurchase of U.S.$25.0 million (face
value) of old notes.

      These two factors were partially offset in part by a 24.9% decrease in
interest income from Ps.102.3 million in 2000 to Ps.76.8 million in 2001, as a
result of a lower cash position combined with lower interest rates.

Nonrecurring charges

      We recorded Ps.62.2 million in nonrecurring charges primarily related to
the write-off of fixed assets and installation expenses. Our new management
evaluated and wrote off certain assets and recognized the cost of an overdue
maintenance contract, which no longer are useful to our revised business
objectives. In addition, installation costs that were originally capitalized
were reversed to the extent they related to customers who are no longer part of
our customer base. See note 14 to our consolidated financial statements.

Asset tax

      We recorded Ps.0.8 million in asset taxes in 2001. According to Mexican
tax law, we were not liable for asset taxes in our first two years of
operations.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

      Our consolidated statement of operations for the year ended December 31,
1999 covers only our first eight months of operations, which commenced on May 1,
1999. As a result, a comparison of our results of operations for 1999 and 2000
is not very meaningful.

Net revenues

      Our net revenues were Ps.277.8 million in 2000, a 177% increase as
compared to Ps.100.3 million in 1999. This increase was primarily due to:

                                       37
<PAGE>

      -     the fact that we started operations on May 1, 1999, and therefore
            1999 reflects only eight months of operations, and

      -     the growth in our line count from the start-up stage in 1999 to
            26,910 lines as of December 2000.

      The following table presents a breakdown of our lines by geography and
type of customer at December 31, 1999 and 2000 and the percentage variation:


<TABLE>
<CAPTION>

                           AT DECEMBER 31,
                      ---------------------------
                        1999       2000      %
                      ---------------------------
<S>                   <C>        <C>         <C>
Business lines ..     16,676     17,582      5.4
Residential lines      1,057      9,328    782.5
                      ------     ------    -----
   Total lines ..     17,433     26,910     54.4
</TABLE>

Operating costs and expenses

      Our operating costs and expenses were Ps.668.2 million in 2000, a 110%
increase as compared to Ps.318.1 million in 1999. This increase is primarily due
to the:

      -     fact that we started operations on May 1, 1999, and therefore 1999
            reflects only eight months of operations; and

      -     growth in our service infrastructure from the start-up stage.

      Our network operating costs were Ps.112.5 million in 2000, a 126% increase
as compared to Ps.49.9 million in 1999. This increase is primarily due to the
same reasons mentioned above.

      Our selling, general and administrative expenses were Ps.345.7 million in
2000, an 88% increase as compared to Ps.183.8 million in 1999 and included the
following:

      -     Salaries, wages and benefits were Ps.188.4 million in 2000 as
            compared to Ps.106.8 million in 1999. As of December 31, 2000, our
            employee headcount was 457 compared to 293 employees as of a year
            earlier;

      -     Leasing costs were Ps.27.5 million in 2000 as compared to Ps.21.1
            million in 1999. During 2000, we incurred additional expenses by
            increasing the number of offices rented, the cluster sites for our
            customers and warehousing spaces;

      -     Consulting fees were Ps.56.0 million in 2000 as compared to Ps.17.0
            million in 1999. During 2000, we were forced to retain services of
            several consultants in order to fill vacant senior management
            positions; and

      -     Marketing expenses were Ps.17.6 million in 2000 as compared to
            Ps.19.0 million in 1999. This decrease was mainly due to the lack of
            a focused marketing effort.

      Depreciation and amortization costs were Ps.209.9 million in 2000, a 148%
increase as compared to Ps.84.5 million in 1999. This increase is due to the
amortization costs related to the issuance of the old notes and the cost of
stock options and warrants granted in connection with the operating agreement
with CT Global Telecommunications, Inc., the strategic and assistance agreement
with Bachow & Associates, Inc. and the vendor financing agreement with Nissho
Iwai American Corporation. Additionally, depreciation costs stepped up to
reflect the increase in fixed assets.

Integral cost of financing

      Our integral cost of financing was Ps.232.4 million in 2000, a 690%
increase as compared to Ps.29.4 million in 1999. Our integral cost of financing
in 1999 resulted from:

                                       38
<PAGE>

      -     a net interest expense of Ps.41.3 million, mainly resulting from our
            level of indebtedness under the Nissho Iwai and the Hewlett Packard
            vendor facilities described below in "-B. Liquidity and capital
            resources-Financing sources and liquidity;" and

      -     a Ps.10.9 million exchange loss resulting from the effect of the
            monthly fluctuation of the peso relative to the U.S. dollar on our
            net liability U.S. dollar position.

      Our integral cost of financing in 2000 resulted from:

      -     a net interest expense of Ps.315.3 million related to interest
            payments on the old notes; and

      -     a foreign exchange loss of Ps.11.2 million related to our
            indebtedness in foreign currency.

      These two factors were partially offset in part by a Ps.94.1 million
monetary gain resulting from the effect of inflation on our net liability peso
position in 2000.

PRINCIPAL DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP

      The financial information included in this annual report is prepared and
presented in accordance with Mexican GAAP, which differ in certain significant
respects from U.S. GAAP. See note 22 to the consolidated financial statements
for a description of the principal differences between Mexican GAAP and U.S GAAP
applicable to us; for a reconciliation of our net income and stockholders'
equity to U.S. GAAP as of December 31, 1999, 2000 and 2001 and for each of the
same three years; and for a description of the principal differences in
classification between the statements of changes in financial position under
Mexican GAAP and the requirements under U.S. GAAP for statements of cash flows.

RECENT UNITED STATES 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.

      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 FASB also recently issued FAS No. 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets." The objectives of FAS No.
143 are to establish accounting standards for the recognition and measurement of
tangible long-lived asset retirement obligation and its associated asset
retirement cost. FAS No. 143 is effective for fiscal years beginning after June
30, 2002.

      In 2001, the FASB issued FAS No. 144, "Accounting for the Impairment of
Long-Lived Assets" which supercedes FAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed of," 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." FAS No. 144 provides new guidance on (i) the
recognition of impairment losses on long-lived assets to be held and used or to
be disposed of and (ii) 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 yeas beginning after December
15, 2001.

                                       39
<PAGE>

      In April 2002, the FASB issued FAS No. 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. Gains and losses from extinguishment of debt that have been
classified as extraordinary in prior years that do not meet the criteria of APB
30 will be classified on a going-forward basis. In addition, FAS No. 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 provision of FAS No. 28 or 98 as applicable, instead of FAS No.
13. The provisions of this statement with regard to FAS No. 4 will be effective
for fiscal years beginning after May 15, 2002, and those for FAS No. 13 will be
effective for transactions occurring after May 15, 2002. Management is currently
evaluating the impact that the adoption of these standards will have on our
results of operations and financial position.

RECENT 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 of commitments. The
revised Bulletin C-9 states that (i) all contingent assets that have a
practically 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 cannot be accounted
for in the financial statements and are not required to be disclosed. Bulletin
C-9 requires disclosure of committed amounts when it represents significant
fixed asset 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 preoperating costs should be expensed
as a period cost, unless they could be classified as development costs. Bulletin
C-8 requires that intangible assets, including previously existing intangible
assets, with indefinite useful lives should not be amortized, but should be
tested for impairment annually. Intangible assets with finite useful lives
should be amortized over their respective useful lifes. The provisions of
Bulletin C-8 are required to be applied beginning on January 1, 2003, although
early adoption is recommended. Management is currently evaluating the impact
that the adoption of these standards will have on our results of operations and
financial position.

B.    LIQUIDITY AND CAPITAL RESOURCES

FINANCING SOURCES AND LIQUIDITY

      We financed our start-up costs through capital contributions and vendor
financing, as described below:

      -     U.S.$100.0 million vendor financing facility from Nissho Iwai
            American Corporation, bearing an annual interest rate of three-month
            LIBOR plus 4.15% due August 12, 2005. Funds from this facility were
            used to purchase Lucent Technologies equipment. We used U.S.$72.3
            million of proceeds from the sale of the old notes on March 17, 2000
            to repay all amounts outstanding in full and terminated this
            facility.

      -     U.S.$20.0 million vendor financing facility from Nissho Iwai
            American Corporation, bearing an annual interest rate of three-month
            LIBOR plus 4.15% due August 12, 2005. Funds from this facility were
            used to purchase NEC equipment. We used U.S.$13.9 million of
            proceeds from the sale of the old notes on March 17, 2000 to repay
            all amounts outstanding in full and terminated this facility.

      -     U.S.$18.7 million vendor financing from Hewlett Packard de Mexico
            bearing an annual interest rate of three-month LIBOR plus 4.15% due
            November 25, 2005. We used U.S.$16.3 million of proceeds from the
            sale of the old notes on March 17, 2000 to repay all amounts
            outstanding in full and terminated this facility.

                                       40
<PAGE>

      -     U.S.$70.0 million raised from private equity investors since
            inception through May 1998.

      On March 17, 2000, we sold the old notes bearing an annual interest rate
of 13 3/4% due April 1, 2007 in an aggregate principal amount of U.S.$300.0
million. Our debt service relating to the old notes for the first two years was
paid with U.S.$77.9 million of the net proceeds of the offering of the old notes
that were deposited in the interest escrow account.

      In September 2000, our principal shareholders invested an aggregate of
U.S.$35.0 million of new capital. This capital contribution was used primarily
to fund capital expenditures and working capital related to the buildout of our
network infrastructure.

      During 2001, we financed our operations and capital expenditures with
remaining funds from the issuance and sale of the old notes and with the
remaining funds from the U.S.$35.0 million capital contribution materialized in
September 2000.

      On April 29, 2002, we consummated a debt restructuring and
recapitalization of Maxcom. The purpose was to reduce our debt service burden,
improve our liquidity and attract additional investment, in order to continue
the buildout of our infrastructure and the growth of our business. The following
actions were taken pursuant to the debt restructuring and recapitalization:

      -     Holders tendered an aggregate of U.S.$259,410,000 in principal
            amount of old notes in exchange for an aggregate of (i)
            U.S.$165,078,150 in principal amount of new notes bearing 0%
            interest through March 1, 2006, and 10% annual interest in the last
            year, and (ii) 26,459,820 series N2 convertible preferred stock,
            with an initial liquidation preference of U.S.$0.4927 per share and
            limited voting rights, in the form of CPOs, which represent in the
            aggregate 15.2% of our total capital stock;

      -     Existing and new shareholders invested U.S.$66.2 million and
            received preferred stock (more fully described in "Item 7. Major
            Shareholders and Related Party Transactions -- A. Major shareholders
            The capital restructuring") representing in the aggregate 77.0% of
            our total capital stock; and

      -     Our capital structure was restructured as more fully described in
            "Item 7. Major Shareholders and Related Party Transactions -- A.
            Major shareholders -- The capital restructuring."

      As a result of the debt restructuring, we will save U.S.$37.5 million in
interest expense on an annualized basis from the date of issuance of the new
notes through February 28, 2006. From March 1, 2006 until March 1, 2007, which
is the maturity date of the new notes, we will save U.S.$17.3 million in
interest expense.

      We estimate that the U.S.$66.2 million private equity investment together
with funds from operating activities and financing available through our cash
reserves and future lines of credit with vendors and financial institutions,
will be adequate to meet our new, reduced debt service, our working capital
requirements and our capital expenditure needs through 2006. However, we cannot
assure you that we will have sufficient resources and that, if needed, any
financing will be available in the future or on terms acceptable to us. In
addition, our ability to incur additional indebtedness will be restricted by the
terms of the indenture governing the new notes.

      These estimates may be affected if we enter into joint ventures or
acquisitions which are currently not foreseeable. Our future operating
performance and ability to service and repay the new notes and the old notes, if
any, will be subject to future economic and competitive conditions and to
financial, business and other factors, many of which are beyond our control.

INDEBTEDNESS

      Our consolidated debt at December 31, 2001 was Ps.2,514.0 million
(including Ps.74.3 million of debt discount related to the issuance of
detachable warrants), of which all was long-term debt. All of our consolidated
debt outstanding at December 31, 2001 was denominated in U.S. dollars. The old
notes represented all of our indebtedness.

                                       41
<PAGE>

After giving effect to the April 29, 2002 debt restructuring, our pro forma
consolidated debt at December 31, 2001 would have been Ps.1,651.7 million.

      The U.S.$300 million aggregate principal amount old notes accrued interest
at an annual rate of 13 -3/4%, representing an interest expense of U.S.$39.8
million per year. In May and June 2001, Maxcom purchased U.S.$25 million
aggregate principal amount of old notes in the secondary market, which Maxcom
cancelled in April 2002. Pursuant to the April 29, 2002 debt restructuring, old
notes in an aggregate principal amount of U.S.$259,410,000 were exchanged for
new notes in an aggregate principal amount of U.S.$165,078,150, as well as for
certain equity. The new notes bear 0% interest through March 1, 2006, and 10%
annual interest in the last year. Old notes in an aggregate principal amount of
U.S.$15,590,000 remain outstanding.

      As a result of this debt restructuring, we will save U.S.$37.5 million in
interest expense on an annualized basis from the date of issuance of the new
notes through February 28, 2006. From March 1, 2006 until March 1, 2007, which
is the maturity date of the new notes, we will save U.S.$17.3 million in
interest expense.

      The indenture governing the terms of the new notes restricts our ability
to incur indebtedness. In particular, in order to be able to incur additional
indebtedness, we must comply with a minimum consolidated leverage ratio of less
than 3.75 to 1.00 and a minimum fixed charge coverage ratio of 2.00 to 1.00, in
each case after giving effect to the proposed incurrence of indebtedness. We do
not, and are unlikely in the foreseeable future to, meet these ratios. However,
pursuant to certain exemptions, we are still able to incur up to U.S.$100.0
million of indebtedness to finance the cost of acquiring or constructing or
installing telecommunication assets, and up to U.S.$20.0 million for working
capital purposes, in each case at any one time outstanding. The indenture
governing the old notes no longer has covenants restricting our ability to incur
indebtedness.

      The indenture governing the terms of the new notes also provides that, if
an event of default occurs and is continuing, the trustee appointed under the
indenture or our holders representing at least 25.0% in principal amount of the
then outstanding new notes, may declare all the new notes to be due and payable
immediately.

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 private equity, public
debt and vendor financing. For the years ended December 31, 1999, 2000 and 2001,
our earnings were insufficient to cover our fixed charges by Ps.264.3 million
(U.S.$28.9 million), Ps.709.1 million (U.S.$77.6 million) and Ps.658.0 million
(U.S.$71.9 million), respectively.

Resources used for operating activities

      For the year ended December 31, 2001, net resources used in operating
activities amounted to Ps.336.6 million compared to Ps.811.7 million for the
year ended December 31, 2000. The decrease was mainly attributable to the
release of the escrow account (Ps.526.2 million). This decrease was partially
offset by the non-cash gain on the repurchase of debt of Ps.121.2 million. Net
resources used in operating activities in 1999 were Ps.145.8 million. The
increase in 2000 from 1999 was mainly due to the escrow of funds to guarantee
the first four coupon payments on the old notes (Ps.438.2 million). In addition,
we had a Ps.376.2 million higher loss in 2000 since that was our first full year
in operation. This decrease was partially offset by Ps.125.4 million higher
depreciation in 2000.

Resources provided by financing activities

      For the year ended December 31, 2001, net resources used in financing
activities amounted to Ps.93.5 million compared to resources provided of
Ps.2,463.6 million for the year ended December 31, 2000. The decrease was
attributable to the issuance of the old notes (Ps.2,106.3 million) in March 2000
and the U.S.$35.0 million capital contribution (Ps.357.3 million) in September
2000. In 2001, we had no capital or debt infusion. Instead, we repurchased a
portion of our debt for Ps.94.4 million. Net resources provided by financing
activities in 1999 were Ps.689.2 million. The increase in 2000 from 1999 was
mainly due to the fact that the only source of financing in 1999 was vendor
financing in the amount of Ps.676.0 million.

Resources used for investing activities

                                       42
<PAGE>

      For the year ended December 31, 2001, net resources used for investing
activities amounted to Ps.516.8 million compared to Ps.707.2 million for the
year ended December 31, 2000. The decrease was mainly attributable to lower debt
issuance costs of Ps.283.4 million partially offset by higher capital
expenditures of Ps.295.3 million. Net resources used for investing activities in
1999 were Ps.809.0 million. The decrease in 2000 from 1999 was mainly due to
lower capital expenditures of Ps.295.3 million offset by higher debt issuance
costs of Ps.283.4 million.

OTHER CONTRACTUAL OBLIGATIONS

      In addition to our financial indebtedness, we are committed to make
certain payments under different lease arrangements. All of our peso-denominated
leases and some of our dollar-denominated site leases adjust automatically to
reflect any variances experienced by the Mexican and U.S. consumer price index,
respectively.

      The majority of our contractual operating leases denominated in pesos
corresponds to our former corporate headquarters. This lease expires on
September 30, 2013. We are subject to penalties for the early termination of
this lease. We are currently evaluating the effects of the early termination of
the lease or the subleasing or transfer of the lease to a third party, among
others.

      Our new corporate headquarters are leased for a 5-year term, renewable for
two additional 5-year terms. Site leases generally run for five, ten of fifteen
year terms.

      The following table presents our minimum contractual operating lease
obligations denominated in Pesos for the periods indicated:

<TABLE>
<CAPTION>
                                                                                   2006 &
                                         2002      2003       2004      2005   thereafter
                                         ----      ----       ----      ----   ----------
                                                     (in thousands of Pesos)

<S>                                  <C>        <C>        <C>       <C>       <C>
Facilities.........................  Ps.14,454  Ps. 1,401  Ps.1,309  Ps.1,242   Ps. 2,794
Sites..............................     15,091     12,757     7,512     6,493      22,224
Poles..............................      2,554          -         -         -           -
Others.............................        149          -         -         -           -
                                     ---------  ---------  --------  --------  ----------
    Total..........................  Ps.32,248  Ps.14,158  Ps.8,821  Ps.7,735   Ps.25,018
                                     =========  =========  ========  ========  ==========
</TABLE>


      The following table presents our contractual operating lease obligations
denominated in dollars for the periods indicated:

<TABLE>
<CAPTION>
                                                                              2006 &
                                  2002       2003         2004     2005     thereafter
                                  ----       ----         ----     ----     ----------
                                         (in thousands of U.S. dollars)
<S>                              <C>        <C>        <C>        <C>        <C>
Corporate headquarters           $3,337     $2,503     $2,503     $2,503     $2,920
Sites ................              213         48         48         48        131
Poles ................               --         --         --         --         --
Others ...............              247        124         62         --         --
                                 ------     ------     ------     ------     ------
  Total ..............           $3,797     $2,675     $2,613     $2,551     $3,051
                                 ======     ======     ======     ======     ======
</TABLE>

CAPITAL EXPENDITURES

      Through December 31, 2001, we have invested Ps.2,067.8 million in the
buildout of our network operating support system and other capital expenditures,
excluding cumulative preoperating expenses and the expenses related to the
issuance of the old notes. This amount includes Ps.121.0 million paid to obtain
all of our frequency rights.

      For 2002, we plan to make capital expenditures of approximately U.S.$75.5
million, mainly to continue to build out our network. We estimate, that
approximately U.S.$18.9 million will be spent to expand our fiber optic
facilities; approximately U.S.$37.7 million will be used for the outside plant,
both clusters and singles sites; approximately U.S.$8.3 million for our data
platform, switches and telecom equipment; and approximately U.S.$10.6

                                       43
<PAGE>

million for other investments, including IT equipment, alternate channels
program, transportation equipment, office /furniture, installation expenses and
marketing expenses.

DIVIDEND POLICY

      Our current policy is to reinvest profits into our operations. In
addition, the indenture that will govern the terms of the new notes allows us to
pay cash dividends only if we meet the following conditions:

      -     a minimum consolidated leverage ratio of less than 3.75 to 1.00;

      -     a minimum fixed charge coverage ratio of 2.00 to 1.00;

      -     no default (as defined in the indenture) must have occurred and be
            continuing or result from the payment of the cash dividend; and

      -     the cash dividend payments do not exceed an amount determined in the
            indenture based on, among other things, cash flow generated from
            operations or equity offerings and consolidated interest expense.

CRITICAL ACCOUNTING POLICIES

Allowance of doubtful accounts receivable

      Determining our allowance for doubtful accounts receivable requires
significant estimates. Due to the large number of customers that we serve, it is
impractical to review the credit-worthiness of each of our customers, although a
credit review is performed for business customers, which represented 6.9% of our
total customer base as of December 31, 2001. We consider a number of factors in
determining the proper level of the allowance, including historical collection
experience, current economic trends and the aging of the accounts receivable
portfolio. From this analysis, our current policy is to reserve 90% of the
outstanding balance of a customer with at least one bill past due 90 days and
100% of the outstanding balance of a customer with at least one bill past due
120 days. We periodically review this policy to ensure that it accurately
reflects current collection policies.

      In addition, in order to mitigate collections risk, our collection
procedures include, but are not limited to, periodic reminder phone calls once a
customer is past due, suspension of service, use of a collection agency and
disconnection of service, if needed. Furthermore, within our network we have
systems to detect fraudulent call activity. If these systems fail to identify
any of this activity, we may have to recognize a higher degree of uncollectable
accounts. While we believe that our estimates are reasonable, changes in our
customer trends or any of the factors mentioned above could materially affect
our bad debt expense.

Revenue recognition

      We recognize revenues from telephone services provided to customers, from
the sale of customer-premise equipment, from services provided to other
telephone-service companies (such as interconnection services), and from
installation charges.

      Revenues are recognized when the service is provided or the product is
delivered. In addition, we have entered into agreements with several telephone
carriers with a "bill and keep" feature. Under this arrangement, if the
imbalance between local calls originated by the other carrier and terminated by
Maxcom and calls originated by Maxcom and terminated by the other carrier during
a month does not exceed 70%, then no interconnection fee amounts are payable by
the net user of interconnection services. If the imbalance exceeds 70% in any
given month, the net user incurs a liability per minute. If we fail to maintain
a significant percentage of residential users, then the "bill and keep"
arrangement will be terminated and asymmetrical interconnection rates may apply.
Due to a timing lag, we must estimate whether or not the 70% threshold was
exceeded for any given month and record a corresponding receivable or payable.
Based on previous experience with these carriers, i.e. the threshold has never
been exceeded; we have not accrued for any potential revenue or cost.

                                       44
<PAGE>

Installation costs

      Installation costs include labor, tools and materials and are capitalized
and amortized over on a straight-line basis. Once service with a customer is
terminated, the capitalized installation cost is expensed. However, installation
costs vary from customer to customer depending on location. We do not track
installation costs on an individual customer basis because to do so would be
inefficient. Based on cost analysis, we have determined an average cost per
customer and use this cost for amortization and disconnection purposes.

Valuation of long lived assets

      We review fixed, intangible and other long-lived assets whenever events or
changes indicate that the carrying amount of an asset may not be recoverable. In
making such evaluations, we estimate the fair value of the long-lived assets in
order to calculate the impairment loss equal to the difference between the fair
value and carrying value of the assets. We make significant assumptions and
estimates in this process regarding matters that are inherently uncertain, such
as estimating remaining useful lives 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 the impairment analysis.
Although we believe that our estimates are reasonable, different assumptions
regarding such remaining useful lives could materially affect the valuation of
our long-lived assets.

      We also evaluate our operating leases for utilization. Spaces leased in
buildings with low occupancy have been reserved based on the contractual penalty
for early termination, which is calculated by taking the remaining contractual
obligation of the estimated unused space minus the estimated proceeds to be
received from any sub-leases to third parties.

Stock-based compensation

      We have historically entered into various agreements with third parties
and our employees to exchange our warrants or our stock for services rendered to
us. The fair value of such transactions is based on various assumptions, such as
our value, volatility, risk free interest rates and expected life of the
options. We contract a third party to assist in developing said assumptions.
Different assumptions regarding such estimations could materially affect our
financial position and results of operations.

Deferred taxes

      As part of the process of preparing our consolidated financial statements,
we are required to estimate our income tax liability. This process involves
estimating actual current tax exposure together with assessing temporary
differences resulting from the different treatment for tax and accounting
purposes of several items, such as depreciation, amortization, and allowance for
doubtful accounts. These differences result in deferred tax assets and
liabilities that are included in our consolidated balance sheet. We must then
assess the likelihood that our deferred tax assets will be recovered from future
taxable income and, to the extent we believe that recovery is not likely to
occur, we must include an expense within the tax provision in the statement of
operations.

      Significant management judgment is required in determining our provision
for income taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. The valuation allowance
is based on management projections of future financial results. Accordingly, we
have created a valuation account for the full balance of our deferred tax asset
as we feel it is unlikely we will use our net operating loss carryforwards
before they expire. If actual results differ from these estimates or we adjust
the projections in future periods, we may need to materially adjust the
valuation allowance.

Related party transactions

      See "Major Shareholders and Related Party Transactions -- B. Related party
transactions" for a full disclosure of our transactions with related parties.

C.    RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

      Maxcom does not undertake research and development activities other than
market research.

                                       45
<PAGE>

D.    TREND INFORMATION

      The growth of competition has been substantial and we expect it to
continue. We are in the process of improving our competitive position by
strengthening our voice products and developing our data products and services.
The increase in competition negatively affects our profit margins.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.    DIRECTORS AND SENIOR MANAGEMENT

DIRECTORS

      Our Board of Directors is responsible for the management of our business.
Our Board of Directors currently consists of seven series A directors, two
series B directors and four series N directors. Our series A shareholders have
the ability to elect the majority of the Board of Directors. With the exception
of Mr. Valdez, who was elected Director on October 2, 2001, the current members
of the Board of Directors were elected at the shareholders' meeting held on May
22, 2001. At that May 22, 2001 meeting, the shareholders appointed only nine
directors and nine alternate directors, leaving four seats vacant. Five
directors were appointed by our series A shareholders, one director by our
series B shareholders and three directors by our series N shareholders.

      At a shareholders' meeting on March 5, 2002, our shareholders resolved
that, upon and subject to the consummation of the debt restructuring and
recapitalization, the composition of our Board of Directors would change. The
debt restructuring and recapitalization were consummated on April 29, 2002. As a
result, and pursuant to the capital restructuring described in "Principal
Shareholders -- Capital restructuring," our series A and A1 shareholders, voting
together as a class, now appoint five directors. The remaining four directors
are appointed by our series B and B1 shareholders, voting together as a class.
Pursuant to the terms of the securityholders agreement described in "Item 7.
Major Shareholders and Related Party Transactions -- A. Major Shareholders --
Securityholders agreement," which became effective upon the consummation of the
debt restructuring and recapitalization. The series B and B1 directors are now
selected from among nominees proposed by Nexus -- Banc of America Fund II, L.P.,
a major shareholder which we refer to in this Annual Report as "Nexus."

      Series N2 shareholders have the right to appoint an observer to our Board
of Directors for so long as the series N2 preferred shares represent at least 3%
of the outstanding capital stock of the Company or, so long as any series N2
preferred stock remain outstanding and at least U.S.$17.5 million aggregate
principal amount of the new notes remain outstanding. This observer, who will
not be a member of the Board of Directors, has the right to attend meetings of
the Board of Directors but is not entitled to vote. In the event Mexican foreign
ownership restrictions are lifted, the series N2 shareholders will be entitled
to appoint one director, provided the series N2 shares represent at least 10% of
Maxcom's outstanding capital stock.

      The following table presents information concerning our directors prior to
the debt restructuring and recapitalization (ages as of December 31, 2001):

<TABLE>
<CAPTION>
NAME                                             POSITION                          AGE
----                                             --------                          ---
<S>                                 <C>                                            <C>
Adrian Aguirre Gomez.............   Series A Director and Chairman of the Board    51
Maria Guadalupe Aguirre Gomez....   Series A Director                              53
Maria Trinidad Aguirre Gomez.....   Series A Director                              41
Marco Provencio Munoz............   Series A Director                              43
Gilberto Solis Silva(1)..........   Series A Director                              54
Michael R. Coltrane..............   Series B Director                              55
Jacques Gliksberg................   Series N Director                              44
Sebastian Valdez.................   Series N Director                              40
Salvatore A. Grasso..............   Series N Director                              44
</TABLE>

                                       46
<PAGE>

(1)   Mr. Gilberto Solis Silva is an alternate series A director, substituting
      for Mr. Salvador Alva, who resigned in February 2002.

      The following table presents information concerning our current directors
(ages as of December 31, 2001):


<TABLE>
<CAPTION>
NAME                                             POSITION                                    AGE
----                                             --------                                    ---
<S>                                 <C>                                                       <C>
Adrian Aguirre Gomez.............   Series A and A1 Director and Chairman of the Board        51
Maria Guadalupe Aguirre Gomez....   Series A and A1 Director                                  53
Maria Trinidad Aguirre Gomez.....   Series A and A1 Director                                  41
Marco Provencio Munoz............   Series A and A1 Director                                  43
Gilberto Solis Silva.............   Series A and A1 Director                                  54
Roberto Chute....................   Series B and B1 Director                                  28
Jacques Gliksberg................   Series B and B1 Director                                  44
Pedro Querio(1)..................   Series B and B1 Director                                  35
Salvatore A. Grasso..............   Series B and B1 Director                                  44
</TABLE>

(1)   Mr. Pedro Querio is series B and B1 director, substituting for Mr. Barry
      R. Rubens, who resigned in April 2002.

      Miguel Sepulveda Martinez, Raul Sanchez Rucobo, Maria Elena Aguirre Gomez
and Raul Guijarro de Pablo are alternate series A and A1 directors. Marco Viola,
Michael Hajjar Jorge Cervantes and Roberto Engels are alternate series B
directors. Enrique Boillini is the board observer for the series N-2
shareholders. Gonzalo Alarcon Iturbide is the secretary of the Board.

      Adrian, Maria Guadalupe, Maria Trinidad and Maria Elena Aguirre Gomez are
siblings. Gilberto Solis Silva is the spouse of Maria Elena Aguirre Gomez. Raul
Guijarro de Pablo is the spouse of Maria Trinidad Aguirre Gomez. Miguel
Sepulveda Martinez is the spouse of Maria Guadalupe Aguirre Gomez.

      Set forth below is a brief biographical description of our directors:

      ADRIAN AGUIRRE GOMEZ has been a series A (now A and A1) director and
Chairman of the Board of Maxcom since Maxcom's incorporation in February 1996.
Mr. Aguirre also sits on the Board of Directors of Corporativo en
Telecomunicaciones, S.A. de C.V., a subsidiary of Maxcom, Grupo Empresarial de
Telecomunicaciones, S.A. de C.V., Operadora Plusgamma, S.A. de C.V. (formerly
known as Recover, S.A. de C.V.), Corporacion Plusgamma, S.A. de C.V. (formerly
known as Laguna Real, S.A. de C.V.) and Fundacion Teleton. He has been the
Chairman of the Board since December 1992 for Operadora Plusgamma, S.A. de C.V.
In addition, he has been a member of the Consulting Board of UNICEF Mexico since
1997. Previously, Mr. Aguirre was CEO of Grupo Radio Centro, S.A. de C.V. from
November 1968 to May 24, 1999 and a Director until May 1999. Mr. Aguirre is a
certified public accountant and holds an undergraduate degree in accounting from
the Instituto Tecnologico Autonomo de Mexico (ITAM).

      MARIA GUADALUPE AGUIRRE GOMEZ has been a series A director (now A and A1)
of Maxcom since June 1999. She also sits on the Board of Directors of Sport and
Terapy Center, S.A. de C.V., Operadora Plusgamma, S.A. de C.V. (formerly
Recover, S.A. de C.V.), Corporacion Plusgamma, S.A. de C.V. (formerly known as
Laguna Real, S.A. de C.V.). Previously, Ms. Aguirre sat on the Board of
Directors of Majurame, S.A. de C.V. and Cable Centro, S.A. de C.V. from February
1997 to April 1999 and was an Alternate Director of Grupo Radio Centro, S.A. de
C.V., from July 1998 to May 1999. In her capacity as Alternate Director, Ms.
Aguirre had both director and management responsibilities. Ms Aguirre holds an
undergraduate degree in communications from the Universidad Ibero Americana.

      MARIA TRINIDAD AGUIRRE GOMEZ has been a series A director (now A and A1)
of Maxcom since May 1998. She also sits on the Board of Directors of Talento
Arte Visual, S.A. de C.V., Promotora de Radiodifusion del Sureste, S.A. de C.V.,
Promotora de Publicidad del Sureste, S.A. de C.V. and Publicidad y Promocion del
Sureste, S.A. de C.V. Previously, Ms. Aguirre was an Alternate Director of Grupo
Radio Centro, S.A. de C.V. from March 10, 1997 to May 7, 1999. Ms. Aguirre holds
an undergraduate degree in communications from the Universidad Iberoamericana.

                                       47
<PAGE>

      MARCO PROVENCIO MUNOZ has been a series A (now A and A1) director of
Maxcom since May 2001. He is also a partner and head of the public relations
practice at the consulting firm MBD: Mexico Business Development. During 2000,
Mr. Provencio was the press secretary and the spokesman for the then Mexican
President Mr. Ernesto Zedillo. He served 14 years in the Ministry of Finance and
Public Credit where he held various positions, including Director General for
International Financial Affairs. Mr. Provencio worked also for three years for
the Foreign Affairs Ministry, where he was appointed under-secretary for
Economic and Multicultural Affairs. Mr. Provencio holds an undergraduate degree
in economics from the Universidad Interamericana and a master's degree in
economics and public affairs from the Woodrow Wilson School at Princeton
University.

      GILBERTO SOLIS SILVA has been a series A (now A and A1) director of Maxcom
since February 2002. Prior to that Mr. Solis was an alternate series A director.
He also is the Secretary of the Board of Radiocomunicacion Profesional, S.A. de
C.V., Radiocomunicacion Enfocada, S.A. de C.V. and Radiocomunicacion Saltillo,
S.A. de C.V. Previously, Mr. Solis sat on the Board of Directors of Grupo Radio
Centro, S.A. de C.V. from 1990 to 1998. Mr. Solis holds an undergraduate degree
in geological engineering from the UNAM.

      MICHAEL R. COLTRANE was a series B director and Vice Chairman of Maxcom
from August 1997 until April 2002. Mr. Coltrane is President, Chief Executive
Officer and Director of CT Communications, Inc. He also sits on the Board of
Directors of Palmetto MobileNet, L.P., Access/On Multimedia, First Charter
Corporation, and Northeast Medical Center. Mr. Coltrane is Vice Chairman of
First Charter Corporation, the parent company of First Charter National Bank and
Chairman of the United States Telecom Association. Previously, Mr. Coltrane
served for more than six years as Executive Vice President of First Charter
National Bank. Mr. Coltrane holds an undergraduate degree from Davidson College
and a master's degree in business administration from the Wharton School of
Business of the University of Pennsylvania.

      JACQUES GLIKSBERG was a series N director of Maxcom from May 1998 until
April 2002, and has been a series B and B1 director since then. He also sits on
the Board of Directors of Acme Paging, L.P., Bank America International
Investment Corporation, Structured Intelligence LLP, Organizacion Rescarven,
C.A. (Venezuela), Vesper Holdings, Velocom and Difusion Panoramica S.A. de C.V.
Mr. Gliksberg has been a managing partner of Bank of America Equity Partners
since 1994. Mr. Gliksberg holds a Bachelor of Arts degree in Economics and
Political Science from the University of Rochester and a master's degree in
business administration from the J. L. Kellogg Graduate School of Management of
Northwestern University, Chicago, Illinois.

      SEBASTIAN VALDEZ was a series N director of Maxcom from October 2000 until
April 2002. He is Vice President of BancBoston Capital Inc. and President of
BancBoston Investments Microserving Holdings, Inc. Further, he is on the Board
of Directors of Grupo Embotelladores De Sureste S.A. de C.V., Recovery
International Group Holdings and BancBoston Investments Microserving Holdings,
Inc. Prior to joining us, Mr. Valdez spent four years as Vice President Loan
Syndicate for BancBoston Securities, Inc. He was also a Vice President at the
BankBoston Precious Metals division. Mr. Valdez joined BankBoston's Buenos Aires
branch in 1985. Mr. Valdez holds an undergraduate degree from Instituto
Tecnologico de Buenos Aires, Argentina.

      SALVATORE A. GRASSO was a series N director of Maxcom from May 1998 until
April 2002, and a series B and B1 director since then. He also sits on the Board
of Directors of Bachow and Associates, Inc. Mr. Grasso is currently Managing
Director and Chief Financial Officer of Bachow and Associates, Inc., Chief
Financial Officer of Bachow Innovative Master Fund, Ltd. and Paul S. Bachow
Co-Investment Fund, LP. Further, he is the Vice-President of Bachow/Coastel
Operations, Inc., Bala Equity, Inc., Bachow Co-Investment, Inc, Bachow 39 GHz,
Inc., Bala Equity IV, Inc., Bachow Innovative Equity, LC, Bachow/Coastal, LLC,
Bachow/Coastal, Inc., Bachow Investment Partners III, LP, Bachow Co-Investment,
Inc., Bachow Strategic Partners, LLC. He is also a Partner in Bala Equity
Partners, L.P., Bachow Co-Investment, L.P., Bachow Innovative Partners, L.P.,
Bachow Innovative Equity, L.P., Bachow Strategic Partners, L.P. and Bachtel
Development, L.P. Mr. Grasso holds a bachelor of science degree in accounting
from St. Joseph's University and is a certified public accountant in the state
of Pennsylvania.

      SALVADOR ALVA was a series A director from May 2001 until February 2002.
Mr. Alva has worked in different divisions of PepsiCo. where he has been
President of Grupo Gamesa from 1996 to date. Prior to that Mr. Alva was General
Manager for Latin America for the International Division of Alegro from 1985 to
1996. Mr. Alva is a Chemical Engineer from the Universidad Nacional Autonoma de
Mexico and holds a master's degree in business administration from the
Universidad de las Americas.


                                       48
<PAGE>
             _
      PEDRO QUERIO has been a series B and B1 director since June 2002. He also
sits on the Board of Directors of Eki Discount (Argentina), Outdoor Advertising,
Microlending, Structured Intelligence and Difusion Panoramica, S.A. de C.V. Mr.
Querio has been working since 1997 for Banc of America Equity Partners - Latin
America. Prior to that, Mr. Querio worked at Booz Allen & Hamilton in Buenos
Aires, Argentina for one year, and for Merchant Bankers Asociados also in Buenos
Aires, Argentina for four years, where he received extensive expertise in
mergers an acquisitions and, corporate finance for capital risk funds of the
group. Mr. Querio holds a Bachelor of Arts degree from the Universidad Catolica
de Argentina and a master's degree in management from J.L. Kellog Graduate
School of Management of Northwestern University, Chicago, Illinois.

      ROBERTO CHUTE, has been a series B and B1 director since April 2002. Mr.
Chute sits on the Board of Directors of Difusion Panoramica, a Mexican outdoor
advertising company, and Eki Discount, an Argentinean discount store chain. Mr.
Chute has been an associate of Bank of America Equity Partners since September
2001. Previously, Mr. Chute worked for Goldman, Sachs, Techint and Strat
Management Consulting. Mr. Chute holds an industrial engineering degree from the
Instituto Tecnologico de Buenos Aires, Argentina and a master's degree in
business administration from the J. L. Kellogg Graduate School of Management of
Northwestern University, Chicago, Illinois.

      BARRY RUBENS, was a series B and B1 director until April 2002. Mr. Rubens
has been a Senior Vice President, the Chief Financial Officer, Secretary and
Treasurer of CT Communications, Inc. since 1995. Mr. Rubens was Vice-President
for External Affairs of the same company from 1992 to 1995. Prior to this, Mr.
Rubens was a senior manager in Ernst & Young's telecommunications practice in
Washington, D.C. Mr. Rubens serves on the executive committee of BellSouth
Carolinas PCS, LLC, as a director of Carolinas FiberNet and as an officer and
board member of Wireless One of North Carolina, LLC.

EXECUTIVE OFFICERS

      In April 2001, Mr. Fulvio del Valle was appointed as Chief Executive
Officer. In February 2001, Mr. Eduardo Patron was appointed as Chief Marketing
Officer. In May 2001, Mr. Rene Sagastuy was appointed as Chief Operating Officer
and Mr. Ricardo Arevalo was appointed as Chief Information System Officer. In
June 2001, Ms. Eloisa Martinez was appointed Chief Financial Officer. In
September 2001, Mr. Francisco Soroa de las Cuevas was appointed Vice-President
of Corporate Communications and Public Relations.

      The following table sets forth our current executive officers (ages as of
December 31, 2001):
<TABLE>
<CAPTION>
NAME                                             POSITION                      AGE
----                                             --------                      ---

<S>                                 <C>                                        <C>
Fulvio del Valle.................   President and Chief Executive Officer      52
Rene Sagastuy....................   Chief Operating Officer                    41
Eloisa Martinez..................   Chief Financial Officer                    42
Eduardo Patron...................   Chief Marketing Officer                    44
Ricardo Arevalo Ruiz.............   Chief Information Systems Officer          37
Francisco Soroa de las Cuevas....   Vice-President, Corporate Communications
                                    and Public Relations                       48
Carlos Castro Paniagua...........   Vice-President, Human Resources            51
Cesar A. Castillo Guerra.........   Chief Commercial Operations Officer        38
</TABLE>

      Set forth below is a brief biographical description of each of our
executive officers not otherwise provided above:

      FULVIO V. DEL VALLE has been the President and Chief Executive Officer of
Maxcom since April 2001. Prior to joining Maxcom, Mr. del Valle was President of
Iusacell since June 1997 and a member of its Board of Directors since June 1998.
From August 1996 until June 1997, Mr. del Valle served as President of the
non-wireline cellular companies in Regions 3 (Norcel) and 4 (CedeTel). For more
than 20 years prior, Mr. del Valle served in senior Latin America region
executive positions for several multinational positions for several
multinational corporations. Mr. del Valle was employed by AMP Inc. as regional
director, Latin America, from January 1996 through July 1996 and as President,
Mexico, from August 1992 until December 1995. From September 1986 until July
1992, Mr. del Valle
                                       49
<PAGE>
served as Regional Director for South America, Electronic Division, for DuPont
Latin America Corp. and from March 1980 through August 1986, he served as
general manager, Latin American North Region, for National Semiconductor Corp.
Mr. del Valle holds an undergraduate degree in electrical engineering from the
Instituto Politecnico Nacional of Mexico and a master's degree in physics from
Virginia Polytechnic Institute.

      RENE SAGASTUY has been Chief Operating Officer to Maxcom since May 2001.
Prior to joining Maxcom, Mr. Sagastuy served for one year as Director of
Operations for Johnson Controls in Mexico, a U.S. public company with 19
manufacturing sites in Mexico. Mr. Sagastuy also served as operations, strategic
planning, manufacturing and project manager and director of several companies in
Mexico, including Avex Electronics, AMP de Mexico, S.A. de C.V. and the
Jefferson Smurfit Group in Mexico. Mr. Sagastuy holds a bachelor's degree in
civil engineering from the Universidad Iberoamericana in Mexico and a master's
degree in Business Administration form the Instituto Technologico Autonomo de
Mexico.

      ELOISA MARTINEZ has been Chief Financial Officer since June 2001. Prior to
joining Maxcom, Ms. Martinez served for two years as Financial Planning and
Control Director and two years as Assistant to the Chief Financial Officer at
Iusacell. Previously, Ms. Martinez worked for 12 years at IBM Corporation in
Mexico and in the United States, where she held the positions of Controller,
Internal Audit Manager, Corporate Internal Auditor and Business Control and
Planning Analyst. Ms. Martinez holds a bachelor's degree in Business
Administration from the Instituto Politecnico Nacional in Mexico City and a
master's degree in Business Administration from the Instituto Tecnologico de
Estudios Superiores de Monterrey.

      EDUARDO PATRON has been Chief Marketing Officer of Maxcom since February
2001. Prior to joining Maxcom, Mr. Patron served for 14 years as Marketing
Director, Assistant General Manager and in several other positions for Kraft
Foods in Mexico, a subsidiary of Phillip Morris. Previously, Mr. Patron worked
as Promotion and Merchandising Manager for Alfa Alimentos, S.A. de C.V., a food
company, and as an account executive for A. C. Nielsen. Mr. Patron holds an
Industrial Engineering degree from the Universidad Iberoamericana in Mexico.

      RICARDO AREVALO RUIZ has been Chief Information Systems Officer since
April 2001. Prior to joining Maxcom, Mr. Arevalo served as Vice-President,
Information Systems and Chief Information Officer of Iusacell from August 1997
to May 2001. Mr. Arevalo also served as Vice President, Information Systems, as
Chief Information Officer and as Director, Systems Development of Grupo Iusacell
Cellular during the previous two years. Before then, Mr. Arevalo served as
Director of Information Systems, Materials, Logistics and Customer Service of
AMP de Mexico, S.A. de C.V. from May 1993 until August 1997. Mr. Arevalo was
also the Information Systems Manager for Tequila Cuervo, S.A. de C.V. from
October 1990 until May 1993. Mr. Arevalo has an undergraduate degree in computer
sciences and a diploma in marketing from the Instituto Technologico y de
Estudios Superiores de Monterrey.

      FRANCISCO SOROA DE LAS CUEVAS has been Vice-President of Corporate
Communications and Public Relations since September 2001. Prior to joining
Maxcom, he held the same position at Nissan Mexicana for two years and at
Iusacell for three years. Mr. Soroa has also served as Director of Public
Relations for Pepsico de Mexico and Director of Public Relations and Press
Secretary of the State of Puebla. Mr. Soroa de las Cuevas holds a bachelor's
degree in International Relations, a Business Management Communications degree
from the Universidad de las Americas and a Human Resources Management degree
from Michigan University. He holds a bachelor's degree in International
Relations from the Universidad de las Americas.

      CARLOS CASTRO PANIAGUA has been Vice-President of Human Resources since
March 2001. Prior to joining Maxcom, Mr. Castro served as Director of Human
Resources at Gillette de Mexico for twelve years and as Director of Corporate
Human Resources at Phillips Mexicana for two years. Mr. Castro also served at
Gillette de Mexico as engineering manager and production manager. Mr. Castro
holds an industrial degree from the Centro Nacional de Ensenanza Tecnico
Industrial.

      CESAR A. CASTILLO GUERRA has been Chief Commercial Operations Officer
since May 2002. Prior to joining Maxcom, Mr. Castillo served at Axtel, S.A. de
C.V. as Vice-President for the North Region, Vice-President of Mexico City and
Vice-President of Sales and Service from February 2000 to April 2002. He also
served as Director of Sales and Customer Care for the same company from January
1999 to February 2000. From May 1998 to January 1999, Mr. Castillo served at
Iusacell where he was Director of Strategic Alliances and Channels (Marketing).
Mr. Castillo was Director of Strategic Alliances and Alternate Channels for
Alestra between May

                                       50
<PAGE>
1996 and April 1998. Mr. Castillo holds a CPA degree from the Instituto
Tecnologico de Estudios Superiores de Monterrey - Monterrey Campus, as well as a
master's degree in business administration with specialization in marketing,
from the same University.

B. COMPENSATION

GENERAL

      For the year ended December 31, 2001, our executive officers received an
aggregate compensation (including bonuses and severance payments) of
approximately Ps.28.1 million. These amounts represent 6.5% of Maxcom's total
selling, general and administrative expenses for 2001.

      Through December 31, 2001, members of our Board of Directors received
options to purchase up to 250 series N shares at an exercise price of U.S.$0.01
per share, each time the member attended a Board of Directors or an Operating
Advisory Committee meeting. The Chairman of the Board received options to
purchase up to 500 series N shares at an exercise price of U.S.$0.01 per share
each time he attended. There were two Board of Directors meetings and six
Operating Advisory Committee meetings during 2001. In 2001, we granted to our
directors options to purchase a total of up to 26,000 series N shares.

      Starting January 1, 2002, members and the Chairman of the Board will
receive options to purchase up to 2,500 and 5,000 series N shares, respectively,
at an exercise price of U.S.$0.01 per share, for each meeting attended. Both the
2001 and the 2002 options vest immediately.

OLD EXECUTIVE STOCK OPTION PLAN

      We implemented an executive compensation plan that included bonuses and
stock options on our C/N CPOs (which are described in note (1) under "Item 7.
Major Shareholders and Related Party Transactions -- A. Major Shareholders").
Upon the completion of the capital restructuring described in "Principal
Shareholders -- Capital restructuring," beneficiaries under the plan will now
receive series N shares in exchange for their series C shares.

      We granted 142,250, 583,000 and 206,820 options in 1999, 2000 and 2001,
respectively for the services rendered during the years 1998, 1999 and 2000.
Options granted had exercise prices of U.S.$8.70, U.S.$10.45 and U.S.$12.55,
respectively, which were the then estimated fair market values. Of these
options, 356,108 had vested and 12,424 had been forfeited at December 31, 2001.

NEW EXECUTIVE STOCK OPTION PLAN

      We are implementing a new executive stock plan, covering services rendered
during the years 2001, 2002 and 2003. The plan will be divided into four levels,
depending on the ranking of the different members of management. We expect that
there will initially be 80 participants in the plan. Participants in the top
three levels will be guaranteed a minimum number of options for series N stock.
The granting of options for the fourth level, which is comprised of the
junior-most management, will be discretionary.

      The number of options granted will depend on certain revenue and operating
cash flow targets. There will be a bonus portion of the plan that will be
allocated to individual executives at the discretion of management and the Board
of Directors. Vesting will be 20% upon allocation and 20% per year for the next
four years. Options will be granted during the second quarter of 2002, 2003 and
2004 at exercise prices of U.S.$0.4927, U.S.$0.5912 and U.S.$0.7094,
respectively.

      For the options granted during the second quarter of 2002, we are
finalizing the details of the implementation of this plan, including a Board of
Directors resolution approving the beneficiaries and the execution of the plan
with a Mexican trustee in charge of managing the plan.

      The number of options that we expect to be granted under the stock option
plan for our Chief Executive Officer will depend on revenue and cash flow
targets, and other factors such as the success of the debt restructuring,


                                       51
<PAGE>

additional capital raising and the obtainment of certain regulatory approvals.
In addition, the vesting will be over a two-year period from the grant date with
an exercise price of U.S.$0.4927 per share for all shares.

      The maximum aggregate number of shares of series N stock that can be
distributed under the new executive stock plan (which includes the Chairman of
the Board and Chief Executive Officer plan), including potential bonuses, will
be 25.9 million shares of series N stock, which is equivalent to about 11.6% of
our capital stock on a fully diluted basis, after giving effect to the exchange
offer (assuming all old notes are exchanged) and the private equity investment.

C.    BOARD PRACTICES

      The members of our Board of Directors are elected annually at our ordinary
general meeting of shareholders. All board members hold the positions for one
year and may be reelected.

      Our Board of Directors established an Operating Advisory Committee
responsible for advising the Board on, and overseeing, Maxcom's operations. The
Operating Advisory Committee is currently comprised of Adrian Aguirre, Jacques
Gliksberg, Salvatore Grasso, Roberto Chute and Fulvio del Valle.

      Under the Mexican Companies Law (Ley General de Sociedades Mercantiles),
we are required to have at least one statutory auditor (comisario), who is
elected by our shareholders at the annual ordinary general shareholders'
meeting. C.P. Juan Manuel Ferron is our statutory auditor. The primary role of
the statutory auditor is to report to our shareholders at the annual ordinary
general shareholders' meeting regarding the accuracy, sufficiency and reasonable
basis of the financial information presented to such shareholders by the Board
of Directors.

      Our executive officers are appointed by the Board of Directors for an
indefinite term and may be removed by the Board at will, provided the
corresponding severance payments are made in accordance with Mexican labor law
and the applicable labor contract.

      Members of the Board of Directors are not entitled to any benefits upon
termination.

D.    EMPLOYEES

      As of December 31, 2001, we had 660 employees. Of these, 119 employees
were unionized and covered by the terms of a collective bargaining agreement
that we entered into with the National Union of Telecommunications,
Communications, Cybernetics, Electric, Electronic and Similar Products Workers
of the Mexican Republic (Sindicato Nacional de Trabajadores de
Telecomunicaciones, Telefonia, Comunicaciones, Cibernetica, Productos
Electricos, Electronicos, Similares y Conexos de la Republica Mexicana). This
agreement is renewable every year and next expires on March 31, 2002. We have
not experienced any strikes or work stoppages and believe that our relations
with our employees are satisfactory.

E.    SHARE OWNERSHIP

      None of our directors or officers owns more than 1% of our shares,
excluding the shares held by the Aguirre Gomez family, which are described below
in "Principal Shareholders."

      The only agreement that we currently maintain for purposes of compensating
our employees with our capital stock is our old executive stock option plan,
described above under " -- B. Compensation."

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.    MAJOR SHAREHOLDERS

      The following table presents the equity structure of Maxcom at December
31, 2001:

                                       52
<PAGE>

<TABLE>
<CAPTION>

                                  SERIES A STOCK    SERIES B STOCK      SERIES C STOCK(1)    SERIES N STOCK(1)       TOTAL
                                -----------------   ----------------    -----------------   -----------------    -----------------
                                 NUMBER       %      NUMBER      %       NUMBER       %      NUMBER       %       NUMBER       %
NAME OF STOCKHOLDER             OF STOCK    OWNED   OF STOCK   OWNED    OF STOCK    OWNED   OF STOCK    OWNED    OF STOCK    OWNED
-------------------             --------    -----   --------   -----    --------    -----   --------    -----    --------    -----

<S>                            <C>         <C>     <C>         <C>     <C>         <C>     <C>         <C>      <C>          <C>
Aguirre Gomez Family(2)......  1,276,428   100.0%                        405,064     7.2%     405,064     7.2%    2,086,556    15.2%
CT Global
   Telecommunications,
   Inc.......................                      1,226,372   100.0%    515,953    10.9%     515,953    10.9%    2,258,279    16.4%
BankAmerica International
   Investment Corporation....                                          1,577,582    28.1%   1,577,582    28.1%    3,155,164    22.9%
Bachow Investment
   Partners III, LP..........                                          1,166,568    20.8%   1,166,568    20.8%    2,333,136    17.0%
Latinvest Strategic
   Investment Fund, L.P......                                            671,964    12.0%     671,964    12.0%    1,343,928     9.8%
BancBoston Investments, Inc..                                            658,702    11.7%     658,702    11.7%    1,317,404     9.6%
LA Strategic Capital Partners II                                         175,287     1.3%     175,287     1.3%      350,573     2.5%
Other Investors..............                                            451,702     8.0%     451,702     8.0%      903,404     6.6%
                               ---------   -----   ---------   -----   ---------     ---    ---------   -----    ----------   -----
                               1,276,428   100.0%  1,226,372   100.0%  5,622,822     100%   5,622,822   100.0%   13,748,444   100.0%
</TABLE>


(1)   The series C and series N stock were deposited into a trust, which issued
      C/N CPOs and which will be terminated upon the consummation of the
      exchange offer. Upon implementation of the capital restructuring, all
      current series C shares will be converted into series N shares, the C/N
      CPO Trust will be terminated and the C/N CPOs will be cancelled.

(2)   The shares of Maxcom controlled by the Aguirre Gomez family are held
      individually or through trusts or corporations.

SHARE OWNERSHIP UPON DEBT RESTRUCTURING AND RECAPITALIZATION

         The following table presents Maxcom equity structure after giving
effect to the consummation of our debt restructuring and recapitalization on
April 29, 2002:
<TABLE>
<CAPTION>
                          SERIES A    SERIES A1  SERIES B    SERIES B1  SERIES N    SERIES N1    SERIES N2                     %
NAME OF SHAREHOLDER        SHARES      SHARES     SHARES      SHARES     SHARES      SHARES       SHARES       TOTAL         OWNED
                          ---------   ---------   ---------  ---------  ----------  -----------  ----------   -----------    ------
<S>                       <C>         <C>         <C>        <C>        <C>         <C>          <C>          <C>            <C>
Current shareholders(1).  1,276,428               1,226,372             11,245,644                             13,748,444      7.90%
New investors(2)........              6,088,896              5,848,209              122,468,441               134,405,546     77.00%
Old note holders(3).....                                                                         26,459,820    26,459,820     15.10%
                          ---------   ---------   ---------  ---------  ----------  -----------  ----------  ------------    ------
   Subtotal.............  1,276,428   6,088,896   1,226,372  5,848,209  11,245,644  122,468,441  26,459,820   174,613,810    100.00%
                          =========  ==========  ==========  =========  ==========  ===========  ==========  ============    =======
</TABLE>

(1)   Current shareholders include all the shareholders mentioned in the table
      above.

(2)   New investors include those investors who participate in the private
      equity investment. These investors include some of the current
      shareholders (and affiliates of our current shareholders) such as certain
      members of the Aguirre Gomez family, Nexus and BAS Capital Funding
      Corporation, and certain first-time equity investors.

(3)   Old note holders are those who exchange their old notes in the exchange
      offer.

         In addition, we have issued options for the purchase of up to 33.2
million series N shares. See " -- Outstanding options and warrants."

         The following table presents Maxcom's equity structure after giving
effect to the consummation of the debt restructuring, the recapitalization and
the implementation of the capital restructuring, on a fully diluted basis:


                                       53
<PAGE>


<TABLE>
<CAPTION>
                          SERIES A   SERIES A1  SERIES B    SERIES B1  SERIES N      SERIES N1    SERIES N2                    %
NAME OF SHAREHOLDER        SHARES     SHARES     SHARES      SHARES     SHARES        SHARES       SHARES       TOTAL        OWNED
                          ---------  ---------   ---------  ---------  ----------    -----------  ----------   -----------   -------
<S>                       <C>        <C>         <C>        <C>        <C>           <C>          <C>          <C>           <C>

Current shareholders....  1,276,428              1,226,372             11,245,644                               13,748,444     6.44%
New investors...........             6,088,896              5,848,209               122,468,441                134,405,546    62.97%
Old note holders........                                                                          26,459,820    26,459,820    12.40%
Options and warrants....                                               38,820,624                               38,820,624    18.19%
                          ---------  ---------   ---------  ---------  ----------    -----------  ----------   -----------    ------
   Subtotal.............  1,276,428  6,088,896   1,226,372  5,848,209  50,066,268   122,468,441   26,459,820   213,434,434   100.00%
                          ========= ==========  ==========  =========  ==========   ===========  ===========   ===========   =======
</TABLE>

THE CAPITAL RESTRUCTURING

         We obtained an authorization from the Mexican Foreign Investment Bureau
(Direccion General de Inversion Extranjera) to increase our ability to issue
neutral investment shares for up to 95% of our total capital stock and to
simplify our equity structure.

         Under the capital restructuring, we liquidated the existing C/N CPO
trust and canceled the corresponding C/N CPOs. Additionally, the series C stock
was converted at an exchange ratio of one - to - one into series N stock. As a
result, the holders of the C/N CPOs have become the direct holders of two shares
of series N stock for each C/N CPO.

         Additionally, we issued the following series of stock:

         -    Series A1 common voting stock with preferred liquidation rights;

         -    Series B1 common voting stock with preferred liquidation rights;

         -    Series N1 preferred stock with limited voting rights; and

         -    Series N2 preferred stock with limited voting rights.

         The holders of our series A stock and series A1 preferred stock voting
together as a class have the ability to elect the majority of the Board of
Directors. All series A stock and A1 preferred stock are beneficially owned,
directly or indirectly, by several members of the Aguirre Gomez family,
including Adrian Aguirre Gomez, Maria Guadalupe Aguirre Gomez, Maria Elena
Aguirre Gomez, and Maria Trinidad Aguirre Gomez. Pursuant to our amended
by-laws, our amended series A stock and A1 preferred stock represent 51% of our
voting stock and may only be held by Mexican nationals.

         Although the Aguirre Gomez family holds 51% of the voting stock through
the series A stock and A1 preferred stock, and has the power to elect the
majority of the Board of Directors, its ability to control Maxcom is
substantially limited by the terms of the securityholders' agreement described
below under " -- Securityholders agreement." The holders of our series B stock
and series B1 preferred stock voting together have the right to elect four
directors of our nine-member Board of Directors. However, pursuant to the terms
of the securityholders agreement, the series B and B1 director are elected from
among nominees proposed by Nexus.

         The holders of our series N2 preferred stock have the right to appoint
an observer to the Board of Directors for so long as (i) the series N2 preferred
shares represent at least 3% of the outstanding capital stock of Maxcom or (ii)
there is at least one share of series N2 preferred stock remain outstanding and
at least U.S.$17.5 million aggregate principal amount of the new notes remain
outstanding. This observer, who is not a member of the Board of Directors, has
the right to attend meetings of the Board of Directors but is not entitled to
vote.

OUTSTANDING OPTIONS AND WARRANTS

         As of the date hereof, we have authorized the issuance of options and
warrants for the purchase of up to 38.8 million series N shares. Each option
entitles the holder to purchase one series N share or, so long as the C/N CPO
trust is in existence, either a series N or a series C share but in the form of
a C/N CPO. The following table presents information concerning the stock options
and warrants authorized and outstanding:

                                       54
<PAGE>


<TABLE>
<CAPTION>
                                                                                                              PERCENTAGE
                                                                        NUMBER OF     EXERCISE PRICE          OF OPTIONS
NAME OF OPTION HOLDER                                                    OPTIONS         PER SHARE             VESTED %
---------------------                                                    -------         ---------             --------
<S>                                                                      <C>          <C>                      <C>
Nissho Iwai American Corporation(1)...........................             337,472    U.S.$   10.87               100
CT Global Telecommunications, Inc. (operating services)(2)....           1,105,779             3.06               100
Bachow & Associates, Inc. (strategic assistance services)(3)..             442,312             3.06               100
Amsterdam Pacific LLC.........................................              24,426             8.70               100
1998-2000 Executive Stock Option Plan.........................             575,000    8.70 to 12.50                38
2001-2003 Executive Stock Option Plan.........................          18,120,000     0.49 to 0.71                 0
UBS Warburg LLC(4)............................................              89,244             0.01               100
Donaldson, Lufkin & Jenrette Securities Corporation(4)........              22,312             0.01               100
Predecessor old notes warrantholders(5).......................             764,938             0.01               100
Gian Carlo Pecchioni(6).......................................              10,000             0.01               100
Adrian Aguirre(7).............................................           3,626,959             0.49                52
Fulvio Del Valle stock option plan............................           7,730,177             0.49                 0
Fulvio Del Valle (bonuses)(8).................................           3,957,588             0.01                51
Eduardo Patron (signing bonus)................................             108,100             0.01               100
Rene Sagastuy (signing bonus).................................              54,050             0.01               100
Ricardo Arevalo (signing bonus)...............................              54,050             0.01               100
Eloisa Martinez (signing bonus)...............................              43,240             0.01               100
Francisco Soroa (signing bonus)...............................              36,105             0.01               100
Signing bonus reserve for new officers........................             407,103             0.01                 0
BankAmerica International Investment Corporation
     (management services)(9).................................             249,781             0.01               100
LA Strategic Capital Partners II (management services)(10)....              27,754             0.01               100
Bachow & Associates, Inc. (management services)(11)...........             277,535             0.01               100
Directors compensation........................................             756,699             0.01                 3
                                                                  ----------------
    Total.....................................................          38,820,624
</TABLE>

(1)      These options were issued in 1998 as partial compensation for vendor
         financing.

(2)      We authorized the issuance of options to purchase up to 250,000 series
         N shares at U.S.$8.70 per share in May 1998 as compensation for
         operating services. Pursuant to the proposed capital restructuring, we
         have authorized the issuance of options to purchase up to an additional
         855,779 series N shares at an exercise price of U.S.$3.06 per share and
         to reduce the exercise price of the original options to U.S.$3.06 per
         share as partial anti-dilution protection. See " -- B. Related party
         transactions -- Operation services" and " -- Option grants to
         shareholders."

(3)      We authorized the issuance of options to purchase up to 100,000 series
         N shares at U.S.$8.70 per share in May 1998 as compensation for
         strategic assistance services. Pursuant to the proposed capital
         restructuring, we have authorized the issuance of options to purchase
         up to an additional 342,312 series N shares at an exercise price of
         U.S.$3.06 per share and to reduce the exercise price of the original
         options to U.S.$3.06 per share as partial anti-dilution protection. See
         " -- B. Related party transactions -- Strategic assistance services"
         and " -- B. Related party transactions -- Management services."

(4)      These warrants were issued in March 2000 as partial compensation for
         underwriting services related to the issuance of units comprised of our
         predecessor old notes and warrants.

(5)      These warrants were issued as part of the March 2000 offering of our
         units comprised of our predecessor old notes and warrants.

(6)      Mr. Pecchioni is a former Chief Executive Officer of Maxcom. These
         options, which are partial compensation for his services, have been
         exercised; however, the issuance of the underlying shares is subject to
         certain corporate and regulatory approvals.

(7)      We issued options to purchase up to 375,000 series N shares at a strike
         price varying between U.S.$8.70 and U.S.$12.50 per share pursuant to
         the old executive stock option plan described in "Item 6. Directors,
         Senior

                                       55
<PAGE>

         Management and Employees -- B. Compensation -- Old executive
         stock option plan." Pursuant to the proposed capital restructuring, we
         have authorized the issuance of options to purchase up to 3,251,959
         series N shares at an exercise price of U.S.$0.49 and to reduce the
         exercise price of the original options to U.S.$0.49 per share as
         partial anti-dilution protection.

(8)      These options relate to signing, performance and special bonuses. The
         number of options presented represent the maximum number of options
         that could be earned if all incentive targets are met. See "Item 6.
         Directors, Senior Management and Employees -- B. Compensation -- New
         execution stock option plan."

(9)      We issued options to purchase up to 42,300 series N shares at U.S.$0.01
         per share in May 2001 as compensation for management services provided
         during 2000. Pursuant to the proposed capital restructuring, we have
         authorized the issuance of options to purchase up to an additional
         207,481 series N shares at an exercise price of U.S.$0.01 per share as
         partial anti-dilution protection. See " -- B. Related party
         transactions -- Management services."

(10)     We issued options to purchase up to 4,700 series N shares at U.S.$0.01
         per share in May 2001 as compensation for management services provided
         during 2000. Pursuant to the proposed capital restructuring, we have
         authorized the issuance of options to purchase up to an additional
         23,053 series N shares at an exercise price of U.S.$0.01 per share as
         partial anti-dilution protection. See " -- B. Related party
         transactions -- Management services."

(11)     We issued options to purchase up to 47,000 series N shares at U.S.$0.01
         per share in May 2001 as compensation for management services provided
         during 2000. Pursuant to the proposed capital restructuring, we have
         authorized the issuance of options to purchase up to an additional
         230,535 series N shares at an exercise price of U.S.$0.01 per share as
         partial anti-dilution protection. See " -- B. Related party
         transactions -- management services."

SECURITYHOLDERS AGREEMENT

         On August 18, 2000, Maxcom executed an amended and restated
securityholders agreement with our shareholders to, among other things, reflect
the then restructuring of our capital stock and to provide that the exchange of
series C stock and series N stock for CPOs may not adversely affect in any
manner the rights granted to the holders of the series N stock under the
original securityholders agreement.

         The securityholders agreement was again amended and restated in
connection with our recapitalization. All of the holders of series A stock,
series A1 preferred stock, series B stock, series B1 preferred stock, series N
stock and series N1 preferred stock are parties to the securityholders
agreement, which sets forth certain corporate governance and the transfer or
sale of such securities. The primary purpose of the securityholders agreement is
to confirm the rights and obligations under the proposed by-laws of each of the
parties to such agreement. Accordingly, with certain limited exceptions, the
terms of the new securityholders agreement are substantially the same as the
terms of the proposed by-laws as applicable to the holders of series A stock,
series A1 preferred stock, series B stock, series B1 preferred stock, series N
stock and series N1 preferred stock.

         In particular, the new securityholders agreement provides that we are
managed by a Board of Directors composed of nine members and nine alternate
members. Five members are designated by holders of a majority of the series A
stock and the series A1 preferred stock, voting together as a single class, and
the remaining four members are designated by the holders of our series B stock
and series B1 preferred stock voting together. However, the series B and B1
directors are selected from among nominees proposed by Nexus.

         Pursuant to the new securityholders agreement, Maxcom is required to
deliver to certain significant holders of series A, B and N stock and series A1,
B1 and N1 preferred stock financial statements and other information reasonably
requested by such shareholders.

         In addition, the new securityholders agreement provides, among other
things, approval of key matters (which will require the affirmative vote of both
Nexus and the Board, inclusive the approval of at least one director designated
by Nexus), restrictions on transfers, rights of first offer, participation
rights, and rights and obligations

                                       56
<PAGE>

with respect to public offerings. For further description of corresponding
provisions of the proposed by-laws see "Item 10. Additional Information -- B.
Memorandum and articles of association."

B.       RELATED PARTY TRANSACTIONS

GENERAL POLICY

         Our general policy is that we will not, and will not permit our
subsidiaries to, enter into any contract or transaction with or for the benefit
of any affiliate (other than transactions between us and our subsidiary), which
is not at a price and on other terms at least as favorable to Maxcom or our
subsidiaries as those which could be obtained on an arm's-length basis from an
unaffiliated third party.

OPERATION SERVICES

         On October 17, 1997, we entered into an operating agreement with CT
Global Telecommunications, Inc., our series B shareholder. This agreement was
amended and restated as of May 21, 1998 and October 1, 1999 and was terminated
on December 31, 2000. Under this agreement, CT Global was responsible for:

         -    the planning, supervision, implementation and management of our
              network construction and operations and for the transfer of
              responsibility to us following the start-up phase;

         -    the management, advice and assistance for the overall direction,
              planning, coordination and supervision of our day-to-day telephone
              operations;

         -    the provision of our Chief Operating Officer, other management and
              other CT Global employees with appropriate experience and
              training;

         -    the design and supervision of the implementation of focused
              marketing and sales services;

         -    the planning, coordination and supervision of our operational
              financial affairs, including the preparation of an annual
              operating budget; and

         -    the training of personnel to enable us to assume direct
              responsibility for all operations.

         -    From October 1, 1999 through December 31, 2000, CT Global was
              responsible for:

         -    continuing to provide us with advisory, consulting and support
              services; and

         -    the administrative responsibilities for all employees seconded to
              us.

         In addition, we paid CT Global U.S.$4.6 million and U.S.$3.7 million
for reimbursement of expenses related to the secondment of several management-
level employees during 1999 and 2000, respectively.

         Finally, CT Global earned options to purchase 250,000 series N shares
as incentive compensation for meeting certain start-up and operational targets.
The exercise price for these is U.S.$8.70 per share, provided that the maximum
value that CT Global may realize upon the exercise of the options may not exceed
U.S.$40.00 per share. For each of 1999 and 2000, we paid CT Global U.S.$0.9
million for its services. No amounts were paid in 2001.

         In addition, as part of the proposed capital restructuring described in
"--A. Major Shareholders--Proposed capital restructuring", we have authorized
the issuance of options in favor of CT Global to purchase up to 855,779 series N
shares at an exercise price of U.S.$3.06 per share and to reduce the exercise
price of the original options to U.S.$3.06 per share as partial anti-dilution
protection. See "--A. Major Shareholders--Outstanding options and warrants."


STRATEGIC ASSISTANCE SERVICES

                                       57
<PAGE>


         On May 21, 1998, we entered into a strategic assistance agreement with
Bachow & Associates, Inc., an affiliate of one of our current principal
shareholders. The agreement provided that Bachow would help us to:

         -    develop and implement a budget model template for our annual
              operating and capital budgets;

         -    evaluate and assist in the choice and implementation of a
              financial accounting system;

         -    develop a template for the monthly Board of Directors operational
              reporting package;

         -    evaluate and assist in the choice and implementation of a customer
              billing system;

         -    design a sales and marketing plan; and

         -    provide training and guidance to our Chief Financial Officer.

         This agreement expired on April 1, 1999. For 1999, we paid Bachow
              U.S.$0.2 million for its services. In addition, Bachow received
              options to purchase 100,000 series N shares at a strike price of
              U.S.$8.70 per share. In accordance with the terms of the strategic
              assistance agreement, Bachow may elect to have the Company finance
              up to 95% of the exercise price with a seven-year term
              non-recourse loan that will be secured by the stock. The maximum
              value that Bachow may realize upon the exercise of the options may
              not exceed U.S.$40.00 per share.

INCENTIVE FOR CAPITAL CONTRIBUTIONS

         Our Board of Directors resolved on February 15, 2000, that those
shareholders who commit to make or cause to be made a U.S.$35.0 million capital
contribution by September 30, 2000 be compensated for providing such commitment.
This capital contribution, which occurred in August 2000, was a condition to the
offering of the notes. The committing shareholders, which include the Aguirre
Gomez family, CT Global Telecommunications, Inc., BankAmerica International
Investment Corporation, LA Strategic Capital Partners II, Bachow Investment
Partners III, L.P. and BancBoston Investments, Inc., received warrants to
purchase an aggregate of 70,002 series N stock, at an exercise price of
U.S.$0.01 per share. As a result of a capital restructuring implemented in
February 2000, the series N stock, if purchased, were automatically converted
into C/N CPOs on a two-to-one basis. All warrants were exercised in June 2000.

ADVERTISING

         In 2001, we paid an aggregate of Ps.6.2 million to Operadora Plusgamma
S.A. de C.V., a company controlled by certain members of the Aguirre Gomez
family, for administrative services and advertising time purchased by Operadora
Plusgamma from Grupo Radio Centro, which is an operator of a network of radio
stations located throughout Mexico and a company owned by other family members
of the Aguirre Gomez family.

         We have also tentatively agreed, conditioned on the consummation of the
exchange offer, to purchase U.S.$3.0 million of advertising time over the Grupo
Radio Centro radio network from Operadora Plusgamma. The amount of advertising
time that we will receive will be determined by an independent expert. The
Aguirre Gomez family will use the U.S.$3.0 million proceeds that will be
received by Operadora Plusgamma from this agreement to purchase series A1 stock
pursuant to the private equity investment.

MANAGEMENT SERVICES

         In May 2001, Bank America International Investment Corporation, Bachow
& Associates, Inc. and LA Strategic Capital Partners II, which are principal
shareholders (or affiliates of principal shareholders in the case of Bachow)
received options to purchase an aggregate of 94,000 series N shares at an
exercise price of U.S.$0.01 for management services rendered in 2000, during the
term of vacancies in the offices of Chief Executive Officer, Chief Operating
Officer and Chief Marketing Officer.

         In addition, as part of the proposed capital restructuring described in
" -- A. Major Shareholders -- Proposed capital restructuring", we have
authorized the issuance to the same partners of options to purchase 461,069


                                       58
<PAGE>

series N shares at an exercise price of U.S.$0.01 per share partial
anti-dilution protection. See "--A. Major Shareholders--Outstanding Options and
Warrants."

C.       INTEREST OF EXPERTS AND COUNSEL

         Not applicable.

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

         We are not currently party to any material legal proceedings.

DIVIDEND POLICY

         Our current policy is to reinvest profits into our operations. In
addition, the indenture that will govern the terms of the new notes allows us to
pay cash dividends only if we meet the following conditions:

         -    a minimum consolidated leverage ratio of less than 3.75 to 1.00;

         -    a minimum fixed charge coverage ratio of 2.00 to 1.00;

         -    no default (as defined in the indenture) must have occurred and be
              continuing or result from the payment of the cash dividend; and

         -    the cash dividend payments do not exceed an amount determined in
              the indenture based on, among other things, cash flow generated
              from operations or equity offerings and consolidated interest
              expense.

         B.   SIGNIFICANT CHANGES

          Except for the debt restructuring and recapitalization described in
"Item 5. Operating and Financial Review and Prospects -- Recent Developments,"
no significant change has occurred affecting our results or financial conditions
since December 31, 2001.

ITEM 9.  THE OFFER AND LISTING

A.       OFFER AND LISTING DETAILS

         Maxcom's stock is not traded on any stock exchange. Maxcom's series N-2
CPOs were issued to holders of old notes as part of the exchange described in
"Item 5. Operating and Financial Review and Prospects -- Recent Developments."
This exchange was made pursuant to Section 3(a)(9) of the Securities Act of
1933, as amended. Otherwise, Maxcom's stock has never been publicly offered in
the United States or anywhere.

B.       PLAN OF DISTRIBUTION

         Not applicable.

C.       MARKETS

         None of Maxcom's securities are traded on any stock exchange.

                                       59
<PAGE>
D.       SELLING SHAREHOLDERS

         Not applicable.

E.       DILUTION

         Not applicable.

F.       EXPENSES OF THE ISSUE

         Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A.       SHARE CAPITAL

         Not applicable.

B.       MEMORANDUM AND ARTICLES OF ASSOCIATION

GENERAL

         Maxcom was incorporated on February 28, 1996, under the name "Amaritel,
S.A. de C.V." as a variable capital corporation (sociedad anonima de capital
variable) established under the laws of Mexico. Maxcom was registered in the
Public Registry of Commerce of the Federal District of Mexico under folio no.
210585 on June 11, 1996. Amaritel changed its name to "Maxcom
Telecomunicaciones, S.A. de C.V." on February 9, 1999.

         Maxcom was formed for the purpose of installing, operating and
exploiting a public telecommunications network granted by the Mexican federal
government for the provision of local and long distance telephone services.

         Maxcom's corporate purposes are found under Article Two of its by-laws.
The duration of Maxcom's existence under our by-laws is indefinite.

         The following table sets forth our capital structure as of December 31,
2001:


<TABLE>
<CAPTION>
                                                                                % OF TOTAL CAPITAL
CLASS OF STOCK                                            NUMBER OF STOCK            STRUCTURE
--------------                                            ---------------            ---------
<S>                                                       <C>                   <C>
  Series A Stock....................................         1,276,428                   9.3%
  Series B Stock....................................         1,226,372                   8.9%
  Series C Stock....................................         5,622,822                  40.9%
  Series N Stock....................................         5,622,822                  40.9%
                                                            ----------                 -----
            Total...................................        13,748,444                 100.0%
</TABLE>

         Our series A stock, which represent 51% of our voting stock, may only
be subscribed, paid for and held by Mexican investors. All of our series A stock
is held directly or indirectly by members of the Aguirre Gomez family. The
remaining 49% of our voting stock is held by CT Global Telecommunications, Inc.,
a Delaware corporation, which holds 100% of all the issued and outstanding
series B shares of Maxcom. The series C stock was voting stock that generally
voted as directed by the holders of the series A stock. Series N stock is
limited voting stock that is not computed for purposes of determining the
foreign investment percentage under the Mexican Foreign Investment Law. The
series B, C and N stock could be subscribed, paid for and held by Mexicans and
non-Mexican investors.

         Our series C stock and series N stock were deposited in a trust which
issued C/N CPOs with each such C/N CPO representing one series C share and one
series N share. Upon the approval by the Mexican Foreign Investment Bureau, this
trust was terminated and the corresponding C/N CPOs were cancelled. In
connection therewith, all series C stock were converted into series N stock, and
the prior holders of C/N CPOs now hold series N stock


                                       60
<PAGE>
directly (two series N stock for each cancelled CPO). Our series A and B stock
remain outstanding following consummation of our capital restructuring.

         After giving effect to the consummation of the debt restructuring, the
recapitalization and the capital restructuring, our capital structure now is
follows:

<TABLE>
<CAPTION>
                                                                      % OF TOTAL CAPITAL
      CLASS OF STOCK                              NUMBER OF STOCK         STRUCTURE
      --------------                              ---------------         ---------
<S>                                               <C>                 <C>
      Series A ...............................       1,276,428                0.7%
      Series A1 Preferred Stock ..............       6,088,896                3.5%
      Series B ...............................       1,226,372                0.7%
      Series B1 Preferred Stock ..............       5,848,209                3.4%
      Series N ...............................      11,245,644                6.4%
      Series N1 Preferred Stock ..............     122,468,441               70.1%
      Series N2 Preferred Stock ..............      26,459,820               15.2%
                                                   -----------              -----
            Total ............................     174,613,810              100.0%
</TABLE>

         In connection with our capital restructuring, we issued four new
classes of stock: the series A1, B1, N1 and N2 preferred stock. The series A1
and B1 preferred stock have full voting stock and the series N1 and N2 preferred
stock have limited voting stock. The series N1 and N2 preferred stock are not
computed for purposes of determining the foreign investment percentage under the
Mexican Foreign Investment Law and may be subscribed, paid for and held by
Mexican and non-Mexican investors. Our series N2 preferred stock have been
deposited into the CPO trust, which is administered by Banco Nacional de Mexico,
S.A. who is also the holder of record of the series N2 preferred stock. The
trust is managed by a technical committee, a majority of the members of which
are designated by Maxcom. The technical committee has the authority to direct
the trustee to, among other things, waive preemptive rights otherwise provided
by Mexican law. Each CPO represents one series N2 preferred stock.

         Our series A stock and series A1 preferred stock, which may only be
subscribed, paid for and held by Mexican investors, collectively represent about
51% of our voting stock, and all of our series A and series A1 stock are held
directly or indirectly by members of the Aguirre Gomez family. The series B
stock and the series B1 preferred stock represent 49% of our voting stock and
may be subscribed, paid for and held by Mexican and non-Mexican investors.

VOTING RIGHTS

         Under our amended by-laws, the holders of series A stock, series A1
preferred stock, series B stock and series B1 preferred stock are entitled to
vote on all matters submitted to a vote of the shareholders, with each share of
series A stock, series A1 preferred stock, series B stock and series B1
preferred stock being entitled to one vote. In addition, under our proposed
by-laws, holders of series N stock have no voting rights and holders of series
N1 and N2 preferred stock have limited voting rights.

         Holders of series N1 preferred stock will vote together as a separate
class in connection with:

         --       any amendment to the proposed by-laws that adversely and
                  disproportionately affects the economic characteristics (i.e.,
                  conversion right, liquidation right and dividend right) of the
                  series N1 preferred stock as compared to the series N2
                  preferred stock; and

         --       any amendment to the section of the proposed by-laws relating
                  to the voting rights of series N1 preferred stock.

         In addition, holders of series N2 preferred stock will vote together as
a separate class in connection with:

         --       determining whether a sale of all or substantially all of the
                  consolidated assets of Maxcom or a merger, recapitalization,
                  reorganization or consolidation of Maxcom, immediately after
                  which the shareholders of Maxcom beneficially own less than
                  50% of the voting power or equity securities of


                                       61
<PAGE>
                  the surviving entity will not be deemed a liquidation event
                  with respect to the series N2 preferred stock;

         --       any amendment to the by-laws that adversely and
                  disproportionately affects the economic characteristics (i.e.,
                  conversion right, liquidation right and dividend right) of the
                  series N2 preferred stock as compared to the series N1
                  preferred stock;

         --       any amendment to the by-laws that adversely affects the right
                  of the holders of a majority of the series N2 preferred stock
                  to designate an observer (or, in the circumstance described
                  below, a member) to the board of directors;

         --       any amendment to the by-laws that adversely affects the rights
                  of the observer designated by the series N2 preferred stock to
                  receive, subject to any restrictions imposed by applicable
                  law, copies of any written materials distributed to the
                  holders of series A and B stock and series A1 and B1 preferred
                  stock simultaneously with such holders;

         --       certain amendments to the by-laws that impose additional
                  transfer restrictions or conditions on the series N2 preferred
                  stock, except to the extent necessary to comply with
                  applicable law;

         --       any amendment to the by-laws that adversely affects the
                  co-sale rights or obligations of holders of series N2
                  preferred stock;

         --       any amendment to the by-laws that adversely affects the forced
                  sale rights or obligations of holders of series N2 preferred
                  stock; and

         --       any amendment to the section of the by-laws of Maxcom relating
                  to the voting rights of series N2 preferred stock.

         Shareholders' meetings may be called by the Board of Directors, its
Chairman, Vice-Chairman or Secretary, the statutory auditor or Nexus or, in
certain cases, by a Mexican court of competent jurisdiction. In addition, the
Board of Directors or the statutory auditor 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 that period have not considered the items mentioned in Article 181
of the Mexican Companies Law. Notice of meetings must be published in the
Official Gazette of the Federation or in a newspaper of general circulation in
Mexico City or by written notice given to each shareholder of record 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 depositing, at least 24
hours before the time set for holding the shareholders' meeting, such shares
with Maxcom's corporate secretary or with a Mexican bank or other qualified
institution. If entitled to attend the meeting, a shareholder may be represented
by proxy or a power-of-attorney.

         Shareholders' meetings may be ordinary, extraordinary or special.
Extraordinary general meetings are called to consider the matters specified in
Article 182 of the Mexican Companies Law, and principally include increases or
reductions of capital stock, amendments to the by-laws, dissolution, issuance of
bonds or preferred stock, merger, spin-off, transformation from one type of
company to another, change in nationality and change of corporate purpose.

         General meetings called to consider all matters other than those
mentioned above are ordinary meetings. An ordinary general meeting of the
shareholders of Maxcom 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, principally including the election of
directors, the report of the Board of Directors regarding the performance of
Maxcom, containing the financial statements of Maxcom for the preceding fiscal
year and the declaration of dividends, if any.

         Special meetings for each class of stock may be held to elect the
members or observers of the Board of Directors representing those shareholders
and to address other matters relating to the relevant series.


                                       62
<PAGE>
         Under our by-laws, the quorum on a first call, and each call
thereafter, for an ordinary general shareholders' meeting is at least a majority
of the voting shares. The quorum on a first call for extraordinary shareholders'
meetings, and each call thereafter, is at least a majority of the shares having
a right to vote at such meetings. Except for purposes of certain key matters to
be voted upon as a separate class by each of the holders of series N1 and series
N2 preferred stock, series N stock, and series N1 and N2 preferred stock are not
considered voting shares for purposes of determining the quorum at ordinary
general or extraordinary shareholders' meetings. The quorum on a first call for
special shareholders' meetings, and each call thereafter is at least a majority
of the shares of the respective series for which the special meeting is being
held.

         Resolutions of ordinary general and special shareholders' meetings may
be adopted by the affirmative vote of the majority of shares present at the
meeting, except as to certain matters described below. Resolutions of general
extraordinary shareholders' meetings held on a first call, and each call
thereafter may be adopted by the affirmative vote of at least a majority of the
shares having a right to vote at such meetings.

         Under Mexican law, holders of 33% of Maxcom's 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 meeting at
which such action was taken, by showing that the challenged action violates
Mexican law or Maxcom's by-laws.

         Under Mexican law, an action for civil liabilities against a member or
members of the Board of Directors may be initiated by a shareholders'
resolution. In the event shareholders decide to bring an action, the person or
persons against whom the action is brought will immediately cease to be members
of the Board of Directors. Additionally, shareholders representing not less than
33% of the outstanding shares of Maxcom may directly take such action against
members of the Board of Directors, provided that:

         --       such shareholders have not voted in favor of a resolution
                  approved at the relevant shareholders' meeting pursuant to
                  which it was resolved not to take any action against the
                  directors who are to be sued; and

         --       the claim in question covers the total amount of damages
                  alleged to have been caused to Maxcom as well as to the
                  individual plaintiffs' interests.

         Any recovery of damages will be for the benefit of Maxcom and not the
shareholders bringing the action.

         Under Mexican law, any shareholder or director who has a conflict of
interests in connection with any matter must abstain from voting at the relevant
shareholders' or board of directors' meeting, respectively. Any shareholder or
director who votes on a business transaction where its interests conflict with
those of Maxcom may be liable for damages if the transaction would not have been
approved without such shareholder's or director's vote.

         The terms of compensation of the members of the Board of Directors must
be approved at a shareholders' meeting.

APPROVAL OF KEY MATTERS

         Our amended by-laws provide that the approval of each of the key
matters described below will require the approval in advance of both Nexus,
solely in its capacity as a shareholder, and the board of directors; provided
that the approval of the board of directors will require the affirmative vote of
at least one director designated by Nexus.

         Key matters generally include the following:

         --       the incurrence or assumption by the company and/or any of its
                  subsidiaries of any indebtedness (including capitalized lease
                  obligations) or other liabilities exceeding U.S.$10,000,000;

         --       the issuance of any equity securities of the company or any of
                  its subsidiaries;

         --       the sale, transfer, exchange or other disposal of all or a
                  significant portion of the assets or equity securities of the
                  company or any of its subsidiaries;


                                       63
<PAGE>
         --       any assignment by the company or any of its subsidiaries for
                  the benefit of creditors or the voluntary commencement of any
                  bankruptcy or insolvency proceedings;

         --       the establishment by the company or any of its subsidiaries of
                  any non-wholly-owned-subsidiary or the making by the company
                  or any of its subsidiaries of any loans or advances to,
                  guarantees for the benefit of, or investments in, any person
                  or entity other than a wholly-owned subsidiary;

         --       the declaration of dividends on, or the making of any other
                  distributions in respect of, any of its capital stock, other
                  than dividends and distributions by a direct or indirect
                  wholly-owned subsidiary of the company to its parent;

         --       the acquisition of any equity securities of the company or any
                  of its subsidiaries;

         --       the entering into any transaction with any restricted persons;

         --       the election, appointment or removal of the Chief Executive
                  Officer, the General Managers of any business units, the Chief
                  Operating Officer, the Chief Financial Officer, the Director
                  of Marketing and the Chief Engineer (or any other individual
                  with a similar or more senior title or position), and the
                  approval of salary, compensation and benefit or other similar
                  plans for such key executives;

         --       the approval of the company's and its subsidiaries' annual
                  business plan and annual budget for each fiscal year;

         --       the entering by the company or any of its subsidiaries into
                  any new line of business (other than the main corporate
                  purpose of the company);

         --       any agreement that would restrict the company's or any of its
                  subsidiaries' right or ability to perform the provisions of
                  its by-laws (Estatuto) or any agreements or instruments to
                  which it is a party;

         --       the manner in which the shares or other interests of any
                  subsidiary or entity owned by the company shall be voted at
                  shareholders' meetings called for key matters;

         --       any amendments to the concessions/licenses granted by the
                  Mexican authorities, by-laws and certain other specified
                  agreements;

         --       the subdivision or combination, in any manner, of the
                  outstanding shares of one class or series of shares, unless
                  the outstanding shares of the other class or series of shares
                  of the company shall also be proportionately subdivided or
                  combined in a similar manner;

         --       the grant to any person or entity of the right to request the
                  company to register securities; and

         --       any commitment or agreement to do any of the foregoing.

BOARD OF DIRECTORS

         Our Board of Directors is composed of nine members, five of whom are
designated by the holders of series A stock and series A1 preferred stock and
four of whom are designated by the holders of series B stock and series B1
preferred stock. Pursuant to the terms of the securityholders agreement
described in "Principal Shareholders -- Securityholders agreement," it will be a
qualification that each series B and B1 director be elected from the nominees
selected by Nexus. One alternate is also designated for each member of the Board
of Directors.

         Prior to the consummation of a qualified public offering, the holders
of series N2 preferred stock or the new class of voting preferred stock into
which the series N2 preferred stock is convertible are generally entitled to
designate one observer to the Board of Directors. With certain exceptions, the
observer has the right to attend meetings of the Board of Directors and receive
information distributed to the company's directors and copies of any


                                       64
<PAGE>
written materials distributed to the holders of series A and B stock and series
A1 and B1 preferred stock. The observer, who is not a member of the Board of
Directors, is also entitled to attend meetings of any committee of the Board of
Directors authorized to act on behalf of the full Board of Directors. The
observer has no right to vote at any meeting of the Board of Directors or any
committee of the Board of Directors. The holders of series N2 preferred stock or
the new class of preferred stock into which such series N2 preferred stock is
converted are permitted to designate an observer to the Board of Directors for
so long as either:

         --       the series N2 preferred stock, or such other voting preferred
                  stock represents at least 3% of the issued and outstanding
                  capital stock of Maxcom; or

         --       there are any shares of series N2 preferred stock outstanding
                  and at least U.S.$17.5 million principal amount of the new
                  notes outstanding.

         Upon a change in the applicable laws in Mexico permitting a majority of
our Board of Directors to be composed of non-Mexicans, the holders of series N2
preferred stock, or such other voting preferred stock into which the Series N2
preferred stock is convertible, will be entitled to designate and elect a full
member of the Board of Directors (in lieu of the observer) for so long as series
N2 preferred stock, or such voting preferred stock, represents at least 10% of
the total capital stock of the company then outstanding. If the series N2
preferred stock, or such other voting preferred stock, declines below this
threshold, the class will again be permitted to designate an observer.

DIVIDENDS

         At the annual ordinary general meeting of shareholders of Maxcom, the
Board of Directors will typically submit the financial statements of Maxcom for
the previous fiscal year, together with a report by the Board of Directors, to
the general ordinary shareholders' meeting for their approval. The holders of
series A and B stock and holders of series A1 and B1 preferred stock will
determine the allocation of Maxcom's net profits for such fiscal year. At least
5% of such net profits must be allocated to a legal reserve, which is not
available for distribution except as a stock dividend, until the amount of the
legal reserve equals 20% of Maxcom's paid-in capital stock. Additional amounts
may be allocated to other reserve funds as the shareholders determine. The
remaining balance of net profits, if any, is available for distribution as
dividends.

         The series N2 preferred stock (on an as-converted basis) are entitled
to receive dividend payments, if any, and rank pari passu with the series A1, B1
and N1 preferred stock with respect to dividend rights. Maxcom will pay no
dividends on any class of capital stock that is junior to the series N2
preferred stock unless it also pays dividends to holders of series N2 preferred
stock.

         Maxcom does not anticipate that it will declare and pay dividends in
the foreseeable future.

LIQUIDATION RIGHTS

         In the event that we are dissolved or liquidated, one or more
liquidators must be appointed at an extraordinary general shareholders' meeting
to wind up our affairs. Except as provided below, all fully paid and outstanding
shares of capital stock will be entitled to share ratably in all assets
remaining after payment of liabilities. Partially paid shares will be entitled
to participate in a liquidation, dissolution or winding up in the same manner as
they would in a dividend or distribution.

         However, under our amended by-laws, upon any liquidation, dissolution
or winding up of Maxcom, holders of series N2 preferred stock will be entitled
to receive liquidation proceeds in preference to the holders of the series A, B
and N stock and pari passu with the holders of series A1, B1 and N1 preferred
stock on a pro rata basis in an amount equal to the greater of:

         --       U.S.$0.4927 per share, as adjusted for stock splits, stock
                  dividends and similar events, plus the accretion of such
                  amount at a cumulative rate of 12% per year compounded
                  semi-annually; and

         --       the amount that holders of series N2 preferred stock would
                  have received if they had converted all of their series N2
                  preferred stock into series N stock (or, to the extent the
                  series N stock has been


                                       65
<PAGE>
                  converted, to the class of stock the series N stock is
                  converted into) immediately prior to the liquidation event.

         A sale of all or substantially all of the consolidated assets of
Maxcom, or a merger, recapitalization, reorganization or consolidation of
Maxcom, immediately after which the shareholders of Maxcom beneficially own less
than 50% of the voting power or the equity securities of the surviving entity,
will be deemed to be a liquidation event with respect to the series N2 preferred
stock, unless the holders of at least a majority of the series N2 preferred
stock deem that such event does not constitute a liquidation event with respect
to their shares.

         A waiver of this deemed liquidation event by holders of series N2
preferred stock will not impair the liquidation rights of holders of series A1,
B1 and N1 preferred stock.

         The liquidation preference rights will not be retained in the event of
an optional conversion or mandatory conversion into common stock in connection
with a qualified public offering.

CHANGES IN SHARE CAPITAL

         An increase of our 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
our capital stock may be effected until all previously-issued shares of capital
stock have been fully paid. A reduction of our capital stock may be effected to
absorb losses, to redeem shares, or to release shareholders from payments not
made.

         Increases in capital may not result in the series N stock and series N1
and N2 preferred stock representing more than 95% in the aggregate of the
outstanding capital stock of Maxcom. The series N stock and the series N1 and N2
preferred stock currently represent 91.7% of our outstanding capital stock.

         The fixed portion of our capital stock may only be increased or
decreased by resolution of an extraordinary general meeting of shareholders and
an amendment to our by-laws. The variable portion of our capital stock may be
increased or decreased by resolution of an extraordinary general meeting of
shareholders.

PREEMPTIVE RIGHTS

         In the event of a capital increase through the issuance of new shares
for payment in cash or in kind, as a matter of Mexican law, a holder of shares
has a preferential right to subscribe for a sufficient number of new shares to
maintain the holder's existing proportion of shares held.

         Shareholders have a preemptive right to subscribe for shares, except:

         --       in connection with mergers or spin-offs;

         --       on the conversion of convertible debentures; or

         --       issuances of shares pursuant to a public offering, if a
                  general extraordinary shareholders' meeting called for such
                  purpose so approves and other requirements specified in
                  Article 81 of the Mexican Securities Law are satisfied,
                  including obtaining the approval of the Mexican National
                  Banking and Securities Commission.

         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 but may be waived at the moment of
issuance of such shares.

         The series N2 preferred stock are held in a limited purpose trust
administered by Banco Nacional de Mexico, S.A., who is also the holder of
record. The CPO trust is managed by a technical committee, a majority of the
members of which is appointed or designated by Maxcom, which has the authority
to direct the trustee to, among other things, waive any applicable preemptive
rights. See " -- Description of the CPO trust."


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<PAGE>
         We may not be able to offer additional shares of capital stock to
holders of the CPOs pursuant to preemptive rights granted to our shareholders in
connection with any future issuance of stock, unless a registration statement
under the Securities Act is effective or an exemption from the registration
requirements is available. Whenever we are required to make a preemptive rights
offering to the holders of the series N2 preferred stock, we will evaluate the
costs and potential liabilities associated with any such registration statement,
the benefits to the holders of CPOs, and any other factors that we consider
appropriate and then we will determine whether or not to file such registration
statement. If we determine that we will not be able to offer the holders of CPOs
the right to subscribe for additional shares of capital stock, we will direct
the trustee of the CPO trust to waive its preemptive rights as the holder of
record of the series N2 preferred stock.

         Our by-laws and securityholders agreement provide that if the trustee
of the CPO trust waives the preemptive rights in connection with a share
issuance, the holders of series N1 preferred stock will also waive their
preemptive rights with respect to such issuance. Although the holders of series
N1 preferred stock must waive their statutory preemptive rights, such holders
will be permitted to participate directly in the share subscription or if
otherwise permitted to do so.

OPTIONAL CONVERSION RIGHTS

         The series N2 preferred stock are convertible, in whole or in part, at
the option of the holder into series N stock at any time prior to the earlier
of:

         --       the consummation of a public offering; and

         --       the elimination of certain foreign ownership restrictions
                  under Mexican law so as to permit the unrestricted ownership
                  and/or control of Maxcom by non-Mexicans.

         Upon a public offering, the series N2 preferred stock (as well as new
voting preferred stock issued pursuant to a mandatory conversion related to the
elimination of certain foreign ownership restrictions under Mexican law) will be
convertible, in whole or in part, at the option of the holder into the same
class of equity securities offered in such public offering.

         In addition, the series A1, B1 and N1 preferred stock are convertible,
in whole or in part, at the option of the holder, at such time, and on such
terms, as the series N2 preferred stock.

MANDATORY CONVERSION

         Upon a qualified public offering, all, but not less than all, the
series N2 preferred stock (as well as new voting preferred stock issued pursuant
to a mandatory conversion related to the elimination of certain foreign
ownership restrictions under Mexican law) will be convertible at the option of
Maxcom into the same class of equity securities offered in such qualified public
offering.

         In addition, all, but not less than all, of the series A1, B1 and N1
preferred stock will be convertible at the option of Maxcom at such time and on
such terms, as the series N2 preferred stock.

         Upon the elimination of certain foreign ownership restrictions under
Mexican law so as to permit the unrestricted ownership and/or control of Maxcom
by non-Mexicans, the series N2 preferred stock will automatically convert into a
new voting preferred stock. This new voting preferred stock will retain the same
liquidation preference rights of the series N2 preferred stock and the right to
appoint either a member of the Board of Directors or, if such new voting
preferred stock represents less than 10% of the outstanding capital stock of
Maxcom, an observer to the Board of Directors.

ANTI-DILUTION PROTECTION AND CONVERSION PRICE ADJUSTMENTS

         If Maxcom issues any shares of common equity or securities convertible
into common equity (other than certain permitted issuances) for consideration
per share of less than either (i) the conversion price, which will initially be
U.S.$0.4927 per share, in effect immediately prior to that time or (ii) the then
fair market value of the stock sold, then, until December 31, 2002, full ratchet
anti-dilution protection will apply, and, thereafter,


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institutional weighted average anti-dilution protection will apply to the
preferred stock, as more fully described below. This anti-dilution protection
will no longer be available after the preferred stock is converted into common
stock.

         The following permitted issuances will not trigger the anti-dilution
protections:

         --       any rights, options and warrants granted or issued, or
                  authorized to be granted or issued, to certain employees,
                  directors, consultants and vendors of Maxcom and its
                  subsidiaries, as of March 5, 2002, or under any management
                  incentive plan approved by the Board of Directors, including
                  the affirmative vote of at least one of the directors selected
                  from Nexus appointees.

         --       any securities issued pursuant to the private equity
                  investment and up to U.S.$3.8 million of securities issued
                  within one year of the consummation of the private equity
                  investment at or above U.S.$0.4927 per share;

         --       any shares issued upon the exercise or conversion of any of
                  the foregoing; and

         --       any of the capital stock issued in connection with a
                  conversion of any of the series A1, B1, N1 or N2 preferred
                  stock.

         Full-ratchet anti-dilution protection means that the conversion price
will be automatically reduced to the lowest consideration at which any share of
capital stock has been issued or sold.

         Institutional weighted average anti-dilution protection means that the
conversion price will be reduced to the lower of:

         --       an amount equal to (A) the sum of (i) the product derived by
                  multiplying the conversion price in effect immediately prior
                  to such issuance or sale by the number of "common shares
                  deemed outstanding," as defined below, immediately prior to
                  such issue or sale, plus (ii) the aggregate consideration
                  (expressed as a net price per share), if any received by
                  Maxcom upon such issue or sale, divided by (B) the number of
                  common shares deemed outstanding immediately after such issue
                  or sale; and

         --       the conversion price determined by multiplying the conversion
                  price in effect immediately prior to such issuance or sale by
                  a fraction, the numerator of which will be the sum of (i) the
                  number of the common shares deemed outstanding immediately
                  prior to such issue or sale multiplied by the then market
                  value of the then fair market value of the common stock of
                  Maxcom then outstanding as of the date of such issuance or
                  sale plus (ii) the aggregate consideration, if any, received
                  by Maxcom upon such issuance or sale and the denominator of
                  which shall be the product derived by multiplying the then
                  fair market value of the common stock of Maxcom by the number
                  of common shares deemed outstanding immediately after such
                  issue or sale.

         For the purposes of the foregoing calculations, the term "common shares
deemed outstanding" means the currently outstanding capital stock of Maxcom plus
all shares of capital stock issuable upon the exercise of options and warrants
or conversion of convertible securities. Whenever Maxcom grants options or
issues securities convertible into the capital stock of the company, the issue
price will be the sum of the per share consideration received by the company
upon the grant or issue of the option or convertible security plus any per share
additional consideration that the company will receive upon exercise or
conversion of such option or convertible security.

         Determinations of fair market value will be made in good faith by the
Board of Directors so long as the issuance is for cash consideration (and
without any associated service arrangements) and at least 70% of the shares
issued are to persons who are not then shareholders of Maxcom. Otherwise, Maxcom
at its expense will obtain the opinion of an internationally recognized or
nationally recognized in the United States financial advisory firm or investment
bank to be selected by Maxcom as to the fair value of the shares to be issued
and any non-cash consideration for such shares.

         The conversion price will also be adjusted for any stock splits or
combinations.


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<PAGE>
         Following any adjustment of the conversion price of the series N2
preferred stock, Maxcom will deliver notice to the CPO trustee of the adjustment
setting forth the calculation of the adjustment. In addition, upon the written
request of the CPO trustee, Maxcom will furnish or cause to be furnished to the
CPO trustee a certificate setting forth (i) a summary of all adjustments and
readjustments to the conversion price, (ii) the conversion price for the series
N2 preferred stock then in effect, and (iii) the number of shares of capital
stock into which the series N2 preferred stock is then convertible.

RIGHT OF FIRST REFUSAL

         Except in connection with a sale of at least 50.1% of the total equity
of Maxcom, a public offering or a transfer to an affiliate or a certain other
permitted transferee, if a Maxcom shareholder other than certain significant
shareholders, who we refer to as the "investors," intends to sell its capital
stock, then shareholders other than the investors and the holders of the series
N2 preferred stock (but only with respect to their series N2 preferred stock)
will have the right to purchase such capital stock. This right of first refusal
will terminate upon the earlier of:

         --       a sale or transfer of at least 50.1% of the total capital
                  stock of Maxcom or the sale of all or substantially all of the
                  consolidated assets of Maxcom in one or more related
                  transactions to an independent third party or parties, or

         --       the elimination of certain foreign ownership restrictions
                  under Mexican law so as to permit the unrestricted ownership
                  and/or control of Maxcom by non-Mexicans.

RIGHT OF FIRST OFFER

         Except in connection with a sale of at least 50.1% of the total equity
of Maxcom, a public offering or a transfer to an affiliate or a certain other
permitted transferee, in the event any investor intends to transfer any series
A1, B1 or N1 preferred stock, or securities received in a conversion of such
preferred stock, such investor must offer to sell such securities to each other
investor holding more than one percent of the aggregate series A1, B1 and N1
preferred stock, or securities received in a conversion of such preferred stock,
then outstanding. This right of first offer will terminate upon the earlier of:

         --       a qualified public offering;

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving at least 50.1% of the total capital stock of
                  Maxcom or a sale of all or substantially all of the
                  consolidated assets of Maxcom in one or more related
                  transactions to an independent third party or parties.

CO-SALE RIGHTS AND FORCED SALE OBLIGATIONS

Co-sale rights

         If holders of series A1, B1 or N1 preferred stock intend to sell, alone
or together with any other shareholder of Maxcom, at least 50.1% of the total
capital stock of Maxcom in one or more related transactions to an independent
third party or parties, then holders of series N2 preferred stock will, except
in certain circumstances, have the right to participate in any such sale on a
pro rata basis with the sellers. Holders of series N2 preferred stock will be
entitled to sell such shares generally on the same terms and conditions as the
selling shareholder. This co-sale right will terminate upon the consummation of
the earlier of

         --       a qualified public offering; or

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving a transfer of at least 50.1% of the total
                  capital stock of Maxcom or a sale of all or substantially all
                  of the consolidated assets of Maxcom to an independent third
                  party or parties in one or more related transactions.

         In connection with any sale or transfer of any of our equity
securities, debt securities with equity features or other securities convertible
into equity securities, shareholders other than holders of series N-2 preferred
stock may


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<PAGE>
participate in such sale on a pro rata basis at a price and on terms
substantially the same as the selling securityholder. However, these co-sale
rights will not apply to a sale or transfer of no more than 7,000,000 shares of
preferred stock. This co-sale right will terminate upon the consummation of the
earlier of:

         --       a qualified public offering; or

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving a transfer of at least 50.1% of the total
                  capital stock of Maxcom or a sale of all or substantially all
                  of the consolidated assets of Maxcom to an independent third
                  party or parties in one or more related transactions.

Forced sale obligations

         If Nexus desires to transfer at least two-thirds of the beneficial
ownership of the total capital stock of Maxcom then outstanding, in one or more
related transactions to an independent third party or parties, on terms and
conditions approved by Nexus, then all shareholders of Maxcom (including holders
of series N2 preferred stock) may be forced by Nexus to sell a proportionate
share of their series N2 preferred stock. Such shareholders will be entitled to
sell such shares generally on the same terms and conditions as the selling
shareholders.

         If Nexus desires to sell all or substantially all of the consolidated
assets of Maxcom in one or more related transactions to an independent third
party or parties on terms and conditions approved by Nexus, then all
shareholders of Maxcom (including holders of series N2 preferred stock) may be
forced by Nexus to vote in favor of, consent to and raise no objections against
such asset sale.

         Holders of series N2 preferred stock may not be forced to participate
in, or vote for, any of the foregoing transactions unless:

         --       the consideration for such sale is paid in cash and/or freely
                  tradeable, exchange -- listed equity securities; and

         --       the value of such consideration on a per share basis is not
                  less than the then applicable liquidation preference for each
                  share of series N2 preferred stock.

         These forced sale obligations will terminate upon the consummation of
the earlier of:

         --       a qualified public offering; or

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving a transfer of at least 50.1% of the total
                  capital stock of Maxcom or a sale of all or substantially all
                  of the consolidated assets of Maxcom to an independent third
                  party or parties in one or more related transactions.

Other provisions

         In both the case of a co-sale and a forced sale, the holders of series
N2 preferred stock will not be required to execute any ancillary documents.
However, to the extent the proceeds from any such sale will be subject to any
expense, escrow, holdback or indemnification obligation, the selling
shareholders assume this obligation on a pro rata basis. The amount of any such
obligation of each shareholder in connection with a participation in a sale or a
forced sale will be limited to the maximum amount of proceeds that the such
holder is entitled to receive. Shareholders participating in a sale or forced to
sell may provide the purchaser with different assurances or collateral for their
indemnification obligations. As a result, some shareholders may be permitted to
sign an indemnification agreement or give a guarantee while others may be
subject to a hold back of their sale proceeds.

         It is possible that both the participation rights and forced sale
obligations will be triggered by a single transaction. In this event, the
participation rights will not apply.

         In the event that the participation rights or forced sale obligations
have been triggered, we will prepare, and to the extent applicable, file with
the appropriate regulatory authority, with the advice of U.S. counsel, any
notices or offering material required by our by-laws or applicable Mexican and
U.S. federal and state securities laws to be


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<PAGE>
delivered to the beneficial owners of the series N2 preferred stock and to cause
such documents to be delivered to the CPO trustee in sufficient quantities for
distribution to the beneficial owners of the series N2 preferred stock.

RIGHTS AND OBLIGATIONS WITH RESPECT TO PUBLIC OFFERINGS

Registration rights

         Nexus at any time and from time to time may request that Maxcom take
all requisite action, at its expense, to register one or more series of Maxcom's
equity securities under applicable Mexican securities laws, rules and
regulations or applicable U.S. federal and state securities laws. However, the
initial demand by Nexus shall be a public offering that is expected to yield
aggregate net proceeds of at least U.S.$10.0 million.

         Holders of series N1 preferred stock and series A1 and B1 stock will
have the right to participate (piggyback) in any registration statement filed
pursuant to the Securities Act for a public offering other than an initial
public offering. However, the registration rights will be subject to customary
cutback provisions.

Cooperation in connection with an underwritten offering

         During the period commencing on Maxcom's initial public offering that
is not a qualified public offering and ending on the earlier to occur of
eighteen months after the consummation of such initial public offering or the
consummation of Maxcom's first qualified public offering, at the request of one
or more holders of series N2 preferred stock, or of any class of stock into
which the series N2 preferred stock has been converted, and at such holders'
expense Maxcom will cooperate one time only with the efforts of such holders to
effect an underwritten offering of their stock, provided that such offering is
for at least U.S.$5.0 million in net proceeds. In addition, the underwriter must
be reasonably acceptable to Maxcom and Maxcom may delay such underwritten
offering for up to six months if it is then separately in the process of
preparing a qualified public offering. Maxcom will not be obligated to prepare
any offering memorandum or registration statement in connection with such
offering.

Listing rights

         After a public offering, at the request of any holder of series N2
preferred stock, or any class into which the series N2 preferred stock has been
converted, Maxcom will, at its expense, use commercially reasonable efforts, to
cause the shares into which the series N2 preferred stock has been converted or
is convertible, including any CPOs representing such shares, to be listed on
each securities exchange or the NASD automated quotation system, as applicable,
on which similar securities of Maxcom, including certificates of participation
representing the beneficial ownership of such similar securities are then
listed. In connection with any such listing, Maxcom will, if required, also
register such securities with the National Registry of Securities and
Intermediaries of the National Banking and Securities Commission of Mexico.

Lock-up restrictions

         We may, under certain circumstances, impose a limitation on the
transfer of series N2 preferred stock, which provides that such stock may not be
transferred after notice from Maxcom, which may not be more than 30 days prior
to the expected effective date of Maxcom's first qualified public offering until
the 180th day after such effective date. Maxcom may not impose this restriction
on the transfer of series N2 preferred stock if more than 20% of the securities
being registered in connection with the qualified public offering are for the
account of Maxcom's shareholders. In addition, this restriction on transfer may
not be more restrictive than any restrictions placed on all other shareholders.

TRANSFER OF CPOS AND TRANSFER RESTRICTIONS

         The series N2 preferred stock and any shares of capital stock into
which series N2 preferred stock is converted will be deposited in the CPO trust
and may not be transferred separate from the CPOs representing such securities.
The CPOs may be transferred without restriction under U.S. federal securities
laws by persons who are not affiliates of Maxcom. However, no market currently
exists for the CPOs and Maxcom does not currently plan to list the CPOs on any
exchange for trading. In certain circumstances Maxcom may be required to list
the CPOs on a


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<PAGE>
securities exchange and to cooperate one time only with efforts of holders of
the CPOs to effect an underwritten offering. Maxcom may impose limitations on
the transfer of CPOs for a period after the consummation of a qualified public
offering. See " -- Rights and obligations with respect to public offerings."

         Until the earlier of a qualified public offering or a sale of the
company, no holder of series A, B or N stock and series A1, B1 or N1 preferred
stock may transfer such shares without the prior approval of both Nexus, solely
in its capacity as a shareholder, and the Board, which Board approval will
require the affirmative vote of at least one Nexus director.

         Until a qualified public offering, in the event that certain
significant holders of series A1, B1 and N1 preferred stock desire to transfer
such shares, such holders will be obligated to first offer to sell such shares
to other holders of Series A1, B1 or N1 preferred stock at the same price, terms
and conditions offered to the initial proposed transferees.

         Upon the effectiveness of changes in certain Mexican regulations, other
holders of series A, B and N stock and series A1, B1 and N1 preferred stock who
desire to transfer such shares will be obligated to first offer to sell such
shares to other series A, B and N stock and series A1, B1 and N1 preferred stock
at the same price, terms and conditions offered to the initial proposed
transferees.

         Under our telecommunications concessions and By-laws, the SCT has 90
days to object to any transfer, subscription or conveyance of 10% or more of our
capital stock with the exception of:

         --       transfers related to series N stock and N1 and N2 stock and
                  any successor stock; and

         --       subscriptions made pursuant to the exercise of a shareholder's
                  preemptive rights, as long as the percentage participation of
                  the shareholders in the capital stock of Maxcom does not vary.

OTHER PROVISIONS

Forfeiture of stock

         Under our amended by-laws, the current or future foreign shareholders
of Maxcom firmly undertake with the Ministry of Foreign Relations (Secretaria de
Relaciones Exteriores) to consider themselves as Mexican nationals with respect
to the stock of Maxcom that they may acquire or own, as well as with respect to
the properties, rights, concessions, securities or interests owned by Maxcom, or
the rights and obligations derived from the agreements entered with the Mexican
authorities to which Maxcom is a party. The current or future foreign
shareholders of Maxcom firmly undertake not to invoke the protection of their
government, under penalty of forfeiting such shares to the benefit of the
Mexican nation.

Dissolution

         Pursuant to the Mexican Companies Law and our by-laws, we may be
dissolved upon the occurrence, among other things, of any of the following
events:

         --       the impossibility of continuing with our current line of
                  business;

         --       the resolution of our shareholders at an extraordinary general
                  shareholders' meeting;

         --       the reduction of the number of our shareholders to fewer than
                  two; and

         --       the loss of two thirds of our capital stock.

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


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which its interest conflicts with that of Maxcom may be liable for damages if
the transaction would not have been approved without such shareholder's vote.

Director conflicts of interest

         Under Mexican law, any member of the Board of Directors who has a
conflict of interest with Maxcom in any transaction must disclose such a 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 a provision may be liable for damages
caused to Maxcom. Additionally, members of the Board of Directors may not
represent any shareholders at any shareholders' meeting.

DESCRIPTION OF THE CPO TRUST

General

         The series N2 preferred stock have been deposited by Maxcom in a
limited purpose trust which is administered by Banco Nacional de Mexico, S.A.
under a trust agreement. We refer to the trust as the "CPO trust" and the
trustee of the CPO trust as the "CPO trustee." The CPO trustee is the holder of
record of the series N2 preferred stock and any securities into which the series
N2 preferred stock may be converted.

         The CPO trustee issued Certificados de Participacion Ordinarios, or
"CPOs", which are negotiable instruments under Mexican law that give their
holders the economic rights and voting rights of the series N2 preferred stock
or any other shares of capital stock into which the series N2 preferred stock
may be converted, which we refer to together as the "deposited securities."

         The CPOs are initially held in book-entry form through DTC, and a
nominee of DTC is the holder of record of a global CPO certificate. See "Book -
Entry, Delivery and Form" above. Our amended by-laws provide that we will obtain
all governmental approvals required in connection with the conversion of the
series N2 preferred stock held in the CPO trust to other securities of Maxcom.

         The following is a description of (i) certain provisions included in
the CPO trust agreement and (ii) applicable provisions of the Law of Negotiable
Instruments and Credit Transactions (Ley General de Titulos y Operaciones de
Credito). This is a summary description and does not purport to be complete and
is qualified in its entirety by reference to the CPO trust agreement and the
provisions of Mexican law referred to in such description.

Purpose

         The main purpose of the CPO trust is to have the CPO trustee, as record
holder of the deposited securities and upon the instructions of the technical
committee described below under "Administrator of the CPO trust," waive or not
exercise any statutory preemptive rights that it may have from time to time to
subscribe for additional shares of Maxcom capital stock. As the record holder of
the deposited securities, the CPO trustee exercises certain rights attached to
such securities in order to preserve to the largest extent possible the economic
and voting rights that would otherwise be held directly by the beneficial owners
of the CPOs.

Waiver of statutory preemptive rights

         The trustee of the CPO trust will waive statutory preemptive rights
with respect to deposited securities when, in the sole judgment of the technical
committee of the CPO trust, as described below, the exercise of such preemptive
rights would require that the shares so subscribed be registered pursuant to the
Securities Act, unless Maxcom decides to register such shares. If the exercise
of the preemptive rights is possible without registration under the Securities
Act (or Maxcom decides to carry out such registration) and the holders of CPOs
provide the CPO trustee with the necessary funds, the CPO trustee will subscribe
for the corresponding number of shares, which will be held in the CPO trust, and
deliver additional CPOs in respect of such additional deposited securities to
the subscribing CPO holders. Under Mexican law preemptive rights may not be
transferred separately from the underlying shares.

Voting and economic rights


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<PAGE>
         The holders of CPOs are not entitled to directly exercise any voting or
economic rights with respect to the deposited securities. Such voting rights are
exercisable only by the CPO trustee pursuant to the instructions of the holders
of CPOs. The holders of CPOs will be entitled to receive dividend distributions,
if any, from Maxcom through the CPO trustee. DTC will receive the distributions
and will make distributions to the beneficial owners of the CPOs. In the event
of a forced sale the trustee of the CPO trust will cause the series N2 preferred
stock to be delivered in connection with any such sale and will distribute to
the record holder of the CPOs the proceeds from such sale subject to any
holdbacks required pursuant to the terms of any such sale. The CPO trustee will
also deliver deposited securities in connection with the exercise of the co-sale
rights and will distribute to the record holders of the CPOs the proceeds from
sale subject to any holdbacks required pursuant to the terms of any such sale.
See " -- Co-sale rights and forced sale obligations" above.

         If a distribution by Maxcom consists of a dividend in shares, such
shares will be transferred to the CPO trustee, and held in the CPO trust, and
the CPO trustee will distribute to the holders of CPOs in proportion to their
holdings, additional CPOs to represent the additional deposited securities
received by the CPO trustee as such dividend.

         The holders representing a majority of the outstanding CPOs will be
entitled to appoint the board observer, or in certain circumstances, a member of
the Board of Directors. See " -- Board of Directors."

Administration of the CPO trust

         The CPO trust is administered by the CPO trustee under the direction of
a technical committee, which consists of three members, two members of which are
designated by Maxcom and one by the holders of CPOs.

Common representative

         The majority of holders of CPOs have the right to appoint a common
representative, whose duties include, among others: verification of the due
execution and terms of the CPO trust agreement; verification of the existence of
the deposited securities; authentication, by its signature, of the certificate
evidencing the CPOs, exercise of the rights of the CPO holders in connection
with the payment of any dividend or distribution related to the deposited
securities to which such CPO holders are entitled; and undertaking of any other
action required to protect the rights, actions or remedies to which CPO holders
may be entitled to under the CPO trust.

Transfer

         CPO holders may sell their interest in CPOs. Sales of CPOs may be
subject to Mexican taxes. Neither Maxcom nor the CPO trustee will have any
liability in connection with any such sale. CPO holders may not sell the
deposited securities separately from the CPOs.

Term and termination

         The maximum term of the CPO trust is thirty years, but it may be
terminated at any moment by recommendation of the technical committee, in which
case the deposited securities will be delivered to the CPO holders.

Fees

         The fees of the CPO trustee for the administration of the CPO trust,
and the fees of the common representative for acting in such capacity, are paid
by Maxcom.

C.       MATERIAL CONTRACTS

CONCESSIONS

         In February 1997, we obtained a concession to provide local telephony
services covering Mexico City and the Gulf region and long distance services
nationwide from the Mexican government. We also obtained a


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nationwide point-to-point and three regional point-to-multipoint microwave
concessions in October 1997. In September 2001, our local telephony concession
was expanded to cover all of Mexico. For a description of our concessions, see
"Item 4. Information on the Company -- B. Business review -- Supervision and
regulation of the Mexican telecommunications industry -- Our concessions."

INTERCONNECTION AGREEMENTS

         In November 1998, we entered into a local interconnection agreement
with Telmex. We have also signed reciprocal interconnection agreements with
mobile telephony providers Telcel, Grupo Iusacell and Pegaso. Finally, we have
signed long distance interconnection agreements with Telmex, Alestra, Bestel,
Protel and Iusatel. For a description of these interconnection agreements, see
"Item 4. Information on the Company -- B. Business review -- Supervision and
regulation of the Mexican telecommunication industry -- Interconnection."

LUCENT SUPPLY AGREEMENT

         On September 5, 1997, Maxcom executed a purchase and sales agreement
with subsidiaries of Lucent Technologies, Inc. pursuant to which Maxcom may
purchase from Lucent products, services and software. Through December 31, 2000,
Maxcom has purchased approximately U.S.$62.6 million.

NEC SUPPLY AGREEMENT

         On October 15, 1998, Maxcorn executed a master agreement for the
purchase and sale of equipment and services with Nec de Mexico, S.A. de C.V.
pursuant to which Maxcom may purchase from Nec de Mexico certain services and
equipment for the installation, operation and exploitation of its
telecommunications network. Through December 31, 2000, Maxcom has purchased
approximately U.S.$5.5 million.

HEWLETT-PACKARD SUPPLY AGREEMENT

         On November 3, 1998, Maxcom executed a supply and services agreement
with Hewlett-Packard de Mexico, S.A. de C.V. pursuant to which Hewlett-Packard
agreed to provide to Maxcom telecommunications solutions and services. The
obligations under this agreement have been substantially fulfilled. Maxcom paid
U.S.$18 million for these solutions and services.

METRO NET CAPACITY SALES AGREEMENT

         On April 28, 2000, Maxcom executed a metropolitan network capacity sale
agreement with Metro Net, S.A. de C.V. (which was amended on December 21, 2000)
for an aggregate amount of U.S.$7.2 million pursuant to which Maxcom purchased
from Metro Net (i) the exclusive and unlimited right to use certain backbone
fiber optic capacity of 6 (six) fiber optic strands of Metro Net's metropolitan
rings in Mexico City, and (ii) an option to acquire the exclusive and unlimited
right to use additional backbone fiber optic capacity of 6 (six) fiber optic
strands.

CPO TRUST AGREEMENT

         On April 25, 2002, Maxcom and its shareholders executed an irrevocable
trust agreement with Banco Nacional de Mexico, S.A. acting as trustee for the
issuance of ordinary participation certificates, also known as "CPOs," each
representing one series N2 share of the capital stock of Maxcom with liquidation
preference rights. For a description of this agreement, see "Item 10. Additional
Information -- B. Memorandum and Articles of Association -- Description of the
CPO Trust."

SECURITYHOLDERS' AGREEMENT

         On April 29, 2002, Maxcom executed an amended and restated
securityholders' agreement with the shareholders of the Company to, among other
things, reflect the restructuring of the capital stock of Maxcom. For a
description of the securityholders' agreement, see "Item 7. Major Shareholders
and Related Party Transactions -- A. Major shareholders -- Securityholders'
agreement."

INDENTURES


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Old Indenture

         On March 17, 2000, Maxcom and its subsidiaries, entered into an
Indenture with The Bank of New York, acting as trustee, which governs the terms
and conditions of the issuance by Maxcom of U.S.$300 million 13-3/4% senior
notes due April 1, 2007. The Indenture restricted Maxcom's ability to incur
indebtedness by requiring that Maxcorn meet minimum consolidated leverage and
fixed charge coverage ratios. In addition, the Indenture limited Maxcom's
ability to pay dividends, repurchase subordinated debt, redeem its capital
stock, dispose of assets and make investments, among other things. All of these
restrictions were eliminated as a result of the exchange offer and
U.S.$15,590,000 aggregate amount of notes under the indenture remains
outstanding.

New Indenture

         On April 29, 2002, Maxcom and its subsidiaries entered into an
Indenture with The Bank of New York acting as a Trustee, which governs the terms
and conditions of the issuance by Maxcom of U.S.$165,078,150 senior notes due
2007. This Indenture has substantially the same restrictions the old indenture
had before they were eliminated pursuant to the exchange offer.

WARRANT AGREEMENT

         On March 17, 2000, Maxcom entered into a warrant agreement with The
Bank of New York, acting as warrant agent, pursuant to which Maxcom agreed to
issue warrants to purchasers of 13-3/4% senior notes due April 1, 2007 for the
purchase of up to 764,938 series N shares, convertible into 382,469 CPOs. The
exercise price for each warrant, which entitled the purchaser to receive 2.54979
series N shares, was U.S.$0.01. These warrants were offered as an incentive to
the purchasers of the notes.

D.       EXCHANGE CONTROLS

         The peso fluctuates freely against the U.S. dollar. The Mexican Central
Bank intervenes occasionally in the market to stabilize the exchange rate.
Mexico had an exchange control system from 1982 until November 11, 1991. Under
this system, Mexican residents and companies were entitled to purchase, and
required to sell, foreign currencies for certain purposes at a controlled rate
of exchange that was established daily by the Mexican Central Bank (Banco de
Mexico). Transactions to which the controlled rate applied included payments for
virtually all merchandise imports, revenues from virtually all merchandise
exports, royalty payments and payments of principal, interest and related
expenses with respect to indebtedness to foreign creditors registered with the
Mexican government. For all transactions to which the controlled rate did not
apply, foreign currencies could also be purchased, if they were available, at
the then prevailing domestic free market rate for the type of transaction.

         From November 11, 1991 to October 20, 1992, the Mexican Central Bank
permitted a free market rate to fluctuate according to supply and demand within
a moving band. In late December 1994, the Mexican government responded to
exchange rate pressures first by increasing by 15% the upper limit of the
peso/U.S. dollar exchange rate band and then, two days later, allowing the peso
to fluctuate freely against the U.S. dollar. By December 31, 1994, the peso/U.S.
dollar exchange rate, which had been Ps.3.47 to U.S.$1.00 on December 19, 1994
was Ps.5.00 to U.S.$1.00. The peso continued to devalue significantly through
1998, closing at Ps.9.901 to U.S.$1.00 at December 31, 1998. Although the
peso/U.S. dollar exchange rate has remained relatively stable in the last three
years, there may be significant devaluations in the future.

         Except for the period from September through December 1982 during the
Mexican liquidity crisis, the Mexican Central Bank consistently has made foreign
currency available to Mexican private sector entities to meet their foreign
currency obligations. Nevertheless, in the event of a renewed shortage of
foreign currency, we cannot assure you that the Mexican Central Bank would
continue to make foreign currency available to private sector companies or that
foreign currency we need to service foreign currency obligations could be
purchased in the open market without substantial additional cost.

         Pursuant to the provisions of North American Free Trade Agreement, or
"NAFTA," Mexico remains free to impose foreign exchange controls on investments
made in Mexico, including those made by U.S. and Canadian investors


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<PAGE>
E.    TAXATION

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

General

      The following is a general discussion of certain U.S. federal income tax
consequences of the exchange offer and consent solicitation that may be
relevant to you if you hold our old notes as a capital asset and are a U.S.
holder. In general, you will be a U.S. holder if you are:

      -     An individual citizen or resident of the United States;

      -     a corporation or other entity taxable as a corporation created in or
            organized under the laws of the United States or of any political
            subdivision thereof;

      -      an estate, the income of which is subject to U.S. federal
            income tax without regard to its source; or

      -     a trust, if a court within the United States is able to exercise
            primary supervision over its administration and one or more United
            States persons have the authority to control all of the substantial
            decisions of such trust.

      This summary is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as currently in effect
and all subject to change at any time, perhaps with retroactive effect. This
discussion is for general information only and does not describe all of the tax
consequences that may be relevant to you in light of your particular
circumstances or if you are subject to special tax treatment under the Code,
including, without limitation, because you are:

      -     a foreign person or entity;

      -     a tax-exempt organization, a financial institution, an insurance
            company, a regulated investment company or a dealer or broker in
            securities or currencies;

      -     a trader in securities or commodities that elects mark-to-market
            treatment;

      -     a person who holds the old notes as part of an integrated investment
            such as a straddle, hedge, constructive sale, conversion transaction
            or other risk reduction transaction;

      -     a person whose functional currency is not the U.S. dollar;

      -     a partnership or other flow-through entity (including an S
            corporation or a limited liability company treated as a partnership
            for U.S. federal income tax purposes);

      -     a person subject to the alternative minimum tax; or

      -     a person who owns or will own directly, indirectly or by attribution
            10% or more (by voting power) of our voting stock or 10% or more (by
            value) of our outstanding capital stock.

      The summary does not include any discussion of the tax laws of any state,
locality or non-U.S. government that may be applicable to you. You should note
that no rulings have been or will be sought from the United States Internal
Revenue Service (the "IRS") with respect to any of the U.S. federal income tax
consequences discussed below, and we cannot assure you that the IRS will not
take contrary positions. You should consult your own tax advisors concerning the
application of U.S. federal income tax laws to your particular situation as well
as any consequences of the exchange offer and consent solicitation arising under
the laws of any other taxing jurisdiction.

Certain U.S. federal income tax consequences of the exchange


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<PAGE>
      In general, for U.S. federal income tax purposes, you will be treated as
the beneficial owner of the series N2 preferred stock represented by the CPOs
you receive in the exchange.

      The law is unclear as to whether any gain or loss that you realize upon
the exchange will be recognized for U.S. federal income tax purposes. The tax
consequences to you of the exchange of your old notes for new notes and CPOs
representing series N2 preferred stock will depend primarily on whether the
exchange will be treated as a "recapitalization" within the meaning of section
368(a)(1)(E) of the Code. The exchange will be treated as a tax-free
recapitalization only if the old notes that you tender in the exchange qualify
as "securities" for U.S. federal income tax purposes.

      The rules for determining whether an obligation constitutes a security are
imprecise. The term security is not defined in the Code or in the regulations
issued thereunder and has not been clearly defined by judicial decisions, which
are not entirely consistent. The determination of whether a particular debt
constitutes a security depends upon an overall evaluation of the nature of the
debt. Under applicable administrative pronouncements and judicial decisions, one
of the most significant factors considered in determining whether a particular
debt instrument is a security is its original term. In general, debt obligations
with a weighted average maturity of ten years or more are usually considered
securities and debt instruments with a weighted average maturity of less than
five years are usually not considered securities. The status of debt instruments
with a weighted average maturity of five years or more but less than ten years
is unclear. Furthermore, the maturity of a debt instrument alone is not
necessarily determinative and other factors, such as the degree of participation
in the company and continuing interest associated with the debt instrument and
the purpose of the advances, may be relevant. Although not free from doubt, we
believe that the old notes are likely to be treated as securities for U.S.
federal income tax purposes. You are encouraged to consult your own tax advisor
with respect to this issue.

      RECAPITALIZATION TREATMENT. If the exchange is treated as a
recapitalization for federal income tax purposes, you will recognize gain
realized on the exchange only to the extent of the amount of "boot" you receive
in the exchange. Any such gain should be capital gain and generally will be
long-term capital gain if the old notes have been held for more than one year at
the time of the exchange. If you realize a loss on the exchange, however, you
will not be able to recognize that loss.

      In general, you will receive boot in the exchange only if you receive
property other than our stock and securities. However, any nonqualified
preferred stock that you receive in the exchange will constitute boot. We
believe that the CPOs you will receive in the exchange will not be treated as
nonqualified preferred stock under the Code. Therefore, if the new notes qualify
as securities, you will not receive any boot in the exchange. While the issue is
not free from doubt because the new notes will have an original term of only
four years and eleven months, there is a reasonable position that the new notes
should be treated as securities for U.S. federal income tax purposes. You are
encouraged to consult your own tax advisor with regard to this issue.

      If the new notes qualify as securities, your aggregate tax basis in the
new notes and the CPOs you receive in the exchange will equal your tax basis in
your old notes. Although the method for allocating your tax basis in the old
notes between the new notes and the CPOs is unclear, the determination of the
portion of your tax basis in the old notes that should be allocated to each
category of consideration received should be based on the issue price of the new
notes (as determined below under "Certain U.S. federal income tax consequences
of holding and disposing of the new notes -- Original issue discount") and the
fair market value of the CPOs. Your holding period in the new notes and the CPOs
will include your holding period in the old notes you surrender in the exchange.

      If the new notes do not qualify as securities, the amount of boot you are
deemed to receive should be equal to the issue price of the new notes. Your tax
basis in the new notes should equal their issue price, and your tax basis in the
CPOs received in the exchange should equal your tax basis in your old notes,
less the issue price of the new notes plus any gain recognized in the exchange.
Your holding period in the new notes will begin on the day following the date of
the exchange and your holding period in the CPOs will include your holding
period in the old notes you surrender in the exchange.

      NON-RECAPITALIZATION TREATMENT. If the old notes that you exchange are not
considered securities, the transaction will not be treated as a
recapitalization. In this case, the exchange will be a fully taxable transaction
for U.S. federal income tax purposes. Accordingly, you will recognize gain or
loss equal to the difference between the


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<PAGE>
issue price of the new notes and the fair market value of the CPOs you receive
in the exchange and your adjusted tax basis in the old notes. Any such gain or
loss recognized on the exchange of your old notes for new notes and CPOs should
be capital gain or loss and generally will be long-term capital gain or loss if
the old notes have been held for more than one year at the time of the exchange.

      The deductibility of losses, if any, realized on the exchange of your old
notes for new notes and CPOs may be subject to certain limitations. If you think
you may realize a loss, you should consult your tax advisor as to the possible
limitations on the deductibility of any such loss.

      Your adjusted tax basis in the new notes and the CPOs will equal the issue
price of the new notes and your adjusted tax basis in the CPOs will equal the
fair market value of the CPOs. Your holding period in the new notes and the CPOs
will begin on the day following the date of the exchange.

      RECEIPT OF ACCRUED INTEREST. Notwithstanding the foregoing, any property
you receive in the exchange that is attributable to accrued and unpaid interest
will not be treated as received in exchange for your old notes. Rather, such
property will be taxable to you as ordinary interest income (if you have not
previously included such interest into gross income).

      CONSEQUENCES TO NON-TENDERING HOLDERS. The proposed amendments to the old
notes may constitute a significant modification of the old notes, with the
result that, even if you do not tender your old notes, you may be deemed for
U.S. federal income tax purposes to have exchanged your old notes for a new debt
instrument. However, while the issue is not free from doubt, if you do not
participate in the exchange offer, you should not be deemed to have engaged in a
taxable exchange for U.S. federal income tax purposes as a result of the
elimination of the restrictive covenants in the indenture governing the old
notes. Therefore, you should not recognize gain or loss for U.S. federal income
tax purposes and you should have the same adjusted tax basis and holding period
in the old notes, as the case may be, after the adoption of the exchange offer
and consent solicitation as you had in the old notes immediately before such
adoption. You are encouraged to consult your own tax advisor as to the potential
tax consequences to you if you do not participate in the exchange offer.

      REPORTING REQUIREMENTS. You may be subject to certain IRS reporting
requirements in connection with your exchange of old notes for new notes and
CPOs. You are encouraged to consult your own tax advisor as to whether these
reporting requirements may be relevant to you.

Certain U.S. federal income tax consequences of holding and disposing of the
new notes

      PAYMENTS OF INTEREST AND ADDITIONAL AMOUNTS. Generally, payments of
qualified stated interest, as defined below (including Mexican withholding tax
imposed on such interest), and additional amounts (if any) would be taxable to
you as ordinary income. Payments of qualified stated interest and additional
amounts (if any) on the new notes generally are includible in your income as it
accrues or is received, in accordance with your regular method of accounting for
tax purposes.

      ORIGINAL ISSUE DISCOUNT. The treatment of original issue discount in
respect of the new notes is highly complex. You are urged to consult with your
tax advisor concerning this issue.

      General. The new notes will be treated as issued with original issue
discount for U.S. federal income tax purposes if the amount by which the "stated
redemption price at maturity" of the new notes exceeds their "issue price" by
more than a de minimis amount (generally, the product of 0.25% of the stated
redemption price at maturity and the number of full years to maturity on the
instrument). A new note's stated redemption price at maturity equals the total
amount of all principal and interest payments to be made on the new note, other
than "qualified stated interest." Qualified stated interest generally is stated
interest that is unconditionally payable at least annually at a single fixed
rate over the entire term of the note. The interest payments with respect to the
new notes do not constitute qualified stated interest because such payments are
not made at least annually.

      Your issue price in respect of the new notes received in the exchange will
depend on whether either the old notes or the new notes are "publicly-traded."
If as of the date the exchange offer is consummated, the new notes are "traded
on an established securities market" within the meaning of the applicable
regulations on or at any time


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<PAGE>
during the sixty day period ending thirty days after the date the exchange offer
is consummated, then the issue price of such notes would equal the fair market
value established by such trading. If the new notes are not so traded, but the
old notes are so traded, then the issue price of the new notes would equal the
fair market value, established by such trading, of the old notes. If neither the
new notes nor the old notes are so traded, the issue price of the new notes
generally would be the stated principal amount of such notes. It cannot be
determined at the present time whether the new notes or the old notes will be,
at the relevant times, traded on an established securities market within the
meaning of the applicable regulations.

      The relevant Treasury Regulations are complex and highly detailed in
defining the phrase "traded on an established market." For example, it is
possible that the new notes will be treated as so traded not only if they are
listed on an exchange, but also if transfers of such new notes appear on a
computerized quotation medium. You should consult you own tax advisor with
respect to whether your old notes or new notes qualify for this purpose as
"traded on an established market."

      In the event neither the old notes nor the new notes are treated as traded
on an established securities market, the issue price of a new note will equal
its stated principal amount, only if the interest rate is equal to or greater
than the "applicable federal rate," or AFR, for the month in which the new notes
are issued. If the interest rate is less than the AFR, the issue price of a new
note will be equal to its imputed principal amount, which generally is the sum
of all payments due under the new note (including qualified stated interest)
discounted from the date of payment to the issue date of the new notes at the
AFR. Under these rules, if the new notes were issued on the date of this
exchange offer and consent solicitation, they would contain original issue
discount because the interest rate on the new notes would be less than the AFR.

      Inclusion of original issue discount in income. If the new notes are
treated as having original issue discount, you must include the original issue
discount in income as ordinary interest income as it accrues on the basis of a
constant yield to maturity. Original issue discount must be included in income
regardless of whether cash is received in respect of such income. The amount of
original issue discount includible in income by you is the sum of the "daily
portions" of original issue discount with respect to the new notes for each day
during the taxable year or portion of the taxable year on which you held such
note. The daily portion is determined by allocating to each day in any accrual
period other than the initial short accrual period and the final accrual period
an amount equal to the excess of:

      -     the product of a new note's "adjusted issue price" at the beginning
            of such accrual period and its "yield to maturity" (determined on
            the basis of compounding at the close of each accrual period and
            properly adjusted for the length of the accrual period) over

      -     the amount of qualified stated interest payments, if any, allocable
            to such accrual period.

      The yield to maturity is the discount rate that, when applied to all
payments under a new note, results in a present value equal to the issue price.
The amount of original issue discount allocable to the final accrual period is
the difference between the amount payable at maturity and the adjusted issue
price of the new note at the beginning of the final accrual period. The amount
of original issue discount allocable to the initial short period may be computed
under any reasonable method.

      The adjusted issue price of a new note at the beginning of the first
accrual period is equal to its issue price. A new note's adjusted issue price at
the beginning of any subsequent accrual period is equal to its issue price
increased by the amount of accrued original issue discount previously includible
in your gross income (and market discount, as discussed below) for each prior
accrual period and reduced by the amount of any payments previously made on the
note to you (other than payments of qualified stated interest, if any).

      Generally, upon election, you may use the constant yield to maturity
method applicable to original issue discount to determine the timing of
inclusion of all qualified stated interest (if any) and original issue discount
on the new notes, subject to certain limitations. Such an election will apply to
all debt instruments held or acquired by you on or after the beginning of the
first taxable year to which the election applies and may not be revoked without
the consent of the IRS.


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<PAGE>
      The above treatment assumes that the stated redemption price at maturity
for a note does not include any additional amounts payable on the notes. It is
possible that the IRS might disagree with this treatment and contend that the
stated redemption price at maturity should include the reasonably expected
amount of additional amounts payable on the new notes. In such case, the amount
of original issue discount on the new notes would be increased by such amount.

      However, the rules discussed below under "Premium and acquisition premium"
may reduce or eliminate the amount of original issue discount includible by you
as a holder of the new notes. For example, if your exchange of the old notes for
new notes and CPOs qualifies as a recapitalization, your basis in the new notes
may substantially exceed the issue price of such new notes (depending on your
basis in the old notes), and you may be able to reduce or eliminate the amount
of original issue discount includible with respect to such old notes.

      You should consult your tax advisor concerning the inclusion in your
taxable income of the original issue discount attributable to the new notes.

      PREMIUM AND ACQUISITION PREMIUM. If you acquire new notes for an amount
(or with a basis) less than or equal to the sum of all amounts payable on such
new notes after the acquisition date (other than payments of qualified stated
interest, if any) but in excess of their adjusted issue price (any such excess
being acquisition premium), you will be considered to have acquired the new
notes at an acquisition premium. If you do not make the election described
below, you are permitted to reduce the daily portions of original issue discount
includible in your income by a fraction, (i) the numerator of which is the
excess of your adjusted tax basis in the new notes immediately after their
acquisition over the adjusted issue price of such new notes and (ii) the
denominator of which is the excess of the sum of all amounts payable on such new
notes after the acquisition date (other than payments of qualified stated
interest, if any) over the adjusted issue price of such new notes.

      If you acquire the new notes for an amount (or with a basis) greater than
the sum of all amounts payable on such new notes after the acquisition date
(other than payments of qualified stated interest, if any) you will be
considered to have acquired the new notes at a premium. In such a case, you will
not be required to include any original issue discount in your gross income.

      You generally may elect to amortize the premium on the constant yield
method. The amount amortized in any year will be treated as a reduction of your
interest income from the new notes. The election to amortize the premium on a
constant yield method, once made, applies to all debt obligations held or
subsequently acquired by you on or after the first day of the first taxable year
to which the election applies and may not be revoked without the consent of the
IRS. If you make this election, you will be required to reduce your basis in the
new notes to the extent that any amortizable bond premium is applied to offset
your interest income on the new notes.

      MARKET DISCOUNT. If the exchange is not treated as a recapitalization, the
new notes will be considered to have been acquired with market discount if the
adjusted issue price of the new notes at the time of the exchange exceeds your
initial tax basis in the new notes by more than a specified de minimis amount
(as noted above, your initial tax basis in the new notes will depend on whether
the new notes are treated as securities for U.S. federal income tax purposes).
The excess will be treated as de minimis market discount if such amount is less
than 0.25% of the stated redemption price at maturity of the new notes
multiplied by the number of complete years to maturity from the date you
acquired such new notes, with the result that the amount of market discount will
be considered to be zero.

      The Code provides the authority for regulations to be issued by the
Treasury Department that would provide that any accrued market discount not
treated as ordinary income upon an exchange of market discount bonds in which
gain or loss is not recognized in whole or in part, such as the exchange of the
new notes and the CPOs for the old notes (if such exchange is treated as a
recapitalization, the old notes are market discount bonds and the new notes are
treated as securities for U.S. federal income tax purposes), would carry over to
the nonrecognition property received on the exchange. If such regulations are
promulgated and are applicable to this exchange, any accrued market discount not
treated as ordinary income on the exchange would carry over to the new notes and
CPOs received in the exchange. On disposition of any such notes or stock, any
gain recognized generally would be treated as ordinary income to the extent of
the amount of accrued market discount carried over thereto (unless, in the case
of the new notes, you had previously elected to include market discount in
income as it accrues). Although not free


                                       81
<PAGE>
from doubt, it is likely that the above characterization would be required under
the Code even without the promulgation of regulations.

      Under the market discount rules, you generally will be required to treat
any partial principal payment on, and any gain realized on the sale, exchange,
retirement or other disposition of, a new note as ordinary income (generally
treated as interest income) to the extent of the market discount which accrued
but was not previously included in income during the period you held such new
note. In addition, you may be required to defer your deduction of all or a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry such new note until the maturity of the new note or its
earlier disposition in a taxable transaction.

      In general, market discount will be considered to accrue ratably during
the period from the date of acquisition to the maturity date of the new note,
unless you make an irrevocable election (on an instrument-by-instrument basis)
to accrue market discount under a constant yield method. You may also elect to
include market discount on the new note in income currently as it accrues (under
either a ratable or constant yield method), in which case the rules described
above regarding the treatment as ordinary income of gain upon the disposition of
the new note and upon the receipt of certain payments and the deferral of
interest deductions will not apply. The election to include market discount in
income currently, once made, applies to all market discount obligations acquired
by you on or after the first day of the first taxable year to which the election
applies, and may not be revoked without the consent of the IRS. Such currently
included market discount will increase your tax basis in the new note and
generally is treated as ordinary interest income for U.S. federal income tax
purposes.

      SALE, EXCHANGE OR RETIREMENT OF THE NEW NOTES. Upon the sale, exchange or
retirement of a new note, you generally will recognize capital gain or loss
equal to the difference between (i) the amount realized on the sale, exchange or
retirement (other than amounts representing accrued and unpaid interest which
are taxable as ordinary income) and (ii) your adjusted tax basis in the new
note. Such capital gain or loss recognized on the sale, exchange or retirement
of the new note generally will be long-term capital gain or loss and subject to
a maximum U.S. federal income tax rate of 20% if you held the new note for more
than one year before sale. U.S. corporations, however, are taxed on their net
capital gains at the regular corporate income tax rates. Gain or loss recognized
by you in connection with the disposition of the new notes generally will be
treated as U.S. source gain or loss.

      FOREIGN TAX CREDIT.

      Interest, original issue discount and additional amounts. Qualified stated
interest, original issue discount and additional amounts (if any) paid on the
new notes will constitute income from sources outside the United States, and,
with certain exceptions, will be grouped together with other items of passive
income, for purposes of computing the foreign tax credit allowable to you. If
the payments of qualified stated interest, original issue discount and
additional amounts (if any) were to become subject to a withholding tax imposed
by a foreign country at a rate of 5% or more, the qualified stated interest,
original issue discount and additional amounts (if any) may be considered "high
withholding tax interest" for purposes of computing the foreign tax credit. If
you are predominantly engaged in the active conduct of a banking, insurance,
financing or similar business, the payments of qualified stated interest,
original issue discount and additional amounts (if any) may be considered
"financial services income" for purposes of computing the foreign tax credit,
provided that such amounts do not constitute high withholding tax interest, as
described above.

      Effect of Mexican withholding taxes. You will be required to include the
amount of Mexican withholding taxes, if any, imposed on payments on a note
(including any additional amounts payable by our company) in gross income as
interest income. Such treatment will be required regardless of whether, as will
generally be true, our company is required to pay additional amounts so that the
amount of Mexican withholding taxes does not reduce the net amount actually
received by you as a holder of a new note.

      Subject to certain limitations, you may be entitled to a credit against
your U.S. federal income tax liability, or a deduction in computing your U.S.
federal taxable income, for the amount of Mexican taxes withheld by our company
(which, as described above, would include amounts withheld on additional amounts
paid by us with respect to Mexican taxes). However, Mexican taxes may be
deducted from your taxable income only if you do not claim a credit for any
Mexican or other foreign taxes paid or accrued in that taxable year. You may be
required to


                                       82
<PAGE>
provide the IRS with a certified copy of the receipt evidencing payment of such
withholding tax imposed in respect of payments on the new notes in order to
claim a Mexican tax credit in respect of such Mexican withholding tax.

      Since you may be required to include in your gross income original issue
discount on the new notes in advance of any withholding of Mexican income taxes
from payments relating to the discount (which would generally occur when such
discount is paid in cash), you may not be entitled to a credit or deduction for
these Mexican withholding taxes in the year the original issue discount is
included in your gross income for U.S. federal income tax purposes, and may be
limited in your ability to credit or deduct in full the foreign taxes in the
year those taxes are actually withheld by our company. In addition, under
certain U.S. Treasury Department guidance, foreign tax credits will not be
allowed for withholding taxes imposed in respect of certain short-term or hedged
positions in securities or in respect of arrangements in which your expected
economic profit, after non-U.S. taxes, is insubstantial. You should consult your
tax advisor concerning the availability and timing of a foreign tax credit or
deduction relating to the payment of Mexican withholding taxes.

Certain U.S. federal income tax consequences of holding and disposing of the
CPOs

      DISTRIBUTIONS. Subject to the "passive foreign investment company" rules
discussed below, generally, distributions of cash or property with respect to
your CPOs (including the amount of any Mexican taxes withheld on any such
distribution) will constitute ordinary dividend income to the extent of our
company's current and accumulated earnings and profits (as determined for U.S.
federal income tax purposes), which generally will be includible in your income
on the day on which the dividends are received by the CPO trustee, and will be
treated as foreign source dividend income (generally passive income) for foreign
tax credit limitation purposes. Any distributions in excess of such earnings and
profits will constitute a nontaxable return of capital and reduce your tax basis
in such CPOs. To the extent such distributions exceed your tax basis in your
CPOs, such excess will constitute capital gain. Dividends on the CPOs will not
be eligible for the dividends received deduction allowed to U.S. corporations.

      Dividends paid in a foreign currency (including the amount of any foreign
taxes withheld therefrom) will be includible in your income in a U.S. dollar
amount calculated by reference to the exchange rate in effect on the day the
dividends are received by the CPO trustee, regardless whether the dividends are
converted into U.S. dollars. In addition, any gain or loss resulting from
currency exchange fluctuations during the period from the date the dividend is
includible in your income to the date such payment is converted into U.S.
dollars will be exchange gain or loss and will be treated as ordinary income or
loss.

      SALE, REDEMPTION OR OTHER TAXABLE DISPOSITION OF THE CPOS. Subject to the
"passive foreign investment company" rules discussed below, generally, you will,
upon the sale, redemption or other taxable disposition of your CPOs, recognize
gain or loss for U.S. federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and fair market value of property
received therefor (if the amount received is denominated in foreign currency
other than in U.S. dollars, then its U.S. dollar equivalent determined at the
spot rate on the date of the disposition) and (ii) your tax basis in your CPOs
(as determined in U.S. dollars).

      Capital gain recognized by you generally will be long-term capital gain
and subject to a federal income tax rate of 20% if you held CPOs for more than
one year before the sale. U.S. corporations, however, are taxed on their net
capital gains at the regular corporate income tax rates. Gain or loss recognized
by you in connection with the disposition of your CPOs generally will be treated
as U.S. source gain or loss.

      Generally, you will not recognize any gain or loss upon the conversion of
the CPOs into series N stock or other classes of our stock.

      PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS. In general, a foreign
corporation will be classified as a passive foreign investment company, or PFIC,
if (i) at least 75% of its gross income for the taxable year consists of passive
income or (ii) at least 50% of the average value of the corporation's assets
(determined as of the close of each quarter) in a taxable year is attributable
to assets that produce or are held for the production of passive income. For
this purpose, passive income generally includes dividends, interest, royalties,
rents (other than rents and royalties derived from the active conduct of a trade
or business and not derived from a related person), annuities and gains from
assets that produce passive income.


                                       83
<PAGE>
      Because a determination of PFIC status is a factual determination that
must be made annually at the close of each taxable year, it cannot at present be
determined with certainty whether we will become a PFIC in the current taxable
year or in future taxable years. This will depend on the sources of our income
and the relative values of our passive assets such as cash and our non-passive
assets, including goodwill. As a result of the private equity investment, we
will hold passive assets and earn passive income on funds, awaiting use in the
conduct of our business. In addition, the consummation of the exchange offer and
the resulting reduction of our outstanding liabilities may significantly affect
the relative values of our passive and active assets for PFIC purposes, due to
the specific mechanics of the PFIC calculation. Based on our projections of our
income and assets and our current plan of operation, we believe that we are not
currently a PFIC for U.S. federal income tax purposes. However, as noted above,
there can be no certainty in this regard until the close of the 2002 taxable
year, and our current belief that we are not a PFIC could be subject to change
in the future. We will make the determination of whether we are a PFIC on an
annual basis and notify you within 75 days of the end of any year in which we
become a PFIC.

      If we were to become a PFIC in any taxable year, a special tax regime
would apply to both (a) any "excess distribution" by us (generally, your ratable
share of distributions in any year that are greater than 125% of the average
annual distributions received by you in the three preceding years or your
holding period, if shorter) and (b) any gain realized on the sale or other
disposition (including a pledge) of your CPOs. Under this regime, any excess
distribution and realized gain will be treated as ordinary income and will be
subject to tax as if (a) the excess distribution or gain had been realized
ratably over your holding period in the CPOs, (b) the amount deemed realized had
been subject to tax in each year of that holding period at the highest
applicable tax rate in effect for that year and (c) the interest charge
generally applicable to underpayments of tax had been imposed on the taxes
deemed to have been payable in those years.

      You are urged to consult your own tax advisor as to the effect to you of
our company being a PFIC and the availability, if any, of either the "qualified
electing fund" or "mark-to-market" election as defined in the Code and the
regulations thereunder.

      CONTROLLED FOREIGN CORPORATION CONSIDERATIONS. If more than 50% of the
voting power of all classes of our capital stock or the total value of our
capital stock is owned, directly or indirectly, by "U.S. shareholders," we may
be treated as a controlled foreign corporation, or a CFC, under Subpart F of the
Code. U.S. shareholders are defined as citizens or residents of the United
States, United States domestic partnerships and corporations or estates or
trusts other than foreign estates or trusts, each of whom owns 10% or more of
the total combined voting power of all classes of our capital stock. The United
States generally taxes a U.S. shareholder of a CFC currently on its pro rata
share of the Subpart F income of the CFC. Such U.S. shareholder is generally
treated as having received a current distribution out of the CFC's Subpart F
income and is also subject to current U.S. tax on its pro rata share of the
CFC's earnings invested in U.S. property. In addition, gain from the sale or
exchange of stock in a CFC by a U.S. person who is or was a U.S. shareholder of
the CFC at any time during the five-year period ending with the sale or exchange
is treated as ordinary income to the extent of the CFC's earnings and profits
attributable to the stock sold or exchanged. If a foreign corporation is both a
PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC
with respect to U.S. shareholders of the CFC.

      Under the current ownership structure, we believe that we are not a CFC
for U.S. federal income tax purposes. However, because of the complexity of the
CFC rules, you should consult your own tax advisor as to the potential
application of these rules to you based on your particular circumstances.

Certain U.S. federal income tax consequences to non-U.S. holders of the new
notes and CPOs

      Subject to the discussion below concerning information reporting and
backup withholding, generally, a non-U.S. holder will not be subject to U.S.
federal income or withholding tax on distributions in respect of the new notes
or the CPOs, unless such income is effectively connected with the conduct by the
non-U.S. holder of a trade or business in the United States.

      A non-U.S. holder will generally not be subject to U.S. federal income or
withholding tax on gain realized on the sale or the other disposition of the new
notes or the CPOs unless (i) such gain is effectively connected with the conduct
of a United States trade or business by such non-U.S. holder or (ii) such
non-U.S. holder is present in the United States for 183 days or more during the
taxable year of sale or disposition and certain other conditions are met.


                                       84
<PAGE>
Information reporting and backup withholding

      In general, if you are a non-corporate U.S. holder (or do not come within
certain other exempt categories), information reporting requirements will apply
to certain payments of principal, premium and interest on the new notes or
dividends on the CPOs and to payments of the proceeds of the sale of the new
notes or CPOs made to you.

      Additionally, if you are a non-corporate U.S. holder (or do not come
within certain other exempt categories), you may be subject to backup
withholding at a rate of 30% (reduced to 29% for taxable years 2004 and 2005 and
to 28% for taxable years 2006 and thereafter) with respect to such payments,
unless you provide your taxpayer identification number (social security number
or employer identification number), certify that you are not subject to backup
withholding and otherwise comply with applicable requirements of the backup
withholding rules. Generally, you will provide such certification on IRS Form
W-9 ("Request for Taxpayer Identification Number and Certification") or a
substitute Form W-9.

      If you do not provide your correct taxpayer identification number, you may
be subject to penalties imposed by the IRS, as well as backup withholding.
However, any amount withheld under the backup withholding rules may be allowable
as a credit against your U.S. federal income tax liability (which might entitle
you to a refund), provided that you furnish the required information to the IRS.

      A non-U.S. holder generally will be exempt from information reporting
requirements and backup withholding, but may be required to comply with
certification and identification procedures in order to obtain an exemption from
information reporting and backup withholding.

MEXICAN TAXATION


      The following is a general discussion of the material consequences of the
exchange of the old notes, the investment in the new notes and CPOs and the
investment in outstanding old notes under the Mexican Income Tax Law (Ley del
Impuesto sobre la Renta) and rules and regulations thereunder, as currently in
effect based on the advice of PricewaterhouseCoopers, our tax advisors. This
summary of certain Mexican tax considerations deals only with holders of notes
and CPOs or of a beneficial interest therein that are not residents of Mexico
for Mexican tax purposes and that do not conduct a trade or business through a
permanent establishment or fixed base in Mexico (a "Foreign Holder").

      For purposes of Mexican taxation, an individual is a resident of Mexico if
he has a permanent home in Mexico, unless he has been in another country for
more than 183 calendar days, whether consecutive or not, in any one calendar
year and can demonstrate that he has become a resident of that country for tax
purposes. A legal entity is a resident of Mexico for tax purposes if it has been
incorporated under the laws of Mexico, or has established the principal
management of its business or the base of its effective direction in Mexico. A
Mexican citizen is presumed to be a resident of Mexico for tax purposes unless
such person can demonstrate otherwise.

United States/Mexico and other tax treaties

      A Convention for the Avoidance of Double Taxation and Prevention of Fiscal
Evasion, together with a related Protocol thereto (collectively, the "Tax
Treaty"), between the United States and Mexico entered into force on January 1,
1994. Provisions of the Tax Treaty that may affect the taxation of certain U.S.
holders of notes or CPOs are summarized below. The United States and Mexico have
also entered into an agreement that covers the exchange of information with
respect to tax matters. Mexico has also entered into and is negotiating several
other tax treaties that may reduce the amount of Mexican withholding tax to
which the notes may be subject. Holders of the notes and CPOs should consult
their own tax advisors as to the tax consequences, if any, of such treaties.

Mexican tax consequences to Foreign Holders of the exchange of old notes for
new notes and CPOs

      GENERAL. A Foreign Holder will not be subject to any Mexican tax upon the
exchange of the old notes for the new notes and the CPOs, since it will be
treated by us as additional consideration for Mexican tax purposes, paid to the
Foreign Holders in exchange for their tendered old notes.


                                       85
<PAGE>
      OTHER TAXES. A Foreign Holder will not be liable for Mexican estate, gift,
inheritance or similar taxes with respect of the exchange of the old notes, nor
will such a Foreign Holder be liable for Mexican stamp, registration or similar
taxes.

Mexican tax consequences to Foreign Holders of the notes

      TAXATION OF INTEREST AND PRINCIPAL. Under the Mexican Income Tax Law,
payments of interest made by Maxcom in respect of the new notes (including
payments of principal in excess of the issue price of such notes, which, under
Mexican law, are deemed to be interest) to a Foreign Holder will generally be
subject to a Mexican withholding tax assessed at a rate of 4.9% (the "Reduced
Rate"), provided that:

      -     the notes are offered through banks or brokerage houses in a country
            with which Mexico has a tax treaty in force;

      -     the notes are registered in the Special Section of the National
            Registry of Securities and Intermediaries (Registro Nacional de
            Valores e Intermediarios); and

      -     certain periodic information requirements by the Mexican Ministry of
            Finance (Secretaria de Hacienda y Credito Publico) are complied
            with.

      -     If these conditions are not met, the applicable withholding tax rate
            will be 10%.

      FOREIGN HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING WHETHER THEY
RESIDE IN A COUNTRY THAT HAS ENTERED INTO SUCH A TREATY WITH MEXICO WHICH IS
EFFECTIVE, AND IF SO, THE CONDITIONS AND REQUIREMENTS FOR OBTAINING BENEFITS
UNDER SUCH TREATY.

      However, if the beneficial owner, either directly or indirectly,
individually or jointly with related parties, of more than 5% of the interest
derived from the related securities, is any of the following:

      -     a shareholder of the issuer who owns, directly or indirectly,
            individually or jointly with related parties, more than 10% of the
            voting stock of the issuer, or

      -     a legal entity 20% of whose stock is owned, directly or indirectly,
            individually or jointly with related parties, by the issuer,

      then, the withholding tax rate will be 35%.

      Pursuant to Rule 3.25.15 (the "Reduced Rate Rule") issued by the Mexican
Ministry of Finance (Secretaria de Hacienda y Credito Publico) on May 31, 2002
payments of interest with respect to the notes made by us to Foreign Holders,
regardless of the place of residence or the tax regime applicable to the Foreign
Holder recipient of the interest, will be subject to withholding taxes imposed
at the Reduced Rate if:

      -     the notes are registered with the Special Section of the National
            Registry of Securities and Intermediaries and copies of approval of
            such registration are provided to the Ministry of Finance;

      -      we timely file with the Ministry of Finance certain
            information relating to the issuance of the new notes;

      -     we timely file with the Ministry of Finance on a quarterly basis
            information on the amount and dates of interest payments made during
            each quarter and information representing that no party related to
            us, directly or indirectly, is the effective beneficiary of more
            than five percent (5%) of the aggregate amount of each such interest
            payment; and

      -     we maintain records that evidence compliance with the conditions set
            forth above.


                                       86
<PAGE>
      We will comply with the first two conditions set forth above and expect
that the last two conditions will also be met and, accordingly, expect to
withhold Mexican tax from interest payments on the notes at the Reduced Rate
during the effectiveness of such rule.

      However, during the fiscal year 2002, the Tax Treaty is not expected,
generally, to have any material effect on the Mexican tax consequences described
herein, because, as described above, under Mexican Income Tax Law and
regulations as currently in effect, with respect to a U.S. holder that meets the
Reduced Rate Rule requirements described above, we will be entitled to withhold
taxes in connection with interest payments under the notes at the Reduced Rate.
From 2001 and beyond, holders of the notes should consult their own tax advisors
as to the possible application of the Tax Treaty.

      Payments of interest we make on the notes to non-Mexican pension or
retirement funds will be exempt from Mexican withholding taxes, if any such fund
is:

      -     the effective beneficiary of the interest;

      -     duly incorporated under the laws of its country of origin;

      -     exempt in its country of origin from income tax on interest income;
            and

      -     registered with the Ministry of Finance for that purpose.

      Under existing Mexican law and regulations, a Foreign Holder will not be
subject to any Mexican taxes in respect of payments of principal made by us with
respect to the notes.

      TAXATION OF ADDITIONAL AMOUNTS. We have agreed, subject to specified
exceptions and limitations, to pay Additional Amounts (as such term is defined
in "Description of the Notes -- Additional amounts") to the holders of the notes
in respect of the Mexican withholding taxes mentioned above. Payments of
Additional Amounts with respect to the notes will be subject to Mexican
withholding tax at the same rate applicable to interest paid on the notes.

      Holders or beneficial owners of the notes may be requested to provide
certain information or documentation necessary to enable us to establish the
appropriate Mexican withholding tax rate applicable to such holders or
beneficial owners. In the event that the specified information or documentation
concerning the holder or beneficial owner is requested and is not provided on a
timely basis, our obligation to pay Additional Amounts will be limited.

      TAXATION OF ACCRUED INTEREST. Interest accrued that is not due and payable
under the terms applicable to the old notes before the exchange of the old notes
for the new notes will not be subject to a Mexican income tax withholding under
the terms described above, but such interest will be subject to a Mexican income
tax withholding when such interest becomes due and payable under the new notes
after the exchange of the old notes for the new notes.

      GAIN ON DISPOSITIONS. Gains resulting from the sale or other dispositions
of the notes and by a Foreign Holder will not be deemed as an income arising
from Mexican source, and therefore will not be subject to Mexican income tax.

Mexican tax consequences to Foreign Holders of the CPOs

      DISTRIBUTIONS. Dividends, either in cash or in any other form, paid with
respect to the CPOs will be subject to withholding tax based on the amount of
the distributed dividend, multiplied by a factor of 1.5385, in 2002. For
following years the factor will decrease to 1.5152, 1.4925 and 1.4706 in 2003,
2004 and 2005 and thereafter.

      DISPOSITIONS. The sale or other disposition of the CPOs by a Foreign
Holder will not be subject to any Mexican tax if the sale is carried out through
the Mexican Stock Exchange or other securities market approved by the Ministry
of Finance and Public Credit (Secretaria de Hacienda y Credito Publico). Sales
or other dispositions of the CPOs made in other circumstances would be subject
to Mexican tax, regardless of the nationality or residence of


                                       87
<PAGE>
the transferor. However, under the Tax Treaty, a U.S. holder that is eligible to
claim the benefits of the Tax Treaty will be exempt from Mexican tax on gains
realized on a sale or other disposition of the CPOs in a transaction that is not
carried out through the Mexican Stock Exchange or such other approved securities
markets, so long as such holder did not own, directly or indirectly, 25% or more
of our outstanding shares within the twelve-month period preceding such sale or
other disposition.

Certain tax consequences to Mexican holders on the exchange or disposition of
the CPOs.

      The Mexican income tax effect for a Mexican resident holder on the taxable
disposition or exchange of the CPOs, may vary depending on the conditions of the
acquisitions, disposition or exchange of the CPOs, as well as on the
characteristics of the holders. Therefore, such holders should seek advice from
Mexican tax counsel to determine the effects on a case by case basis.

F.    DIVIDENDS AND PAYING AGENTS

      Not applicable.

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 Maxcom 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.

I.    SUBSIDIARY INFORMATION

      Not applicable.


                                       88
<PAGE>
ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

      The old notes, which are payable at a fixed annual rate of 13 3/4%,
constituted substantially all of our outstanding indebtedness at December 31,
2001. The new notes will not accrue or pay interest until March 1, 2006, and
after March 1, 2006, the new notes will accrue interest at a fixed annual rate
of 10%. As a result, we do not currently have any significant interest rate
risk.

FOREIGN EXCHANGE RISK

      Our primary foreign currency exposure relates to our U.S.
dollar-denominated debt. A substantial portion of this debt is incurred to
finance U.S. dollar-denominated capital expenditures. Substantially all of our
debt obligations at December 31, 2001 were denominated in U.S. dollars. This
will also be true immediately after the consummation of the exchange offer.
Therefore, we are exposed to currency exchange rate risks that could
significantly affect our ability to meet our obligations. We currently do not
enter into hedging transactions with respect to these foreign currency risks,
but continue to consider the appropriateness of this option.

      The exchange rate of the peso 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 our results of operations and
financial condition, including our ability to repay or repurchase the notes. At
December 31, 2001, an immediate 10% devaluation of the peso relative to the U.S.
dollar would have increased our interest expense by approximately Ps.36.4
million over a one-year period. On a pro forma basis after giving effect on
January 1, 2001 to the consummation of the exchange offer, at December 31, 2001,
an immediate 10% devaluation of the peso relative to the U.S. dollar would have
increased our interest expense over a one-year period by approximately Ps.2.1
million.

      To the extent capital expenditures are financed with operating cash flows,
we are also exposed to foreign currency fluctuations. Substantially all of our
capital expenditures are denominated in U.S. dollars. In addition, our operating
lease for our new headquarters building is denominated in U.S. dollars. See
"Item 5. Operating and Financial Review and Prospects -- B. Liquidity and
capital resources -- Other contractual obligations" for a description of our
contractual operating lease obligations denominated in dollars.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

      Not applicable.

      Pursuant to the terms of the exchange offer the indenture governing the
old notes was amended to among other things, eliminate:

      -     all the covenants restricting the incurrence of indebtedness, the
            making of investments, the granting of loans, the payment of
            dividends, the creation of liens, the entering into transactions
            with affiliates, the undertaking of mergers, consolidation or sales,
            the disposition of assets or subsidiary stock, a change in control
            and any limitations on the transfer of funds from subsidiaries to
            Maxcom;

      -     the redemption option in the event of a change of control; and;

      -     events of default related to the non-compliance with such covenants,
            cross-defaults, adverse judgments in excess of U.S.$5.0 million and
            certain bankruptcy events.

      The modification of the restrictive covenants permits Maxcom, absent the
existence of similar covenants under other indebtedness, to take actions that
could increase the credit risks, with respect to Maxcom and its subsidiaries,
faced by the holders of the old notes or that could otherwise be adverse to the
interests of the holders of the old notes.


                                       89
<PAGE>
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

      Maxcom is not in default under any of its obligations nor is any payment
of dividends in arrears.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

      Pursuant to the terms of the exchange offer, the indenture governing the
old notes was amended to, among other things, eliminate:

      -     all of the covenants restricting the incurrence of indebtedness, the
            making of investments, the granting of loans, the payment of
            dividends, the creation of liens, the entering into transactions
            with affiliates, the undertaking of mergers, consolidation of sales,
            the disposition of assets or subsidiary stock, a change in control
            and any limitations on the transfer of funds from subsidiaries to
            Maxcom;

      -     the redemption option in the event of a change of control; and

      -     events of default related to the non-compliance with such covenants,
            cross-defaults, adverse judgments in excess of U.S.$5.0 million and
            certain bankruptcy events.

      The modification of the restrictive covenants permits Maxcom, absent the
existence of similar covenants under other indebtedness, to take actions that
could increase the credit risks, with respect to Maxcom and its subsidiaries,
faced by the holders of the old notes or that could otherwise be adverse to the
interest of the holders of the old notes.

ITEM 15. RESERVED

      Not applicable.

ITEM 16. RESERVED

      Not applicable.


                                       90
<PAGE>
                                    PART II


ITEM 17. FINANCIAL STATEMENTS

      We have responded to Item 18 in lieu of responding to this Item.



                                       91
<PAGE>
ITEM 18. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----

<S>                                                                              <C>
Maxcom Telecomunicaciones, S.A. de C.V. and Subsidiaries

Report of Independent Accountants..........................................      F-2
Consolidated Balance Sheets as of December 31, 2000 and 2001...............      F-4
Consolidated Statements of Operations for the period from May 1, 1999
     (commencement of operations), through December 31, 1999, and for
     the years ended December 31, 2000 and 2001............................      F-5
Consolidated Statements of Changes in Shareholders' Equity for the
     years ended December 31, 1999 2000, and 2001..........................      F-6
Consolidated Statements of Changes in Financial Position for the
     years ended December 31, 1999 2000, and 2001..........................      F-7
Notes to the Consolidated Financial Statements.............................      F-8

Financial Statement Schedules

Report of Independent Accountants on Financial Statement Schedules.........      S-I
Valuation and Qualifying Accounts..........................................      S-II
</TABLE>


                                      F-1
<PAGE>
ITEM 19. EXHIBITS

<TABLE>
<CAPTION>
                                                                               PAGE
                                                                               ----

<S>        <C>                                                                 <C>
1.         Amended By-laws (estatutos) of Maxcom Telecomunicaciones,            E-1
           S.A. de C.V...................................................
2(a).      Not applicable.
2(b).
    1.     Indenture dated as of March 17, 2000 among Maxcom,                    *
           Corporativo en Telecomunicaciones, S.A. de C.V. and The Bank
           of New York, as Trustee.......................................
    2.     Indenture dated as of April 29, 2002 among Maxcom,                   E-54
           Corporativo en Telecomunicaciones, S.A., de C.V., Maxcom
           Servicios Administrativos, S.A., de C.V. and The Bank of New
           York, as Trustee..............................................
    3.     Second Supplemental Indenture dated as of April 29, 2002            E-175
           among Maxcom, Corporativo en Telecomunicaciones, S.A. de
           C.V., Maxcom Servicios Administrativos, S.A. de C.V. and the
           Bank of New York, as Trustee..................................
2(c).      Not applicable.
    1.     CPO Trust Agreement effective April 25, 2002 among Maxcom.,         E-183
           its shareholders and Banco Nacional de Mexico, S.A.,
           Institucion de Banca Multiple, Grupo Financiero Banamex
           Accival, acting as trustee....................................
    2.     Second amended and Restated Securityholders Agreement entered       E-219
           into as of April 29, 2002 among Maxcom and certain existing
           and new securityholders.......................................
4(a).      Agreement for the use of infrastructure and installation of           *
           fiber optic cable on the highways between Puebla and Mexico,
           dated August 18, 1998, between Amaritel, S.A. de C.V. (the
           predecessor of Maxcom Telecomunicaciones, S.A. de C.V.) and
           Iusatel, S.A. de C.V..........................................
4(b).      Interconnection Agreement for long distance services, dated           *
           January 22, 1999, between Amaritel and Telefonos de Mexico
           (Telmex) valid for a period of two years between February 1,
           1999 and January 1, 2001.  The agreement establishes that it
           would remain in effect after the expiration date if no
           further agreement for its termination or renewal has been
           entered into, in accordance with article 42 of the Mexican
           Telecommunications law........................................
4(c).      Local Interconnection Service Agreement, dated November 24,           *
           1998, between Amaritel, S.A. de C.V. and Telefonos de Mexico,
           S.A. de C.V...................................................
4(d).      Amendment to Local Interconnection Service Agreement, dated           *
           February 25, 1999, between Amaritel, S.A. de C.V. and
           Telefonos de Mexico, S.A. de C.V., originally entered into on
           November 24, 1998.............................................
4(e).      Metropolitan Network Capacity Sale Agreement, dated April 28,         **
           2000, between Maxcom Telecomunicaciones, S.A. de C.V. and
           Metro Net, S.A. de C.V. (including amendment dated December
           21, 2000).....................................................
4(f).      Telecommunications Service Agreement dated November 15, 1999,         *
           between Maxcom and Telefonos de Mexico, S.A. de C.V...........
4(g).      Telecommunications Service Agreement dated March 9, 1999,             *
           between Maxcom and Bestel S.A. de C.V., according to which
           Bestel will provide long distance and private calls services
           to Maxcom.....................................................
4(h).      Concession for the installation and operation of                      *
           telecommunications services granted to Amaritel, S.A. de C.V.
           by the Secretary of Telecommunications and Transport on
           December 20, 1996.............................................
4(i).      Amendment to Concession for the installation and operation of         *
           telecommunications services granted to Amaritel by the
           Secretary of Telecommunications and Transport on December 20,
           1996, dated September 8, 1999, extending the coverage of such
           concession to include various additional municipalities of
           the State of Mexico...........................................
4(j).      Amendment to Concession for the installation and operation of         *
           telecommunications services granted to Amaritel by the
           Secretary of Telecommunications and Transport on December 20,
           1996, dated December 7, 1999, authorizing Maxcom to employ
           whatever technologies it deems appropriate in providing
           telecommunications services to various municipalities.........
</TABLE>
<PAGE>
<TABLE>
<S>        <C>                                                                 <C>
4(k)       and operation of telecommunications services granted to
           Amaritel, S.A. de C.V. by the Secretary of Telecommunications
           and Transport on December 20, 1996, dated September 27, 2001,
           extending the coverage of such concession to include all of
           Mexico.......................................................       E-271
4(l).      Concession for a public telecommunications network in Regions         *
           3, 5 and 8 granted to Amaritel, S.A. de C.V. by the Secretary
           of Telecommunications and Transport on April 29, 1998.........
4(m).      Concession for the operation of point-to-multipoint microwave         *
           telecommunications services in Region 5 granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on April 23, 1998...................................
4(n)       Concession for the operation of point-to-multipoint microwave         *
           telecommunications services in Region 3 granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on April 23, 1998...................................
4(o).      Concession for the operation of point-to multipoint microwave         *
           telecommunications services in Region 8 granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on April 29, 1998...................................
4(p).      Concessions for the nationwide operation of point-to-point            *
           microwave telecommunications services using five frequency
           bands in the 56 MHz bandwidth, each granted to Amaritel, S.A.
           de C.V. by the Secretary of Telecommunications and Transport
           on June 4, 1998...............................................
4(q).      Concessions for the nationwide operation of point-to-point            *
           microwave telecommunications services using two frequency
           bands in the 100 MHz bandwidth, each granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on June 4, 1998.....................................
4(r).      Amendment to Concession for the operation of                          *
           point-to-multipoint telecommunications services in Regions 3,
           5, 8 granted to Amaritel, S.A. de C.V. by the Secretary of
           Telecommunications and Transport on April 1, 1998, dated
           October 12, 1999, regarding the start date for the initiation
           of services...................................................
4(s).      Amendment to Concession for the installation and operation of         *
           telecommunications services granted to Amaritel, S.A. de C.V.
           by the Secretary of Telecommunications and Transport on
           December 20, 1996, dated September 24, 1999 eliminating
           financial restrictions........................................
4(t).      Warrant Agreement dated as of March 17, 2000 between Maxcom           **
           Telecomunicaciones, S.A. de C.V. and The Bank of New York,
           acting as warrant agent.
5.         Not applicable.
6.         Computation of earnings per share.............................      E-285
7.         Computation of ratio of earnings to fixed charges.............      E-286
8.         No significant subsidiaries.
9.         Not applicable.
10.        None.
</TABLE>

*    Previously filed with Registration Statement on Form F-4 No. 333-11910
     submitted on May 5, 2000.

**   Previously filed with Annual Report on Form 20-F, as amended, submitted on
     June 29, 2001 and on September 28, 2001.
<PAGE>
                      GLOSSARY OF TELECOMMUNICATIONS TERMS

<TABLE>
<S>                                                    <C>
         ADSL...............................           ADSL is a physical-layer protocol that supports up to 8 Mbps
                                                       bandwidth downstream and up to 1 Mbps upstream.  The asymmetrical
                                                       aspect of ADSL technology makes it ideal for Internet browsing, video
                                                       on demand, and remote LAN access.  Users of these applications
                                                       typically download more information than they send.  ADSL also allows
                                                       simultaneous voice communication by transmitting data signals outside
                                                       of the voice frequency range.

         Band...............................           A range of frequencies between two defined limits.

         Bandwidth..........................           The relative range of analog frequencies or digital signals that can
                                                       be passed through a transmission medium, such as glass fibers, without
                                                       distortion.  The greater the bandwidth, the greater the information
                                                       carrying capacity.  Bandwidth is measured in Hertz (analog) or Bits
                                                       Per Second (digital).

         Capacity...........................           Refers to ability to transmit voice or data over telecommunications
                                                       equipment.

         Carrier............................           A provider of telecommunications transmission services by fiber, wire
                                                       or radio.

         Centrex service....................           A business telephone service developed originally by Lucent
                                                       Technologies which offers private branch exchange type features
                                                       directly from the local telephone company central office, such as
                                                       voicemail, call pick-up group, abbreviated dialing and multi-line
                                                       hunting.

         COFETEL............................           Comision Federal de Telecomunicaciones, the Mexican Federal
                                                       Telecommunications Commission.

         Digital............................           Describes 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 /
                                                       switching technologies employ a sequence of discrete, distinct pulses
                                                       to represent information, as opposed to the continuously variable
                                                       analog signal.

         E1.................................           A digital telephony format that carries data at the rate of 2.048
                                                       Mbps (DS-1 level).  E-1 is the European and Latin American version of
                                                       North American T-1, though T-1 is 1.544 Mbps.

         Fiber optic technology.............           Fiber optic systems use laser-generated light to transmit voice, data
                                                       and video in digital format through ultra-thin strands of glass.
                                                       Fiber optic systems are characterized by large circuit capacity, good
                                                       sound quality, resistance to external signal interference and direct
                                                       interface to digital switching equipment and digital microwave
                                                       systems.  A pair of fiber optic strands using advanced transmission
                                                       technologies is capable of carrying over 258,000 simultaneous
                                                       telephone calls.  Because optical signals disperse over distance, they
                                                       must be regenerated / amplified at sites located along the fiber optic
                                                       cable.  Fiber optic systems using earlier generation fiber require
                                                       frequent intervals between regeneration / amplifier sites.  Greater
                                                       distances between regeneration / amplifier sites afforded by the use
                                                       of advanced fiber generally translate into substantially lower
                                                       installation and operating costs and fewer potential
</TABLE>


                                      G-1
<PAGE>
<TABLE>
<S>                                                    <C>
                                                       points of failure.

         Fixed wireless local loop..........           A wireless local telephony service using the 3.4-3.7 GHz frequency
                                                       band.

         FTTH...............................           Fiber-to-the-home, reference to an all fiber-optic public telephone
                                                       network design, where broadband services are delivered to the customer
                                                       premises / network interface by fiber optic.

         Gulf region........................           115 cities and towns in eleven states in eastern Mexico, which
                                                       includes the cities of Puebla, Tampico, Veracruz, Reynosa, Cancun,
                                                       Chetumal, Merida, Ciudad del Carmen, Campeche, Coatzacoalcos and
                                                       Tuxtla Gutierrez, among others.

         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.

         ISDN...............................           Integrated Services Digital Network.  ISDN is an international
                                                       standard that provides end-to-end digital connectivity to support a
                                                       wide range of voice, data and video services.

         Kbps...............................           Kilobits per second, a measurement of speed for digital signal
                                                       transmission expressed in thousands of bits per second.

         LAN................................           Local area network, a private data communications network linking a
                                                       variety of data devices, such as computer terminals, personal computer
                                                       terminals, personal computers and microcomputers, all housed in a
                                                       defined building, plant or geographic area.

         Microwave technology...............           Although limited in capacity compared with fiber optic systems,
                                                       digital microwave systems offer an effective and reliable means of
                                                       transmitting lower volume and narrower bandwidths of voice, data and
                                                       video signals over intermediate and longer distances.  Microwaves are
                                                       very high frequency radio waves that can be reflected, focused and
                                                       beamed in a line-of-sight transmission path.  As a result of their
                                                       electro-physical properties, microwaves can be used to transmit
                                                       signals through the air, with relatively little power.  To create a
                                                       communications circuit, microwave signals are transmitted through a
                                                       focusing antenna, received by an antenna at the next station in the
                                                       network, then amplified and retransmitted.  Because microwaves
                                                       disperse as they travel through the air, this transmission process
                                                       must be repeated at repeater stations, which consist of radio
                                                       equipment, antennae and back-up power sources, located on average
                                                       every 30 kilometers along the transmission route.

         Mbps...............................           MegaBits per second.  A measurement of speed for digital signal
                                                       transmission expressed in millions of bits per second (Mbps).

         Multi-line hunting.................           A value-added service that allows for multiple calls to be received
                                                       with a single telephone number.

         PCS................................           Personal Communications Services.  PCS has come to represent two
                                                       things: first, a digital wireless communications service operating
                                                       over the 1.9 GHz band; and second, more generically, a wireless
</TABLE>


                                      G-2
<PAGE>
<TABLE>
<S>                                                    <C>
                                                       communications service utilizing a digital network that offers typical
                                                       features such as voice, video and data applications, short messaging,
                                                       voicemail, caller identification, call conferencing and call
                                                       forwarding.  Generic PCS suppliers promote this service on the ability
                                                       of its features to be customized, or "bundled," to the needs of the
                                                       individual customers.
         Point-to-multipoint microwave
         transmission......................            A transmission using microwave technology by which a single signal
                                                       goes from one origination point to many destination points.

         Point-to-point microwave
         transmission.......................           A transmission using microwave technology by which a signal goes from
                                                       one point to another, usually connected by some dedicated transmission
                                                       line.

         POTS...............................           Plain Old Telephone Service.  The basic service supplying standard
                                                       single line telephones, telephone lines and access to the public
                                                       switched network.

         SCT................................           Secretaria de Comunicaciones y Transportes, the Mexican
                                                       Communications and Transportation Ministry.

         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.

         Teledensity........................           Teledensity is a measure of telephony service in a population.  It is
                                                       calculated by dividing the total subscriber base (number of lines in
                                                       service) by the inhabitants and multiplying by 100.  It is generally
                                                       used as a comparative measure of network development.  All teledensity
                                                       figures are reported in subscribers per 100 inhabitants.

         Web-hosting........................           A service performed by Internet service providers (also known as
                                                       ISPs) and Internet access providers (also known as IAPs) consisting in
                                                       the hosting of outside companies web pages to be displayed on the
                                                       Internet.

         xDSL...............................           XDSL is a physical-layer protocol that supports bandwidth downstream
                                                       and upstream.
</TABLE>


                                                             G-3
<PAGE>
                                   SIGNATURES

      Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the registrant certifies that it meets all requirements for filing
on Form 20-F and has duly created this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                    MAXCOM TELECOMUNICACIONES, S.A. DE C.V.



                                       By:   /s/ ELOISA MARTINEZ
                                             -----------------------------------
                                             Eloisa Martinez
                                             Chief Financial Officer
DATE: June 30, 2002

<PAGE>

            MAXCOM TELECOMUNICACIONES, S.A. DE C.V. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Reports of Independent Accountants..........................  F-2
  Consolidated Balance Sheets as of December 31, 2000 and
     2001...................................................  F-4
  Consolidated Statements of Operations for the period from
     May 1, 1999 (commencement of operations) through
     December 31, 1999 and for the years ended December 31,
     2000 and 2001..........................................  F-5
  Consolidated Statements of Changes in Shareholders' Equity
     for the years ended December 31, 1999, 2000 and 2001...  F-6
  Consolidated Statements of Changes in Financial Position
     for the years ended December 31, 1999, 2000 and 2001...  F-7
  Notes to Consolidated Financial Statements for the years
     ended December 31, 1999, 2000 and 2001.................  F-8
</Table>

                                       F-1
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

Mexico D.F., March 13, 2002, except for Note 23 for which the date is April 30,
2002

To the Board of Directors and Shareholders of
Maxcom Telecomunicaciones, S. A. de C. V. and Subsidiaries:

We have audited the accompanying consolidated balance sheet of Maxcom
Telecomunicaciones, S. A. de C. V. and its subsidiaries as of December 31, 2001,
and the related consolidated statement of operations, of changes in
stockholders' equity and of changes in financial position for the year then
ended 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 audit. The consolidated balance sheet of the
Company as of December 31, 2000 and the related consolidated statements of
operations for the period from May 1, 1999 (commencement of operations) through
December 31, 1999 and for the year ended December 31, 2000 and consolidated
statements of changes in shareholders' equity and changes in financial position
for the years ended December 31, 1999 and 2000 were audited by other independent
accountants whose report, dated February 12, 2001, expressed an unqualified
opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in Mexico and the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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
financial position of Maxcom Telecomunicaciones, S. A. de C. V. and its
subsidiaries at December 31, 2001, and the results of its operations, its
changes in shareholders' equity and its changes in its financial position for
the year then ended in conformity with accounting principles generally accepted
in Mexico.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is highly leveraged and has suffered recurring
losses from operations that raises substantial doubt about its ability to
continue as a going concern. In addition, under Mexican Companies Law (Ley
General de Sociedades Mercantiles), an interested party may file a claim for
dissolution of the Company and force it to liquidate, if, as is the case of the
Company, the accumulated losses exceed two thirds of its capital stock.
Management's plans in regard to these matters are also described in Note 2. In
addition, the restructuring mentioned in Note 23 improved the Company's
financial position. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

Accounting principles generally accepted in Mexico vary in certain significant
respects from the accounting principles generally accepted in the United States.
The application of the latter would have affected the determination of
consolidated net income expressed in Mexican Pesos for the year ended December
31, 2001 and the determination of consolidated stockholders' equity and
consolidated financial position also expressed in Mexican Pesos at December 31,
2001 to the extent summarized in Note 22 to the consolidated financial
statements.

PricewaterhouseCoopers
/s/ C.P. Juan Manuel Ferron
C.P. Juan Manuel Ferron
Audit Partner

                                       F-2
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Maxcom Telecomunicaciones, S.A. de C.V. and subsidiary

We have audited the accompanying consolidated balance sheets of Maxcom
Telecomunicaciones, S.A. de C.V. and subsidiary, as of December 31, 2000, and
the related consolidated statements of operations for the period from May 1,
1999 (commencement of operations) through December 31, 1999 and for the year
ended December 31 2000, consolidated changes in shareholders' equity and changes
in financial position for the years ended December 31, 1999 and 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the consolidated
financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Maxcom
Telecomunicaciones, S.A. de C.V. and subsidiary, as of December 31, 2000, the
consolidated result of its operations for the period from May 1, 1999
(commencement of operations) through December 31, 1999 and for the year ended
December 31 2000, the consolidated changes in shareholders' equity and the
changes in its financial position for the years ended December 31, 1999 and
2000, in conformity with Mexican generally accepted accounting principles
("Mexican GAAP").

Mexican GAAP vary in certain respects from accounting principles generally
accepted in the United States ("U.S." GAAP"). The application of U.S. GAAP
referred to in Note 22 would have affected the determination of consolidated net
loss expressed at the purchasing power of pesos as of December 31, 2001 for the
years ended December 31, 1999 and 2000 and the determination of the consolidated
shareholders' equity and consolidated financial position, also expressed at the
purchasing power of pesos as of December 31, 2001, as of and for the years ended
December 31, 1999 and 2000, to the extent summarized in Note 22 to the
consolidated financial statements.

These consolidated financial statements have been translated into English solely
for the convenience of the readers of this language.

BDO INTERNATIONAL
/s/ BDO INTERNATIONAL
MEXICO CITY,
FEBRUARY 12, 2001

                                       F-3
<PAGE>

           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)
        (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF
            (DECEMBER 31, 2001 AND THOUSANDS OF U.S. DOLLARS ("$"))

<Table>
<Caption>
                                                            2000           2001         2001
                                                        ------------   ------------   ---------
<S>                                                     <C>            <C>            <C>
                                            ASSETS
Current assets:
Cash and cash equivalents (Note 5)....................  Ps.1,119,478   Ps.  172,583   $  18,849
Restricted cash (Note 12).............................       401,326        186,803      20,402
Accounts receivable:
  Customers, net of allowance of Ps.8,670 and
     Ps.18,631 in 2000 and 2001, respectively.........        40,359         57,889       6,323
  Value-added tax refundable (Note 6).................        17,669         13,803       1,508
  Other sundry debtors................................           524         12,288       1,342
                                                        ------------   ------------   ---------
                                                              58,552         83,980       9,173
Inventory, net........................................         9,408         28,513       3,114
Prepaid expenses, net.................................        11,310         10,303       1,125
                                                        ------------   ------------   ---------
  Total current assets................................     1,600,074        482,182      52,663
Restricted cash (Note 12).............................       192,602             --          --
Frequency rights, net (Note 7)........................       110,885        104,837      11,450
Telephone network systems and equipment, net (Note
  9)..................................................     1,134,617      1,368,870     149,505
Preoperating expenses, net (Note 10)..................       252,055        221,853      24,230
Intangible assets, net (Note 11)......................       338,145        299,528      32,714
Rent deposits of Ps.27,448 in 2001 and other assets...         8,200         31,310       3,420
                                                        ------------   ------------   ---------
  Total assets........................................  Ps.3,636,578   Ps.2,508,580   $ 273,982
                                                        ============   ============   =========



                             LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Interest payable (Note 12)............................       108,682         99,138      10,828
Accrued expenses and other accounts payable...........       130,363        139,336      15,218
Customer deposits.....................................         5,769          3,754         410
Payroll and other taxes payable.......................         9,698         17,524       1,914
                                                        ------------   ------------   ---------
  Total current liabilities...........................       254,512        259,752      28,370
Long-term liabilities:
Senior notes, net (Note 12)...........................     2,920,879      2,439,834     266,473
                                                        ------------   ------------   ---------
  Total liabilities...................................  Ps.3,175,391   Ps.2,699,586   $ 294,843
                                                        ============   ============   =========
Commitments and contingencies (Notes 12, 14, 19 and
  20)
Shareholders' equity:
Capital stock, no par value (Note 15).................     1,203,306        976,096     106,607
Additional paid-in capital (Note 15 and 16)...........       128,239        102,309      11,174
Accumulated deficit (Note 17):
  Prior year's deficit................................      (247,059)      (616,301)    (67,311)
  Net loss for the period.............................      (623,299)      (653,110)    (71,331)
                                                        ------------   ------------   ---------
                                                            (870,358)    (1,269,411)   (138,642)
  Total shareholders' equity (deficit)................       461,187       (191,006)    (20,861)
                                                        ------------   ------------   ---------
  Total liabilities and shareholders' equity..........  Ps.3,636,578   Ps.2,508,580   $ 273,982
                                                        ============   ============   =========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-4
<PAGE>

           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE PERIOD AND YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)
 (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF DECEMBER 31,
                                      2001
        (AND THOUSANDS OF U.S. DOLLARS ("$"), EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
                                       1999             2000             2001            2001
                                  --------------   --------------   --------------   ------------
                                                                                       (NOTE 3)
<S>                               <C>              <C>              <C>              <C>
Net revenues....................  Ps.    100,331   Ps.    277,780   Ps.    314,388   $     34,336
Operating costs and expenses:
  Network operating costs.......          49,854          112,510          150,439         16,431
  Selling, general and
     administrative expenses....         183,790          345,748          429,945         46,958
  Depreciation and
     amortization...............          84,483          209,894          268,473         29,322
                                  --------------   --------------   --------------   ------------
  Total operating costs and
     expenses...................         318,127          668,152          848,857         92,711
                                  --------------   --------------   --------------   ------------
  Operating loss................        (217,796)        (390,372)        (534,469)       (58,375)
Integral cost (income) of
  financing:
  Interest expense..............          52,671          417,592          426,956         46,631
  Interest income...............         (11,428)        (102,265)         (76,766)        (8,384)
  Gain on repurchase of debt
     (Note 12)..................              --               --         (121,249)       (13,243)
  Exchange loss (gain), net.....          10,859           11,177          (90,787)        (9,916)
  Gain on net monetary
     position...................         (22,688)         (94,069)         (82,656)        (9,028)
                                  --------------   --------------   --------------   ------------
                                          29,414          232,435           55,498          6,060
Nonrecurring charges (Note
  14)...........................              --               --           62,215          6,795
Other income (expense), net.....             151             (492)            (177)           (19)
                                  --------------   --------------   --------------   ------------
Loss before taxes...............        (247,059)        (623,299)        (652,359)       (71,249)
Asset tax (Note 19).............              --               --              751             82
                                  --------------   --------------   --------------   ------------
  Net loss......................  Ps.   (247,059)  Ps.   (623,299)  Ps.   (653,110)  $    (71,331)
                                  ==============   ==============   ==============   ============

Loss per share, basic...........  Ps.     (24.07)  Ps.     (54.37)  Ps.     (47.50)  $      (5.19)
Weighted-average shares
  outstanding...................      10,264,827       11,463,667       13,748,445     13,748,445
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-5
<PAGE>

           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)
        (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF
            (DECEMBER 31, 2001 AND THOUSANDS OF U.S. DOLLARS ("$"))

<Table>
<Caption>
                                                        ADDITIONAL                       TOTAL
                                            CAPITAL      PAID-IN      ACCUMULATED    SHAREHOLDERS'
                                             STOCK       CAPITAL        DEFICIT         EQUITY
                                           ----------   ----------   -------------   -------------
                                           (NOTE 15)                   (NOTE 17)
<S>                                        <C>          <C>          <C>             <C>
Balances at December 31, 1998............  Ps.835,372   Ps. 30,777   Ps.        --    Ps. 866,149
Increase in capital stock................      10,628           --              --         10,628
Stock options (Note 16)..................          --        2,154              --          2,154
Contributions for future increases of
  capital................................          --          377              --            377
Net loss.................................          --           --        (247,059)      (247,059)
                                           ----------   ----------   -------------    -----------
Balance at December 31, 1999.............     846,000       33,308        (247,059)       632,249
Increase in capital stock................     350,069           --              --        350,069
Contributions for future increases of
  capital................................          --          100              --            100
Stock options (Note 16)..................          --      102,068              --        102,068
Warrants (Note 16).......................       7,237       (7,237)             --             --
Net loss.................................          --           --        (623,299)      (623,299)
                                           ----------   ----------   -------------    -----------
Balance at December 31, 2000.............   1,203,306      128,239        (870,358)       461,187
Increase in capital stock................      25,930      (25,930)             --             --
Losses absorbed..........................    (254,057)          --         254,057             --
New paid-in capital......................         917           --              --            917
Net loss.................................          --           --        (653,110)      (653,110)
                                           ----------   ----------   -------------    -----------
Balance at December 31, 2001.............  Ps.976,096   Ps.102,309   Ps.(1,269,411)   Ps.(191,006)
                                           ==========   ==========   =============    ===========
U.S. Dollars.............................  $  106,607   $   11,174   $    (138,642)   $   (20,861)
                                           ----------   ----------   -------------    -----------
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-6
<PAGE>

           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)

        (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF
           (DECEMBER 31, 2001 AND THOUSANDS OF U.S. DOLLARS ("$")) )

<Table>
<Caption>
                                              1999           2000           2001         2001
                                           -----------   ------------   ------------   ---------
                                                                                       (NOTE 3)
<S>                                        <C>           <C>            <C>            <C>
Operating activities:
Net loss.................................  Ps.(247,059)  Ps. (623,299)  Ps. (653,110)  $ (71,331)
Adjustments to reconcile net loss to
  resources provided by (used for)
  operating activities:
  Depreciation and amortization..........       84,483        209,894        268,473      29,322
  Nonrecurring charges...................           --             --         62,215       6,795
  Gain on repurchase of debt.............           --             --       (121,249)    (13,243)
Changes in operating assets and
  liabilities:
  (Increase) decrease in:
     Accounts receivable, net............      (32,595)        (7,764)       (17,530)     (1,915)
     Inventory, net......................       (7,644)        (1,763)       (19,106)     (2,087)
     Prepaid expenses, net...............        2,333         (5,300)         1,007         110
  (Decrease) increase in:
     Restricted cash, liabilities and
       others, net.......................       54,669       (383,508)       142,732      15,590
                                           -----------   ------------   ------------   ---------
     Resources used for operating
       activities........................     (145,813)      (811,740)      (336,568)    (36,759)
                                           -----------   ------------   ------------   ---------
Financing activities:
  Issuance of capital stock..............       10,628        357,335            917         100
  Additional paid-in capital.............        2,530         94,932             --          --
  Repurchase of debt.....................           --             --        (94,400)    (10,310)
  Proceeds from loans and notes
     payable.............................      676,031      2,011,368             --          --
                                           -----------   ------------   ------------   ---------
  Resources provided by (used in)
     financing activities................      689,189      2,463,635        (93,483)    (10,210)
                                           -----------   ------------   ------------   ---------
Investing activities:
  Preoperating expenses..................      (88,419)            --             --          --
  Investment in telephone network systems
     and equipment, net of
     dispositions........................     (692,835)      (397,503)      (472,639)    (51,621)
  Intangible assets......................      (25,104)      (308,484)        (7,307)       (798)
  Other assets...........................       (2,655)        (1,233)       (36,898)     (4,030)
                                           -----------   ------------   ------------   ---------
  Resources used for investing
     activities..........................     (809,013)      (707,220)      (516,844)    (56,449)
                                           -----------   ------------   ------------   ---------
Cash and cash equivalents:
Net (decrease) increase in cash and cash
  equivalents............................     (265,637)       944,675       (946,895)   (103,418)
Beginning balance........................      440,440        174,803      1,119,478     122,267
                                           -----------   ------------   ------------   ---------
Ending balance...........................  Ps. 174,803   Ps.1,119,478   Ps.  172,583   $  18,849
                                           ===========   ============   ============   =========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-7
<PAGE>

           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

 (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF DECEMBER 31,
                                      2001
        (AND THOUSANDS OF U.S. DOLLARS ("$"), EXCEPT PER SHARE AMOUNTS)

NOTE 1 -- INCORPORATION AND BUSINESS:

Maxcom Telecomunicaciones, S. A. de C. V. ("Maxcom" or the "Company"), is a
Mexican company incorporated on February 28, 1996. Its main line of business is
the construction and operation of a telephone network, with the purpose of
providing local, national and international long-distance, data and other value-
added services, and virtual private network service, within Mexico.

The Company started its commercial operations in May 1999. Therefore, from its
incorporation through April 30, 1999, the Company was in the preoperating and
development stage.

Effective February 3, 1997 (as amended December 7, 1999 and September 27, 2001),
Mexico's Ministry of Communications and Transportation (the "SCT") awarded the
Company a concession to install and operate a public telecommunication network
in Mexico. This concession is non-exclusive; its initial term is for 30 years;
and it contains certain renewal rights. The concession grants the Company the
right to provide local telephone services in the Federal District of Mexico and
in thirteen states. It also grants the Company the right to provide
long-distance, data and other value-added services nationwide, although it is
not currently providing long-distance service outside their current customer
base. In September, 2001, the SCT amended the concession for national coverage.
The Company must meet certain conditions in order for the concession to remain
effective, such as building certain networks and providing certain services by
predetermined dates, among other things.

In October 1997, the Company was awarded 7 nationwide point-to-point and three
regional point-to-multipoint microwave concessions, each for 20 years.

On November 24, 1998 (as amended March 23, 1999), the Company entered into an
agreement with Telefonos de Mexico, S. A. de C. V. ("Telmex"), through which
both parties agreed to provide interconnection services to each other's local
telecommunications network. This agreement calls for reciprocal interconnection
rates for local-to-local services through September 15, 2002.

On January 22, 1999, the Company entered into another agreement with Telmex
through which Maxcom agreed to provide Telmex with interconnection services for
Telmex's long-distance traffic. This agreement is valid through September 15,
2002, with the possibility of extension after such date.

During 1999, 2000 and 2001, the Company entered into interconnection and
reselling agreements with several other local and long distance carriers and
mobile phone companies. See Note 4.

NOTE 2 -- GOING CONCERN:

From the beginning of its commercial operations, the Company has had negative
operating cash flow and losses from operations due to its recent establishment
and the Company's initial investment in telephone network systems and equipment,
preoperating expenses and frequency rights. The recoverability of this
investment will depend on the ability of the Company to obtain financing to
complete development and on the future profitable commercial exploitation of the
telephone network.

During 2001, the Company's accumulated losses exceeded the equivalent of
two-thirds of its capital stock. According to the Mexican Companies Law (Ley
General de Sociedades Mercantiles), an interested party may file a claim for
dissolution of the Company, forcing it to liquidate.

The Company has incurred net losses of Ps.247,059, Ps.623,299 and Ps.653,110 for
the years ended December 31, 1999, 2000 and 2001, respectively. The losses were
due to higher costs of borrowing and lower-
                                       F-8
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

than-expected sales growth. During 2000, the Company issued 13 3/4% Senior Notes
with a principal amount of $300 million, maturing on April 1, 2007. Due to the
subsequent event mentioned in Note 23, the Company is able to face its cash
needs for the next year.

These factors together raise substantial doubt about the Company's ability to
continue as a going concern.

The Company has experienced significant turnover of key executive officers. For
the most part, the current management team has been with the Company since April
2001 and is dedicated to the turnaround of the business. Through 2001, the
Company's administration has worked aggressively to mitigate its financial
difficulties. The Company is undertaking the following actions:

A.  CORPORATE DEBT RESTRUCTURING --

    As mentioned in Note 23, the Company carried out a restructuring of the
    Senior Notes. As a result of these negotiations, the Company was able to
    exchange a portion of the Senior Notes for a combination of preferred stock
    and new notes with more favorable terms, such as i) interest free debt for a
    period of four years; and ii) a lower interest rate once interest does start
    to accrue.

B.  PRIVATE EQUITY INVESTMENT OF $66.2 MILLION --

    The Company received a capital infusion of $66.2 million from some of its
    existing shareholders, bondholders and certain new investors.

The consolidated financial statements do not give effect to any adjustments
which would be necessary if the Company is not able to continue as a going
concern.

NOTE 3 -- BASIS OF PRESENTATION:

A.  CONSOLIDATION --

The accompanying consolidated financial statements include the accounts of
Maxcom and subsidiaries Corporativo en Telecomunicaciones, S. A. de C. V.
("Corporativo") and Maxcom Servicios Administrativos, S. A. de C. V. ("MSA").
Both are wholly-owned Mexican subsidiaries, whose main line of business is the
rendering of administrative and technical services, mainly to Maxcom. All
intercompany balances and transactions have been eliminated in the
consolidation.

Certain prior year accounts have been reclassified for comparative presentation
purposes only.

B.  CONVENIENCE TRANSLATION --

U.S. Dollar amounts ($) shown in the consolidated financial statements have been
included solely for the convenience of the reader and were translated from
Mexican Pesos, as a matter of arithmetic computation only, at the December 31,
2001, noon-buying rate of Ps. 9.1560 per U.S.$1.00, as published by The Federal

                                       F-9
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Reserve Bank of New York. Such translation should not be construed as a
representation that the Mexican Peso amounts have been or could be converted
into U.S. Dollars at this or any other rate.

NOTE 4 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying consolidated financial statements are expressed in Mexican
Pesos, denoted by the symbol "Ps." and have been prepared in accordance with
accounting principles generally accepted in Mexico ("Mexican GAAP"). The
significant accounting policies used by the Company in the preparation of its
financial statements, including the concepts, methods and criteria related to
the recognition of the effects of inflation on the financial information, are
summarized below:

a.  RECOGNITION OF THE EFFECTS OF INFLATION --

The financial statements of the Company have been prepared in accordance with
Bulletin B-10, "Recognition of the Effects of Inflation on Financial
Information," as amended, issued by the Mexican Institute of Public Accounting
("MIPA"), which provides guidance for the recognition of the effects of
inflation.

     i.   The Company restates its income statement to reflect the purchasing
          power of the Mexican Peso as of the most recent reporting date
          (December 31, 2001), using a restatement factor derived from the
          change in the National Consumer Price Index ("NCPI") from the month in
          which the transaction occurred to the most recent year-end. Other
          financial statements have been restated to Mexican Pesos in purchasing
          power as of December 31, 2001, using the NCPI as of that date. The
          financial statements of the previous years have also been restated in
          terms of the purchasing power of the Mexican Peso as of the most
          recent reporting date, thus making them comparable, by using a
          restatement factor derived from the change in the NCPI, which for 1999
          and 2000 was 1.1376 and 1.0440, respectively. Therefore, these amounts
          differ from those previously reported.

     ii.   Shareholders' equity accounts are restated to express them in terms
           of constant Pesos. The restated amounts are determined by applying
           factors derived from the NCPI to the historical balances.

     iii.  The result on net monetary position represents the inflationary gain
           or loss, as determined by applying factors derived from the NCPI, on
           the Company's monthly net monetary assets and liabilities during the
           period.

     iv.   Integral income and cost of financing consists of interest income and
           expense, exchange gains or losses and the gain or loss on net
           monetary position. Integral income and cost of financing during the
           development stage period was capitalized to preoperating expenses.
           Once the Company commenced operations, amortization on these costs
           began over a ten-year term.

     v.   Bulletin B-12, "Statement of Changes in Financial Position," issued by
          the MIPA, specifies the appropriate presentation of the statement of
          changes in financial position when the financial statements have been
          restated in constant monetary units. Bulletin B-12 identifies the
          sources and applications of resources as the differences between
          beginning and ending financial statement balances in constant monetary
          units. The Bulletin also requires that monetary and foreign exchange
          gains and losses not be treated as non-cash items in the determination
          of resources provided by operations.

                                       F-10
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B.  CASH AND CASH EQUIVALENTS --

Cash equivalents include highly liquid short-term investments valued at market.

C.  INVENTORY --

   Materials and supplies are valued at the lower of acquisition cost on a
   weighted-average basis or net realizable value ("NRV").

D. TELEPHONE NETWORK SYSTEMS AND EQUIPMENT --

   Telephone network systems and equipment are recorded at acquisition cost and
   restated by applying factors derived from the change in the NCPI since
   acquisition date.

   Telephone network equipment for resale are valued at the lower of acquisition
   cost on a LIFO basis or NRV.

   Depreciation is calculated by the straight-line method on the restated cost
   based on the estimated useful lives of the assets. Depreciation is charged to
   results of operations. During the development stage, depreciation was applied
   to preoperating expenses.

   The Company constructs certain of its own network systems and related
   facilities. Internal costs directly related to the construction of such
   facilities are capitalized. Such internal costs capitalized during the year
   were Ps.11,227 and Ps.23,845 (including Ps.5,213 of integral cost of
   financing for 2001) in 2000 and 2001, respectively. There were none
   recognized in 1999.

   Beginning January 1, 2001, the Company elected to capitalize integral cost of
   financing attributable to assets under construction. Capitalized integral
   financing costs include interest cost, gains from monetary position and
   foreign exchange losses and are determined by reference to the Company's
   average interest cost on outstanding borrowings.

   Maintenance and repairs are expensed as incurred. Replacements and
   betterments are capitalized. The cost and related reserves of assets sold or
   retired are removed from the accounts, and any resulting gain or loss is
   reflected in results of operations.

E.  FREQUENCY RIGHTS --

   Frequency rights are recorded at acquisition cost and restated by applying
   factors derived from the change in the NCPI since acquisition date.
   Amortization is calculated by the straight-line method over the term of the
   concession (see Note 7), from the start of the Company's operations.

F.  PREOPERATING EXPENSES --

   All expenses incurred during the development stage or in specific projects in
   progress are capitalized. Such expenses are amortized on a straight-line
   basis over ten years, once the corresponding project commences operations.

G. INTANGIBLES --

   Purchased software and certain activities of developing internal-use software
   are capitalized and amortized over its expected useful lives. Other
   activities, such as training, maintenance and re-engineering, are expensed as
   incurred.

   Debt issuance costs are amortized on a straight-line basis over the
   outstanding term of the related debt.

                                       F-11
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

H. 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 future cash flows
   estimated to be generated by these assets to their respective carrying
   amounts. In the event an 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.

I.  TRANSACTIONS AND BALANCES IN FOREIGN CURRENCIES --

   Transactions in foreign currencies are recorded at the rates of exchange
   prevailing on the dates they are entered into or settled. Monetary assets and
   liabilities of Mexican companies denominated in those currencies are stated
   in Mexican Pesos at the year-end closing rate published in Mexico's Official
   Gazette. Exchange gains or losses are applied to integral cost of financing.

J.  INCOME TAX AND STATUTORY EMPLOYEES' PROFIT SHARING --

   The Company has incurred tax losses since inception and accordingly has not
   provided for income taxes and statutory employees' profit sharing.

   Starting in the year 2000, the Company adopted the guidelines of the revised
   Bulletin D-4, "Accounting for Income Tax, Assets Tax and Employees' Profit
   Sharing," issued by the MIPA. This Bulletin requires the recognition of
   deferred income tax by using the comprehensive asset and liability method.
   Under this method, deferred income taxes are calculated by applying the
   respective income tax rate to the temporary differences between the financial
   statements' carrying amounts and the tax basis of existing assets,
   liabilities and tax losses. An analysis of the corresponding effects is shown
   in Note 19.

   In July 2000, the MIPA issued Circular 54, "Bulletin D-4 Interpretations,"
   which is intended to clarify certain concepts in connection with the
   guidelines and application of D-4.

   Through December 31, 1999, deferred income tax was recognized by using the
   partial liability method, which consisted of calculating deferred income tax
   only for significant distinct and non-recurring temporary differences arising
   from the carrying amount of related assets and liabilities and their
   respective tax basis.

K. MANAGEMENT ESTIMATES --

   Generally accepted accounting principles require that, in preparing a
   company's financial statements, management make estimates and assumptions
   that affect the reported amounts of assets and liabilities and disclose
   contingent assets and liabilities at the date of the financial statements.
   Actual results could differ from those estimates.

L.  FINANCIAL INSTRUMENTS --

   The Company's financial instruments consist principally of cash and cash
   equivalents, restricted cash, accounts receivable and payable, and notes
   payable. The carrying amounts of such financial instruments, as reflected in
   the balance sheet, approximate their fair value as of December 31, 2000 and
   2001, except for long-term debt. Long-term debt is stated at its face value;
   however, at December 31, 2001, its fair value was 20% of face value, based on
   quoted market prices.

                                       F-12
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

   In February 2000, the MIPA issued Bulletin C-2, "Financial Instruments,"
   which is effective as of January 1, 2001. Bulletin C-2 provides guidance for
   recognizing, measuring and disclosing financial assets and liabilities,
   including accounting for derivative instruments and certain hedging
   transactions. Bulletin C-2 requires that all derivative financial instruments
   be recorded in the balance sheet at their fair values and changes in the fair
   value of financial instruments are recorded in each period in the income
   statement. There was no effect on the financial position of the Company upon
   adoption.

M. REVENUE RECOGNITION --

   The Company recognizes revenues from telephone services provided to
   customers, from the sale of customer-premise equipment, from services
   provided to other telephone-service companies (such as interconnection
   services), and from installation charges.

   Revenues from services provided to customers, including maintenance, are
   recognized in the month the service is rendered.

   Revenues from the sale of customer-premise equipment are recognized at the
   time of the sale and delivery and installation of such equipment.

   Revenues from interconnections services are recognized on an accrual basis.
   The Company has entered into agreements with several telephone carriers with
   a "bill and keep" feature. Under this arrangement, if the imbalance between
   local calls originated by the other carrier and terminated by Maxcom and
   calls originated by Maxcom and terminated by the other carrier during a month
   does not exceed 70%, then no interconnection fee amounts are payable by the
   net user of interconnection services. If the imbalance exceeds 70% in any
   given month, the net user incurs a liability per minute. If the Company fails
   to maintain a significant percentage of residential users, then the "bill and
   keep" arrangement will be terminated and asymmetrical interconnection rates
   may apply.

   The Company also has interconnection agreements for mobile and long distance
   services with other carriers, however, they do not incorporate a bill and
   keep feature.

   Service activation and installation revenues are deferred and recognized over
   the life of the contract.

   Advances from customers are classified as current liabilities until they are
   refunded. When the contract is rescinded, these deposits are applied to any
   outstanding balance.

   For the year ended December 31, 2001, the three largest customers accounted
   for more than 23% of revenues. Management believes that this concentration
   will be reduced over time as the size of operations grow. However, revenues
   could be negatively affected, at least in the short term, if one or more of
   these customers cancel their contract.

   The Company creates a reserve for 90% of any receivable due over 90 days,
   except for high volume customers, whose accounts are 100% reserved for once
   they reach 30 days past due.

N. STOCK-BASED COMPENSATION --

   At December 31, 1999, 2000 and 2001, the Company had several stock option
   transactions (Note 16). Since Mexican GAAP does not have specific guidance to
   value and record transactions of this nature, the Company adopted accounting
   principles generally accepted in the United States ("U.S. GAAP") pursuant to
   Mexican Bulletin A-8, "Supplementary Application of International Accounting
   Standards." Bulletin A-8 recommends the application of another promulgation
   when such instances arise. Accounting Principles Board ("APB") Opinion 14,
   "Accounting for Convertible Debt and Debt Issued with Stock Purchase
   Warrants," APB Opinion 25," Accounting for Stock Issued to Employees," and
   Financial

                                       F-13
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

   Accounting Standards Board ("FASB") Statement 123, "Accounting for
   Stock-Based Compensation," have been applied to the warrant and stock option
   grants.

   In accordance with APB 25, the Company recognizes compensation expense for
   its employee stock option plan using the intrinsic-value method of
   accounting. Under the terms of the intrinsic-value method, compensation cost
   is the excess, if any, of the market price of the stock at the grant date, or
   other measurement date, over the amount an employee must pay to acquire the
   stock.

   In accordance with FAS 123, compensation expense for stock options and
   warrants given to non-employees was determined based on fair value using the
   Black Scholes valuation model.

   Debt with detachable warrants is accounted for using APB 14. A portion of the
   proceeds from the issuance of such debt is allocated to additional paid-in
   capital against debt discount. The allocation is based on the relative fair
   value of the debt versus the warrants. The debt discount is subsequently
   amortized over the outstanding term of the debt on a straight-line basis,
   which does not materially differ from the interest method. Amortization
   expense recognized for the years ended December 31, 2000 and 2001 was
   Ps.9,157 and Ps.2,262, respectively.

O.  ADVERTISING AND PROMOTIONAL COSTS --

   The Company expenses costs of advertising and promotions as incurred.
   Advertising and promotional expenses were Ps.19,030 , Ps.17,641 and Ps.20,715
   in 1999, 2000 and 2001, respectively.

P.  SEGMENT REPORTING --

   The International Accounting Standards Committee's IAS No. 14, "Segment
   Reporting" ("IAS 14"), is applicable to Mexican companies under Bulletin A-8.
   IAS 14 requires that companies look to their internal organizational
   structure and internal reporting system for purposes of identifying segments.
   For all years presented the Company operates only one segment and does not
   have any particular geographical location. The revenue by geographical
   location included in Note 21 is a specific disclosure required by the SCT in
   the Company's concession title.

Q.  NEW ACCOUNTING STANDARDS --

   In August 2000, the MIPA issued Bulletin B-4, "Comprehensive Income," which
   became effective January 1, 2001. This Bulletin sets forth new guidelines for
   reporting and disclosing comprehensive income and its components. Based on
   this Bulletin, comprehensive income includes net income for the year and
   other items which, in accordance with other bulletins, are recorded directly
   in shareholders' equity and which are not a result of shareholders'
   transactions, such as contributions, reductions or distributions of capital.
   Currently, the Company does not have any components of other comprehensive
   income other than net income.

   During 2000, the MIPA issued a revised 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. 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.

     As discussed in Note 4.l. above, during 2000, the MIPA issued Bulletin C-2,
     "Financial Instruments," which requires companies to recognize all
     financial instruments, including derivative contracts, as either assets or
     liabilities in the balance sheet and to measure them at fair value. The
     Company has not entered into derivative contracts either to hedge existing
     risk or for speculative purposes. Accordingly, the Company did not have a
     material effect on its financial statements upon adoption of this Bulletin.

                                       F-14
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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 of
     commitments. The revised Bulletin C-9 states that (i) all contingent assets
     that have a practically 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 cannot be accounted for in the financial statements and are not
     required to be disclosed. Bulletin C-9 requires disclosure of committed
     amounts when it represents significant fixed asset additions. The
     provisions of Bulletin C-9 are required to be applied beginning on January
     1, 2003, although early adoption is recommended. Management is currently
     evaluating the impact that the adoption of Bulletin C-9 will have on its
     consolidated financial statements.

     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 preoperating
     costs should be expensed as a period cost, unless they could be classified
     as development costs. Bulletin C-8 requires that intangible assets,
     including previously existing intangible assets, with indefinite useful
     lives should not be amortized, but must be tested for impairment annually.
     Intangible assets with finite useful lives must 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.
     Management is currently evaluating the impact that the adoption of Bulletin
     C-8 will have on its consolidated financial statements.

NOTE 5 -- CASH AND CASH EQUIVALENTS:

Investments maturing within 30 days at December 31 consist of:

<Table>
<Caption>
                                                                  2000          2001
                                                              ------------   ----------
<S>                                                           <C>            <C>
Bank of America: $22,710 and $2,725 in certificates of
  deposit, bearing annual interests at 6.32% and 1.68%,
  respectively..............................................  Ps.  227,609   Ps. 24,913
HSBC Republic: $72,375 and $13,090, in a 5.94% and 1.875%,
  respectively, in a certificate of deposit.................       725,372      119,673
Paine Webber Incorporated: $15,192 and $983 in money market
  instruments, bearing interest at 6.71% and 2.23% per
  annum.....................................................       152,266        8,991
Cash........................................................        14,231       19,006
                                                              ------------   ----------
                                                              Ps.1,119,478   Ps.172,583
                                                              ============   ==========
</Table>

NOTE 6 -- VALUE-ADDED TAX REFUNDABLE:

Value-Added Tax ("VAT") is levied on goods and services acquired, at a standard
rate of 15%. VAT does not usually represent an additional cost to business
enterprises because the amounts paid will be offset against the VAT liability of
the Company generated on the billing to customers. Because the Company has paid
VAT on investments, costs and expenses incurred, the VAT paid has resulted in a
tax overpayment subject to refund. This tax is being refunded on a regular
basis.

                                       F-15
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7 -- FREQUENCY RIGHTS:

Frequency rights at December 31 consist of the following:

<Table>
<Caption>
                                                                 2000         2001
                                                              ----------   ----------
<S>                                                           <C>          <C>
Frequency rights............................................  Ps.120,965   Ps.120,966
Less -- Accumulated amortization............................     (10,080)     (16,129)
                                                              ----------   ----------
                                                              Ps.110,885   Ps.104,837
                                                              ==========   ==========
</Table>

On October 3, 1997, the Mexican federal government granted the Company
concessions to use and exploit different bands of the radio-electric spectrum
and to establish point-to-point and point-to-multi-point microwave links. The
concession became effective February 28, 1998, and will run through to the year
2018.

For the years ended December 31, 1999, 2000 and 2001, the Company recorded
amortization expense of Ps.4,031, Ps.6,049 and Ps.6,049, respectively.

NOTE 8 -- TRANSACTIONS WITH RELATED PARTIES:

     For the period ended December 31, related party expense transactions were
as follows:

<Table>
<Caption>
                                                                1999        2000        2001
                                                              ---------   ---------   --------
<S>                                                           <C>         <C>         <C>
Transactions:
  Office and site lease(1)..................................  Ps. 2,717   Ps.   196   Ps.   --
  Compensation in connection with the operation agreement
     and other expenses with CT Global Telecommunications,
     Inc.(2)................................................     76,029      37,282      1,221
  Strategic assistance agreement and other expenses to
     Bachow and Associates(3)...............................      2,092       1,772        464
  Advisory fee and other expenses to certain
     shareholders(4)........................................        941       1,112        229
  Travel expenses to BancBoston(5)..........................        181          93        246
  Advertising and other management services to Operadora
     Plusgamma(6)...........................................      1,946         660      6,295
                                                              ---------   ---------   --------
                                                              Ps.83,906   Ps.41,115   Ps.8,455
                                                              =========   =========   ========
</Table>

Related party payables, classified within accrued expenses and other accounts
payable, as of December 31 consist of:

<Table>
<Caption>
                                                               2000     2001
                                                              ------   ------
<S>                                                           <C>      <C>
  Compensation in connection with the operation agreement
     and other expenses with CT Global Telecommunications,
     Inc....................................................  Ps.500   Ps. --
  Strategic assistance agreement and other expenses to
     Bachow and Associates..................................      --      133
  Expenses to BancBoston....................................      41       --
  Advertising and other management services expense to
     Operadora Plusgamma(6).................................      --      796
                                                              ------   ------
                                                              Ps.541   Ps.929
                                                              ======   ======
</Table>

---------------

(1) The Company leases a site, such site is located within the installations of
    Radio Centro Group which is controlled by the family of one of the
    shareholders.

(2) For the year 2000, expense relates to operative consulting services provided
    from warrant holders. For 2001, expense relates to the refund of travel
    expenses for board meetings.

(3) The Company entered into an agreement in which Bachow and Associates, a
    shareholder, provided it with strategic advisory services.

                                       F-16
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) Services provided during 2000 by Bachow and Associates, BancAmerica
    International Investment Corporation and L.A. Strategic Capital Partners II
    LLP, all of which were shareholders

(5) Refund of travel expenses to certain shareholders.

(6) Advertising paid to a company owned by the family of one of the
    shareholders.

NOTE 9 -- TELEPHONE NETWORK SYSTEMS AND EQUIPMENT, NET:

Telephone network systems and equipment, net at December 31 consists of:

<Table>
<Caption>
                                                                                       USEFUL LIFE
                                                             2000           2001         (YEARS)
                                                         ------------   ------------   -----------
<S>                                                      <C>            <C>            <C>
Office furniture.......................................  Ps.    6,194   Ps.    8,513        10
Transportation equipment...............................        15,882         28,286         4
Engineering equipment..................................         9,323          9,356        10
Computer equipment.....................................        29,113         44,119      3.33
Telecommunication equipment and network................       786,899        917,650        10
Electronic equipment...................................       194,803        203,472      3.33
Radio equipment........................................       196,635        224,107        10
Leasehold improvements.................................        54,661         84,861        20(1)
Other..................................................         6,044          8,662        10
                                                         ------------   ------------
                                                            1,299,554      1,529,026
Construction in process:
  Telecommunications...................................        27,973        162,907
Capitalized internal costs.............................        11,227         35,072        10
Less: Accumulated depreciation and amortization........      (204,137)      (358,135)
                                                         ------------   ------------
                                                         Ps.1,134,617   Ps.1,368,870
                                                         ============   ============
</Table>

---------------

(1) Or life of the lease, whichever is shorter.

During 2001, the Company wrote-off Ps.8,612, net of accumulated amortization of
Ps.1,322, in leasehold improvements related to its vacancy of its original
building lease.

For the years ended December 31, 1999, 2000 and 2001, the Company recorded
depreciation and amortization (of leaseholds) expense of Ps.58,269, Ps.140,659
and Ps.186,309, respectively.

NOTE 10 -- PREOPERATING EXPENSES:

For the years ended December 31, 1999, 2000 and 2001, the Company recorded
amortization expense of Ps.19,911, Ps.30,217 and Ps.30,191, respectively.
Accumulated amortization was Ps.50,128 and Ps.80,319 as of December 31, 2000 and
2001, respectively.

                                       F-17
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11 -- INTANGIBLES:

Intangibles as of December 31 consist of:

<Table>
<Caption>
                                                                 2000         2001
                                                              ----------   ----------
<S>                                                           <C>          <C>
Software licenses...........................................  Ps. 17,665   Ps. 39,367
Infrastructure rights.......................................     132,718      119,412
Debt issuance costs and other assets........................     217,335      211,891
                                                              ----------   ----------
                                                                 367,718      370,670
Accumulated amortization....................................     (29,573)     (71,142)
                                                              ----------   ----------
                                                              Ps.338,145   Ps.299,528
                                                              ==========   ==========
</Table>

For the years ended December 31, 1999, 2000 and 2001, the Company recorded
amortization expense of Ps.2,269, Ps.32,968 and Ps.45,925, respectively. This
included Ps.714, Ps.3,048 and Ps.6,396 of software amortization expense,
respectively.

NOTE 12 -- LONG-TERM DEBT:

Long-term debt as of December 31 consists of:

<Table>
<Caption>
                                                                  2000           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
$275,000 ($300,000 in 2000) 13.75% Senior Notes due April,
  2007......................................................  Ps.3,006,726   Ps.2,514,132
Less -- Discount (net of accumulated amortization)..........       (85,847)       (74,298)
                                                              ------------   ------------
                                                              Ps.2,920,879   Ps.2,439,834
                                                              ============   ============
</Table>

On March 17, 2000, Maxcom issued $300 million Senior Notes, maturing on April 1,
2007. The main characteristics of these Notes are as follows: (a) unsecured
senior obligations of the Company; (b) pari passu in right of payment to all
existing and future senior indebtedness of the Company; (c) senior in right of
payment to any future subordinated obligations of the Company; (d) subject to
registration with the Securities and Exchange Commission ("SEC"), pursuant to a
Registration Rights Agreement; and (e) unconditionally guaranteed by Corporativo
and MSA. These notes accrue interest at the rate of 13.75% per annum (14.46%
including the withholding tax effect according to prevailing tax regulations in
the year 2001) and are payable semiannually in arrears on April 1 and October 1,
commencing on October 1, 2000. During May and June of 2001, the Company spent
U.S.$10 million for the repurchase in the open market of U.S.$25 million of
notes. As a result, the Company recognized a pre-tax gain of Ps.121,249.

RESTRICTED CASH:

Additionally, the first four semiannual scheduled interest payments were secured
pursuant to a Pledge and Escrow Agreement in a trust, through an historical
deposit of Ps.728,414 ($77.9 million). The trust is invested in a portfolio of
U.S. government securities. The portfolio was in an amount intended to be
sufficient to fulfill said first four payments. As of December 31, 2000 and
2001, this fund amounted to approximately Ps.593.9 and Ps.186.8 million ($59 and
$20 million), respectively, which is presented as restricted cash. After the
mentioned payments, the remaining balance of the fund, if any, will be released
from the pledge.

On September 29, 2000, the Notes were exchanged pursuant to a transaction
registered with the SEC for Series "B" Senior Notes, with substantially
identical terms to those of the old notes, except that the Series "B" can be
freely traded in the open market.

The indenture contains restrictive covenants including: limitations on
indebtedness; limitations on investments, the redemption of capital stock,
prepayment of subordinated obligations and granting of loans;

                                       F-18
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

restrictions on distributions from restricted subsidiaries; limitations on sales
of assets and subsidiary stock; limitation on affiliate transactions; limitation
of sale or issuance of capital stock of restricted subsidiaries; limitations on
liens; limitation on sale/leaseback transactions; and restrictions on mergers
and consolidations, among other items. If an event of default occurs and is
continuing, the trustee or the holders of 25% in principal amount of the
outstanding notes may declare the principal and accrued, but unpaid, interest on
all the notes to be due and payable. As of December 31, 2001, the Company had
complied with all the covenants.

NOTE 13 -- EMPLOYEES BENEFITS:

As of December 31, 2000 and 2001, the Company had the following labor
obligations:

A.  INDEMNITIES TO EMPLOYEES --

   Employees who are dismissed without cause are entitled to severance
   compensation determined in accordance with the provisions of Mexico's Federal
   Labor Law.

B.  SENIORITY PREMIUMS --

   In the event of dismissal without cause, retirement after 15 years of service
   or death, employees are entitled to a seniority premium determined in
   accordance with the provisions of Mexico's Federal Labor Law.

     As of December 31, 2000 and 2001, these items were not significant because
     the seniority of the vast majority of the Company's employees was less than
     two years.

NOTE 14 -- NONRECURRING CHARGES:

Nonrecurring charges at December 31 consist of:

<Table>
<Caption>
                                                                2001
                                                              ---------
<S>                                                           <C>                  <C>
Inventory write-off(1)......................................   Ps.6,575
Maintenance contract(1).....................................      3,409
Lease penalty reserve(2)....................................      6,731
Installation expense write-off(3)...........................     13,364
Fixed asset write-off(1)....................................     32,136
                                                              ---------
                                                              Ps.62,215
                                                              =========
</Table>

---------------

(1) New management wrote-off certain assets and recognized the cost of an
    overdue maintenance contract which no longer are useful for their revised
    objectives.

(2) The Company maintains an operating lease on its headquarters. During 2001,
    the Company vacated a portion of such leased building and moved its
    headquarters to a new building. However, the previous lease has a term of 15
    years, which commenced on October 1, 1998. The Company is looking for a
    sublessor to take over the commitment. In the meantime, the Company
    continues to make payments for the whole of this previous lease. The Company
    is liable for a penalty fee for early termination, the amount of which is
    dependent on the length of time it has actually been leasing the building.

(3) Installation costs that were originally capitalized were reversed to the
    extent they related to customers who are no longer part of the Company's
    customer base.

                                       F-19
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 15 -- CAPITAL STOCK:

Under Mexico's Federal Telecommunications Law and Foreign Investment Law, no
more than 49% of the full voting capital stock of a Mexican corporation holding
a concession to provide local and long-distance telecommunication services may
be held by foreigners.

The capital stock is represented by registered shares with no par value, which
are divided into Series "A", "B" and "C" common shares and Series "N"
limited-voting shares. Series "A" shares may only be subscribed to, acquired or
owned by Mexicans, Series "B" shares may be freely subscribed to and Series "C"
shares can only be subscribed to, acquired or owned by the agent acting as
trustee of a Neutral Investment Trust. Series "N" shares, which may also be
freely subscribed to, are limited-voting shares. Series "C" and "N" shares are
deposited in the Neutral Investment Trust, which in turn issues Certificados de
Participacion Ordinarios ("CPO's"). Series "C" and "N" shares may not be
computed for purposes of determining the foreign-investment percentage under the
terms of the Foreign Investment Law. In compliance with a ruling of the Mexican
Foreign Investment Authorities, in accordance with the Foreign Investment Law
and the Company bylaws, Series "B" shares may not represent more than 49% of the
voting right shares; Series "C" shares may not represent more than 44.5% of the
Company's total outstanding capital stock; and Series "N" shares may not
represent more than 44.5% of the Company's total outstanding capital stock.

The Extraordinary Shareholders' Meeting, held on February 21, 2000, resolved to
modify the equity structure of the Company by converting 50% of Series "N"
shares into new shares of Series "C" shares, at a rate of 1:1. The new Series
"C" shares have full voting and economic rights. They can only be subscribed by
the agent acting as trustee of a Neutral Investment Trust incorporated in
accordance with Mexico's Foreign Investment Law. The trust in turn issues CPOs.
Statutorily, the Trustee must vote the Series "C" shares in the same manner as
the majority of the Series "A" shares are voted. The corporate governance of the
Company remains unaffected.

The same shareholders' meeting also approved the conversion of 255,000 Series
"A" shares into 127,500 Series "C" shares and 127,500 Series "N" shares and the
conversion of 245,000 Series "B" shares into 122,500 Series "C" shares and
122,500 Series "N" shares.

The Extraordinary Shareholders' Meetings, held on June 5 and September 29, 2000,
resolved the following:

1.  To increase the capital stock in an amount of $35 million by issuing
    3,355,446 shares, of which 1,677,723 were Series "C" shares and 1,677,723
    were Series "N" Shares. The shareholders paid $10.44 for each share or its
    equivalent in Mexican Pesos at the exchange rate published in the Official
    Gazette on the day of the payment.

2.  To cancel 4,660,000 Series "N" shares which had previously been authorized
    by the Company to fulfill commitments of the Company in accordance with
    several stock options and warrants agreements (Note 16).

3.  To issue 1,679,866 nominative Series "C" shares and 1,679,866 Series "N"
    shares to be held authorized but not outstanding to fulfill the commitments
    derived from the stock options and warrant agreement (Note 16).

                                       F-20
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, the Company's outstanding shares were:

<Table>
<Caption>
                                                              1999         2000         2001
                                                           ----------   ----------   ----------
<S>                                                        <C>          <C>          <C>
Capital stock:
  Series "A".............................................   1,531,428    1,276,428    1,276,428
  Series "B".............................................   1,471,373    1,226,373    1,226,373
  Series "C".............................................          --    5,622,822    5,622,822
  Series "N".............................................   7,320,190    5,622,822    5,622,822
                                                           ----------   ----------   ----------
  Total issued and outstanding...........................  10,322,991   13,748,445   13,748,445
Authorized and not outstanding:
  Series "C".............................................          --    1,679,866    1,679,866
  Series "N".............................................   4,660,000    1,679,866    1,679,866
                                                           ----------   ----------   ----------
  Total authorized.......................................  14,982,991   17,108,177   17,108,177
</Table>

Of the total outstanding shares, 765,714 Series "A" shares and 763,113 Series
"B" shares represent the minimum fixed portion, with no withdrawal rights, of
Maxcom's capital stock, while the remaining "A", "B", "C" and "N" Series shares
represent the variable portion of the capital stock.

Under the May 1998 Securityholders Agreement, as amended and restated on August
18, 2000, if the Company registers any equity securities for a primary or
secondary public offering prior to May 21, 2002, it must permit parties to the
Securityholders Agreement to include their shares in such an offering. The
Company will bear all expenses of any primary or secondary public offering,
other than the fees of counsel to the holders of the registration rights and any
underwriting commission or discounts. If the Company does not register the
equity securities in a primary or secondary public offering prior to May 21,
2005, the Series "N" shareholders will have the right to retain an investment
banker to: (a) sell substantially all of the assets of the Company; (b) merge or
consolidate into another company; or (c) require parties to the Shareholders
Agreement to sell their shares and distribute the proceeds to the shareholders.

As of December 31, the Company's capital stock consists of:

<Table>
<Caption>
                                                                  2000          2001
                                                              ------------   ----------
<S>                                                           <C>            <C>
Capital stock...............................................    Ps.966,732   Ps.926,916
Restatement for effects of inflation........................       262,465       49,180
                                                              ------------   ----------
  Total capital stock.......................................     1,229,197      976,096
Expenses incurred in connection with private placement......       (19,084)          --
Restatement for effects of inflation........................        (6,807)          --
                                                              ------------   ----------
                                                              Ps.1,203,306   Ps.976,096
                                                              ============   ==========
</Table>

On the October 16, 2001 Shareholders' Meeting, the capital stock was reduced to
absorb the accumulated losses of Ps.254,057.

NOTE 16 -- STOCK OPTIONS:

A.  EMPLOYEE STOCK OPTION PLANS

   i.  Executive stock option plan --

        In May 1998, the Company implemented an executive stock option plan.
        This plan provides that the Company grant options, on every April 1,
        commencing in 1999 through April 2001, to its executive

                                       F-21
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

       officers. Under this plan, a technical committee determines the executive
        officers to whom options to purchase Series "N" shares are granted, as
        well as the terms of those options.

        Generally, options are awarded once certain criteria have been met and
        vest either immediately or over four years (20% upon grant and 20% each
        year thereafter). In the event the employee ceases to be employed by the
        Company, all unvested options are forfeited. Options expire ten years
        from the date of grant.

        On April 1, 1999, 2000 and 2001, the Company granted 142,250, 583,000
        and 206,820 options at $8.70, $10.40 and $12.55 per share, respectively.

   ii.  Board of Directors

        Each member of the Board is entitled to received options to purchase 250
        CPOs at an exercise price of $0.02 per CPO, each time the member attends
        a Board meeting. The Chairman of the Board is entitled to receive 500
        CPOs each time (s)he attends a meeting. One CPO is convertible to one
        series "C" share and one series "N" share.

        Options vest immediately and expire ten years from the date of grant.

Based on APB Opinion No. 25, compensation expense is determined based on the
market or fair-value price of the stock at the measurement date less the amount,
if any, that the employee is required to pay for the stock.

In connection with the above described plans, the Company recorded unearned
deferred compensation expense of Ps.11,007. This amount will be amortized over
the related vesting period. The Company recognized compensation expense of
Ps.9,398, Ps.681 and Ps.1,316 during 1999, 2000 and 2001.

Pursuant to the additional disclosure requirements of FAS 123, the fair value of
options and warrants granted to directors and officers were calculated on the
respective grant dates using the Black Scholes model with the following
assumptions:

<Table>
<Caption>
                                                              FISCAL YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                              1999   2000   2001
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Expected dividend yield.....................................    --     --     --
Expected stock price volatility.............................    --     --     --
Risk-free interest rate.....................................  5.15%  6.35%  4.67%
Expected life of options....................................     5      5      5
</Table>

If the Company had elected to recognize compensation cost based on the fair
value at the date of grant, consistent with the method as prescribed by FAS 123,
net loss for the years ended December 31 would have changed to the pro forma
amounts indicated below:

<Table>
<Caption>
                                                           1999          2000          2001
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Net loss:
  As reported........................................   Ps.(247,059)  Ps.(623,299)  Ps.(653,110)
  Pro forma..........................................      (248,388)     (625,603)     (652,455)
EPS:
  As reported........................................   Ps.  (24.07)  Ps.  (54.37)  Ps.  (47.50)
  Pro forma..........................................        (24.20)       (53.11)       (47.46)
</Table>

                                       F-22
<PAGE>
           MAXCOM TELECOMUNICACIONES, 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 years ended
December 31, is presented below (in thousands of shares):

<Table>
<Caption>
                                                 1999                 2000                 2001
                                          ------------------   ------------------   ------------------
                                                   WEIGHTED-            WEIGHTED-            WEIGHTED-
                                                    AVERAGE              AVERAGE              AVERAGE
                                                   EXERCISE             EXERCISE             EXERCISE
                                          SHARES     PRICE     SHARES     PRICE     SHARES     PRICE
                                          ------   ---------   ------   ---------   ------   ---------
<S>                                       <C>      <C>         <C>      <C>         <C>      <C>
Outstanding at beginning of year........    --       $  --      138      $ 8.70       714     $10.12
  Granted...............................   242        5.11      593       10.27     1,008      13.25
  Exercised.............................   100        0.01       10        0.01        --         --
  Forfeited.............................     4        8.70        7        9.54         1      11.01
                                           ---       -----      ---      ------     -----     ------
Outstanding at the end of the year......   138        8.70      714       10.12     1,721      11.95
                                           ---       -----      ---      ------     -----     ------
Options exercisable at end of year......    28        8.70      174        9.88       447       8.28
                                           ---       -----      ---      ------     -----     ------
Weighted-average fair value of options
  granted during the year (expressed in
  U.S. Dollars).........................             $3.42               $ 2.28               $ 0.21
                                                     =====               ======               ======
</Table>

The following table summarizes the stock options outstanding for employees (in
thousands of shares):

<Table>
<Caption>
                                                          OUTSTANDING               EXERCISABLE
                                                 -----------------------------   ------------------
                                                            WEIGHTED-AVERAGE              WEIGHTED-
                                                          --------------------             AVERAGE
                                    RANGE OF              REMAINING   EXERCISE            EXERCISE
                                     PRICES      NUMBER     LIFE       PRICE     NUMBER     PRICE
                                   -----------   ------   ---------   --------   ------   ---------
    <S>                            <C>           <C>      <C>         <C>        <C>      <C>
    December 31, 1999............  $      8.70    138       9.25       $ 8.70      28      $ 8.70
                                   -----------    ---       ----       ------     ---      ------

    December 31, 2000............  $8.70-10.45    714       9.06       $10.12     174      $ 9.88
                                   -----------    ---       ----       ------     ---      ------

    December 31, 2001............  $      0.01     87       9.41       $ 0.01      87      $ 0.01
                                    8.70-10.45    713       8.06        10.12     319        9.98
                                   12.55-15.06    921       9.28        14.50      41       12.55
                                   -----------    ---       ----       ------     ---      ------
</Table>

B.  WARRANTS FOR SERVICES RENDERED

   i.  Nissho Iwai American Corp. stock options:

        On March 24, 1998, the Company granted options to Nissho Iwai for
        337,471 Series "N" shares at fixed exercise prices per share of $10.87,
        vesting immediately and expiring March 2005. These options were issued
        in connection with a financing agreement and their cost was to be
        amortized over the 7-year life of the financing. However since the
        financing agreement terminated in March of 2000, the remaining
        unamortized balance was expensed in 2000.

   ii.  CT Global Telecommunications, Inc. ("CTGT") stock options:

        On May 21, 1998, CTGT was given the opportunity to earn up to 250,000
        Series "N" shares at an exercise price of $8.70. These options will
        expire two years after CTGT disposes of its equity participation in
        Maxcom. CTGT's rights to these options are subject to certain
        performance objectives. On this basis, the Company granted CTGT 50,000
        and 77,500 immediately vested Series "N" shares during 1999 and 2000
        (none in 2001), respectively. The cost of these options was expensed as
        granted. The shares subject to this options agreement are limited to a
        maximum gain of $40.00 per share.

                                       F-23
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

   iii.  Bachow and Associates ("Bachow") stock options:

        On May 21, 1998, Bachow was given the opportunity to earn up to 100,000
        Series "N" shares at an exercise price of $8.70 expiring two years after
        Bachow Investment Partners III L.P. disposes of its current equity
        participation in Maxcom. Bachow's right to exercise the options was
        subject to performance objectives. As of December 31, 2000, Bachow had
        accomplished all objectives, which gave it the right to exercise the
        total of the options (30,000 in 1998 and 70,000 in 2000). The cost of
        these options was expensed as granted. The shares subject to this
        options agreement are limited to a maximum gain of $40.00 per share.
        Bachow may elect to have the Company finance up to 95% of the exercise
        price with a 7-year term non-recourse loan that will be secured by the
        shares upon exercise. Bachow will pay the Company 5% of the $870 cost.
        During 1999 and 2000, Bachow advanced the $44 towards the exercise of
        its options and such amount is reflected in additional paid-in capital.

        In addition, on April 28, 2000, the Company issued options to purchase
        94,000 shares at an exercise price of $0.01 for management services
        rendered from Bachow, L.A. Strategic Partners II LLP and BancAmerica
        International Investment Corporation. The cost of these options was also
        expensed as incurred.

   iv.  Warrants in connection with the offering of the Notes:

        The Company granted the bondholders, initial purchasers and underwriters
        of the Senior Notes up to 876,491 warrants to purchase an equivalent
        amount of Series "N" shares at an exercise price of $0.01 per share (or
        $0.02 per CPO). The cost of these warrants was valued at approximately
        $9.3 million. The fair value of the warrants was compared to the fair
        value of the Notes to calculated the proportionate discount to the
        Notes. This discount is being amortized as additional interest expense
        over the life of the Senior Notes.

        All options in connection with these warrants vest immediately and
        expire 7 years from the date of grant.

The fair value of options for services rendered was determined using the Black
Scholes options pricing model and resulted in a non-cash charge of approximately
Ps.1,583, Ps.4,553 and Ps.1,458, which was recognized as expense during the
years ended December 31, 1999, 2000 and 2001.

A summary of the changes of the stock options for non-employees for the years
ended December 31 is presented below (in thousands):

<Table>
<Caption>
                                                     1999                 2000                 2001
                                              ------------------   ------------------   ------------------
                                                       WEIGHTED-            WEIGHTED-            WEIGHTED-
                                                        AVERAGE              AVERAGE              AVERAGE
                                                       EXERCISE             EXERCISE             EXERCISE
                                              SHARES     PRICE     SHARES     PRICE     SHARES     PRICE
                                              ------   ---------   ------   ---------   ------   ---------
    <S>                                       <C>      <C>         <C>      <C>         <C>      <C>
    Outstanding at beginning of year........   414      $10.47       464     $10.28     1,582      $3.83
    Granted.................................    50        8.70     1,188       1.09        --         --
    Exercised...............................    --          --        70       0.01        --         --
                                               ---      ------     -----     ------     -----      -----
    Outstanding at the end of the year......   464       10.28     1,582       3.83     1,582       3.83
                                               ---      ------     -----     ------     -----      -----
    Options exercisable at end of year......   464       10.28     1,582       3.83     1,582       3.83
                                               ---      ------     -----     ------     -----      -----
    Weighted-average fair value of options
      granted during the year (expressed in
      U.S. Dollars).........................            $ 4.75               $ 8.79                $  --
                                                        ======               ======                =====
</Table>

                                       F-24
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the stock options outstanding for non-employees
(in thousands):

<Table>
<Caption>
                                                               OUTSTANDING               EXERCISABLE
                                                      -----------------------------   ------------------
                                                                 WEIGHTED-AVERAGE              WEIGHTED-
                                                               --------------------             AVERAGE
                                         RANGE OF              REMAINING   EXERCISE            EXERCISE
                                          PRICES      NUMBER     LIFE       PRICE     NUMBER     PRICE
                                        -----------   ------   ---------   --------   ------   ---------
    <S>                                 <C>           <C>      <C>         <C>        <C>      <C>
    December 31, 1999.................  $8.70-10.87    464       5.27       $10.28     464      $10.28
                                        -----------    ---       ----       ------     ---      ------
    December 31, 2000.................  $      0.01    970       6.51         0.01     970        0.01
                                         8.70-10.87    612       4.79       $ 9.90     612      $ 9.90
                                        -----------    ---       ----       ------     ---      ------
    December 31, 2001.................  $      0.01    970       5.51         0.01     970        0.01
                                         8.70-10.87    612       3.79       $ 9.90     612      $ 9.90
                                        -----------    ---       ----       ------     ---      ------
</Table>

NOTE 17 -- ACCUMULATED DEFICIT:

Dividends, either in cash or other forms, paid by the Company will be subject to
income tax in accordance with the Mexican Income Tax Law if the dividends are
paid from earnings that have not been subject to Mexican income taxes computed
on an individual company basis under the provisions of the Mexican Income Tax
Law, as follows:

     Dividends paid to companies resident in Mexico will be subject to a 35%
     income tax to be paid by the companies paying the dividend and applied to
     the result of multiplying the dividends paid by a factor of 1.5385.

     Dividends paid to individuals or foreign residents will be subject to a
     withholding tax of 5% applied to the result of multiplying the dividends
     paid by a factor of 1.5385 (1.5150 if dividends are paid to Mexican
     individuals from earnings that have been subject to Mexican income taxes).

The Company has never generated distributable profits. Any dividends will be
paid in Mexican Pesos.

NOTE 18 -- POSITION IN FOREIGN CURRENCY:

As of December 31, the Company's foreign-currency position was:

<Table>
<Caption>
                                                                 2000          2001
                                                              -----------   -----------
<S>                                                           <C>           <C>
U.S. dollars:
Assets......................................................  $   170,799   $    47,290
Liabilities.................................................      320,945       317,977
                                                              -----------   -----------
  Net liabilities in U.S. dollars...........................  $  (150,146)  $  (270,687)
                                                              ===========   ===========
Exchange rate at end of the year (Ps. per U.S.$1.00)........  Ps.  9.6000   Ps.  9.1423
                                                              -----------   -----------
</Table>

The Company currently does not hedge any of its foreign-denominated assets or
liabilities.

NOTE 19 -- INCOME TAX, ASSET TAX AND TAX-LOSS CARRYFORWARDS:

The Company has had tax losses since inception and accordingly has not been
subject to current income taxes or provided for deferred income taxes. The
difference between taxable income for income tax and pre-tax income for
accounting purposes is due principally to the inflation adjustments recognized
for income tax purposes, translation effects due to the remeasurement into
dollars, the difference between book and tax

                                       F-25
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

depreciation and amortization, and temporary differences for certain items that
are reported in different periods for financial reporting and income tax
purposes.

Asset tax is calculated at a 1.8% rate on the net value of certain assets and
liabilities and is due only when the asset tax exceeds the income tax amount
payable. The asset tax paid can be recovered over the following 10 years, if and
when income taxes exceed asset tax during such year. The Mexican tax government
waives this tax for the first two years of a company's operations.

The components of deferred income tax assets (liabilities) at December 31 are as
follows:

<Table>
<Caption>
                                                                 2000          2001
                                                              -----------   -----------
<S>                                                           <C>           <C>
CURRENT:
Bad debt allowance..........................................        3,035         6,521
Inventory...................................................       (3,293)       (9,979)
Prepaid expenses............................................           --        (3,165)
                                                              -----------   -----------
     Total current..........................................         (258)       (6,623)
                                                              -----------   -----------
NON-CURRENT:
Telephone network equipment and leasehold improvements,
  net.......................................................      (68,968)     (184,357)
Frequency rights............................................       (4,331)       (7,055)
Tax on assets...............................................           --         8,679
Intangible assets...........................................      (14,337)       (3,088)
Preoperating expenses, net..................................      (80,973)      (69,307)
Tax loss carryforwards......................................      363,732       630,621
                                                              -----------   -----------
     Total non-current......................................      195,123       375,493
                                                              -----------   -----------
Net deferred income tax assets before valuation allowance...      194,865       368,870
Valuation allowance.........................................     (194,865)     (368,870)
                                                              -----------   -----------
     Net deferred income tax assets (liabilities)...........  Ps.      --   Ps.      --
                                                              ===========   ===========
</Table>

In accordance with Mexico's Income Tax Law, tax losses are subject to
restatement by inflation and may be carried forward against future taxable
profit of the subsequent ten years. As of December 31, 2001, the Company's
restated cumulative tax losses were:

<Table>
<Caption>
                                                              EXPIRATION
FISCAL YEAR INCURRED                              AMOUNT         YEAR
--------------------                           ------------   ----------
<S>                                            <C>            <C>
1996.........................................  Ps.    6,583      2006
1997.........................................        23,489      2007
1998.........................................       151,011      2008
1999.........................................       383,517      2009
2000.........................................       514,923      2010
2001.........................................       729,185      2011
                                               ------------
                                               Ps.1,808,708
                                               ------------
</Table>

                                       F-26
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 20 -- COMMITMENTS AND CONTINGENCIES:

At December 31, 2001, the Company had the following commitments:

The Company maintains operating leases on buildings, sites, poles, and office
furniture. The Company recorded leasing expense of Ps.27,435, Ps.28,766 and
Ps.63,553 in 1999, 2000 and 2001. One of the Company's building lease has an
escalation clause for inflation. The monthly payment of Ps.1,087 is to be
multiplied by the NCPI for the respective year for the remaining 15 year term.
The schedule of estimated future minimum lease payments is as follows:

<Table>
<Caption>
                                                                2001
                                                              ---------
<S>                                                           <C>
2002........................................................  Ps.32,248
2003........................................................     14,158
2004........................................................      8,821
2005........................................................      7,735
2006 and thereafter.........................................     25,018
                                                              ---------
                                                              Ps.87,980
                                                              =========
</Table>

The Company entered into a new 5-year, renewable building lease on July 26,
2001, which is denominated in U.S. Dollars. The schedule of future minimum lease
payments on said lease and other U.S. Dollar denominated leases is as follows:

<Table>
<Caption>
                                                               2001
                                                              -------
<S>                                                           <C>
2002........................................................  $ 3,797
2003........................................................    2,675
2004........................................................    2,613
2005........................................................    2,551
2006 and thereafter.........................................    3,051
                                                              -------
                                                              $14,687
                                                              =======
</Table>

NOTE 21 -- REVENUE BY GEOGRAPHICAL LOCATION:

The Company's concession title requires a revenue report by geographic location:

<Table>
<Caption>
                                                                            CENTER-
SERVICES                                                     METROPOLITAN    SOUTH       TOTAL
--------                                                     ------------   --------   ----------
<S>                                                          <C>            <C>        <C>
Year ended December 31, 1999:
  Local....................................................   Ps.29,964     Ps.2,363   Ps. 32,327
  Long distance............................................      55,545          662       56,207
  Rent of dedicated links..................................         506           --          506
  Sales of customer premise equipment......................       1,474          539        2,013
  Lease of capacity........................................         673           --          673
  Other....................................................       8,403          202        8,605
                                                              ---------     --------   ----------
                                                              Ps.96,565     Ps.3,766   Ps.100,331
                                                              =========     ========   ==========
</Table>

                                       F-27
<PAGE>
           MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                                            CENTER-
SERVICES                                                    METROPOLITAN     SOUTH       TOTAL
--------                                                    ------------   ---------   ----------
<S>                                                         <C>            <C>         <C>
Year ended December 31, 2000:
  Local...................................................   Ps.155,773    Ps.30,342   Ps.186,115
  Long distance...........................................       78,656        4,969       83,625
  Rent of dedicated links.................................        2,568           --        2,568
  Sales of customer premise equipment.....................          719          719        1,438
  Lease of capacity.......................................          494           --          494
  Other...................................................        1,911        1,629        3,540
                                                             ----------    ---------   ----------
                                                             Ps.240,121    Ps.37,659   Ps.277,780
                                                             ==========    =========   ==========
</Table>

<Table>
<Caption>
                                                                            CENTER-
SERVICES                                                    METROPOLITAN     SOUTH       TOTAL
--------                                                    ------------   ---------   ----------
<S>                                                         <C>            <C>         <C>
Year ended December 31, 2001:
  Local...................................................   Ps.183,610    Ps.76,718   Ps.260,328
  Long distance...........................................       19,797       15,136       34,933
  Rent of dedicated links.................................        2,271           --        2,271
  Sales of customer premise equipment.....................        3,599        1,735        5,334
  Lease of capacity.......................................          187           --          187
  Other...................................................       10,092        1,243       11,335
                                                             ----------    ---------   ----------
                                                             Ps.219,556    Ps.94,832   Ps.314,388
                                                             ==========    =========   ==========
</Table>

                                       F-28
<PAGE>


NOTE 22 - SIGNIFICANT DIFFERENCES BETWEEN MEXICAN AND U.S. GAAP:
---------------------------------------------------------------

The Company's consolidated financial statements are prepared in accordance with
Mexican GAAP, which differ in certain significant respects from accounting
principles generally accepted in the United States of America ("U.S. GAAP"). The
Mexican GAAP consolidated financial statements include the effects of inflation
as provided for under Bulletin B-10 of MIPA. The application of Bulletin B-10
represents a comprehensive measure of the effects of price level changes in the
Mexican economy, and is considered to result in a more meaningful presentation
than historical cost-based financial reporting for both Mexican and U.S.
accounting purposes. Therefore, the following reconciliation to U.S. GAAP does
not include the reversal of such inflationary effects.

The principal differences between Mexican GAAP and U.S. GAAP other than
inflation accounting, are presented in the following pages with an explanation,
where appropriate, of the effects on consolidated net income and shareholders'
equity. Reconciling items are presented net of any gain or loss from monetary
position.

The following is a summary of the adjustments to net loss and shareholders'
equity as of and for the years ended December 31, 1999, 2000 and 2001:



<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,                                   1999           2000           2001
-------------------------------------------------   -----------    -----------    -----------
<S>                                                <C>             <C>             <C>

Net loss under Mexican GAAP                         (Ps.247,059)   (Ps.623,299)   (Ps.653,110)
adjustments:
Preoperating expenses  (Note 22a.)                      (90,906)          --             --
Amortization of preoperating expenses (Note 22a.)        19,911         30,217         30,191
Capitalization of interest (Note 22b.)                   20,661         16,085            (91)
Depreciation of capitalized interest (Note 22b.)         (3,164)        (5,002)        (5,800)
Amortization of frequency rights (Note 22c.)             (3,320)            77            403
Installation revenues (Note 22d.)                          --             --           (5,417)
Installation costs (Note 22e.)                             --             --          (16,845)
                                                    -----------    -----------    -----------
Total U.S. GAAP adjustments                             (56,818)        41,377          2,441
                                                    -----------    -----------    -----------
Net loss under U.S. GAAP                            (PS.303,877)   (PS.581,922)   (PS.650,669)
                                                    -----------    -----------    -----------
Weighted-average common shares outstanding,
basic and diluted                                    10,264,827     11,463,667     13,748,445
                                                    -----------    -----------    -----------
Net loss per share under U.S. GAAP                  (Ps.  29.60)   (Ps.  50.76)   (Ps.  47.33)
                                                    ===========    ===========    ===========
</TABLE>


                                      F-29
<PAGE>
<TABLE>
<CAPTION>

BALANCES AS OF DECEMBER 31,                             1999        2000        2001
---------------------------                           --------    --------    --------
<S>                                                 <C>         <C>         <C>

Shareholders' equity (deficit) under Mexican GAAP   Ps.632,249  Ps.461,187  (Ps.191,006)
accumulated adjustments:
Preoperating expenses (Note 22a.)                     (302,173)   (302,173)    (302,173)
Amortization of preoperating expenses (Note 22a.)       19,911      50,128       80,319
Capitalization of interest (Note 22b.)                  41,984      58,069       57,978
Depreciation of capitalized interest (Note 22b.)        (4,224)     (9,226)     (15,026)
Amortization of frequency rights (Note 22c.)           (10,838)    (10,761)     (10,358)
Installation revenues (Note 22d.)                         --          --         (5,417)
Installation costs (Note 22e.)                            --          --        (16,845)
                                                    ----------  ----------  -----------
Total U.S. GAAP adjustments                           (255,340)   (213,963)    (211,522)
                                                    ----------  ----------  -----------

Shareholder's equity (deficit) under U.S. GAAP      Ps.376,909  Ps.247,224  (Ps.402,528)
                                                    ==========  ==========  ===========
</TABLE>




Provided below is an analysis of changes in shareholders' equity (deficit) under
U.S. GAAP:

<TABLE>
<CAPTION>
                                                                Years ended
                                                                DECEMBER 31,

                                                      1999          2000           2001
                                                   --------      --------       --------
<S>                                              <C>           <C>            <C>

Balance at the beginning of the year             Ps.667,627     Ps.376,909     Ps.247,224
Net loss under U.S. GAAP                           (303,877)      (581,922)      (650,669)
Increase in capital stock                            10,628        350,069           --
New paid in capital                                    --             --              917
Contributions for future
increases of capital                                    377            100           --
Stock options and warrants                            2,154        102,068           --
                                                 ----------     ----------     ----------

Balance at the end of the year                   Ps.376,909     Ps.247,224    (Ps.402,528)
                                                 ==========     ==========    ===========
</TABLE>



a. PREOPERATING EXPENSES:
   ---------------------

Under Mexican GAAP, all expenses incurred while a company or a project is in the
preoperating or development stages are capitalized. Such capitalized expenses
are amortized on a straight-line basis after operations commence for a period
not exceeding 10 years. Under U.S. GAAP, such preoperating expenses are expensed
as incurred and reported in accumulated deficit during the development stage in
shareholders' equity.

b. CAPITALIZATION OF INTEREST:
   --------------------------

In accordance with Mexican GAAP, capitalization of the integral cost of
financing (which is comprised of interest expense, foreign exchange gains or

                                      F-30
<PAGE>


losses and monetary gain related to the debt) incurred during the period of
construction and installation of an asset is optional. The cost capitalized is
limited to the specific financing obtained for the construction of the related
asset. The Company did not capitalize any amount in 2000 and 1999, but did in
2001 (Note 4d).

Under U.S. GAAP, capitalization of interest is required for certain qualifying
assets that require a period of time to get them ready for their intended use.
The amount of interest to be capitalized is that portion of the interest cost
incurred during the asset acquisition period that theoretically could have been
avoided if expenditures for the assets had not been made, and is not limited to
indebtedness directly attributable to the 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.

c. FREQUENCY RIGHTS:
   ----------------

Under Mexican GAAP, frequency rights are being amortized by the straight-line
method over the term of the concession, from the date the Company commenced
operations.

Under U.S. GAAP, this item should be amortized during the term of the concession
beginning at the granting date of the concession by the SCT.

d. INSTALLATION REVENUES:
   ----------------------

Under Mexican GAAP, installation revenues may be recognized when the service is
rendered.

Under U.S. GAAP, installation revenues and direct installation costs are
deferred and amortized over the the expected customer life. Prior to 2001,
installation revenues were not material.

e.  INSTALLATION COSTS:
    ------------------

Under Mexican GAAP, installation costs not charged to customers are capitalized
and amortized on a straight-line basis over 20 years.

Under U.S. GAAP, direct installation costs are deferred and amortized over the
expected customer life, four years. Prior to 2001, installation costs were not
material.

f. EXTINGUISHMENT OF DEBT:
   ----------------------

As more fully explained in Note 12, during 2001, the Company extinguished
U.S.$25.0 million in debt through a repurchase and recognized a related pre-tax
gain of Ps.121,249, which is included in integral income of financing. Under
U.S. GAAP, such extinguishment, net of tax of Ps.42,437, would have been
reflected as an extraordinary item in the consolidated income statement.


                                      F-31
<PAGE>


g. OPERATING INCOME:
   ----------------
Mexican GAAP allows certain nonrecurring charges, such as asset write-offs,
to be classified as non-operating

Under U.S. GAAP, such items are considered part of operating income. Under U.S.
GAAP, consolidated operating loss would have been Ps.295,275, Ps.365,080, and
Ps.531,937 for the years ended December 31, 1999, 2000, and 2001.

h. DEFERRED INCOME TAXES:
   ---------------------

As mentioned in Note 4j. as of January 1, 2000, the Company adopted revised
Bulletin D-4. Under the new method of Bulletin D-4, the Company recognized
future tax consequences based on the difference between the financial statements
and tax bases of assets and liabilities -temporary differences- as of the date
of the financial statements. Through 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 originate, and benefits form tax loss carryforwards were not allowed
to be recognized before the period in which the carryforward is utilized. For
purposes of the reconciliation to U.S. GAAP, the Company has applied Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS
109), for all periods presented.

FAS 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 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.

FAS 109 requires deferred tax assets to be reduced by a valuation allowance if,
based on the weight of available evidence, including cumulative losses in recent
years, it is more likely that not that some portion or all of the deferred tax
assets will no be realized. Accordingly, the Company has established a valuation
allowance for the full amount of the deferred tax assets.



                                      F-32
<PAGE>

The components of the deferred tax asset applying FAS 109 consist of the
following:

DECEMBER 31,                                   2000                2001
------------                                   ----                ----

Net deferred tax asset recorded under
Mexican GAAP, before valuation
allowance (*)                                   202,657            368,870

Impact of U.S. GAAP adjustments:
Accruals                                              -             13,113
Frequency rights                                      -              2,470
Telephone network system and equipment             (298)                 -
Preoperating expenses                            88,221                  -
Tax-loss carryforwards                           (7,785)                 -
Installation revenues                                 -              1,896
Installation costs                                    -             (5,896)
Capitalized interest                                  -            (16,334)
Valuation allowance                            (282,795)          (364,119)
                                          -------------      --------------
Net deferred tax asset                    Ps.         -         Ps.      -
                                          =============      ==============

(*) For Mexican GAAP purposed, 100% of this asset was eliminated.

i. STATEMENT OF CHANGES IN FINANCIAL POSITION:
   ------------------------------------------

Under Mexican GAAP, the Company presents statements of changes in financial
position in constant Mexican Pesos. This presentation identifies the generation
and application of resources representing differences between beginning and
ending financial statement balances in constant Mexican pesos.

Under U.S. GAAP, pursuant to FAS No. 95, "Statement of Cash Flows" ("FAS 95"), a
statement of cash flows is a required component of a complete set of financial
statements in lieu of a statement of changes in financial position. FAS 95
establishes specific presentation requirements and additional disclosures but
does not provide guidance with respect to inflation adjusted financial
statements. Based on requirements of the SEC, the effect of inflation
restatements and foreign exchange gains and losses on cash flow related to
financing and operating activities has been included in the line item, "Monetary
gain", and the effect of inflation on cash balances has been included in a
separate line item after cash flows from investing activities.
<TABLE>
<CAPTION>

                                                                Years ended December 31,

                                                      1999                2000               2001
                                                      ----                ----               ----
<S>                                               <C>              <C>             <C>

Operating activities:
Net loss under U.S. GAAP                          (Ps. 303,877)    (Ps.581,922)     (Ps.650,669)
Adjustments to reconcile net loss to
net cash flow provided by operating activities:
Depreciation and amortization                           72,760         184,598           243,679
Gain on repurchase of debt                              -                 -             (121,249)
Fixed asset write-offs                                  -                 -               38,711
Allowance for doubtful accounts                          3,231           8,389            10,326
</Table>

                                      F-33
<PAGE>
<Table>
<Caption>
<S>                                                <C>            <C>               <C>
Monetary (loss) gain                                   (22,714)        (94,069)          (77,588)
Non recurring charges                                   -               -                 23,504
Allowance of inventory obsolescence                     -               -                    528
Unrealized foreign exchange loss, net                  -                30,060            51,597
                                                  ------------    ------------      ------------
                                                      (250,600)       (452,944)         (481,161)
Changes in operating assets and liabilities:

Restricted cash                                        (21,259)       (566,986)          192,602
Accounts receivable                                    (23,690)          5,785           (30,992)
Inventory                                               (7,644)         (2,393)          (19,688)
Prepaid expenses                                        (4,775)         (5,693)              532
Accrued interest                                         6,134         108,682             -
Accrued expenses and other accounts payable             68,972         171,021           (24,903)
                                                  ------------    ------------      -------------

Cash flow used in operating activities                (232,862)       (742,528)         (363,610)
                                                  ------------    ------------      -------------


Financing activities:
Proceeds from debt and notes payable                   718,463       2,797,683            57,324
Payments of notes payable                               -             (749,783)            -
Increase in capital stock                              142,242         426,874             -
Repurchase of debt                                       -              -                (94,400)
Increase in additional paid-in capital                  33,307          97,671           -
                                                  ------------    ------------      ------------

Cash flow provided by (used in) financing
 activities                                            894,012       2,572,445           (37,076)
                                                  ------------    ------------      -------------

Investing activities:
Acquisition of fixed assets                           (737,704)       (598,758)         (455,794)
Other assets                                           (44,495)       (187,163)          (44,205)
                                                  ------------    ------------      -------------

Cash flow used in investing activities                (782,199)       (785,921)         (499,999)
                                                  -------------   ------------      -------------

Cash and cash equivalents:
Effect of inflation and exchange rate changes
on cash and cash equivalents                          (144,588)        (99,321)          (46,210)

Net (decrease) increase in cash
and cash equivalents                                  (265,637)        944,675          (946,895)
Cash and cash equivalents at
beginning of the year                                  440,440         174,803         1,119,478
                                                  ------------    ------------      ------------

Cash and cash equivalents at end of year          Ps.  174,803    Ps.1,119,478        Ps.172,583
                                                  ============    ============      ============
Interest paid                                     Ps.   48,884    Ps.  262,035        Ps.396,415
                                                  ============    ============      ============
Taxes paid                                        Ps.    -        Ps.     -           Ps.    751
                                                  ============    ============      ============
Supplemental disclosures of non-cash activities   Ps.    -        Ps.     -           Ps.  -
                                                  ============    ============      ============
</TABLE>


j. RECENT U.S. ACCOUNTING PRONOUNCEMENTS:
   -------------------------------------

In July 2001, the FASB issued FAS No. 141, "Business Combination" which
supercedes APB opinion No. 16, "Business Combinations" and amends or supersedes
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
combination accounted for by the purchase method that are completed after June
30, 2001. FAS No. 141 addresses financial accounting and reporting for business


                                      F-34
<PAGE>


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 to business combinations. To date, management
has not entered into any business combinations.

In July 2001, the FASB also issued FAS No. 142, "Goodwill and Other Intangible
Assets" which supersedes 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 does not expect
the adoption of this Standard will have a material impact on its financial
position.

The FASB also recently issued FAS No. 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets". The objectives of FAS No.
143 are to establish accounting standards for the recognition and measurement of
tangible long-lived asset retirement obligations and their associated asset
retirement costs. FAS No. 143 is effective for fiscal years beginning after June
30, 2002. The Company does not expect the adoption of this standard will have a
material impact on its financial position.

In 2001, the FASB issued FAS No. 144, "Accounting for the Impairment of
Long-Lived Assets" which supersedes FAS No. 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". FAS No. 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.
The Company does not expect the adoption of this standard will have a material
impact on its financial position.

In April of 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". As a result, companies will not longer be allowed to classify
gains and losses from extinguishments of debt as extraordinay items unless they
meet the criteria of APB No. 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 No. 30 shall be reclassified on a go forward basis. In addition,
FAS No. 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 FAS No. 28 or 98, as applicable, instead of FAS No.
13. The provisions of this statement with regard to FAS No. 4 will be effective
for fiscal years beginning after May 15, 2002, and those for FAS No. 13 will be
effective for transactions ocurring after May 15, 2002. The Company is currently
evaluating the effect this provision will have on its financial position.


                                      F-35
<PAGE>


k. CONDENSED CONSOLIDATING FINANCIAL INFORMATION:
   ---------------------------------------------

As mentioned in Note 10, in March 2000 the Company issued U.S.$300 million of
senior unsecured notes (the "Notes") as part of its financing program. The Notes
are joint and severally guaranteed on a senior subordinated, unsecured, full and
unconditional basis, pursuant to a guarantee by the Company's subsidiaries,
Corporativo and MSA ("Guarantor subsidiaries"). The subsidiaries guarantee is
full and unconditional.

The Company has not presented separate financial statements and other
disclosures concerning the Guarantor Subsidiaries because management has
determined that such information is not material to investors.


<Table>
<Caption>

                                                   MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------

<S>                                                <C>         <C>             <C>           <C>            <C>
Balance Sheet as of December 31, 1999:

Cash and cash equivalents and restricted cash    Ps.174,416     Ps.    387      Ps.    -       Ps.    -      Ps.  174,803
Short- and long-term restricted cash                 21,259              -             -              -            21,259
Accounts receivable, net                             79,111          5,511             -         (5,381)           79,241
Inventory, net                                        7,644              -             -              -             7,644
Prepaid expenses, net                                 4,672            103             -              -             4,775
Frequency rights, net                               116,934              -             -              -           116,934
Telephone network system and equipment, net         897,381              -             -              -           897,381
Preoperating expenses, net                          282,275              -             -              -           282,275
Other assets                                         48,841            119             -            273            49,233
                                               ------------     ----------      --------       --------      ------------
Total assets                                   Ps.1,632,533     Ps.  6,120      Ps.    -      (Ps.5,108)     Ps.1,633,545
                                               ============     ==========      ========       ========      ============
Total liabilities                                 1,000,284          6,393             -         (5,381)        1,001,296
                                               ------------     ----------      --------       --------      ------------

Shareholders' Equity:

Capital stock and additional paid-in capital        879,308             74             -            (74)          879,308
Accumulated deficit                                (247,059)          (347)            -            347          (247,059)
                                               ------------     ----------      --------       --------      ------------
Total shareholders' equity                          632,249           (273)            -            273           632,249
                                               ------------     ----------      --------       --------      ------------
Total liabilities and shareholders' equity     Ps.1,632,533     Ps.  6,120      Ps.    -      (Ps.5,108)     Ps.1,633,545
                                               ============     ==========      ========       ========      ============

Total shareholders' equity  (deficit) under
Mexican GAAP                                        632,249           (273)            -            273           632,249
Preoperating expenses                              (302,173)             -             -              -          (302,173)
Amortization of preoperating expenses                19,911              -             -              -            19,911
Capitalization of interest                           41,984              -             -              -            41,984
Amortization of capitalized interest                 (4,224)             -             -              -            (4,224)
Amortization of frequency rights                    (10,838)             -             -              -           (10,838)
                                               ------------     ----------      --------       --------      ------------
Total shareholders' equity (deficit) under
U.S. GAAP                                      Ps.  376,909    (Ps.    273)     Ps.    -       Ps.  273      Ps.  376,909
                                               ============     ==========      ========       ========      ============
</Table>


                                      F-36
<PAGE>
<Table>
<Caption>

                                                   MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------

<S>                                                <C>         <C>             <C>           <C>            <C>
Statements of Operations for the year ended
December 31, 1999:

Revenues                                       Ps.  100,331    P.  100,474      Ps.    -     (Ps.100,474)   Ps.    100,331
Operating cost and expenses                        (317,211)      (101,364)            -         100,448          (318,127)
Integral (income) cost of financing                 (29,651)           245             -              (8)          (29,414)
Other (income) expense                                 (528)           134             -             545              (151)
                                               ------------    -----------      --------       ---------     -------------
Net (loss) income                             (Ps.  247,059)  (Ps.     511)     Ps.    -       Ps    511    (Ps.   247,059)
                                               ============    ===========      ========       =========     =============

Net (loss) income for the year under
Mexican GAAP                                  (Ps.  247,059)  (Ps.     511)     Ps.    -       Ps.   511    (Ps.   247,059)

Preoperating expenses                               (90,906)             -             -               -           (90,906)
Amortization of preoperating expenses                19,911              -             -               -            19,911
Capitalization of interest                           20,661              -             -               -            20,661
Amortization of capitalized interest                 (3,164)             -             -               -            (3,164)
Amortization of frequency rights                     (3,320)             -             -               -            (3,320)
                                               ------------    -----------      --------       ---------     -------------
Net (loss) income for the year under
U.S. GAAP                                     (Ps.  303,877)  (Ps.     511)     Ps.    -       Ps.   511    (Ps.   303,877)

Statement of Changes in Financial Position
for the Year Ended December 31, 1999:

Net (loss) income                             (Ps.  247,059)  (Ps.     511)     Ps.    -       Ps.   511    (Ps.   247,059)
Depreciation and amortization                        84,483              -             -               -            84,483
                                               ------------    -----------      --------       ---------     -------------
                                                   (162,576)          (511)            -             511          (162,576)
                                               ------------    -----------      --------       ---------     -------------
Net change in working capital                        16,224            969             -            (430)           16,763
                                               ------------    -----------      --------       ---------     -------------
Resources (used in) provided by
operating activities                               (146,352)           458             -              81          (145,813)
                                               ------------    -----------      --------       ---------     -------------

Financing activities:
Issuance of capital stock                            10,628              -             -               -            10,628
Additional paid-in-capital                            2,530              -             -               -             2,530
Proceeds from loans and notes payables              676,031              -             -               -           676,031
                                               ------------    -----------      --------       ---------     -------------
Resources provided by financing activities          689,189              -             -               -           689,189
                                               ------------    -----------      --------       ---------     -------------
Investing activities:
Preoperating expenses                               (88,419)             -             -               -           (88,419)
Telephone network systems and equipment            (699,978)             -             -           7,143          (692,835)
Other assets                                        (20,424)          (111)            -          (7,224)          (27,759)
                                               ------------    -----------      --------       ---------     -------------
Resources used in investing activities             (808,821)          (111)            -             (81)         (809,013)
                                               ------------    -----------      --------       ---------     -------------

Cash and cash equivalents:
(Decrease) increase during the period              (265,984)           347             -               -          (265,637)
Beginning balances                                  440,400             40             -               -           440,440
                                               ------------    -----------      --------       ---------     -------------
Ending balances                                Ps.  174,416    Ps.     387      Ps.    -       Ps.     -     Ps.   174,803
                                               ============    ===========      ========       =========     =============
Balance Sheet as of December 31, 2000:

Cash and cash equivalents and restricted
cash                                           Ps.1,118,569    Ps.     909      Ps.    -       Ps.     -     Ps. 1,119,478
Short- and long-term restricted cash                593,928              -             -               -           593,928
Accounts receivable, net                             71,822          9,056             -         (22,326)           58,552
Inventory,  net                                       9,408              -             -               -             9,408
Prepaid expenses                                     24,843              -             -         (13,533)           11,310
Frequency rights, net                               110,885              -             -               -           110,885
Telephone network system and
equipment, net                                    1,134,617              -             -               -         1,134,617
Preoperating expenses, net                          252,055              -             -               -           252,055
Intangible assets, net                              338,012            133             -               -           338,145
Other assets                                          8,200              -             -               -             8,200
                                               ------------    -----------      --------       ---------     -------------
Total assets                                   Ps 3,662,340    Ps.  10,098      Ps.    -      (Ps.35,859)    Ps. 3,636,578
                                               ============    ===========      ========       =========     =============
Total liabilities                                 3,201,152         12,335             -         (38,096)        3,175,391
                                               ------------    -----------      --------       ---------     -------------
</Table>

                                      F-37
<PAGE>
<Table>
<Caption>

                                                   MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------

<S>                                                <C>         <C>             <C>           <C>            <C>

Shareholders' Equity:
Capital stock and additional paid-in capital      1,331,545             74             -            (74)        1,331,545
Accumulated deficit                                (870,358)        (2,311)            -          2,311          (870,358)
                                               ------------     ----------      --------     ----------      ------------
Total shareholders' equity                          461,187         (2,237)            -          2,237           461,187

Total liabilities and shareholders' equity     Ps.3,662,339     Ps. 10,098      Ps.    -    (Ps. 35,859)     Ps.3,636,577
                                               ============     ==========      ========     ==========      ============

Total shareholders' equity under Mexican
GAAP                                                461,187         (2,237)            -          2,237           461,187

Preoperating expenses                              (302,173)             -             -              -          (302,173)
Amortization of preoperating expenses                50,128              -             -              -            50,128
Capitalization of interest                           58,069              -             -              -            58,069
Amortization of capitalized interest                 (9,226)             -             -              -            (9,226)
Amortization of frequency rights                    (10,761)             -             -              -           (10,761)
                                               ------------     ----------      --------     ----------      ------------
Total shareholders' equity under U.S. GAAP     Ps.  247,224    (Ps.  2,237)     Ps.    -     Ps.  2,237      Ps.  247,224
                                               ============     ==========      ========     ==========      ============

Statements of Operations for the year ended
December 31, 2000:

Revenues                                       Ps.  277,780     Ps.171,110      Ps.    -    (Ps.171,110)     Ps.  277,780
Operating cost and expenses                        (666,374)      (172,888)            -        171,110          (668,152)
Integral (income) cost of financing                (233,262)           850             -            (23)         (232,435)
Other (income) expense                               (1,443)        (1,033)            -          1,984              (492)
                                               ------------     ----------      --------     ----------      ------------
Net (loss) income                             (Ps.  623,299)   (Ps.  1,961)     Ps.    -     Ps.  1,961     (Ps.  623,299)

Net (loss) income for the year under
Mexican GAAP                                  (Ps.  623,299    (Ps.  1,961)     Ps.    -     Ps.  1,961     (Ps.  623,299)

Preoperating expenses                                     -              -             -              -                 -
Capitalization of interest                           16,085              -             -              -            16,085
Amortization of preoperating expenses                30,217              -             -              -            30,217
Amortization of frequency rights                         77              -             -              -                77
Amortization of capital interest                     (5,002)             -             -              -            (5,002)
                                               ------------     ----------      --------     ----------      ------------
Net loss (income) for the year under
U.S. GAAP                                      Ps. (581,922)   (Ps.  1,961)     Ps.    -      Ps.  1,961     Ps. (581,922)
                                               ============     ==========      ========      ==========     ============

Statement of Changes in Financial Position
for the Year Ended December 31, 2000:

Net (loss) income                             (Ps.  623,299)   (Ps.  1,961)     Ps.    -     Ps.  1,961     (Ps.  623,299)
Depreciation and amortization                       209,894              -             -              -           209,894
                                               ------------     ----------      --------     ----------      ------------
                                                   (413,405)        (1,961)            -          1,961          (413,405)
                                               ------------     ----------      --------     ----------      ------------
Net change in working capital                      (398,877)         2,503             -         (1,961)         (398,335)

Resources (used in) provided by operating
activities                                         (812,282)           542             -              -          (811,740)
                                               ------------     ----------      --------     ----------      ------------
Financing activities:
Issuance of capital stock                           357,335              -             -              -           357,335
Additional paid-in-capital                           94,932              -             -              -            94,932
Proceeds from loans and notes payables            2,011,368              -             -              -         2,011,368
                                               ------------     ----------      --------     ----------      ------------
Resources provided by financing activities        2,463,635              -             -              -         2,463,635

Investing activities:
Telephone network systems and equipment            (397,503)             -             -              -          (397,503)
Intangible assets                                  (308,464)           (20)            -              -          (308,484)
Other assets                                         (1,233)             -             -              -            (1,233)
                                               ------------     ----------      --------     ----------      ------------
Resources used in investing activities             (707,200)           (20)            -              -          (707,220)
                                               ------------     ----------      --------     ----------      ------------
Cash and cash equivalents:

Increase (decrease) during the period               944,153            522             -              -           944,675
Beginning balances                                  174,416            387             -              -           174,803
                                               ------------     ----------      --------     ----------      ------------
Ending balances                                Ps.1,118,569     Ps.    909      Ps.    -     Ps.      -      Ps.1,119,478
                                               ============     ==========      ========     ==========      ============
</Table>
                                      F-38
<PAGE>
<Table>
<Caption>

                                                   MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------

<S>                                            <C>             <C>             <C>           <C>            <C>
Balance Sheet as of December 31, 2001:

Cash and cash equivalents and restricted
cash                                           Ps.  151,466    Ps.   3,288     Ps. 17,829     Ps.       -          172,583
Short- and long-term restricted cash                186,803              -              -               -          186,803
Accounts receivable, net                             90,034           (467)        (5,588)              -           83,979
Inventory, net                                       28,513              -              -               -           28,513
Prepaid expenses, net                                10,303              -              -               -           10,303
Frequency rights, net                               104,837              -              -               -          104,837
Telephone network system and equipment,
net                                               1,368,870              -              -               -        1,368,870
Preoperating expenses, net                          221,854              -              -               -          221,853
Intangible assets, net                              299,430             97              -               -          299,528
Other assets                                         31,283             28              -               -           31,311
                                               ------------    -----------     ----------     -----------    -------------
Total assets                                   Ps.2,493,393    Ps.   2,946     Ps. 12,241     Ps.            Ps. 2,508,580
                                               ============    ===========     ==========     ===========    =============
Total liabilities                                 2,684,399          4,713         11,959           1,484        2,699,586
                                               ------------    -----------     ----------     -----------    -------------

Shareholders' Equity:
Capital stock and additional paid-in
capital                                           1,078,405             74             51            (125)       1,078,405
Accumulated deficit                              (1,269,411)        (1,840)           231           1,609       (1,269,411)
                                               ------------    -----------     ----------     -----------    -------------
Total shareholder's equity                         (191,006)        (1,766)           282           1,484         (191,006)
                                               ------------    -----------     ----------     -----------    -------------
Total liabilities and shareholders' equity     Ps.2,493,393    Ps.   2,946     Ps. 12,241     Ps.       -    Ps. 2,508,580
                                               ============    ===========     ==========     ===========    =============

Total shareholders' equity under
Mexican GAAP                                  (Ps.  191,006)  (Ps.   1,766)    Ps.    282     Ps.   1,484   (Ps.   191,006)

Preoperating expenses                              (302,173)             -              -               -         (302,173)
Amortization of preoperating expenses                80,319              -              -               -           80,319
Capitalization of interest                           57,978              -              -               -           57,978
Amortization of capitalized interest                (15,026)             -              -               -          (15,026)
Amortization of frequency rights                    (10,358)             -              -               -          (10,358)
Installation revenues                                (5,417)             -              -               -           (5,417)
Installation costs                                  (16,845)             -              -               -          (16,845)
                                               ------------    -----------     ----------     -----------    -------------
Total shareholders' equity  under U.S. GAAP   (Ps.  402,528)  (Ps.   1,766)    Ps.    282     Ps.   1,484   (Ps.   402,528)
                                               ============    ===========     ==========     ===========    =============

Statement of Operations for the year ended
December 31, 2001:

Revenues                                       Ps.  314,388    Ps. 133,465     Ps.103,075        (236,540)         314,388
Operating cost and expenses                        (849,258)      (133,249)      (102,892)        236,542         (848,857)
Integral (cost) income of financing                 (55,361)          (183)            46               -          (55,498)
Other                                               (62,879)           438              2            (704)         (63,143)
                                               ------------    -----------     ----------     -----------    -------------
Net (loss) income                             (Ps.  653,110)   Ps.     471     Ps.    231    (Ps.     702)  (Ps.   653,110)
                                               ============    ===========     ==========     ===========    =============

Net (loss) income for  the year under
Mexican GAAP                                  (Ps.  653,110)   Ps.     471     Ps.    231    (Ps.     702)  (Ps.   653,110)
Preoperating expenses                                     -              -              -               -                -
Amortization of preoperating expenses                30,191              -              -               -           30,191
Capitalization of interest                              (91)             -              -               -              (91)
Amortization of capitalized interest                 (5,800)             -              -               -           (5,800)
Amortization of frequency rights                        403              -              -               -              403
Installation revenue                                 (5,417)             -              -               -           (5,417)
Installation costs                                  (16,845)             -              -               -          (16,845)
                                               ------------    -----------     ----------     -----------    -------------
Net (loss) income for the year under
U.S. GAAP                                     (Ps.  650,669)   Ps.     471    (Ps.    231)   (Ps.     702)  (Ps.   650,669)

Statement of Changes in Financial Position
for the year ended December 31, 2001:

Net (loss) income                             (Ps.  653,110)   Ps.     471     Ps.    231    (Ps.     702)  (Ps.   653,110)
Non recurring charges                                62,215              -              -               -           62,215
Gain on repurchase of debt                         (121,249)             -              -               -         (121,249)
Depreciation and amortization                       268,473              -              -               -          268,473
                                               ------------    -----------     ----------     -----------    -------------
Net change in working capital                        86,946           1908         17,547             702          107,103
                                               ------------    -----------     ----------     -----------    -------------
Resources (used in) provided by operating
activities                                         (356,725)         2,379         17,778               -         (336,568)
                                               ------------    -----------     ----------     -----------    -------------
Financing activities                                    917              -              -               -              917
Repurchase of debt                                  (94,400)             -              -               -          (94,400)
                                               ------------    -----------     ----------     -----------    -------------
</Table>


                                      F-39
<PAGE>
<Table>
<Caption>
<S>                                          <C>            <C>           <C>          <C>          <C>
Resources used in financing activities          (93,483)          -           -               -           (93,483)
                                             ----------     ----------    -----------    -----------   ----------

Investing activities:

Telephone network systems and equipment        (472,639)          -           -                -         (472,639)
Intangible assets                                (7,307)          -           -                -           (7,307)
Other assets                                    (36.949)          -                51          -          (36,898)
                                             ----------     ----------    -----------    -----------   ----------

Resources (used in) provided by investing
activities                                     (516,895)         -                 51          -         (516,844)
                                             ----------     ----------    -----------    -----------   ----------

Cash and cash equivalents:

(Decrease) increase during the period          (967,103)         2,379         17,829          -         (946,895)

Beginning balances                            1,118,569            909            -            -        1,119,478
                                             ----------     ----------    -----------    -----------   ----------

Ending balances                              Ps.151,466     Ps.  3.288     Ps. 17,829    Ps.   -       Ps.172,583
                                             ==========     ==========    ===========    ===========   ==========

</Table>


Note 23 - Subsequent event

On April 30, 2002, the Company announced the consummation of the exchange offer
for its 13-3/4% Series B Senior Notes due 2007 and a U.S.$66.2 million private
equity investment. Holders tendered U.S.$259,410,000 in principal amount of
Series B Senior Notes, representing 94.3% of all such notes outstanding. These
holders received in exchange an aggregate of U.S.$165,078,150 in principal
amount of New Senior Notes due March 1, 2007, bearing 0% interest through March
1, 2006, and 10% annual interest in the last year. Tendering holders also
received an aggregate of 26,459,820 series N2 convertible preferred stock, with
an initial liquidation preference of U.S.$0.4927 per share and limited voting
rights, in the form of Mexican Trust Certificates known as "CPOs". Private
equity investees received 6,088,896 and 5,848,209 shares of Series A1 and B1,
respectively, common voting stock with preferred liquidation rights and
122,468,441 Series N1 preferred stock with limited voting rights. In addition,
options to purchase an additional 33.2 million series N shares were granted.
Series B Senior Notes in an aggregate principal amount of U.S.$15,590,000 remain
outstanding.

Under Mexican GAAP in effect prior to revised Bulletin C-9 (see Note 4a.),
troubled debt restructuring are not specifically addressed. Therefore, the new
debt and equity which are issued are recorded at face value and nominal value,
respectively, with any difference between theses amounts and the carrying value
of the old debt being reflected as additional paid in capital. Interest on the
new debt is recognized according to cash flow terms of the arrangement. With
respect to the unamortized debt issuance costs of the old debt, they may
continue to be amortized over the maturity of the new debt when the stated
interest rate on the new debt is lower than that of the debt it replaces. If
this occurs, costs incurred to effect the restructuring are expensed
immediately. Under Mexican GAAP, the Company expects to recognize a loss of
approximately Ps.79,785 for professional fees and warrants granted, a reduction
in liabilities of Ps.785,632 and an increase in stockholders equity of
Ps.1,324,736 in 2002.

                                      F-40
<PAGE>
The unaudited pro forma condensed balance sheet under Mexican GAAP of the
Company as of December 31, 2001 after giving effect to certain pro forma
adjustments is as follows:

       ASSETS
       Current assets                                              Ps. 993,819
       Property and equipment, net                                   1,363,548
       Other assets                                                    684,996
                                                                  ------------
       Total assets                                               Ps.3,042,363
                                                                  ============



       LIABILITIES AND SHAREHOLDERS' EQUITY
       Interest payable                                           Ps.      357
       Other current liabilities                                       160,614
       Senior notes, net                                             1,654,203
       Capital stock and additional paid in capital                  2,870,782
       Accumulated deficit                                          (1,643,593)
                                                                   -----------
       Total liabilities and shareholders' equity                 Ps.3,042,363
                                                                  ============



                                      F-41
<PAGE>
                                [BDO LETTERHEAD]


                                  ON SCHEDULE


TO THE BOARD OF DIRECTORS AND SHAREHOLDER
OF MAXCOM TELECOMUNICACIONES, S.A. DE C.V.


The audits referred to in our report to MAXCOM Telecomunicaciones, S.A. de C.V.
dated February 12, 2001. Which is contained in the document constituting part
of this annual Report included the audit of the document constituting part of
this annual Report included the audit of the schedule listed under item 21 for
each of the years ended December 31, 1998, 1999 and 2000. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based upon our audits.


In our opinion, such schedule present fairly, in all material respects, the
information set forth therein

BDO INTERNACIONAL

/s/ BDO INTERNATIONAL

MEXICO CITY
FEBRUARY 12, 2001


                                      S-I
<PAGE>
                    Maxcom Telecomunicaciones, S.A. DE C.V.

                 Schedule II- Valuation and Qualifying Accounts

                         Year Ended 1999, 2000 and 2001

              (Amounts expressed in Million of Mexican Pesos (Ps.)
                 with Purchasing Power as of December 31, 2001)



<Table>
<Caption>
                                   Balance at    Charged to     Charged
                                  beginning of   cost and       to other                     Balance at
                                    period       expenses       accounts     Deductions    end of period
<S>                              <C>            <C>            <C>          <C>            <C>
Allowance for doubtful accounts
                                     1999            --       Ps. 3,094.7        --         Ps. 3,094.7
                                     2000      Ps. 3,094.7    Ps. 9,674.3   Ps. (4,464.0)   Ps. 8,305.0
                                     2001      Ps. 8,305.0    Ps.17,103.3   Ps. (6,777.1)   Ps.18,630.6

Allowance for obsolete and
slow-moving inventories
                                     1999            --          --              --              --
                                     2000            --          --              --              --
                                     2001     Ps.    --       Ps.   582.0   Ps.  --         Ps.   582.0

Allowance for  lease penalty
                                     1999            --          --              --              --
                                     2000            --          --              --              --
                                     2001     Ps.    --       Ps. 6,731.0    Ps. --         Ps. 6,731.0
</Table>

                                      S-II
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================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

             [ ] registration statement pursuant to section 12(b) or
                   (g) of the securities exchange act of 1934

                                       or

              [X] 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

            [ ] 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 333-11910

                     MAXCOM TELECOMUNICACIONES, S.A. DE C.V.
             (Exact name of Registrant as specified in its charter)

                         MAXCOM TELECOMMUNICATIONS, INC.
                 (Translation of Registrant's name into English)

                              UNITED MEXICAN STATES
                 (Jurisdiction of incorporation or organization)

                      GUILLERMO GONZALEZ CAMARENA NO. 2000
                        COLONIA CENTRO DE CIUDAD SANTA FE
                               MEXICO, D.F. 01210
                    (Address of principal executive offices)

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT.
                                      None

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                              Senior Notes due 2007
                  Series N2 Ordinary Participation Certificates

              SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION
                     PURSUANT TO SECTION 15(D) OF THE ACT:
                     13-3/4% Series B Senior Notes Due 2007

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 shares, no par value   1,276,428
                Series B shares, no par value   1,226,372
                Series C shares, no par value   5,622,822
                Series N shares, no par value   5,622,822

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

                                    YES X   NO
                                       ---    ---

INDICATE BY CHECK MARK WHICH FINANCIAL STATEMENT ITEM THE REGISTRANT HAS ELECTED
TO FOLLOW:

                            ITEM 17       ITEM 18 X
                                    ---          ---
================================================================================
TABLE OF CONTENTS
PAGE
                                                                                                   ----
PART I................................................................................................1
        ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.................................1
        ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE...............................................1
        ITEM 3. KEY INFORMATION.......................................................................1
        ITEM 4. INFORMATION ON THE COMPANY...........................................................13
        ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.........................................32
        ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES...........................................46
        ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS....................................52
        ITEM 8. FINANCIAL INFORMATION................................................................59
        ITEM 9. THE OFFER AND LISTING................................................................59
        ITEM 10.ADDITIONAL INFORMATION...............................................................60
        ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........................89
        ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES...............................89
        ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES......................................90
        ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.........90
        ITEM 15.RESERVED.............................................................................90
        ITEM 16.RESERVED.............................................................................90

PART II..............................................................................................91
        ITEM 17.FINANCIAL STATEMENTS.................................................................91
        ITEM 18.FINANCIAL STATEMENTS................................................................F-1
        ITEM 19.EXHIBITS............................................................................E-1

SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS ....................................................S-II

GLOSSARY OF TELECOMMUNICATIONS TERMS................................................................G-1
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 of
December 31, 2001 purchasing power. Amounts presented in this annual report may
not add up or may be slightly inconsistent due to rounding.

            Unless otherwise provided, 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 at December 31, 2001, which was Ps.9.1560 per
U.S.$1.00. The currency conversions should not be construed as representations
that the peso amounts actually represent such dollar amounts. Additionally,
these conversions should not be construed as representations that these peso
amounts have been or could have been converted into U.S. dollars at those or any
other rates of exchange.

            This annual report contains forward-looking statements. Statements
that are not statements of historical fact, including statements about our
beliefs and expectations are forward-looking statements. The words
"anticipates," "believes," "estimates," "expects," "forecasts," "intends,"
"plans," "predicts," "projects," "targets" and similar words are intended to
identify these statements, which necessarily involve known and unknown risks and
uncertainties. Accordingly, our actual results of operations may be different
from our current expectations, and the reader should not place undue reliance on
these forward-looking statements. Forward-looking statements speak

                                       i
only as of the date they are made, and we do not undertake any obligation to
update them in light of new information or future developments.

            We will provide without charge to each person to whom this 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 Maxcom
Telecomunicaciones, S.A. de C.V., Guillermo Gonzalez Camarena No. 2000, Colonia
Centro de Ciudad Santa Fe, Mexico, D.F. 01210, attention: Director, Investor
Relations. Telephone requests may be directed to 011-52-55-5147-1125.

                                       ii
PART I

ITEM 1      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

            Not applicable.

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

            Not applicable.

ITEM 3.     KEY INFORMATION

A.          SELECTED FINANCIAL DATA

            The following tables present selected consolidated financial
information of Maxcom and its consolidated subsidiaries. We have derived this
information from the audited consolidated financial statements of Maxcom for the
years ended December 31, 1997, 1998, 1999, 2000 and 2001, including the audited
consolidated financial statements as of December 31, 2000 and 2001 and for the
years ended December 31, 1999, 2000 and 2001, and accompanying notes appearing
elsewhere in this annual report. This data is qualified in its entirety by
reference to, and should be read in conjunction with, such consolidated
financial statements.

            The consolidated financial statements have been prepared in
accordance with Mexican GAAP, which differs in certain significant respects from
U.S. GAAP. Pursuant to Mexican GAAP, we have prepared the 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. See note 22 to the consolidated
financial statements for a description of the principal differences, other than
inflation accounting, between Mexican GAAP and U.S. GAAP applicable to us and
for a reconciliation of our net income and stockholders' equity to U.S. GAAP.

                                       1
AS OF THE YEAR ENDED DECEMBER 31,
                                             -------------------------------------------------------------------------------------
                                               1997(1)      1998(1)        1999(2)          2000            2001         2001(4)
                                             -----------  -----------    -----------     -----------    ------------   -----------
                                                                 THOUSANDS OF CONSTANT DECEMBER 31, 2001 PESOS
                                                   AND THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA(3)
STATEMENT OF OPERATIONS DATA:
MEXICAN GAAP
Net revenues ...............................                             Ps. 100,331     Ps. 277,780    Ps. 314,388    $   34,336
Operating costs and expenses:
   Network operating costs .................                                  49,854       112,510        150,439          16,431
   Selling, general and administrative .....                                 183,790       345,748        429,945          46,958
   Depreciation and amortization ...........                                  84,483       209,894        268,473          29,322
                                                                         -----------     -----------    ------------   -----------
        Total operating costs and expenses .                                 318,127       668,152        848,857          92,711
                                                                         -----------     -----------    ------------   -----------
Operating loss .............................                                (217,796)     (390,372)      (534,469)        (58,375)
Integral cost (income) of financing:
   Interest expense ........................                                  52,671       417,592        426,956          46,631
   Interest income .........................                                 (11,428)     (102,265)       (76,766)         (8,384)
   Gain on repurchase of debt ..............                                                             (121,249)        (13,243)
   Exchange loss (gain), net ...............                                  10,859        11,177        (90,787)         (9,916)
   Gain on net monetary position ...........                                 (22,688)      (94,069)       (82,656)         (9,028)
                                                                         -----------     -----------    ------------   -----------
        Total integral cost of financing ...                                  29,414       232,435         55,498           6,060
Nonrecurring charges .......................                                                               62,215           6,795
Other income (expense), net ................                                     151          (492)          (177)            (19)
Asset tax ..................................                                                                  751              82
                                                                         -----------     -----------    ------------   -----------
Net loss ...................................                                (247,059)     (623,299)      (653,110)        (71,331)
                                                                         ===========     ===========    ===========   ===========

Net loss per share, basic ..................                             Ps. (24.07)     Ps. (54.37)    Ps. (47.50)    $     (5.19)
Weighted-average shares outstanding ........  1,371,943    8,134,883      10,264,827     11,463,667     13,748,445      13,748,445

U.S. GAAP

Net loss ................................... Ps. (66,247) Ps. (125,568) Ps.(303,877)    Ps. (581,922)   Ps. (650,669)  $   (71,065)
Net loss per share ......................... Ps. (48.29)  Ps. (15.44)    Ps. (29.60)    Ps.   (50.76)   Ps.   (47.33)  $     (5.17)

BALANCE SHEET DATA:
MEXICAN GAAP

Cash and cash equivalents .................. Ps. 55,748   Ps. 440,562    Ps. 174,803    Ps. 1,119,478   Ps. 172,583    $    18,849
Restricted cash ............................                    2,115         21,259          593,928       186,803         20,402
Working capital(5) .........................     15,425       41,274           1,118         (66,560)       (37,818)        (4,130)
Frequency rights, net ......................    119,661      119,661         116,934         110,885        104,837         11,450
Telephone network systems and equipment, net      1,311      281,899         930,318       1,134,617      1,368,870        149,505
Preoperating expenses, net .................     71,676      219,923         282,275         252,055        221,853         24,230
Intangible assets, net .....................                                                 338,145        299,528         32,714
Rent deposits and other assets .............                                                   8,200         31,310          3,420
Total assets ...............................    263,821    1,105,434       1,526,706       3,636,578      2,508,580        273,982
Total liabilities ..........................                 239,054         910,751       3,175,391      2,699,586        294,843
Capital stock ..............................    263,821      835,372         846,000       1,203,306        976,096        106,607
Additional paid-in capital .................                  30,777          33,308         128,239        102,309         11,174
Accumulated deficit ........................                                (247,059)       (870,358)    (1,269,411)      (138,642)
                                             -----------  -----------    -----------     -----------    ------------   -----------
Shareholders' equity (deficit) .............    263,821      866,149         632,249         461,187       (191,006)       (20,861)

U.S. GAAP

Shareholders equity ........................ Ps. 191,089  Ps. 667,627    Ps. 376,909     Ps. 247,224    Ps. (402,528)  $   (43,963)

OTHER FINANCIAL DATA:
MEXICAN GAAP

EBITDA(6) ..................................                             Ps. (133,313)   Ps.(180,478)   Ps. (265,996)  $   (29,053)
Capital expenditures(7) ....................    131,700      456,673         808,991         709,209         474,299         51,802
Ratio of earnings to fixed charges(8) ......                                   (2.45)          (0.39)          (0.48)         (0.48)
Cash flow used in operating activities .....                                (145,813)       (811,740)       (336,568)       (36,759)
2
AS OF THE YEAR ENDED DECEMBER 31,
                                             -------------------------------------------------------------------------------------
                                               1997(1)      1998(1)        1999(2)          2000            2001         2001(4)
                                             -----------  -----------    -----------     -----------    ------------   -----------
                                                                 THOUSANDS OF CONSTANT DECEMBER 31, 2001 PESOS
                                                   AND THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA(3)
U.S. GAAP

EBITDA(6) ................................. Ps. (67,463)  Ps.(147,146)   Ps. (133,307)   Ps. (180,473)   Ps. (288,258)  Ps. (31,483)
Cash used in operating activities .........     (54,088)      (97,679)   Ps. (232,862)   Ps. (742,528)   Ps. (363,610)  Ps. (39,715)
Cash provided by financing activities .....     183,218       893,982    Ps.  894,012    Ps. 2,572,445   Ps. (37,076)   Ps.  (4,050)
Cash used in investing activities ..........    (87,316)     (782,172)   Ps. (782,199)   Ps. (785,921)   Ps. (499,999)  Ps. (54,612)
3
NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

(1)      All amounts incurred in operations from February 28, 1996 (date of
         incorporation) to May 1, 1999 (commencement of operations) were
         capitalized as "preoperating expenses" under Mexican GAAP. Therefore,
         no amounts are reported in the statement of operations for those
         periods.

(2)      We commenced commercial operations on May 1, 1999. In accordance with
         Mexican GAAP, our financial statements reflect eight months of
         operations.

(3)      Pursuant to Mexican GAAP, financial data for all periods in the
         financial statements have, unless otherwise indicated, been restated in
         constant pesos as of December 31, 2001. Restatement into December 31,
         2001 pesos is made by multiplying the relevant nominal peso amount by
         the inflation index for the period between the end of the period to
         which such nominal peso amount relates and December 31, 2001. The
         inflation index used in this annual report for 1997 figures is 1.5155,
         for 1998 figures is 1.2777, for 1999 figures is 1.1376 and for 2000
         figures is 1.0440.

(4)      Peso amounts were converted to U.S. dollars at the exchange rate of
         Ps.9.1560 per U.S.$1.00 reported by the Federal Reserve Bank of New
         York as its noon buying rate for pesos on December 31, 2001. Such
         conversions are for the convenience of the reader and 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.

(5)      Working capital is defined as current assets (excluding cash and cash
         equivalents and restricted cash) less current liabilities (excluding
         current maturities of long-term debt, which includes interest payable).

(6)      EBITDA represents earnings before income and asset taxes, integral cost
         of financing, other income (expense), nonrecurring charges, and
         depreciation and amortization. We have included information concerning
         EBITDA (which is not a measure of financial performance under Mexican
         or U.S. GAAP) because we believe it is a standard financial statistic
         commonly reported and widely used by analysts and other interested
         parties. We understand that EBITDA is also used by investors as one
         measure of an issuer's ability to service or incur indebtedness. We
         also understand that EBITDA may be defined differently by other
         companies that disclose a similarly titled account. You should not
         construe EBITDA as an alternative to operating income or as a measure
         of liquidity or cash flows from operating activities.

(7)      Capital expenditures include frequency rights, telephone network
         systems and equipment, intangible assets and other assets. Investing
         activities in the consolidated statements of changes in financial
         position are net of dispositions.

(8)      Our earnings have been insufficient to cover fixed charges since we
         started incurring debt in 1998. Fixed charges include interest expense,
         capitalized interest and the portion of operating lease rental expense
         that represents the interest factor. The fixed charge coverage
         deficiency for the years ended December 31, 1999, 2000 and 2001
         amounted to Ps.264.3 million, Ps.709.1 million and Ps.658.0 million,
         respectively. Since there is no statement of operations for the years
         ended December 31, 1997 and 1998, the information has not been included
         herein.

                                       4
EXCHANGE RATES

            The following table sets forth, for the periods indicated, the
period-end, average, high and low noon buying rates, in each case for the
purchase of U.S. dollars, all expressed in nominal pesos per U.S. dollar. The
noon buying rate at June 27, 2002 was Ps.9.970 per U.S.$1.00.
NOON BUYING RATE(1)
                                                      ----------------------------------------------------------------
                                                       PERIOD END         AVERAGE(2)          HIGH               LOW
                                                       ----------         ----------         -------           -------
1997.........................................            Ps.8.07           Ps.7.917          Ps.8.41           Ps.7.72
1998.........................................               9.90              9.152            10.63              8.04
1999.........................................               9.48              9.553            10.60              9.24
2000.........................................               9.62              9.459            10.09              9.98
2001.........................................               9.16              9.337             9.97              8.95
December 2001................................                                                   9.25              9.09
January 2002.................................                                                   9.25              9.10
February 2002................................                                                   9.17              9.05
March 2002...................................                                                   9.11              9.00
April 2002...................................                                                   9.38              9.00
May 2002.....................................                                                   9.71              9.41
------------------

(1)  Source: Federal Reserve Bank of New York.

(2)  Represents the average rates for each period indicated, calculated by using
     the average of the exchange rates on the last day of each month during the
     period.

B.          CAPITALIZATION AND INDEBTEDNESS

            Not applicable.

C.          REASONS FOR OFFER AND USE OF PROCEEDS

            Not applicable.

D.          RISK FACTORS

FACTORS RELATING TO MAXCOM

We anticipate that we will have negative operating cash flow until we develop a
sufficiently large customer base

            The development of our business and the installation and expansion
of our network, services and customer base require significant expenditures. Our
planned capital expenditures for 2002 are approximately U.S.$75.5 million. These
expenditures, together with operating expenses, will adversely impact our cash
flow and profitability until an adequate customer base is established. We have
generated negative cash flows from operating activities since our incorporation
in 1996 and expect to generate insufficient cash flows to cover our fixed
charges through 2002. We cannot assure you that we will be able to establish an
adequate customer base to generate sufficient positive cash flows from our core
operations.

            If we cannot generate significant revenues, achieve and sustain
profitability or generate positive cash flows from operating activities in the
future, we will not be able to meet our debt service or working capital
requirements, and the value of our securities, as a result, would be materially
reduced.

Our auditors have indicated in their report that there is substantial doubt
about our ability to continue as a going concern under current conditions

                                       5
PricewaterhouseCoopers, in its Report of Independent Accountants
dated March 13, 2002, except for note 23 for which the date is April 30, 2002
related to our consolidated financial statements as of and for the year ended
December 31, 2001, has stated that we are highly leveraged and have suffered
recurring losses from operations that raises substantial doubt about our ability
to continue as a going concern. We believe that if our financial situation does
not improve, we will be unable to service our debt and operate as a viable
company and we may qualify for dissolution or liquidation under Mexican
corporate law.

            During 2001, our accumulated losses exceeded the equivalent of
two-thirds of our capital stock. According to the Mexican Companies Law (Ley
General de Sociedades Mercantiles), an interest party may file a claim for
dissolution and force us to liquidate our assets if the accumulated losses
exceed two-thirds of our contributed capital.

We expect to incur net losses through at least 2003

            Our cash flow from operations for the year 2001 was insufficient to
cover our fixed charges. Even with the consummation of the exchange offer and
the private equity investment, we expect to continue to incur net losses through
at least 2003.

We may need additional financing

            We may require additional financing in the future to service our
indebtedness and fund our operations. We cannot assure you that we will have
sufficient resources and that, if needed, any financing will be available in the
future or on terms acceptable to us. In addition, our ability to incur
additional indebtedness will be restricted by the terms of the indenture
governing the new notes.

We may be unable to build out our network in a timely manner or without undue
cost

            Our ability to achieve our strategic objectives will depend, in
large part, upon the successful, timely and cost-effective buildout of our
network. Factors that could affect such buildout include, among other things:

     -    our inability to obtain permits to use public rights of way;

     -    our inability to obtain future financing necessary for such buildout;

     -    unforeseen delays, costs or impediments relating to the granting of
          state and municipal permits for our buildout;

     -    delays or disruptions resulting from physical damage, power loss,
          defective equipment or the failure of third-party suppliers or
          contractors to meet their obligations in a timely and cost-effective
          manner; and

     -    regulatory and political risks relating to Mexico, such as the
          temporary seizure or permanent expropriation of assets, import and
          export controls, political instability, changes in the regulation of
          telecommunications and any future restrictions on the repatriation of
          profits or on foreign investment.

     Although we believe that our cost estimates and buildout schedule are
reasonable, we cannot assure you that the actual construction costs or time
required to complete the buildout will not substantially exceed current
estimates. Any significant cost overrun or delay could materially affect our
cash flow and our ability to repay our debt.

We depend on key personnel; if they were to leave us, we would have insufficient
qualified employees

            Our operations are managed by a small number of key management
personnel, the loss of whom could materially affect our operations. In June and
July 2000, our then chief executive, chief operating and chief marketing
officers resigned. In April 2001, our chief financial officer also resigned. We
have since appointed new officers to all these positions. The significant
turnover we have experienced among such management has affected our ability

                                       6
to develop and execute our business strategies. The success of our company
depends in part upon our ability to hire and retain highly skilled and qualified
management personnel. The competition for highly qualified management personnel
in the telecommunications industry is intense and, accordingly, we cannot assure
you that we will be able to hire or retain the management personnel necessary
for our success.

We may not have sufficient administrative, operational or financial resources to
grow as rapidly as we would like

            Our expected growth will place a significant strain on our
administrative, operational and financial resources. We anticipate that
continued growth will require us to recruit and hire a substantial number of new
managerial, finance, sales and marketing, accounting and support personnel. If
we are unable to attract and retain personnel who can manage our growth
effectively, our growth may be limited and the quality of our service may be
impaired. This occurrence could adversely affect our results of operations and
financial condition.

We depend on Telmex for interconnection

            Telmex exerts significant influence on all aspects of the
telecommunications market in Mexico, including interconnection agreements. We
use Telmex's network to service virtually all of our customers. Our
interconnection agreement with Telmex expires on September 15, 2002. We cannot
assure you that once this agreement expires we will be able to obtain the
services we require from Telmex on terms and conditions that permit us to offer
services at rates that are both profitable and competitive.

Our high leverage could affect our ability to service our debt

            We are highly leveraged. In 2001, our earnings were insufficient to
cover fixed charges by an amount equal to Ps.658.0 million (U.S.$71.9 million).
On a pro forma basis after giving effect to the exchange offer and the private
equity investment consummated on April 29, 2002 and described in "Item 5.
Operating and Financial Review and Prospects -- Recent Developments," our
earnings in 2001 would have been insufficient to cover fixed charges by an
amount equal to Ps.377.3 million (U.S.$41.3 million).

            Our ability to meet our debt service requirements will depend on our
future performance, which is subject to a number of factors, many of which are
outside our control. We cannot assure you that we will generate sufficient cash
flows from operating activities to meet our debt service and working capital
requirements. In addition, our high leverage could affect our access to credit
or our ability to pursue business opportunities.

            The indenture governing the new notes issued pursuant to the
exchange offer will limit but not prohibit our incurrence of additional
indebtedness. We expect to incur additional indebtedness in the future. However,
our significant level of indebtedness may impair our ability to raise additional
indebtedness on commercially reasonable terms when required or with terms that
will not limit our ability to develop our business.

            Furthermore, our significant leverage could adversely affect:

            -     our ability to fund capital expenditures, acquisitions or
                  operating losses or to refinance existing indebtedness;

            -     our flexibility in planning for, or reacting to, changes in
                  our business and market conditions; and

            -     our ability to compete in our markets.

We are and will be subject to restrictive covenants

            The terms of the new notes, impose significant operating and
financial restrictions. These restrictions will affect, and in many respects
significantly limit or prohibit, our ability to, among other things:

            -           borrow money;

            -           pay dividends on our capital stock;

                                       7
-     purchase stock or repay subordinated indebtedness;

            -     make investments;

            -     restrict the ability of our subsidiaries to pay dividends;

            -     use assets as security in other transactions;

            -     sell assets; and

            -     consolidate or merge into other companies.

            If we do not comply with these restrictions, we could be in default
even if we are able to service our debt. If there were a default, holders of the
notes could demand immediate payment of the aggregate principal amount and
accrued interest on the notes outstanding. This could lead to our bankruptcy or
reorganization for the benefit of our creditors or to our inability to pay our
obligations.

We may not be able to finance a change of control offer

            We will be required to offer to repurchase all of the new notes if a
change of control, as such term is defined in the indenture governing the new
notes, occurs. However, it is possible that we will not have sufficient funds at
the time of the change of control to make the required repurchase.

If we do not successfully upgrade and operate accounting, billing, customer
service and management information systems, we may not be able to achieve
desired operating efficiencies

            Sophisticated information and processing systems are vital to our
operations and growth and our ability to monitor costs, render monthly invoices
for services, process customer orders, provide customer service and achieve
operating efficiencies. We intend to upgrade the accounting, information and
processing systems necessary to provide services efficiently. However, we cannot
assure you that we will be able to successfully upgrade or operate such systems
or that they will perform as expected.

Our operations are dependent upon our ability to protect our network
infrastructure

            Our operations are dependent upon our ability to protect our network
infrastructure against damage from fire, earthquakes, floods, power loss, and
similar events and to construct networks that are not vulnerable to the effects
of such events. The occurrence of a natural disaster or other unanticipated
problem at our facilities or at the sites of our switches could cause
interruptions in the services we provide. The failure of a switch would result
in the interruption of service to the customers served by that switch until
necessary repairs are effected or replacement equipment is installed. Any damage
or failure that causes interruptions in our operations could have a material
adverse effect on our business, financial condition and results of operations.

A significant portion of our revenues is represented by a small number of
customers

            In 2001, our three largest customers accounted for 23.0% of our
revenues. We believe that this customer concentration will be reduced over time
as the size of our operations grows. However, our revenues could be negatively
affected, at least in the short term, if one or more of our largest customers
cancel our service.

We could be negatively affected by the "by-pass" traffic

            Pursuant to regulations of the Federal Telecommunications Commission
(Comision Federal de Telecomunicaciones), which we refer to as "COFETEL," the
only legal way to transport international long distance calls in Mexico is
through the international settlement rate system. However, alternative ways to
route and terminate international long distance calls at a lower cost in
countries that exchange a significant amount of traffic with Mexico exist. Some
estimates show that, given the disparity between international settlement rates
and domestic interconnection rates that would be payable under an alternative
arrangement, an increasing portion of the long

                                       8
distance market between Mexico and the United States is being served by entities
that "by-pass" the international settlement rate system. This practice is deemed
illegal by COFETEL.

            Maxcom complies with all relevant regulations relating to local and
long distance services and cannot confirm whether any of its high-volume
customers is engaging in "by-pass" activities. Under Mexican legislation, Maxcom
is not required to investigate whether any such high-volume customers are
engaged in "by-pass" activity. Maxcom is required, however, to obey any COFETEL
formal order to disconnect a customer deemed to be engaged in "by-pass" activity
by COFETEL.

            Mexican regulatory authorities have announced their intention to
conduct more rigorous audits of persons or companies engaging in "by-pass"
activity. In December 2000, some of the major Mexican long distance carriers
signed a cooperation agreement to combat "by-pass" in Mexico. If, as a
consequence of such actions, the regulatory authorities determine that any of
our high-volume customers are engaged in "by-pass" activity, Maxcom's revenues
could be negatively affected.

Our telecommunications network infrastructure has several vulnerabilities and
limitations

            Our telecommunications network is the source of all our revenues.
Any problem with or limitation of our network may result in a reduction in the
number of our customers and our revenues. The development and operation of our
network is subject to problems and technological risks, including:

            -     power loss;

            -     capacity limitations;

            -     software defects;

            -     breaches of security, whether by computer virus, break-in or
                  otherwise; and

            -     other factors which may cause interruptions in service or
                  reduced capacity for our customers.

            A failure to achieve current specifications for, or future upgrades
of, our network may materially and adversely affect our results of operations
and financial condition.

FACTORS RELATING TO THE MEXICAN TELECOMMUNICATIONS INDUSTRY

We face significant increasing competition, which may negatively affect our
operating margins

            The telecommunications industry in Mexico is becoming highly
competitive. We compete with our rivals primarily on the basis of features,
pricing and customer service. We face significant competition from Telmex in all
of the areas where we operate. In particular, as the former state-owned
telecommunications monopoly, Telmex has significantly greater financial and
other resources than those available to us, a nationwide network and concession
and an established customer base.

            We also face significant competition from recent entrants,
particularly in Mexico City. Some of these recent entrants may have
significantly greater financial and other resources than us. In addition, we
could face increased competition if the Mexican government grants more
concessions or if new, competing technologies are developed. Competition may
limit our ability to grow or maintain our customer base or to implement price
increases to keep pace with inflation.

If the Mexican government grants more concessions, the value of our concessions
could be severely impaired

            The telecommunications industry is regulated by the Mexican
government. Our concessions are not exclusive and the Mexican government could
grant concessions covering the same geographic regions and frequency bands to
other entrants. We cannot assure you that additional concessions to provide
services similar to

                                       9
those we plan to provide will not be granted and that the value of our
concessions will not be adversely affected as a result.

We could lose our concessions if we do not comply fully with their terms

            The terms of our concessions require us to satisfy a number of
technical, buildout and financial conditions. We believe we are currently in
compliance with all of these terms. However, we cannot assure you that we will
be able to comply in the future. A failure to comply could result in the
termination of our concessions, and the Mexican government would not be required
to compensate us. If any of our concessions were to be terminated, we could be
unable to engage in our core business and we would likely be unable to repay our
indebtedness.

Fraud increases our expenses

            The fraudulent use of telecommunications networks imposes a
significant cost upon service providers, who must bear the cost of services
provided to fraudulent users. We suffer loss of revenue as a result of
fraudulent use, and also cash costs due to our obligation to reimburse carriers
for the cost of services provided to fraudulent users. Although technology has
been developed to combat this fraudulent use and we are installing it in our
operations, this technology does not eliminate fraud entirely. In addition,
since we rely on other long-distance carriers for interconnection, some of which
do not have anti-fraud technology in their network, we are particularly exposed
to this risk in our long distance service. In 2001, we incurred approximately
Ps.4.1 million in expenses for the prevention and detection of fraud.

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. While we have been installing
what we believe to be a technologically advanced fiber optic network with a
microwave overlay, we cannot assure you that this technology will not be
challenged by competition from new or improved digital or other technologies 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.

The Mexican government could temporarily seize or permanently expropriate our
assets under certain circumstances

            The Mexican government has the authority to temporarily seize all
assets related to a telecommunications concession in the event of natural
disaster, war, significant public disturbance, threats to internal peace,
economic events, and for other reasons related to national security. In
addition, the Mexican government has the statutory right to permanently
expropriate any telecommunications concession and claim any related assets for
reasons of public interest. Mexican law provides for compensation in connection
with losses and damages related to temporary seizure or expropriation. However,
we cannot assure you that the actual compensation paid would be adequate or that
such payment would be timely.

FACTORS RELATING TO MEXICO

If Mexico experiences future political and economic crises, our business could
be affected negatively

            We are a Mexican company with all of our operations in Mexico.
Accordingly, the political and economic environment within Mexico can have 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, the candidate of the National Action Party (Partido Accion
Nacional). This represents the first time in over 70 years that the
Institutional Revolutionary Party (Partido Revolucionario Institucional) has not
won the Presidency and has not secured the absolute majority of the Mexican
Congress. We cannot predict the impact that this new political landscape will
have on the Mexican economy, particularly on the growth and deregulation of the
telecommunications industry.

                                       10
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
telecommunications services.

            Crises such as these could have a material adverse effect on our
financial condition and results of operations and on the market value of our
securities.

Changes in tax or other regulations could have an adverse impact on our
financial condition

            Effective January 1, 2002, the Mexican Congress expanded the scope
of the Sales and Use Tax Law (Ley del Impuesto Especial Sobre Produccion y
Servicios), whereby, among other things, a new 10% tax was imposed on the
rendering of certain telecommunications and supplementary services. Although we
believe, based on the advice of our tax and regulatory advisors, that local and
long distance services, which are our core business, are not subject to such
special tax, we cannot assure you that the tax authorities may not interpret the
law otherwise. In such case, our operations and financial condition would be
materially and adversely affected.

            The operation of telecommunications systems in Mexico is subject to
laws and regulations administered by the Mexican Ministry of Communications and
Transportation (Secretaria de Comunicaciones y Transportes) and the Mexican
Federal Telecommunications Commission (Comision Federal de Telecomunicaciones).
These governmental agencies may take regulatory actions that could damage our
business.

Foreign ownership restrictions limit our ability to raise equity capital

            Mexican law currently provides that no more than 49% of the full
voting stock of a Mexican corporation holding a concession to provide
telecommunications services, other than cellular services, may be held by
non-Mexicans. Non-Mexicans represent 49% of our full voting stock. In addition,
Mexican authorities have mandated that our limited voting shares, which are also
referred to as neutral investment shares, may not represent more than 95% of our
capital stock.

            Under our current capital structure, we have limited flexibility to
raise equity capital from non-Mexican investors. As a result, any future sales
of equity securities, may require substantial participation by Mexicans or a
waiver or modification of Mexican foreign investment laws and regulations. We
cannot assure you that such a waiver or modification could be obtained.

We may lose money because of peso devaluations

            While our revenues are almost entirely denominated in pesos, the
majority of our obligations, and all of our long-term debt, are, and after
consummation of the exchange offer and the private equity investment, will be,
denominated in U.S. dollars. In addition, substantially all of our capital
expenditures are denominated in U.S. dollars. We are, and will be, exposed to
peso devaluation risk. The peso has devalued substantially against the U.S.
dollar in the past and may devalue significantly in the future. For example, the
noon buying rate rose from Ps.3.45 per U.S.$1.00 on December 19, 1994 to Ps.5.00
per U.S.$1.00 on December 31, 1994 and Ps.7.74 per U.S.$1.00 on December 31,
1995, representing a 124.6% devaluation of the peso relative to the U.S. dollar.
In 1998, the peso devalued 22.7% relative to the U.S. dollar.

            We do not currently have, nor do we expect to have, hedging
arrangements with respect to this risk because we do not believe them to be cost
effective for us. Further declines in the value of the peso relative to the U.S.
dollar could adversely affect our ability to meet our U.S. dollar-denominated
obligations, including the notes. In addition, any further decrease in the value
of the peso may negatively affect the value of Mexican securities such as ours.
Although the peso-to-dollar exchange rate has remained relatively stable in the
last three years, there may be significant devaluations in the future.

Developments in other countries may impact the price of our securities

                                       11
We cannot assure you that the price of our securities will not be
adversely affected by events elsewhere, especially in the United States and in
emerging market countries. Mexican financial and securities markets are, to
varying degrees, influenced by economic and market conditions in other
countries. Although economic conditions are different in each country, investor
reaction to developments in one country has had and can have significant effects
on the prices of securities of issuers in other countries, including Mexico.
Currently, the economic slow down in the United States, as well as political and
financial crisis in certain emerging markets have had a significant negative
impact on the financial and securities markets in many emerging market
countries, including Mexico. The effects of these crises may worsen, or new
crises may occur, which may negatively affect the price of our new notes and
CPOs or our financial condition and results of operations.

Our financial statements do not give you the same information as financial
statements prepared under United States accounting principles

            We prepare our financial statements in accordance with Mexican GAAP.
These principles differ in significant respects from U.S. GAAP, including in the
treatment of the amortization of frequency rights, the capitalization of
preoperating expenses, the capitalization of interest, the extinguishment of
debt, the restructuring of troubled debt and deferred income taxes and
employees' profit sharing, and in the presentation of cash flow information. In
particular, all Mexican companies must incorporate the effects of inflation
directly in their accounting records and in published financial statements. We
cannot assure you that these will be the only differences in the future. See
note 22 to the consolidated financial statements for a description of the
principal differences between Mexican GAAP and U.S. GAAP applicable to Maxcom.

You may suffer a U.S. dollar shortfall if you obtain a judgment against us or a
distribution in bankruptcy

            In the event you are awarded a judgment from a court enforcing our
U.S. dollar-denominated obligations under either our old or new notes or the
liquidation preference under our series N2 preferred stock, we will have the
right to discharge our obligations by paying you in pesos at the exchange rate
in effect on the date of payment of such judgment. Likewise, if we are declared
bankrupt, we will have the right to discharge our obligations by paying our
creditors in pesos at the exchange rate in effect on the date of the declaration
of such bankruptcy.

            The exchange rate is currently determined by the Mexican Central
Bank (Banco de Mexico) every banking day in Mexico and published the following
banking day in the Official Gazette of the Federation (Diario Oficial de la
Federacion). As a result of such currency conversion, you could face a shortfall
in U.S. dollars. No separate actions exist or are enforceable in Mexico for
compensation for any such shortfall.

            You should also be aware that in the event we are declared bankrupt
by a Mexican court or if we are subject to a bankruptcy reorganization
proceeding (concurso mercantil) in such court, our debt obligations, including
the new notes and the old notes, if any, will cease to accrue interest and
payment of any of our debt obligations would depend on the outcome of the
bankruptcy reorganization proceedings, which are often very lengthy.

We may not be able to make 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 our access to U.S. dollars to meet our
U.S. dollar obligations and could also have a material adverse effect on our
business, financial condition and results of operations. We cannot predict the
impact of any such measures on the Mexican economy.

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, was 18.6%, 12.3%, 9.0%, and 4.4% in 1998, 1999,
2000, and 2001, respectively. High inflation rates can adversely affect our
business and results of operations in the following ways:

                                       12
-     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 also 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 24.8%, 21.4%, 15.2% and 11.3% for 1998, 1999, 2000 and 2001,
respectively. Although we do not currently have any peso-denominated debt, if we
need to incur such debt in the future, it will likely be at high interest rates.

ITEM 4.     INFORMATION ON THE COMPANY

A.          HISTORY AND DEVELOPMENT OF THE COMPANY

            Maxcom Telecomunicaciones, S.A. de C.V. is a limited liability
company (sociedad anonima de capital variable) with indefinite life, organized
under the laws of Mexico on February 28, 1996. We were originally organized
under the name "Amaritel, S.A. de C.V." We changed our legal name to "Maxcom
Telecomunicaciones, S.A. de C.V." on February 9, 1999. Our legal name is also
our commercial name.

            Our principal offices are located at Guillermo Gonzalez Camarena No.
2000, Colonia Centro de Ciudad Santa Fe, Mexico, D.F. 01210 and our general
phone number is (52) 55-5147-1111. Our website address, the contents of which
are not part of, or incorporated into, this annual report, is www.maxcom.com.
Our agent in the United States is Puglisi & Associates, 850 Library Avenue,
Suite 204, P.O. Box 885, Newark, Delaware 19715.

            In February 1997, we were awarded Mexico's first competitive
wireline local and long distance telephony concession, covering the Federal
District of Mexico and over 100 cities and towns in the Gulf region for local
service and the whole nation for long distance service. This concession has a
term of 30 years. The local telephony portion of our concession was expanded in
September 1999 to cover over 80% of the Greater Mexico City area and a wider
area within the Gulf region. In September 2001, our concession was further
expanded to allow us to provide nationwide wireline local telephony service.

            In October 1997, we were awarded seven nationwide point-to-point and
three regional point-to-multipoint microwave concessions. Each of these
concessions have a term of 20 years.

            We commenced commercial operations on May 1, 1999.

            For the three years ended December 31, 2001, we invested
approximately Ps.1,992.5 million in capital expenditures, primarily for the
buildout of our infrastructure.

            For 2002, we plan to invest approximately U.S.$75.5 million in
capital expenditures, mainly to continue to build out our network. Of this
amount, we had already spent approximately Ps.59.1 million (approximately
U.S.$6.5 million) by March 31, 2002.

B.          BUSINESS OVERVIEW

            We are a growing facilities-based telecommunications company
operating in the competitive local exchange carrier market in Mexico. We are
focused on developing our network and support infrastructure required to provide
local as well as long distance and other value-added services to targeted small
and medium-sized businesses and residential customers within our concession
areas. In particular, we believe that the cities of Mexico and Puebla, where we
currently operate, and certain other cities where we are planning to operate in
accordance with our new nationwide concession, offer opportunities for growth in
telecommunications use as a result of the combination of a relatively large
population, low subscriber line penetration by international standards and

                                       13
economic growth. We anticipate a large and growing demand for telephony services
in these regions. See below " -- Our markets -- Concession areas" for a fuller
description of the new nationwide concession.

            The construction of our telecommunications network is based on a
smart-build, customer-driven, modular platform that utilizes a combination of
fiber optic, copper wire and microwave transmission technology. This methodology
enables us to provide fast service to our target markets, reduces the time lag
between the incurrence of capital expenditures and the generation of revenues
and increases flexibility to accommodate a changing market environment. To
operate our network, we have constructed two central switching offices located
in Mexico City and the City of Puebla, with a 170-kilometer fiber optic link
connecting the two cities. As of December 31, 2001, we had in service two
state-of-the-art Lucent Technologies 5ESS switches. We are currently negotiating
with Lucent Technologies, Inc. and other vendors the acquisition of two
additional state-of-the-art switches that will support our future growth and
expansion.

            We believe that the combination of our smart-build network
construction strategy, our position as a customer service-oriented provider, our
focus on quality and reliability and our state-of-the-art network and systems
will allow us to benefit from the expected growth of the Mexican
telecommunications industry.

            We position ourselves as a single-source provider of
telecommunications services to our customers. In addition to our existing local,
long distance and data services, we offer value-added products such as digital
high-speed data connectivity and Internet access. We are currently expanding the
functionality of our network to offer other broadband services, such as
dedicated Internet access, private lines and web-hosting.

            In order to support our market positioning, we follow a marketing
strategy that is focused on differentiating ourselves from competitors.
According to our market research, our target customers value highly, among other
things, around-the-clock customer care availability, rapid response time and
accurate billing. A key element in this strategy is to offer superior customer
service, such as our "one-stop-shopping " feature which allows our customers to
receive their statement containing local, long distance and Internet charges in
one single invoice.

            Our new management team has significant experience in
telecommunications and marketing. Our President and Chief Executive Officer was
the former Chief Executive Officer of Iusacell, the second largest mobile
telephone company in Mexico, which we refer to as "Iusacell." Our Chief
Operating Officer has more than 10 years of experience in executive operations,
having worked with Johnson Controls and AMP. Our Chief Financial Officer has
more than 20 years of experience, which includes four years at Iusacell and 12
years at IBM. Our Chief Information Systems Officer has a wide range of
experience in telecommunications, having worked four years at Iusacell. Our
Chief Marketing Officer has a wide range of experience in marketing, having
worked 14 years for Kraft Foods. Our recently hired Chief Commercial Operations
Officer has more than six years of experience in the telecommunications
industry, having worked in similar positions with Alestra, Iusacell and Axtel.

STRATEGY

            We intend to capitalize on our competitive strengths to become a
leading telecommunications provider in Mexico. Our management team has been
executing a new strategy of growth in our existing markets and expansion in
accordance with our new nationwide concession. This strategy includes the
following components:

Capture unmet demand for telephony services

            We seek to capture unmet demand by targeting small and medium-sized
businesses and residential customers that are looking to expand their
telecommunications capacity or that do not currently receive the types of
products and services we offer. We believe that the potential for expansion in
the Mexican telecommunications market is significant given the low teledensity
rate, which was 12.7 telephone lines per 100 inhabitants as of December 31,
2000, the increasing level of competition and the development of the Mexican
economy.

Build our network on a demand-driven, modular basis

            We build our network based on customer demand. We first identify
city areas with the largest potential for new lines, which we refer to as
"clusters," in the markets that we serve through various market research
techniques. We then carry out the network buildout in tandem with increased
sales and promotional efforts targeted at customers

                                       14
within the cluster. This parallel track minimizes the time lag between the
incurrence of capital expenditures and the generation of revenues, and allows a
choice of technology and construction method based on the particular needs of
the cluster. We refer to this approach as our "smart-build" strategy.

Differentiate product offerings based on features and price

            We believe that we can differentiate ourselves from competitors by
offering a variety of product features that meet the specific needs of our
customers. To that end, we seek to develop customer loyalty and brand awareness
by informing consumers about the telecommunications services that we offer and
by helping them to differentiate between the various telecommunications services
available in the market. We also seek to offer our services at prices that are
between 5% and 15% lower than the prevailing market price in order to build our
customer base. See " -- Pricing."

Deploy cost-efficient technology

            We use a cost-efficient technology to deploy our network and serve
our customers. Our current network consists of optical fiber, copper lines and
microwave technology which we deploy to particular customers based on deployment
cost, time to market, time to revenue, time to profitability, quality and
reliability in our service.

            Our technology platform allows us to provide xDSL services,
dedicated Internet access lines, POTS and ISDN services, among others. In
addition, due to additional duct capacity in our current facilities we are able
to deploy fiber-to-the-home (FTTH) services whenever customer premises equipment
technology is available at reasonable prices. Our microwave rings allow us to
reach customers throughout our market in a cost efficient manner and allow us to
build network clusters that can reach from 500 to 6,000 lines.

Capitalize on our nationwide local telephony concession

            In September 2001, our local telephony concession was expanded,
allowing us to provide service to all of Mexico. This provides us with an
opportunity to target small and medium-sized businesses and residential
customers within our new concession areas who we believe are willing to evaluate
other alternatives as they look for better service, higher reliability and lower
tariffs.

            In addition, we believe that the quality of our product and services
offerings gives us a competitive advantage in many regions within our nationwide
concession area, as experienced in the City of Puebla, where in 2001 we more
than tripled our number of lines in service and where we installed almost 40% of
new net additions according to COFETEL.

OUR MARKETS

Concession areas

            In February 1997, we were awarded Mexico's first competitive local
and long distance telephony concession, covering the Federal District of Mexico
and over 100 cities and towns in the Gulf region for local service and
nationwide for long distance service. In September 1999, we received the
approval of the SCT and COFETEL to provide local telephony services in several
municipalities contiguous to the Federal District, which are part of Mexico
City, as well as in selected additional cities in the Gulf region. In September
2001, our local service concession was expanded to cover all of Mexico. Under
our concession, we are required to start providing service to the cities of
Queretaro, Leon, Celaya, Irapuato, Silao, Aguascalientes, Guadalajara and
Monterrey by 2006.

            We commenced commercial operations in Mexico City in May 1999.
Mexico City has the nation's greatest concentration of service and manufacturing
industries and is also the center of Mexico's public and financial services
sectors. In 2001, Mexico City had a population of approximately 20.0 million
people, according to the Mexican National Institute of Statistics, Geography and
Information (Instituto Nacional de Estadistica, Geografia e Informatica).
Although Mexico City has the highest teledensity rate in Mexico, at
approximately 34.2% telephone lines per 100 inhabitants as of June 2001, we
believe that significant unmet demand for high-quality local telephony services
in Mexico City remains. As of December 31, 2001, we had 41,873 lines installed
in Mexico City.

                                       15
We also commenced commercial operations in the City of Puebla in May
1999. Puebla is the fourth largest city in Mexico, with a population of
approximately 1.4 million people as of December 31, 2001. In the City of Puebla
we have expanded our market share in local telephony service from 2.5% in 2000
to 7.7% in 2001. As of December 31, 2001, we had 36,108 lines installed, as
compared to 9,990 lines installed as of December 31, 2000. According to COFETEL,
these new lines represented 40% of all the new lines installed in the City of
Puebla during this period.

Clusters

            We have developed a comprehensive marketing strategy that starts by
identifying city areas with the largest potential for new lines, which we refer
to as "clusters." We use a variety of techniques to identify potential clusters,
including canvassing, plotting of potential clusters and database marketing.
Once a cluster is identified, a map of the geographic area is produced and the
cluster is defined. A cluster becomes the basis for network design and
deployment and for the launching of focused field sales and marketing one-on-one
efforts.

            Our cluster strategy is divided into three stages:

            -     IDENTIFY CLUSTERS through market research. Our market research
                  is designed to identify small- and medium-sized businesses and
                  residential customers. Once we identify potential customers
                  within the clusters, we design the deployment of the access
                  network to cover them. We perform a return on investment
                  analysis for each cluster to assure that the investment made
                  in such cluster meets our return benchmarks.

            -     DEPLOY CLUSTERS through the implementation of a sales plan for
                  each cluster based on our network deployment schedule. We
                  promote our services at the same time that we build our
                  network.

            -     FILL IN CLUSTERS by offering our services to all customers
                  within the cluster.

OUR NETWORK

Buildout strategy

            We build out our network on a modular basis. Once a cluster has been
identified in a joint effort by our marketing, engineering and sales
departments, we build our network in clusters varying from 500 to 6,000 lines.
To ensure the highest quality service to our customer, we install 24-gauge
copper wire and limit the distance between our backbone network and the customer
premises to four kilometers. These attributes also allow us to provide to our
customers voice and data services, such as ADSL services with bandwidth of up to
2Mbps.

            We standardize all our Lucent, AFC and Ascom equipment to assure
consistent, cost efficient, high quality service and also to enable us to use
the same access equipment for all of our services.

Network backbone

            At December 31, 2000, our network backbone consisted of one owned
170-kilometer 24 strand fiber optic link between Mexico City and the City of
Puebla with three optical regenerators at halfway points. We have the capability
with this link to transmit synchrony links, LAN network links, long distance
links and dedicated links. We have also installed a Lucent Technologies 5ESS
digital switch in each city with a total capacity of 120,000 trunks. Our switch
in Mexico City is connected to four different nodes in the city's public
switched telephone network, some by our own and some by leased fiber capacity.
Our switch in Puebla is connected to the city's public switched telephone
network by our own fiber ring. We also lease capacity to connect to long
distance networks.

            In June 2000, we finished constructing a lighted 144 strand, 57
Kilometer fiber optic ring in the City of Puebla. We also acquired six strands
of dark fiber for approximately 175 kilometers in metropolitan rings in Mexico
City and obtained an option for additional capacity in future fiber optic rings
also in Mexico City. In addition, the infrastructure is in place to provide
local telephony service to five towns located along our Mexico City-City of
Puebla fiber optic link.

                                       16
We use our own fiber optic rings to connect our microwave nodes to
the fiber rings in order to transport the telephone communications from our
customers to the telephone switch and from there back to our customers or to the
public switched telephone network. We also use this fiber to provide to our
customers dedicated links and dedicated Internet links that we connect through
our fiber and also by leased capacity to the Internet backbone.

Last-mile connectivity

            The last-mile connectivity portion of our network is comprised of a
mix of wireline and wireless access technologies. We use point-to-point
microwave transmission technology for fast deployment to clusters and single
site locations. We have point-to-point frequencies in the 15 and 23 GHz band
forming a complex microwave network throughout both Mexico City and the City of
Puebla in which collectively we have more than 400 microwave links. We use
microwave links to connect customers with more than 20 lines and to connect
clusters that cannot be immediately connected to our own fiber network. We also
have a point-to-multipoint concession for the 10.5 GHz band, covering a portion
of the Gulf region. We are testing different technologies in order to use this
concession for commercial purposes.

            We also use wireline access to provide service to clusters. Clusters
generally have an area ranging between one and six kilometers in diameter. An
average of 50 kilometers of cable plant is required to provide last-mile
connectivity within the clusters.

            We use copper wire feeder and distribution facilities placed from
the host or remote site along rights of way with a mix of aerial and underground
construction. Aerial is our preferred and most used method because of its cost
of construction advantage. Underground cable is placed using either the open
trench or directional boring methods of construction. The size of the cable is
based on the anticipated number of customers in each cluster's influence area as
forecasted by our marketing research. We also integrate fiber optic facilities
in the distribution plant to allow us to provide broadband services.

Switching

            We have a Lucent Technologies 5ESS digital switch in Mexico City and
the City of Puebla. Our switch in Mexico City is currently engineered and
equipped for 86,000 trunks, and new switches will be installed as the maximum
capacity of the existing switches is reached. Our switch in the City of Puebla
is engineered and equipped for 60,000 trunks. Each trunk can generally carry
between 1 and 3 lines, depending on whether it serves a residential or a
business customer. Our equipment capacity is scaleable at incremental costs
according to customer demand.

            The switches are capable of providing analog lines, E1 digital
lines, digital high-speed data services, centrex services and operator-assisted
services. In addition, they can provide private analog lines, private
clear-channel digital lines, data transmission and value-added services.

            Our switches also have a synchrony network that is designed to
assure a proper synchronization of every call that is made in the cities we
serve and to assure proper synchronization with the public switched telephone
network as well as any other carriers with whom we connect. We also have two
STPs (Signaling Transfer Point) in the City of Puebla and four in Mexico City to
assure the proper signaling in our interconnection with all other carriers.

Operational support systems

            We have a network operations and control center in Mexico City which
oversees, administers and provides technical support to all service areas. Our
center, which uses Hewlett Packard hardware and Lucent Technologies software
controls and monitors, among other systems, all of our network, microwave,
fiber, access equipment, data equipment, synchrony, signaling and energy
systems. Our center allows us to manage a multi-vendor network with the greatest
efficiency possible, and to identify problems early in order to utilize
available redundancy and repair the damaged part of the network.

            Our operational support systems are designed to allow us to
differentiate ourselves in the marketplace by being able to:

                                       17
-     offer a flexible, large selection of services;

            -     provide tailored service packages;

            -     quickly introduce products and services;

            -     deliver near real-time activation and disconnection;

            -     deliver a high quality of service;

            -     minimize activation errors; and

            -     provide accurate and timely billing services.

            Our information technology strategy is to implement operational
support systems possessing a high level of functionality and flexibility from
the service order to the delivery of customer invoices. The systems include the
following functional features:

            -     Spanish language support for invoices and documentation;

            -     a high degree of integration between a small number of
                  operational support systems components;

            -     flow-through of information, provisioning and service
                  activation;

            -     capabilities to monitor, manage and resolve network problems;
                  and

            -     allowance for growth on a modular scalable basis.

OUR SERVICES

            Our primary focus of service is local telephony, particularly the
provision of high-quality, flexible last-mile connectivity to small and
medium-sized businesses and residential customers. We offer long distance
service as an integrated value-added service for our local telephony customers.
We do not offer our long distance service separately from our local telephony
service.

            We currently provide value-added services such as: voice mail, speed
dialing, call waiting, call forwarding, three-way calling, call blocking, caller
identification and multi-line hunting. We also provide digital high-speed
connectivity and dial-up Internet access.

SERVICE PRODUCTS

            We seek to offer high-quality telephony service products combining
(1) prices that are between 5% and 15% below current market levels, (2) a wide
range of value-added solutions and (3) superior customer service. The following
are the service products we currently offer to our customers:

            -     LINEAMAX RESIDENCIAL. This is a service for residential
                  customers that provides a high-quality telephone line. The
                  features offered under this product include voice mail, call
                  waiting, call forwarding, three-way calling, call blocking,
                  speed dialing and unlisted numbers.

            -     LINEAMAX COMERCIAL. This service, which is offered to business
                  customers, is identical to LineaMax Residencial, except that
                  it also includes multi-line hunting.

            -     CENTRALMAX. This service provides business customers with all
                  the functions of a private branch exchange using centrex
                  technology, without having to acquire and maintain equipment.
                  The features offered under this product include call waiting,
                  call forwarding, three-way calling, direct inward dialing,
                  direct outward dialing, intercom dialing, call transfer, speed
                  dialing, call hold, call pick up,

                                       18
outgoing call blocking, single digit access to attendant and
                  distinctive ringing. Optional solutions include voice mail,
                  music-on-hold, multi-line hunting and attendant services.

            -     LARGA DISTANCIA MAX. This service provides domestic and
                  international long distance. We do not offer our long distance
                  service separately from our local telephony service. See
                  "Supervision and Regulation of the Mexican Telecommunication
                  Industry -- Our concessions -- Long distance" for a
                  description of significant special charges we would have to
                  pay Telmex if we decide to provide long distance service to
                  customers other than our local telephony customers.

            -     TRONCALMAX DIGITAL. This service provides digital trunks for
                  business customers that need highly reliable access to and
                  from the public telephone network through their existing
                  private branch exchange. This service is sold in groups of 10,
                  20 or 30 trunks. The groups can be configured with direct
                  inward dial (DID), direct outward dial (DOD), caller
                  identification or main telephone number assignments.

            -     TRONCALMAX ANALOGICA. This service, which is offered to
                  business customers, provides connectivity to analog PBX or key
                  systems. The features available with this product are
                  multi-line hunting, caller identification and call barring.

            -     SPEEDY MAX (ADSL (256 AND 512 KBPS AND 1 AND 2 MBPS)).
                  Asymmetric digital subscriber line is a transmission service
                  that turns ordinary telephone lines into high-speed data
                  connections. It is a digital data service that provides
                  telecommuting capabilities at speeds much faster than standard
                  modems. With ADSL it is possible to have secure, dedicated
                  links to the Internet or a company's LAN at a high-speed
                  transmission.

            -     ASISTELMAX. This service, which we launched in April 2002,
                  provides basic telephone medical and home assistance to our
                  customers in case of emergency.

Beginning in the third quarter of 2002, we plan to start offering the following
service products:

            -     DIGITAL PRIVATE LINES. We expect that our private lines will
                  be highly reliable dedicated circuits between two or more
                  physical locations. They are designed to integrate voice, data
                  and video private networks over a single physical link.
                  Digital private lines are, in effect, leased lines for
                  exclusive/private use with no limitations in usage, available
                  365 days a year, with no restrictions in amount of traffic.

            -     VIRTUAL PRIVATE NETWORKS. This product provides customers with
                  several telecommunications services such as simplified
                  dialing, privacy and security of communications and control
                  calls, over national and international private networks.

            -     WEB SERVICES. Hosting web applications, domain name
                  administration, applications on demand, unified messaging
                  services and small and medium-sized business enablement
                  content.

            -     DEDICATED INTERNET ACCESS. For LAN, this product offers
                  Internet access at high speed within a clear channel access to
                  the Internet backbone.

            -     CALLING CARDS. Calling cards provide the capability to offer
                  subscribers the option of automatically billing their calls to
                  an alternate account number. This service is typically
                  provided as a convenience to subscribers that have a need to
                  place calls when they are away from their homes or offices.

            -     1-800 NUMBERS. For those customers interested in making free
                  of charge in-bound phone calls to their call centers.

            We believe that these products will help us capitalize on the
significant data applications growth expected in Mexico and help us increase our
participation in the small and medium-sized business market. In particular, we
believe that these voice and Internet services constitute an attractive set of
product services for those customers. We

                                       19
believe that this portfolio of data services will complement our voice product
offerings and thus enable us to compete more effectively in the business
customer segment.

PRICING

            We generally seek to maintain our prices between 5% and 15% below
current market levels. We offer pricing plans that are simple in order to assure
customers of the integrity of the billing process. Our pricing structure rewards
long-term commitments by increasing discounts in relation to the length of the
commitment. We also provide discounts to high-usage customers that are likely to
generate a significant outflow of calls.

            We pay interconnection charges to other carriers on a per minute
basis. However, the common practice in the Mexican market is to charge customers
on a per-call basis for local service. We seek to minimize the risk associated
with this mismatch between our revenues and costs; for long holding time
customers, we have, in some cases, implemented a per minute charge plan to be
consistent with our interconnection fees that are on a per minute basis.

MARKETING AND SALES

General

            We seek to develop brand name recognition by using our corporate
name, logo and product names consistently to portray a unified image. We conduct
publicity drives within target clusters to small- and medium-sized businesses
and to residential customers. We seek to differentiate ourselves from our
competitors by our pricing, consistent quality and reliability of
first-to-market technology, one-stop shopping and speed of line activation.

Sales and distribution channels

            We focus our sales efforts within clusters using door-to-door sales
and telemarketing promotions. We promote our services primarily through
advertisements on radio, billboards, in-building promotions, press and
magazines. As we commence the deployment of our network within a cluster, we
intensify our promotion efforts through our direct sales force in such cluster.

            Our direct sales approach is to assign sales representatives or
teams to locations within a cluster or to single sites.

            As of December 31, 2001, we employed 52 internal salespeople and 237
external sales agents. We assign our sales force based on territory, product or
market segment, depending on their background and experience. The compensation
structure for our sales force is tailored to attract and retain high achievers
by providing a base salary and a bonus component. Sales commissions are paid
only after the new line is installed.

            Our sales force is recruited from other telecommunications providers
and systems integrators. In addition, we recruit highly qualified students with
engineering and systems degrees from Mexican universities. We believe that
current labor market conditions in Mexico allow us to recruit high-quality
individuals. Our sales force undergoes extensive training that covers the
industry of telecommunications, our products, our internal procedures and
markets, sales, proposal preparation and presentation skills. In its sales
effort, our sales force uses, among other things, multimedia presentation,
corporate videos and corporate and product brochures.

            In addition to our sales force, we are developing other distribution
channels, including store fronts, agents, distributors, outsourcing and
telemarketing.

Customer service

            We seek to differentiate ourselves by providing superior and
consistent customer service. Our customer service group is divided into three
areas:

                                       20
-     CENTRALIZED ANSWERING POINT. This area responds to calls to
                  our main number in Mexico City and the City of Puebla. Many
                  prospective and existing customers use our centralized
                  answering point for all types of queries, including queries
                  regarding area codes, rates, billing and line installation and
                  changes. Our hours of operation are 8:00 a.m. to 8:00 p.m. on
                  Mondays through Fridays and 9:00 a.m. to 6:00 p.m. on
                  Saturdays.

            -     WALK-IN CENTER. We have one walk-in center in Mexico City and
                  two in the City of Puebla for prospective and existing
                  customers who wish to make inquires in person regarding our
                  services. Our hours of operation are 8:00 a.m. to 8:00 p.m. on
                  Mondays through Fridays and from 9:00 a.m. to 6:00 p.m. on
                  Saturdays.

            -     CENTRALIZED TROUBLE-SHOOTING CENTER. This area responds to
                  calls to our main number in Mexico City and the City of
                  Puebla. This center is available 24 hours a day, seven days a
                  week and handles customer service problems.

            Customers may access their billing statements through our website
and link to the websites of two major Mexican banks to effect payment. In
addition, customers may pay their bills with their credit cards, at our walk-in
centers and at the branches of major Mexican banks. We also assist our customers
with new service requests and product information at our walk-in centers.

CREDIT, BILLING AND COLLECTION

            We carry out credit checks on all our potential business customers
using a leading Mexican credit bureau. Based on the result of the credit check,
we assign a credit risk rating to the business customer and, depending on the
credit risk assignment, request a deposit, bond or standby letter of credit.
Normally, for business customers with an imperfect credit history we require a
one to three-month deposit, which is calculated based on the number of lines
contracted. For high-usage customers we may require higher deposits, collect on
a prepaid or weekly basis and undertake a closer monitoring of call activity.

            For our billing process, we use an Ericsson/Hewlett-Packard billing
mediation platform and a Kenan Systems/Arbor billing platform interfaced with
our customer service system. We collect our billing data from our switches using
an X.25 data network, with magnetic tape as backup. We monitor collections and
abnormal activity and develop statistics using our Kenan Systems/Arbor billing
platform. Also, we have a state-of-the-art fraud management system developed by
Sotas, the software manufacturer.

            We perform eight billing cycles per month for our business customers
and four billing cycles per month for residential customers. We invoice
customers monthly on a staggered basis, except in instances that customers
represent a greater credit risk in which case we invoice weekly. For regular
customers we prepare and mail our bills within five days after the close of each
cycle. Customers then have twenty-one days to pay the bill after the cut off
date.

            For customers with one to three lines, if a bill is past-due for
more than two days, we call the customer and leave a reminder message on its
phone. If the bill remains unpaid for five additional days, we restrict service
to incoming calls only. If the bill remains unpaid for 30 additional days, we
suspend the service and call or visit the customer to collect or negotiate the
payment. In some cases, we forward uncollected receivables to a collection
agency or, if necessary, to a legal agency. If no payment is received, we
disconnect the line after ninety days past-due.

            For customers with more than three lines we use the same process
described above, except that we use a personalized approach instead of leaving a
phone message and we negotiate payment terms before any restriction, suspension
or disconnection of the line.

            We have initiated a Customer Relationship Management Program (also
known as CRM) to support our business growth, which is focused on customer
service, collection, training sales force and enhance marketing. Our initial
investment for this program is U.S.$3.5 million and our strategic partner in
this program is Siebel a software consulting company.

COMPETITION

                                       21
We primarily compete in the local telephony market on the basis of
customer service, value-added products and price. Our direct competitors are
wireline and fixed wireless local telephony operators, although we also face
competition indirectly from mobile wireless operators.

            We do not compete directly in the long distance market. Although we
provide long distance service, we position such service as an integrated
value-added service for our local telephony customers. As a result, we do not
offer our long distance service separately from our local telephony service. See
" -- Supervision and Regulation of the Mexican Telecommunications Industry --
Our concessions -- Long distance" for a description of significant special
charges we would have to pay Telmex if we decide to provide long distance
service to customers other than our local telephony customers.

Telmex

            Our main local telephony competitor is Telmex, the former
government-owned telecommunications monopoly. Telmex has significantly greater
financial and other resources than those available to us. In addition, Telmex
has an established customer base, which represents substantially all of the
wireline local telephony lines in Mexico. We depend on Telmex for local
interconnection.

            Our core strategy is to service underserved markets by targeting new
customers that do not currently receive the type of products and services that
we offer. In particular, our intention is to service markets with lower
teledensity rates that are also underserved by Telmex.

New entrants

            We expect to face competition in local telephony from new entrants
that have been awarded concessions and which have just begun, or are expected to
begin, commercial operations. The more significant of these entrants are
Alestra, Avantel Servicios Locales S.A. ("Avantel"), Axtel, S.A. de C.V.
("Axtel"), Megacable Telecomunicaciones de Mexico, S.A. de C.V. ("Megacable"),
Pegaso and Unefon.

            Avantel, in which MCI WorldCom Inc. is a shareholder, was awarded a
long distance service concession in 1996 and a local telephony concession in
April 1999. Avantel offers nationwide long distance services and local services
in Mexico City, Monterrey and Guadalajara.

            Alestra, in which AT&T Corp. is a shareholder, was awarded a long
distance service concession in December 1995 and a local telephony concession in
June 2000. In addition, Alestra has a point-to-point microwave frequency
concession in the 15 and 23 GHz band range, a point-to-multipoint microwave
frequency concession in the 10.5 GHz band range and a point-to-point national
wireless telecommunications concession in the 7 GHz band range. Alestra offers
nationwide long distance services in Mexico City, Monterrey and Guadalajara.

            Alestra and Avantel are using their local telephony concessions to
service primarily the corporate business segment. We believe that Avantel and
Alestra do not represent a significant risk for us in the short term. In
particular, we believe that the core business of these companies will focus on a
different business segment than ours.

            Axtel, in which Bell Canada International is a shareholder, was
awarded a nationwide local telephony and long distance concession in June 1996,
and fixed wireless local loop frequencies in the 3.4 to 3.7 GHz band in May
1998. Axtel commenced commercial services in the northern city of Monterrey in
July 1999, in Mexico City in May 2000, and in Guadalajara, Puebla, Toluca and
Leon during 2001. We believe that Axtel seeks to target both the high-level
business and residential customers due to technological capacity issues.

            Megacable was awarded a wireline local telephony concession in July
1997. In addition, it has a point-to-point microwave frequency concession in the
23 GHz band range. Megacable operates currently only in Mexico City. We believe
that Megacable will focus on providing service to large corporate customers.

            Pegaso, which recently announced that Telefonica will acquire a
majority equity stake in it, was awarded a mix of 30 and 10 MHz bandwidth
concessions in the 1.9 GHz band and PCS band concessions that cover all of

                                       22
Mexico in June 1998. Pegaso offers services in Mexico City, Monterrey,
Guadalajara, Tijuana, Toluca, Ensenada, Reynosa and Nuevo Laredo. We believe
that Pegaso plans to cover the thirty-four most important cities in Mexico.

            Unefon won nationwide concessions for fixed wireless local loop
frequencies in the 3.4 to 3.7 GHz band and in the PCS 1.9 GHz band in May 1998.
Unefon began commercial operations using the 1.96 GHz band in Toluca in early
2000 and has initiated operations in Mexico City, Puebla, Monterey and
Guadalajara, among other cities, but it has not initiated services in the 3.4
GHz to 3.7 GHz band.

            We expect to face significant competition from some of these new
entrants. We believe that, having already commenced operations in Mexico City
and Puebla, we have a significant advantage over these competitors in terms of
brand name recognition, operations and line growth in those cities. These
competitors plan to provide local service in some of the cities in which we are
required to provide services in order to comply with our concession obligations.

OVERVIEW OF THE MEXICAN TELECOMMUNICATIONS INDUSTRY

General

            The telecommunications industry involves the transmission of voice,
data and video communications from point of origination to point of termination.
The Mexican telecommunications industry has been undergoing rapid change in the
last decade due to the introduction of new technologies and the construction of
additional infrastructure, as well as market liberalization, which together have
resulted in increased competition and demand for telecommunications services.

            The modernization of the Mexican telecommunications infrastructure
began in 1990 with the privatization of Telmex, the former government --
controlled telecommunications monopoly. Since privatization, Telmex and several
concessionaires have begun deploying modern fiber and wireless networks
throughout Mexico. To meet the demand for higher volume and higher quality
wireline services, new copper cables are being installed and backbones are being
replaced largely by fiber optic transmission systems that provide greater
capacity at lower cost with higher quality and reliability.

Market liberalization

            Historically, the Mexican telecommunications industry has been
dominated by Telmex. In December 1990, the Mexican government initiated the
privatization and deregulation of Telmex by selling a controlling portion of
Telmex's equity to a private consortium led by Grupo Carso, S.A. de C.V., a
Mexican conglomerate, as well as to subsidiaries of Southwestern Bell
Corporation and France Telecom S.A. Subsequently, the Mexican government opened
the wireless market by granting nine regional cellular concessions in Band "A"
in order to allow concessionaires to compete with Telmex.

            LOCAL TELEPHONY MARKET. In connection with the privatization of
Telmex in 1990, the Mexican government amended Telmex's nationwide concession,
which expires in March 2026, and granted Telmex a six-year implied monopoly over
local telephony services. The amended Telmex concession obligated Telmex to
expand and increase local telephony service at a rate of 12% per year beginning
in 1992 and to provide basic telephone service to all population centers of 500
or more inhabitants by 1995. The implied local service monopoly was eliminated
in mid-1996 when the Mexican Communications and Transportation Ministry
(Secretaria de Comunicaciones y Transportes), which we refer to as the "SCT,"
published regulations governing the licensing of local services on a competitive
basis.

            In order to promote competition in the local telephony market, the
Mexican government granted several concessions beginning in 1997, including
first the regional concession awarded to us for wireline local telephony service
and now expanded to a nationwide concession. Each wireline local telephony
concession granted by the Mexican government generally has a 30-year term, and
authorizes, among other things, the provision of local telephony services and
value-added services in a specified region of the country.

            In addition, the Mexican government does not permit the unbundling
of local loop frequencies, requiring all telephone companies wishing to offer
local telephony service to build their own last-mile connectivity in order to
reach their targeted customers.

                                       23
The Mexican government has also been conducting auctions of spectrum
frequencies in the:

            -     450 MHz, 1.9 GHz (PCS) and 3.4-3.7 GHz (fixed wireless local
                  loop) frequency bands;

            -     7, 15, 23 and 38 GHz frequency band for nationwide
                  point-to-point microwave transmission links; and

            -     10.5 GHz frequency band for regional point-to-multipoint
                  microwave transmission service.

            Four companies won nationwide concessions for fixed wireless local
loop frequencies, although one later forfeited its right for failure to pay
concession fees. In addition, six companies won concessions in the 1.9 GHz (PCS)
frequencies on either a nationwide or regional basis, although one also
forfeited its right for failure to pay concession fees. See " -- Competition."

            LONG DISTANCE TELEPHONY MARKET. In connection with the privatization
of Telmex in 1990, the Mexican government granted Telmex an exclusivity period
for long distance telephony services of six years. In August 1996, the
exclusivity period expired and competition commenced in January 1997. According
to Pyramid Research, since the expiration of the exclusivity period and the
subsequent beginning of competition, Telmex has lost 25% of the long distance
telephony market to new competitors.

            In order to promote competition among domestic and international
long distance providers, the Mexican government granted several concessions,
including the national concession awarded to us, for domestic and international
long distance services, as well as value-added services. Each concession
generally has a nationwide scope and a 30-year term, and authorizes the
provision of domestic and international long distance services and value-added
services.

            The long distance concessionaires include among others:

            -     Alestra, S. de R.L. de C.V., in which AT&T Corp. is a
                  shareholder;

            -     Avantel, S.A. de C.V., in which MCI WorldCom Inc. is a
                  shareholder;

            -     Axtel, S.A. de C.V., in which Bell Canada International is a
                  shareholder; and

            -     Iusatel, S.A. de C.V., in which Verizon and Vodafone are
                  indirect shareholders.

            International liberalization trends will likely impact the flow of
long distance telephone traffic to and from Mexico. In particular, demand for
long distance services may be stimulated by reforms of domestic
access/interconnection charges and international settlement rates and recent
international trade negotiations. As such charges decline, overall demand for
international and local services increases.

Mexican market characteristics

            POPULATION AND ECONOMIC GROWTH. According to the Economic Commission
for Latin America and the Caribbean -- CEPAL (Comision Economica para America
Latina y el Caribe), Mexico is the second largest country in Latin America in
terms of population. In 2000, Mexico had an estimated population of 97.3 million
and a population growth rate of approximately 1.3% for the period from 1995 to
2000. In 2000, 33.1% of the population was under the age of 15, 61.6% between
the ages of 15 and 65 and only 5.3% was over 65. After a decline in 1995,
Mexico's real gross domestic product has grown in the past four years, rising by
6.8% in 1997, 4.8% in 1998, 3.7% in 1999 and 6.9% in 2000. However in 2001,
according to an estimate made by Banco Nacional de Mexico S.A., the real gross
domestic product decreased by approximately 0.4%.

            UNDERSERVED TELEPHONY MARKET. In 1999, The World Bank ranked Mexico
as the 12th largest economy in the world. However, in terms of wireline
penetration, Mexico was ranked 69th in the world. This relatively low level of
wireline penetration evidences substantial unmet demand for fixed telephony
service. The following table presents telephone wirelines in service per 100
inhabitants for the United States and selected Latin American countries as of
December 31, 2000.

                                       24
SELECTED TELEDENSITY RATES
LINES IN SERVICE PER
COUNTRY                                                             100 INHABITANTS(1)
United States...................................                              68
Uruguay.........................................                              29
Argentina.......................................                              22
Chile...........................................                              22
Brazil..........................................                              19
Colombia........................................                              18
Mexico..........................................                              13
Venezuela.......................................                              11
Peru............................................                               7
(1)   Source: Pyramid Research

      According to Pyramid Research, the wireline local telephony market
represents approximately 33% of Mexico's total telecommunications market, when
measured by revenues, and generated approximately U.S.$4.5 billion of revenue in
2000. The business segment represents approximately 25% of the local telephony
market, with the balance accounted for by the residential segment.

      PROJECTED GROWTH TRENDS. With the introduction of competition in the
Mexican telecommunications market, teledensity rates and line usage are expected
to increase substantially. According to Pyramid Research, between 2000 and 2004,
lines in service in Mexico are expected to increase by 6.0 million, a compound
annual growth rate of approximately 10.4%. During the same period, teledensity
rates are expected to increase from 12.7 lines per one hundred inhabitants in
2000 to 18.0 lines per one hundred inhabitants in 2004.

      According to Pyramid Research, local, domestic long distance and
international long distance services revenues are expected to experience 11.4%,
11.3% and 9.7% compound annual growth rates in 2001, 2002 and 2003,
respectively. Total local wireline telephony revenues in Mexico are expected to
increase from U.S.$4.6 billion in 2000 to U.S.$7.5 billion in 2004. This growth
is expected to result from a marked increase in the number of lines in service
and in usage and not from an increase in local service rates, which are even
expected to decrease slightly in this period due to the increasing level of
competition.

SUPERVISION AND REGULATION OF THE MEXICAN TELECOMMUNICATIONS INDUSTRY

General

      The telecommunications industry in Mexico is subject to the New
Telecommunications Law (Ley Federal de Telecomunicaciones) which was enacted in
1995. However, certain rules set forth under the General Means of Communications
Law (Ley de Vias Generales de Comunicacion), the Telecommunications Regulation
(Reglamento de Telecomunicaciones) and the rules promulgated thereunder,
generally remain effective and are referred to as the Old Telecommunications
Law.

      Under the New Telecommunications Law, the Mexican telecommunications
industry is regulated for administrative and operational matters by COFETEL
(Comision Federal de Telecomunicaciones). COFETEL was created in 1996 as an
autonomous entity from the SCT to regulate and promote the efficient development
of the telecommunications industry in Mexico. COFETEL is responsible for, among
other things:

      -     enacting regulations and technical standards for the
            telecommunications industry;

      -     ensuring that holders fulfill the terms of their concessions and
            permits;

      -     suspending operators without concessions;

      -     resolving interconnection controversies between competitors; and

                                       25
-     maintaining a registry of applicable rates.

      The SCT retains the authority to grant all concessions and permits.
COFETEL makes recommendations to the SCT on major issues, such as amending
existing telecommunications laws, allocating spectrum frequencies, granting,
transferring, renewing or revoking concessions and applying penalties for
concession violations. The SCT has final decision making power on these issues.
Once a final decision is made, COFETEL implements the related regulations.

Concessions and permits

      GENERAL. To provide public telephony services in Mexico through a public
network, a service provider must first obtain a concession from the SCT.
Pursuant to the New Telecommunications Law, concessions for public networks may
not exceed a term of 30 years, and concessions for spectrum frequencies may not
exceed a term of 20 years. Generally, concessions for public networks may be
extended for a term equivalent to the term for which the concession was
originally granted. Concessions for spectrum frequencies will be re-auctioned at
least three years prior to their expiration date. Concessions specify, among
other things:

      -     the type and technical specifications of the network, system or
            services that may be provided;

      -     the allocated spectrum frequencies, 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 the
following:

      -     installing, operating or exploiting transmission-ground stations;
            and

      -     providing telecommunications services as a reseller.

      There is no legally mandated maximum term for these permits unless
specifically stated in the permit. Under the New Telecommunications Law, a
company needs to register with COFETEL the rates for the telecommunications
services that it wishes to provide in order to be able to provide them to the
public.

      In addition, on January 1, 2002, the Mexican Congress enacted a law that
expanded the scope of the sales and use tax to include additional services,
including services provided by telecommunications companies. The new taxable
base will be at a rate of 10%. However, the scope of this tax is not clear,
because the law exempts certain services from the payment of this tax. We
believe, based on the advice of our tax and regulatory advisors, that this new
tax should not apply to the core of our business.

      OWNERSHIP RESTRICTIONS. Under the New Telecommunications Law and the
Mexican Foreign Investment Law (Ley Federal de Inversion Extranjera),
concessions may be granted only to:

      -     Mexican individuals; and

      -     Mexican corporations in which non-Mexicans own 49% or less of the
            full voting stock and that are not otherwise controlled by
            non-Mexicans.

                                       26
However, in the case of concessions for cellular communications services,
foreign investment participation may exceed 49% of the voting stock with the
prior approval of the Mexican Foreign Investment Bureau of the Mexican Ministry
of Economy (Secretaria de Economia).

      Pursuant to the Foreign Investment Law, the Mexican Ministry of Economy
may also authorize the issuance of non-voting or limited-voting stock (also
known as "neutral shares") that are not counted for purposes of determining the
foreign investment percentage of a Mexican corporation under the Mexican Foreign
Investment Law. Any share transfers resulting in a violation of these foreign
ownership requirements are invalid under Mexican law.

      TRANSFER. Concessions are transferable after the first three-year period
of the concession, if the SCT approves the transfer of the concession title, the
assignee agrees to comply with the terms of the concession and such a transfer
does not violate the foreign ownership requirements of the New
Telecommunications Law and the Mexican Foreign Investment Law.

      TERMINATION. A concession or a permit may be terminated pursuant to the
New Telecommunications Law upon the following events:

      -     expiration of its term;

      -     resignation by the concession holder or the permit holder;

      -     revocation. A concession or a permit may be revoked prior to the end
            of its term under certain circumstances, such as:

            <  failure to exercise the rights of the concession within 180 days
               of the grant;

               <  failure to provide interconnection services with other holders
                  of telecommunications concessions and permits without just
                  cause;

            <  loss of the concession or permit holder's Mexican nationality;

            <  unauthorized assignment, transfer or encumbrance of the
               concession or permit;

            <  unauthorized interruption of service;

            <  taking 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; and

               <  failure to pay to the Mexican government its fee for the
                  concession or, where applicable, its participation in the
                  revenues of the holder of the concession.

      The SCT may revoke a concession for violations in any of the circumstances
referred to in the first four instances above. Under the last four instances
above, the SCT would have to fine the concessionaire at least three times for
the same failure before moving to revoke a concession.

      -     expropriation. The Mexican government has the statutory right to
            permanently expropriate any telecommunications concession and claim
            any related assets for reasons of public interest. Under Mexican
            law, the Mexican government is obligated to compensate the owner of
            such assets in the case of a statutory expropriation. The amount of
            the compensation is to be determined by appraisers. If the party
            affected by the expropriation disagrees with the appraisal amount,
            such party may initiate judicial action against the government. In
            such a case, the relevant judicial authority will determine the
            appropriate amount of compensation to be paid. We are not aware of
            any instance in which the SCT has exercised its expropriation rights
            in connection with a telecommunications company; and

      -     dissolution or bankruptcy of the concession holder or the permit
            holder.

      TEMPORARY SEIZURE. The Mexican government, through the SCT, may also
temporarily seize all assets related to a telecommunications concession or
permit in the event of a natural disaster, war, significant public disturbance,
threats to internal peace or for economic reasons or for other reasons related
to national security. If the Mexican government temporarily seizes such assets,
except in the event of war, it must indemnify the concession

                                       27
holder for all losses and damages, including lost revenues. We are not aware of
any instance in which the SCT has exercised its temporary seizure powers in
connection with a telecommunications company.

Rates for telecommunications services

      Under the Old Telecommunications Law, the SCT's approval was required for
setting the rates charged for all basic local, long distance and certain
value-added local and long distance telecommunications services. Historically,
the SCT permitted rate increases based on the cost of service, the level of
competition, the financial situation of the carrier and certain 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 also required SCT approval. Rates for private dedicated
circuit services through microwave networks and private networks through
satellites were not regulated under the Old Telecommunications Law.

      Under the New Telecommunications Law, rates for telecommunications
services (including local, cellular and long distance services) are now freely
determined by the providers of such services, except that such rates may not be
set below a service provider's long-term incremental cost.

      In addition, COFETEL is authorized to impose specific rate, quality and
service requirements on those companies determined by the Federal Antitrust
Commission (Comision Federal de Competencia) to have substantial market power
pursuant to the provisions of Mexico's antitrust statute. All rates for
telecommunications services (other than value-added services) must be registered
with COFETEL prior to becoming effective. The New Telecommunications Law
prohibits telecommunications providers from cross-subsidizing among their
services and requires that they keep separate accounting for each of their
services.

      The Mexican Antitrust Commission has found that Telmex has substantial
market power on the local, long distance and Internet and data transmission
markets, as defined under Mexico's antitrust statute. Based on this finding,
COFETEL issued a resolution in September 2000 regulating Telmex as a dominant
carrier, imposing special obligations regarding, among other things, quality of
services, tariffs and disclosure of information. Telmex has obtained a
provisional injunction against potential COFETEL actions that intend to regulate
Telmex by imposing special obligations on Telmex regarding, among other things,
quality of services, tariffs and disclosure information.

Our concessions

      LOCAL TELEPHONY. We obtained our regional wireline local telephony
concession in February 1997. In September 2001, this concession was expanded to
a nationwide concession. The concession, which is not exclusive, grants us the
right to provide business, residential and public wireline local telephony
services all over Mexico. Our wireline local telephony concession has a term of
30 years and may be renewable for up to an equivalent period provided we have
complied with all its terms.

      The concession expressly permits us to provide the following services:

      -     basic local telephony;

      -     the sale or lease of network capacity for the generation,
            transmission or reception of signs, signals, writings, images,
            voice, sounds or other information of any nature;

      -     the purchase and lease of network capacity from other carriers,
            including the lease of digital circuits;

      -     value-added services;

      -     operator services;

      -     data, video, audio and video conference services, except for cable
            or other restricted television, continuous music or digital audio;

      -     credit or debit telephone cards; and

                                       28
-     public telephony.

      The concession does not impose any limitations on the setting of our rates
other than the requirement that we file with COFETEL a notification of any rate
change prior to having it take effect.

      The concession requires us to comply with service quality specifications
and, starting in September 2001, to install infrastructure on the basis of a
yearly schedule. According to this schedule, we must install at least an
aggregate of 376,000 lines in at least 394 cities and towns in Mexico by the end
of 2006. We are currently in compliance with all the material terms of the
concession.

      The failure to comply with the terms of the concession could result in its
revocation and the loss of the Ps.12.2 million performance bond that we
previously issued to the SCT. See " -- Concessions and permits -- Termination."

      As of December 31, 2001, the level of fines, which are based on a multiple
of the Mexican minimum daily salary, ranged from Ps.84,300 to Ps.4.2 million,
depending on the nature of the infraction. In the case of multiple recurring
infractions, these fines may be doubled.

      LONG DISTANCE. We obtained our nationwide long distance concession in
February 1997, concurrently with our local telephony concession. Our nationwide
long distance concession has a term of 30 years and may be renewable for up to
an equivalent period, provided that we have complied with all its terms.

      The concession expressly permits us to provide the following services:

      -     the carrying of switched traffic between two different local calling
            areas that requires the use of a dialing prefix for its routing;

      -     the sale or lease of network capacity for the generation,
            transmission or reception of signs, signals, writings, images,
            voice, sounds or other information of any nature;

      -     the purchase and lease of network capacity from other carriers; and

      -     nationwide and international long distance telephony.

      The concession expressly prohibits the following services:

      -     those which require a concession for frequency bands of the radio
            electric spectrum for specific uses;

      -     those which require a concession to occupy and exploit geostationary
            orbital positions and satellite orbits assigned to Mexico;

      -     those which require a concession to operate radio or television
            broadcasting systems; and

      -     cable or other restricted television.

      The concession does not impose any limitations on our ability to set rates
other than the requirement that we file with COFETEL a notification of any rate
change prior to having it take effect.

      The concession requires us to comply with service quality specifications
and to install infrastructure on the basis of the schedule for our local
telephony concession. According to this schedule, we must provide nationwide
long distance service in the same locations and at the same time in geographic
areas where we provide local telephony services. Of these areas, we must provide
service in 394 cities and towns in Mexico using our own or leased infrastructure
by the end of 2006.

      We are currently in compliance with all the material terms of the
concession.

                                       29
The failure to comply with the terms of the concession could result in its
revocation and the loss of the Ps.12.2 million performance bond that we
previously issued to the SCT. As of December 31, 2001, the level of fines, which
are based on a multiple of the Mexican minimum daily salary, ranged from
Ps.84,300 to Ps.4.2 million, depending on the nature of the infraction. In the
case of multiple recurring infractions, these fines may be doubled.

      We service our long distance concession by reselling our long distance
traffic to other carriers with such capability. We currently do not intend to
provide long distance service to anyone other than our local telephony customers
(who use our own infrastructure for call origination) to avoid having to pay
significant special charges to Telmex. According to COFETEL regulations, any
long distance carrier that wishes to interconnect to Telmex's local network must
make a payment to Telmex on account of Telmex's investment to upgrade its local
infrastructure to allow long distance competition. In December 2000, Avantel and
Alestra negotiated with Telmex a one-time payment of U.S.$13.6 million as an
infrastructure development charge and an interconnection fee of U.S.$0.0053 per
minute. Telmex adjusts the infrastructure development charge at a 10% annual
rate. COFETEL has implicitly accepted that Telmex may require other long
distance carriers to make similar payments.

      According to the Mexican telecommunications regulations, all local
carriers must offer their customers the option to select the long distance
carrier of their preference; this practice is known as pre-subscription.
However, local carriers may request a waiver of this obligation from COFETEL.

      On May 27, 2002, COFETEL granted us a waiver of the pre-subscription
requirement. With this waiver, our local telephony customers who are currently
using other long distance carriers may only change, if they wish to do so, to
our long distance service. New local telephony customers must use our long
distance service. This waiver is valid for two years in Mexico and Puebla, where
we already have operations, and it is valid for five years anywhere else in
Mexico.

MICROWAVE TRANSMISSIONS.

            Point-to-point. In October 1997, we were awarded seven nationwide
point-to-point microwave concessions. These concessions cover:

      -     two consecutive frequency segments in the 15 GHz band, with a 56 MHz
            bandwidth;

      -     three consecutive frequency segments in the 23 GHz band, with a 56
            MHz bandwidth; and

      -     two consecutive frequency segments in the 23 GHz band, with a 100
            MHz bandwidth.

      These concessions, which were issued in June 1998, have a term of 20
years. COFETEL will re-auction the frequencies covered by the concessions at
least three years before the expiration date of the concessions. The concessions
require us to provide available capacity to the general public.

      These concessions do not impose any limitations on the setting of our
rates other than the requirement that we file with COFETEL a notification of any
rate change prior to having it take effect.

      Point-to-multipoint. In October 1997, we were awarded three regional
point-to-multipoint microwave concessions covering Regions 3, 5 and 8, which
include states in the north and southeast of Mexico's Gulf region in the 10.5
GHz with a 60 MHz bandwidth.

      These concessions, which were issued in April 1998, have a term of 20
years. COFETEL will re-auction the frequencies covered by the concessions at
least three years before the expiration date of the concessions. These
concessions require us to install a network and offer service to at least 30% of
the population in each region covered by the concessions by the end of the
second year after the issuance of the concession. We, together with 14 other
concessionaires, have been unable to start operations in some of our Regions
because of lack of commercially viable technological solutions and equipment for
those frequencies. COFETEL initially granted extensions until April 2000 and
later extended them to October 2001. On November 2001, we, together with 13
other concessionaires, requested that COFETEL amend our respective
point-to-multipoint concessions in our Regions in order to postpone the
installation of our network and the offering of our services until November
2002.

                                       30
These concessions do not impose any limitations on the setting of our
rates other than the requirement that we file with COFETEL a notification of any
rate change prior to having it take effect.

Interconnection

      In accordance with the Mexican telecommunications laws, all local
telecommunications carriers are required to provide interconnection to each
local, long distance and cellular carrier operating in Mexico.

      All terms of interconnection (such as point of interconnection) are
negotiated between telecommunications carriers under COFETEL's supervision.
Should telecommunications carriers be unable to agree on the terms of
interconnection (including rates) after a certain period of negotiation, either
carrier may request COFETEL to resolve any interconnection term at issue.
Telecommunications carriers are prohibited from adopting discriminatory
practices in the application of rates or any other terms of interconnection.

      LOCAL INTERCONNECTION. In November 1998, we entered into an
interconnection agreement with Telmex. This agreement calls for reciprocal
interconnection rates for local-to-local services. The interconnection rate was
Ps.0.3220 per minute for the month of December 2000 and Ps.0.1159 per minute for
the month of December 2001.

      This agreement was amended in February 1999 to incorporate a "bill and
keep" feature through September 15, 2002, provided we maintain a significant
percentage of residential users, and again in November 2000, retroactive to
March 2000, to exempt internet service provider traffic from interconnection
fees.

      Under the "bill and keep" arrangement, if the imbalance between calls
originated by Telmex and terminated by Maxcom and calls originated by Maxcom and
terminated by Telmex during a month does not exceed 70%, then no interconnection
fee amounts are payable by the net user of interconnection services. If the
imbalance exceeds 70% in any given month, the "bill and keep" feature will not
apply for that month.

      If we fail to maintain a significant percentage of residential users, then
the "bill and keep" arrangement will be terminated and asymmetrical
interconnection rates may apply. COFETEL has not yet defined what constitutes a
"significant percentage of residential users" in this case, although in local
concessions granted to Alestra and Avantel it defines it to mean that at least
50% of the customers are residential.

      Through December 31, 2001, no material interconnection fees have been
paid.

      MOBILE INTERCONNECTION. We have also signed reciprocal interconnection
agreements with Radiomovil Dipsa, S.A. de C.V., commonly known as Telcel, a
wholly-owned subsidiary of America Movil, which is a spin-off of Telmex; with
several subsidiaries of Iusacell and with Operadora Unefon, S.A. de C.V.
("Unefon") and Pegaso Comunicaciones y Sistemas, S.A. de C.V., ("Pegaso").
Telcel and Iusacell are the first and second largest mobile telephony service
providers in Mexico, respectively. Telcel is a nationwide cellular operator,
while Iusacell provides cellular mobile services in seven of the nine regions
covering central Mexico. Pegaso and Unefon are nationwide PCS mobile operators.

      The mobile to wireline interconnection fees with these carriers were
Ps.0.3220 per minute for the month of December 2000 and Ps.0.1159 per minute for
the month of December 2001. The wireline to mobile interconnection fees under
the "calling party pays" mode was Ps.1.90 per minute for December 2000 and 2001.
There is no interconnection fee for wireline to mobile interconnection outside
of the "calling party pays" mode. The interconnection agreements provide that
transit from Telmex may be used at a rate per minute which was Ps.0.0626 for the
months of December 2000 and 2001.

      LONG DISTANCE INTERCONNECTION. Long distance carriers are required to
ensure call termination by providing transit and direct or indirect
interconnection. Since we view long distance services as a complement to our
core local telephony business, we give our customers the option to use our long
distance services or those of other providers. As a result, we grant long
distance carriers the option to pick up calls at our facilities.

      As a company that provides local service, we have requested
interconnection from all long distance carriers. To date, only Telmex, Alestra
S. de R.L. de C.V. ("Alestra"), Bestel, S.A. de C.V., Operadora Protel, S.A. de
C.V. and Iusatel, S.A. de C.V., the long distance subsidiary of Grupo Iusacell,
have agreed to provide

                                       31
interconnection. We have filed a complaint with COFETEL against four other long
distance carriers who have refused to provide interconnection. It is unclear
when COFETEL will rule in this issue.

      We currently provide our long distance service only to our local telephony
customers through our own network and leased facilities on a reselling basis.

C.    ORGANIZATIONAL STRUCTURE

      Maxcom has only two subsidiaries, Corporativo en Telecomunicaciones, S.A.
de C.V. and Maxcom Servicios Administrativos, S.A. de C.V., each a Mexican
limited liability company (sociedad anonima de capital variable), that provide
corporate services to Maxcom. Maxcom owns all of the capital stock of the
subsidiaries, except for one share of each, which is owned by Marco Antonio
Donjuan, the Controller of Maxcom. Mr. Donjuan's ownership is attributable to
the fact that Mexican law requires that limited liability companies have a
minimum of two stockholders.

D.    PROPERTY, PLANT AND EQUIPMENT

      We currently lease the buildings and/or the land where our operations are
carried out and our microwave transmission equipment and switching centers are
located.

      We lease space for administrative offices in Mexico City and the City of
Puebla. Our main headquarters are located in Santa Fe, Mexico City in a building
leased for a 5-year term that expires on February 26, 2007 and that is renewable
for two additional 5-year terms. This building is comprised of 115,100 square
feet. We lease an additional building in Magdalena, Mexico City, for a 15-year
term that expires on September 30, 2013. We hold one of our Lucent 5ESS switches
at that facility, which is comprised of 70,500 square feet plus parking space.
We are planning to add extra space to our Santa Fe building in 2003 in order to
support our growth and expansion and to reach an agreement to terminate the
current leasing obligation in Magdalena, except for the switching area located
on the first floor, which we intend to keep on a long term basis.

      Our offices in Puebla are leased for a 10-year renewable term that expires
on March 25, 2008. These offices in Puebla are comprised of 14,100 square feet
and hold our other Lucent Technologies 5ESS switch. We have a branch office in
Puebla that is leased for a 5-year term that expires on June 1, 2004, renewable
for one similar additional term. This building is comprised of 1,350 square
feet.

      We have a 96,900-square-foot industrial warehouse in Mexico City leased
for a 2-year term that expires on July 31, 2003, renewable for seven additional
2-year terms. In addition, we lease approximately one hundred other sites that
are used as hosts or single-site buildings and are located throughout Mexico
City and the City of Puebla. We believe that our facilities are adequate for our
present needs and are suitable for their intended purposes.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

      All peso amounts discussed in this annual report are presented in constant
December 31, 2001 pesos in accordance with Mexican GAAP, except as otherwise
indicated. 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 as of December 31, 2001. The U.S. dollar
translations provided in this annual report are solely for the convenience of
the reader and are, unless otherwise indicated, calculated utilizing the noon
buying rate at December 31, 2001, which was Ps.9.1560 per U.S.$1.00 as reported
by the Federal Reserve Bank of New York. Sums may not add due to rounding.

      The following discussion and analysis is intended to facilitate an
understanding and assessment of significant changes and trends in our historical
consolidated results of operations and financial condition and factors affecting
our financial resources. It should be read in conjunction with the audited
consolidated financial statements as of December 31, 2000 and 2001 and for the
period from May 1, 1999 to December 31, 1999 and the years ended December 31,
2000 and 2001 and related notes.

                                       32
These consolidated financial statements, which appear elsewhere in this
annual report, have been prepared in accordance with Mexican GAAP, which differs
in certain significant respects from U.S. GAAP. See note 22 to our consolidated
financial statements for a description of the principal differences between
Mexican GAAP and U.S. GAAP applicable to us. Note 22 to our financial statements
also provides a reconciliation to U.S. GAAP of our net losses for the years
ended December 31, 1999, 2000 and 2002 and of stockholders' equity as of
December 31, 1999, 2000 and 2001.

      Our financial statements have been prepared in accordance with Bulletin
B-10, "Recognition of the Effects of Inflation on Financial Information," as
amended, issued by the Mexican Institute of Public Accountants ("MIPA"), which
provides guidance for the recognition of the effects of inflation and
translation of foreign currency transactions.

      We restate our income statement to reflect the purchasing power of the
peso as of the most recent reporting date (December 31, 2001), using a
restatement factor derived from the change in the national consumer price index
from the month in which the transaction occurred to the most recent year-end.
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. 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
Mexican national consumer price index, were 12.3%, 9.0% and 4.4%, respectively.

      Bulletin B-12, issued by the MIPA, specifies the appropriate presentation
of the statement of changes in financial position when the financial statements
have been restated in constant monetary units. Bulletin B-12 identifies the
sources and applications of resources as the differences between beginning and
ending financial statement balances in constant monetary units. The Bulletin
also requires that monetary and foreign exchange gains and losses not be treated
as non-cash items in the determination of resources provided by operations.

RECENT DEVELOPMENTS

      On April 29, 2002, we consummated a debt restructuring and
recapitalization of Maxcom. The purpose was to reduce our debt service burden,
improve our liquidity and attract additional investment, in order to continue
the buildout of our infrastructure and the growth of our business. The following
actions were taken pursuant to the debt restructuring and recapitalization:

      -     Holders tendered an aggregate of U.S.$259,410,000 in principal
            amount of 13 -3/4% series B senior notes due 2007 (which we refer to
            in this Annual Report as the "old notes") in exchange for an
            aggregate of (i) U.S.$165,078,150 in principal amount of new senior
            notes (which we refer to in this Annual Report as the "new notes")
            bearing 0% interest through March 1, 2006, and 10% annual interest
            in the last year, and (ii) 26,459,820 series N2 convertible
            preferred stock, with an initial liquidation preference of
            U.S.$0.4927 per share and limited voting rights, in the form of
            Mexican Trust Certificates known as "CPOs," which represent in the
            aggregate 15.2% of our total capital stock;

      -     Existing and new shareholders invested U.S.$66.2 million and
            received preferred stock (more fully described in "Item 7. Major
            Shareholders and Related Party Transactions -- A. Major shareholders
            -- The capital restructuring") representing in the aggregate 77.0%
            of our total capital stock; and

      -     Our capital structure was restructured as more fully described in
            "Item 7. Major Shareholders and Related Party Transactions -- A.
            Major shareholders -- The capital restructuring."

      As a result of the debt restructuring, we will save U.S.$37.5 million in
interest expense on an annualized basis from the date of issuance of the new
notes through February 28, 2006. From March 1, 2006 until March 1, 2007, which
is the maturity date of the new notes, we will save U.S.$17.3 million in
interest expense.

                                       33
A.    RESULTS OF OPERATIONS

OVERVIEW OF MAXCOM

      We are a growing facilities-based telecommunications company operating in
the competitive local exchange carrier market in Mexico. We are focused on
developing our network and support infrastructure required to provide local as
well as long distance and other value-added services to targeted small and
medium-sized business and residential customers within our concession areas. We
position ourselves as a single-source provider of telecommunications services to
our customers.

      We commenced commercial operations on May 1, 1999 and currently provide
last-mile connectivity to small and medium-sized business and residential
customers in Mexico City and the City of Puebla. In addition to our existing
local and long distance services, we offer value-added services such as digital
high-speed data connectivity and dial-up Internet access. We are currently
expanding the functionality of our network to offer other broadband services.

      We were incorporated in February 1996 to take advantage of business
opportunities arising out of the liberalization of Mexico's telecommunications
industry. In February 1997, we were awarded Mexico's first competitive wireline
local and long distance telephony concession, covering the Federal District of
Mexico and over 100 cities and towns in the Gulf region for local service and
the whole nation for long distance service. This concession has a term of 30
years. Our concession was expanded in September 1999 to cover over 80% of the
greater Mexico City area, and a wider area within the Gulf region. In September
2001, our wireline local telephony concession was expanded to cover all of
Mexico.

      We were also awarded seven nationwide point-to-point and three regional
point-to-multipoint microwave concessions in October 1997, each for 20 years.

DEVALUATION AND INFLATION

      On December 20, 1994, the Mexican government responded to exchange rate
pressures by increasing the upper limit of the then existing free market
peso/U.S. dollar exchange rate band by 15% and, two days later, by eliminating
the band to allow the peso to fluctuate freely against the U.S. dollar. This
resulted in a major devaluation of the peso relative to the U.S. dollar. Where
the noon buying rate had been Ps.3.45 per U.S.$1.00 on December 19, 1994, by
December 31, 1994 the noon buying rate had fallen to Ps.5.00 per U.S.$1.00,
representing a 44.9% devaluation. The peso continued to decline against the U.S.
dollar during 1995, closing at a noon buying rate of Ps.7.74 per U.S.$1.00 on
December 31, 1995, which represented a 54.8% devaluation relative to the U.S.
dollar for the year.

      The Mexican economy began to recover in 1996 and 1997, as exchange rates
stabilized, inflation decreased and real gross domestic product grew by 5.3% and
6.8%, respectively. However, the financial crises in Asia and Russia, together
with the weakness in the price of oil in 1998, which is a significant source of
revenue for the Mexican government, contributed to renewed weakness in the peso,
which devalued 22.7% relative to the U.S. dollar. From 1999 to 2000, the
peso-to-dollar exchange rate remained relatively stable. In 2001, the
peso-to-dollar exchange rate showed a slight recovery of 4.8% from Ps.9.60 on
December 31, 2000 to Ps.9.14 on December 31, 2001.

      Peso devaluations contributed to sharp increases in inflation. Inflation,
which had been 7.1% in 1994, increased to 52.0% and 27.7% in 1995 and 1996,
respectively. After a reduction to 15.7% in 1997, inflation was 18.6% in 1998.
In 1999, 2000 and 2001, the inflation rate decreased to 12.3%, 9.0% and 4.4%,
respectively.

      The general economic conditions in Mexico resulting from a devaluation of
the peso and the resulting inflation may have a negative impact on our results
of operations, primarily as a result of:

      -     the increase in the peso-carrying costs of our U.S.
            dollar-denominated debt and capital expenditure requirements;

                                       34
-     the ensuing decrease in the purchasing power of Mexican consumers,
            which results in a decrease in the demand for telephony services;
            and

      -     our inability, due to competitive pressures, to increase our prices
            in line with inflation.

CAPITALIZATION OF PREOPERATING EXPENSES

      We commenced commercial operations on May 1, 1999. As permitted under
Mexican GAAP, during our preoperating stage, we capitalized all of our general
and administrative expenses and our net integral cost of financing. Accordingly,
our financial statements do not include consolidated statements of operations
for the periods from February 28, 1996 (our date of incorporation) to April 30,
1999.

      Beginning on May 1, 1999, we were required to begin to amortize all
previously capitalized pre-operating cost. These capitalized preoperating
expenses, net, which amounted to Ps.282.3 million at December 31, 1999, Ps.252.0
million at December 31, 2000 and Ps.221.9 million at December 31, 2001, are
amortized on a straight-line basis for a period not exceeding ten years.

RESULTS OF OPERATIONS

      The following table sets forth, for the periods indicated, selected
statement of operations data calculated in accordance with Mexican GAAP and
expressed as a percentage of net revenue:
YEAR ENDED DECEMBER 31
                                                     -----------------------
                                                     1999     2000     2001
                                                     ----     ----     ----
Net revenues........................................ 100.0%   100.0%   100.0%
Operating cost and expenses:
   Network operating costs..........................  50%      41%      48%
   Selling, general and administrative expenses..... 183%     124%     137%
   Depreciation and amortization....................  84%      76%      85%
                                                     ----     ----     ----
     Total operating cost and expenses.............. 317%     241%     270%
Operating loss...................................... 217%     141%     170%
Integral cost of financing..........................  29%      84%      18%
Nonrecurring charges................................   0%       0%      20%
                                                     ----     ----     ----
Other expense, net..................................   0%       0%       0%
                                                     ----     ----     ----
Net loss............................................ 246%     224%     208%
                                                     ====     ====     ====
YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Net revenues

      Our net revenues primarily include monthly fees, usage fees, installation
charges, interconnection fees and the sale of telephone sets. See note 4.m. to
the consolidated financial statements included in this annual report for an
explanation of how we recognize revenues.

      Our net revenues increased 13.2% in 2001 as compared to 2000, from
Ps.277.8 million in 2000 to Ps.314.4 million in 2001. This increase was
primarily due to a 77.3% increase in the average number of lines in service from
25,222 in 2000 to 44,730 in 2001. The increase in net revenues was partially
offset by a 36.2% overall decrease in ARPUs from U.S.$105 in 2000 to U.S.$67 in
2001.

      The decrease in ARPUs was primarily due to:

      -     a significant shift in our customer mix towards residential lines,
            which carry a lower ARPU, from 35% of total lines at December 31,
            2000 to 71% at December 31, 2001; and

                                       35
-     a lower percentage of high-usage customers, who carry high ARPUs,
            but low profit margins, which resulted from the implementation of
            our strategy to shift our focus from less profitable lines.
            High-usage customers represented 55.2% of our net revenues in 2000
            as compared to 29.1% in 2001.

      These two factors were offset in part by (i) a 6% increase in the monthly
fee we charge our residential customers beginning in September 2001; and (ii)
the adoption in July 2001 of a policy whereby we generally no longer waive
installation charges to most of our residential customers.

      The following table presents a breakdown of our lines by type of customer
at December 31, 2000 and 2001 and the percentage variation:
AT DECEMBER 31,
                      ---------------------------
                        2000      2001        %
                      ---------------------------
Business lines ..     17,582     22,444      27.7
Residential lines      9,328     55,537     495.4
                      ------     ------     -----
Total lines .....     26,910     77,981     189.8
Operating costs and expenses

      Our operating costs and expenses include:

      -     network operating costs which, until December 31, 2000, were
            comprised of long distance reselling costs, circuit leasing costs
            and interconnection costs to carriers other than Telmex and,
            thereafter, also included network technical expenses, installation
            expenses, when applicable and disconnection expenses;

      -     selling, general and administrative expenses, which primarily
            included salaries, wages and benefits; consulting fees, which
            primarily related to temporary management and consulting services,
            executive recruiting consultants and general legal and accounting
            fees; leasing costs which primarily related to our headquarters,
            warehouses, and other facilities; marketing expenses which primarily
            related to the implementation of our branding campaign, general
            advertising and promotions; and provisioning for bad debt; and

      -     depreciation and amortization mainly related to preoperating
            expenses, frequency rights, telephone network systems and equipment
            and intangibles.

      Our operating costs and expenses were Ps.848.9 million in 2001, a 27.0%
increase as compared to Ps.668.2 million in 2000. This increase was primarily
due to:

      -     the 77.3% increase in the average number of lines in 2001 as
            compared to 2000, which resulted in a Ps.17.6 million increase in
            interconnection costs, a Ps.22.3 million increase in sales
            commissions, and Ps.15.9 million increase in maintenance expenses;

      -     a Ps.59.8 million increase in one-time charges related to consulting
            and executive recruiting fees, executive compensation and incentive
            expenses and excess labor-related taxes; and

      -     Ps.41.0 million increase related to installation expenses and the
            recognition of bad debt allowance and inventory obsolescence
            reserve.

      These two factors were partially offset by a Ps.56 million decrease in
long distance reselling costs, primarily due to improved traffic management
policies.

      Depreciation and amortization increased by Ps.58.6 million, or 28%,
primarily because of a larger asset base.

                                       36
Integral cost of financing

      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 cost of financing"
refers to the combined financial effects of:

      -     net interest expense and interest income;

      -     net foreign exchange gains or losses;

      -     net gains or losses on monetary position; and

      -     gain on repurchase of debt.

      Net foreign exchange gains or losses reflect the impact of changes in
foreign exchange rates on 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.

      The gain or loss on monetary position refers to the gains and losses
realized from holding net monetary assets or liabilities and reflects the impact
of inflation on monetary assets and liabilities. For example, a gain on monetary
position results from holding net monetary liabilities in pesos during periods
of inflation, as the purchasing power of the peso declines over time.

      Our integral cost of financing before the gain on repurchase of debt was
Ps.176.7 million in 2001, a 24.0% decrease as compared to Ps.232.4 million in
2000. The decrease in integral cost of financing was primarily due to a foreign
exchange gain during 2001 of Ps.90.8 million as compared to a loss of Ps.11.2
million during 2000. This gain is a consequence of the 5.0% appreciation of the
peso as compared to the U.S. dollar during 2001. In addition, we recorded a gain
of Ps.121.2 million in 2001 due to the repurchase of U.S.$25.0 million (face
value) of old notes.

      These two factors were partially offset in part by a 24.9% decrease in
interest income from Ps.102.3 million in 2000 to Ps.76.8 million in 2001, as a
result of a lower cash position combined with lower interest rates.

Nonrecurring charges

      We recorded Ps.62.2 million in nonrecurring charges primarily related to
the write-off of fixed assets and installation expenses. Our new management
evaluated and wrote off certain assets and recognized the cost of an overdue
maintenance contract, which no longer are useful to our revised business
objectives. In addition, installation costs that were originally capitalized
were reversed to the extent they related to customers who are no longer part of
our customer base. See note 14 to our consolidated financial statements.

Asset tax

      We recorded Ps.0.8 million in asset taxes in 2001. According to Mexican
tax law, we were not liable for asset taxes in our first two years of
operations.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

      Our consolidated statement of operations for the year ended December 31,
1999 covers only our first eight months of operations, which commenced on May 1,
1999. As a result, a comparison of our results of operations for 1999 and 2000
is not very meaningful.

Net revenues

      Our net revenues were Ps.277.8 million in 2000, a 177% increase as
compared to Ps.100.3 million in 1999. This increase was primarily due to:

                                       37
-     the fact that we started operations on May 1, 1999, and therefore
            1999 reflects only eight months of operations, and

      -     the growth in our line count from the start-up stage in 1999 to
            26,910 lines as of December 2000.

      The following table presents a breakdown of our lines by geography and
type of customer at December 31, 1999 and 2000 and the percentage variation:
AT DECEMBER 31,
                      ---------------------------
                        1999       2000      %
                      ---------------------------
Business lines ..     16,676     17,582      5.4
Residential lines      1,057      9,328    782.5
                      ------     ------    -----
   Total lines ..     17,433     26,910     54.4
Operating costs and expenses

      Our operating costs and expenses were Ps.668.2 million in 2000, a 110%
increase as compared to Ps.318.1 million in 1999. This increase is primarily due
to the:

      -     fact that we started operations on May 1, 1999, and therefore 1999
            reflects only eight months of operations; and

      -     growth in our service infrastructure from the start-up stage.

      Our network operating costs were Ps.112.5 million in 2000, a 126% increase
as compared to Ps.49.9 million in 1999. This increase is primarily due to the
same reasons mentioned above.

      Our selling, general and administrative expenses were Ps.345.7 million in
2000, an 88% increase as compared to Ps.183.8 million in 1999 and included the
following:

      -     Salaries, wages and benefits were Ps.188.4 million in 2000 as
            compared to Ps.106.8 million in 1999. As of December 31, 2000, our
            employee headcount was 457 compared to 293 employees as of a year
            earlier;

      -     Leasing costs were Ps.27.5 million in 2000 as compared to Ps.21.1
            million in 1999. During 2000, we incurred additional expenses by
            increasing the number of offices rented, the cluster sites for our
            customers and warehousing spaces;

      -     Consulting fees were Ps.56.0 million in 2000 as compared to Ps.17.0
            million in 1999. During 2000, we were forced to retain services of
            several consultants in order to fill vacant senior management
            positions; and

      -     Marketing expenses were Ps.17.6 million in 2000 as compared to
            Ps.19.0 million in 1999. This decrease was mainly due to the lack of
            a focused marketing effort.

      Depreciation and amortization costs were Ps.209.9 million in 2000, a 148%
increase as compared to Ps.84.5 million in 1999. This increase is due to the
amortization costs related to the issuance of the old notes and the cost of
stock options and warrants granted in connection with the operating agreement
with CT Global Telecommunications, Inc., the strategic and assistance agreement
with Bachow & Associates, Inc. and the vendor financing agreement with Nissho
Iwai American Corporation. Additionally, depreciation costs stepped up to
reflect the increase in fixed assets.

Integral cost of financing

      Our integral cost of financing was Ps.232.4 million in 2000, a 690%
increase as compared to Ps.29.4 million in 1999. Our integral cost of financing
in 1999 resulted from:

                                       38
-     a net interest expense of Ps.41.3 million, mainly resulting from our
            level of indebtedness under the Nissho Iwai and the Hewlett Packard
            vendor facilities described below in "-B. Liquidity and capital
            resources-Financing sources and liquidity;" and

      -     a Ps.10.9 million exchange loss resulting from the effect of the
            monthly fluctuation of the peso relative to the U.S. dollar on our
            net liability U.S. dollar position.

      Our integral cost of financing in 2000 resulted from:

      -     a net interest expense of Ps.315.3 million related to interest
            payments on the old notes; and

      -     a foreign exchange loss of Ps.11.2 million related to our
            indebtedness in foreign currency.

      These two factors were partially offset in part by a Ps.94.1 million
monetary gain resulting from the effect of inflation on our net liability peso
position in 2000.

PRINCIPAL DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP

      The financial information included in this annual report is prepared and
presented in accordance with Mexican GAAP, which differ in certain significant
respects from U.S. GAAP. See note 22 to the consolidated financial statements
for a description of the principal differences between Mexican GAAP and U.S GAAP
applicable to us; for a reconciliation of our net income and stockholders'
equity to U.S. GAAP as of December 31, 1999, 2000 and 2001 and for each of the
same three years; and for a description of the principal differences in
classification between the statements of changes in financial position under
Mexican GAAP and the requirements under U.S. GAAP for statements of cash flows.

RECENT UNITED STATES 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.

      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 FASB also recently issued FAS No. 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets." The objectives of FAS No.
143 are to establish accounting standards for the recognition and measurement of
tangible long-lived asset retirement obligation and its associated asset
retirement cost. FAS No. 143 is effective for fiscal years beginning after June
30, 2002.

      In 2001, the FASB issued FAS No. 144, "Accounting for the Impairment of
Long-Lived Assets" which supercedes FAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed of," 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." FAS No. 144 provides new guidance on (i) the
recognition of impairment losses on long-lived assets to be held and used or to
be disposed of and (ii) 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 yeas beginning after December
15, 2001.

                                       39
In April 2002, the FASB issued FAS No. 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. Gains and losses from extinguishment of debt that have been
classified as extraordinary in prior years that do not meet the criteria of APB
30 will be classified on a going-forward basis. In addition, FAS No. 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 provision of FAS No. 28 or 98 as applicable, instead of FAS No.
13. The provisions of this statement with regard to FAS No. 4 will be effective
for fiscal years beginning after May 15, 2002, and those for FAS No. 13 will be
effective for transactions occurring after May 15, 2002. Management is currently
evaluating the impact that the adoption of these standards will have on our
results of operations and financial position.

RECENT 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 of commitments. The
revised Bulletin C-9 states that (i) all contingent assets that have a
practically 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 cannot be accounted
for in the financial statements and are not required to be disclosed. Bulletin
C-9 requires disclosure of committed amounts when it represents significant
fixed asset 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 preoperating costs should be expensed
as a period cost, unless they could be classified as development costs. Bulletin
C-8 requires that intangible assets, including previously existing intangible
assets, with indefinite useful lives should not be amortized, but should be
tested for impairment annually. Intangible assets with finite useful lives
should be amortized over their respective useful lifes. The provisions of
Bulletin C-8 are required to be applied beginning on January 1, 2003, although
early adoption is recommended. Management is currently evaluating the impact
that the adoption of these standards will have on our results of operations and
financial position.

B.    LIQUIDITY AND CAPITAL RESOURCES

FINANCING SOURCES AND LIQUIDITY

      We financed our start-up costs through capital contributions and vendor
financing, as described below:

      -     U.S.$100.0 million vendor financing facility from Nissho Iwai
            American Corporation, bearing an annual interest rate of three-month
            LIBOR plus 4.15% due August 12, 2005. Funds from this facility were
            used to purchase Lucent Technologies equipment. We used U.S.$72.3
            million of proceeds from the sale of the old notes on March 17, 2000
            to repay all amounts outstanding in full and terminated this
            facility.

      -     U.S.$20.0 million vendor financing facility from Nissho Iwai
            American Corporation, bearing an annual interest rate of three-month
            LIBOR plus 4.15% due August 12, 2005. Funds from this facility were
            used to purchase NEC equipment. We used U.S.$13.9 million of
            proceeds from the sale of the old notes on March 17, 2000 to repay
            all amounts outstanding in full and terminated this facility.

      -     U.S.$18.7 million vendor financing from Hewlett Packard de Mexico
            bearing an annual interest rate of three-month LIBOR plus 4.15% due
            November 25, 2005. We used U.S.$16.3 million of proceeds from the
            sale of the old notes on March 17, 2000 to repay all amounts
            outstanding in full and terminated this facility.

                                       40
-     U.S.$70.0 million raised from private equity investors since
            inception through May 1998.

      On March 17, 2000, we sold the old notes bearing an annual interest rate
of 13 3/4% due April 1, 2007 in an aggregate principal amount of U.S.$300.0
million. Our debt service relating to the old notes for the first two years was
paid with U.S.$77.9 million of the net proceeds of the offering of the old notes
that were deposited in the interest escrow account.

      In September 2000, our principal shareholders invested an aggregate of
U.S.$35.0 million of new capital. This capital contribution was used primarily
to fund capital expenditures and working capital related to the buildout of our
network infrastructure.

      During 2001, we financed our operations and capital expenditures with
remaining funds from the issuance and sale of the old notes and with the
remaining funds from the U.S.$35.0 million capital contribution materialized in
September 2000.

      On April 29, 2002, we consummated a debt restructuring and
recapitalization of Maxcom. The purpose was to reduce our debt service burden,
improve our liquidity and attract additional investment, in order to continue
the buildout of our infrastructure and the growth of our business. The following
actions were taken pursuant to the debt restructuring and recapitalization:

      -     Holders tendered an aggregate of U.S.$259,410,000 in principal
            amount of old notes in exchange for an aggregate of (i)
            U.S.$165,078,150 in principal amount of new notes bearing 0%
            interest through March 1, 2006, and 10% annual interest in the last
            year, and (ii) 26,459,820 series N2 convertible preferred stock,
            with an initial liquidation preference of U.S.$0.4927 per share and
            limited voting rights, in the form of CPOs, which represent in the
            aggregate 15.2% of our total capital stock;

      -     Existing and new shareholders invested U.S.$66.2 million and
            received preferred stock (more fully described in "Item 7. Major
            Shareholders and Related Party Transactions -- A. Major shareholders
            The capital restructuring") representing in the aggregate 77.0% of
            our total capital stock; and

      -     Our capital structure was restructured as more fully described in
            "Item 7. Major Shareholders and Related Party Transactions -- A.
            Major shareholders -- The capital restructuring."

      As a result of the debt restructuring, we will save U.S.$37.5 million in
interest expense on an annualized basis from the date of issuance of the new
notes through February 28, 2006. From March 1, 2006 until March 1, 2007, which
is the maturity date of the new notes, we will save U.S.$17.3 million in
interest expense.

      We estimate that the U.S.$66.2 million private equity investment together
with funds from operating activities and financing available through our cash
reserves and future lines of credit with vendors and financial institutions,
will be adequate to meet our new, reduced debt service, our working capital
requirements and our capital expenditure needs through 2006. However, we cannot
assure you that we will have sufficient resources and that, if needed, any
financing will be available in the future or on terms acceptable to us. In
addition, our ability to incur additional indebtedness will be restricted by the
terms of the indenture governing the new notes.

      These estimates may be affected if we enter into joint ventures or
acquisitions which are currently not foreseeable. Our future operating
performance and ability to service and repay the new notes and the old notes, if
any, will be subject to future economic and competitive conditions and to
financial, business and other factors, many of which are beyond our control.

INDEBTEDNESS

      Our consolidated debt at December 31, 2001 was Ps.2,514.0 million
(including Ps.74.3 million of debt discount related to the issuance of
detachable warrants), of which all was long-term debt. All of our consolidated
debt outstanding at December 31, 2001 was denominated in U.S. dollars. The old
notes represented all of our indebtedness.

                                       41
After giving effect to the April 29, 2002 debt restructuring, our pro forma
consolidated debt at December 31, 2001 would have been Ps.1,651.7 million.

      The U.S.$300 million aggregate principal amount old notes accrued interest
at an annual rate of 13 -3/4%, representing an interest expense of U.S.$39.8
million per year. In May and June 2001, Maxcom purchased U.S.$25 million
aggregate principal amount of old notes in the secondary market, which Maxcom
cancelled in April 2002. Pursuant to the April 29, 2002 debt restructuring, old
notes in an aggregate principal amount of U.S.$259,410,000 were exchanged for
new notes in an aggregate principal amount of U.S.$165,078,150, as well as for
certain equity. The new notes bear 0% interest through March 1, 2006, and 10%
annual interest in the last year. Old notes in an aggregate principal amount of
U.S.$15,590,000 remain outstanding.

      As a result of this debt restructuring, we will save U.S.$37.5 million in
interest expense on an annualized basis from the date of issuance of the new
notes through February 28, 2006. From March 1, 2006 until March 1, 2007, which
is the maturity date of the new notes, we will save U.S.$17.3 million in
interest expense.

      The indenture governing the terms of the new notes restricts our ability
to incur indebtedness. In particular, in order to be able to incur additional
indebtedness, we must comply with a minimum consolidated leverage ratio of less
than 3.75 to 1.00 and a minimum fixed charge coverage ratio of 2.00 to 1.00, in
each case after giving effect to the proposed incurrence of indebtedness. We do
not, and are unlikely in the foreseeable future to, meet these ratios. However,
pursuant to certain exemptions, we are still able to incur up to U.S.$100.0
million of indebtedness to finance the cost of acquiring or constructing or
installing telecommunication assets, and up to U.S.$20.0 million for working
capital purposes, in each case at any one time outstanding. The indenture
governing the old notes no longer has covenants restricting our ability to incur
indebtedness.

      The indenture governing the terms of the new notes also provides that, if
an event of default occurs and is continuing, the trustee appointed under the
indenture or our holders representing at least 25.0% in principal amount of the
then outstanding new notes, may declare all the new notes to be due and payable
immediately.

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 private equity, public
debt and vendor financing. For the years ended December 31, 1999, 2000 and 2001,
our earnings were insufficient to cover our fixed charges by Ps.264.3 million
(U.S.$28.9 million), Ps.709.1 million (U.S.$77.6 million) and Ps.658.0 million
(U.S.$71.9 million), respectively.

Resources used for operating activities

      For the year ended December 31, 2001, net resources used in operating
activities amounted to Ps.336.6 million compared to Ps.811.7 million for the
year ended December 31, 2000. The decrease was mainly attributable to the
release of the escrow account (Ps.526.2 million). This decrease was partially
offset by the non-cash gain on the repurchase of debt of Ps.121.2 million. Net
resources used in operating activities in 1999 were Ps.145.8 million. The
increase in 2000 from 1999 was mainly due to the escrow of funds to guarantee
the first four coupon payments on the old notes (Ps.438.2 million). In addition,
we had a Ps.376.2 million higher loss in 2000 since that was our first full year
in operation. This decrease was partially offset by Ps.125.4 million higher
depreciation in 2000.

Resources provided by financing activities

      For the year ended December 31, 2001, net resources used in financing
activities amounted to Ps.93.5 million compared to resources provided of
Ps.2,463.6 million for the year ended December 31, 2000. The decrease was
attributable to the issuance of the old notes (Ps.2,106.3 million) in March 2000
and the U.S.$35.0 million capital contribution (Ps.357.3 million) in September
2000. In 2001, we had no capital or debt infusion. Instead, we repurchased a
portion of our debt for Ps.94.4 million. Net resources provided by financing
activities in 1999 were Ps.689.2 million. The increase in 2000 from 1999 was
mainly due to the fact that the only source of financing in 1999 was vendor
financing in the amount of Ps.676.0 million.

Resources used for investing activities

                                       42
For the year ended December 31, 2001, net resources used for investing
activities amounted to Ps.516.8 million compared to Ps.707.2 million for the
year ended December 31, 2000. The decrease was mainly attributable to lower debt
issuance costs of Ps.283.4 million partially offset by higher capital
expenditures of Ps.295.3 million. Net resources used for investing activities in
1999 were Ps.809.0 million. The decrease in 2000 from 1999 was mainly due to
lower capital expenditures of Ps.295.3 million offset by higher debt issuance
costs of Ps.283.4 million.

OTHER CONTRACTUAL OBLIGATIONS

      In addition to our financial indebtedness, we are committed to make
certain payments under different lease arrangements. All of our peso-denominated
leases and some of our dollar-denominated site leases adjust automatically to
reflect any variances experienced by the Mexican and U.S. consumer price index,
respectively.

      The majority of our contractual operating leases denominated in pesos
corresponds to our former corporate headquarters. This lease expires on
September 30, 2013. We are subject to penalties for the early termination of
this lease. We are currently evaluating the effects of the early termination of
the lease or the subleasing or transfer of the lease to a third party, among
others.

      Our new corporate headquarters are leased for a 5-year term, renewable for
two additional 5-year terms. Site leases generally run for five, ten of fifteen
year terms.

      The following table presents our minimum contractual operating lease
obligations denominated in Pesos for the periods indicated:
2006 &
                                         2002      2003       2004      2005   thereafter
                                         ----      ----       ----      ----   ----------
                                                     (in thousands of Pesos)
Facilities.........................  Ps.14,454  Ps. 1,401  Ps.1,309  Ps.1,242   Ps. 2,794
Sites..............................     15,091     12,757     7,512     6,493      22,224
Poles..............................      2,554          -         -         -           -
Others.............................        149          -         -         -           -
                                     ---------  ---------  --------  --------  ----------
    Total..........................  Ps.32,248  Ps.14,158  Ps.8,821  Ps.7,735   Ps.25,018
                                     =========  =========  ========  ========  ==========
The following table presents our contractual operating lease obligations
denominated in dollars for the periods indicated:
2006 &
                                  2002       2003         2004     2005     thereafter
                                  ----       ----         ----     ----     ----------
                                         (in thousands of U.S. dollars)
Corporate headquarters           $3,337     $2,503     $2,503     $2,503     $2,920
Sites ................              213         48         48         48        131
Poles ................               --         --         --         --         --
Others ...............              247        124         62         --         --
                                 ------     ------     ------     ------     ------
  Total ..............           $3,797     $2,675     $2,613     $2,551     $3,051
                                 ======     ======     ======     ======     ======
CAPITAL EXPENDITURES

      Through December 31, 2001, we have invested Ps.2,067.8 million in the
buildout of our network operating support system and other capital expenditures,
excluding cumulative preoperating expenses and the expenses related to the
issuance of the old notes. This amount includes Ps.121.0 million paid to obtain
all of our frequency rights.

      For 2002, we plan to make capital expenditures of approximately U.S.$75.5
million, mainly to continue to build out our network. We estimate, that
approximately U.S.$18.9 million will be spent to expand our fiber optic
facilities; approximately U.S.$37.7 million will be used for the outside plant,
both clusters and singles sites; approximately U.S.$8.3 million for our data
platform, switches and telecom equipment; and approximately U.S.$10.6

                                       43
million for other investments, including IT equipment, alternate channels
program, transportation equipment, office /furniture, installation expenses and
marketing expenses.

DIVIDEND POLICY

      Our current policy is to reinvest profits into our operations. In
addition, the indenture that will govern the terms of the new notes allows us to
pay cash dividends only if we meet the following conditions:

      -     a minimum consolidated leverage ratio of less than 3.75 to 1.00;

      -     a minimum fixed charge coverage ratio of 2.00 to 1.00;

      -     no default (as defined in the indenture) must have occurred and be
            continuing or result from the payment of the cash dividend; and

      -     the cash dividend payments do not exceed an amount determined in the
            indenture based on, among other things, cash flow generated from
            operations or equity offerings and consolidated interest expense.

CRITICAL ACCOUNTING POLICIES

Allowance of doubtful accounts receivable

      Determining our allowance for doubtful accounts receivable requires
significant estimates. Due to the large number of customers that we serve, it is
impractical to review the credit-worthiness of each of our customers, although a
credit review is performed for business customers, which represented 6.9% of our
total customer base as of December 31, 2001. We consider a number of factors in
determining the proper level of the allowance, including historical collection
experience, current economic trends and the aging of the accounts receivable
portfolio. From this analysis, our current policy is to reserve 90% of the
outstanding balance of a customer with at least one bill past due 90 days and
100% of the outstanding balance of a customer with at least one bill past due
120 days. We periodically review this policy to ensure that it accurately
reflects current collection policies.

      In addition, in order to mitigate collections risk, our collection
procedures include, but are not limited to, periodic reminder phone calls once a
customer is past due, suspension of service, use of a collection agency and
disconnection of service, if needed. Furthermore, within our network we have
systems to detect fraudulent call activity. If these systems fail to identify
any of this activity, we may have to recognize a higher degree of uncollectable
accounts. While we believe that our estimates are reasonable, changes in our
customer trends or any of the factors mentioned above could materially affect
our bad debt expense.

Revenue recognition

      We recognize revenues from telephone services provided to customers, from
the sale of customer-premise equipment, from services provided to other
telephone-service companies (such as interconnection services), and from
installation charges.

      Revenues are recognized when the service is provided or the product is
delivered. In addition, we have entered into agreements with several telephone
carriers with a "bill and keep" feature. Under this arrangement, if the
imbalance between local calls originated by the other carrier and terminated by
Maxcom and calls originated by Maxcom and terminated by the other carrier during
a month does not exceed 70%, then no interconnection fee amounts are payable by
the net user of interconnection services. If the imbalance exceeds 70% in any
given month, the net user incurs a liability per minute. If we fail to maintain
a significant percentage of residential users, then the "bill and keep"
arrangement will be terminated and asymmetrical interconnection rates may apply.
Due to a timing lag, we must estimate whether or not the 70% threshold was
exceeded for any given month and record a corresponding receivable or payable.
Based on previous experience with these carriers, i.e. the threshold has never
been exceeded; we have not accrued for any potential revenue or cost.

                                       44
Installation costs

      Installation costs include labor, tools and materials and are capitalized
and amortized over on a straight-line basis. Once service with a customer is
terminated, the capitalized installation cost is expensed. However, installation
costs vary from customer to customer depending on location. We do not track
installation costs on an individual customer basis because to do so would be
inefficient. Based on cost analysis, we have determined an average cost per
customer and use this cost for amortization and disconnection purposes.

Valuation of long lived assets

      We review fixed, intangible and other long-lived assets whenever events or
changes indicate that the carrying amount of an asset may not be recoverable. In
making such evaluations, we estimate the fair value of the long-lived assets in
order to calculate the impairment loss equal to the difference between the fair
value and carrying value of the assets. We make significant assumptions and
estimates in this process regarding matters that are inherently uncertain, such
as estimating remaining useful lives 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 the impairment analysis.
Although we believe that our estimates are reasonable, different assumptions
regarding such remaining useful lives could materially affect the valuation of
our long-lived assets.

      We also evaluate our operating leases for utilization. Spaces leased in
buildings with low occupancy have been reserved based on the contractual penalty
for early termination, which is calculated by taking the remaining contractual
obligation of the estimated unused space minus the estimated proceeds to be
received from any sub-leases to third parties.

Stock-based compensation

      We have historically entered into various agreements with third parties
and our employees to exchange our warrants or our stock for services rendered to
us. The fair value of such transactions is based on various assumptions, such as
our value, volatility, risk free interest rates and expected life of the
options. We contract a third party to assist in developing said assumptions.
Different assumptions regarding such estimations could materially affect our
financial position and results of operations.

Deferred taxes

      As part of the process of preparing our consolidated financial statements,
we are required to estimate our income tax liability. This process involves
estimating actual current tax exposure together with assessing temporary
differences resulting from the different treatment for tax and accounting
purposes of several items, such as depreciation, amortization, and allowance for
doubtful accounts. These differences result in deferred tax assets and
liabilities that are included in our consolidated balance sheet. We must then
assess the likelihood that our deferred tax assets will be recovered from future
taxable income and, to the extent we believe that recovery is not likely to
occur, we must include an expense within the tax provision in the statement of
operations.

      Significant management judgment is required in determining our provision
for income taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. The valuation allowance
is based on management projections of future financial results. Accordingly, we
have created a valuation account for the full balance of our deferred tax asset
as we feel it is unlikely we will use our net operating loss carryforwards
before they expire. If actual results differ from these estimates or we adjust
the projections in future periods, we may need to materially adjust the
valuation allowance.

Related party transactions

      See "Major Shareholders and Related Party Transactions -- B. Related party
transactions" for a full disclosure of our transactions with related parties.

C.    RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

      Maxcom does not undertake research and development activities other than
market research.

                                       45
D.    TREND INFORMATION

      The growth of competition has been substantial and we expect it to
continue. We are in the process of improving our competitive position by
strengthening our voice products and developing our data products and services.
The increase in competition negatively affects our profit margins.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.    DIRECTORS AND SENIOR MANAGEMENT

DIRECTORS

      Our Board of Directors is responsible for the management of our business.
Our Board of Directors currently consists of seven series A directors, two
series B directors and four series N directors. Our series A shareholders have
the ability to elect the majority of the Board of Directors. With the exception
of Mr. Valdez, who was elected Director on October 2, 2001, the current members
of the Board of Directors were elected at the shareholders' meeting held on May
22, 2001. At that May 22, 2001 meeting, the shareholders appointed only nine
directors and nine alternate directors, leaving four seats vacant. Five
directors were appointed by our series A shareholders, one director by our
series B shareholders and three directors by our series N shareholders.

      At a shareholders' meeting on March 5, 2002, our shareholders resolved
that, upon and subject to the consummation of the debt restructuring and
recapitalization, the composition of our Board of Directors would change. The
debt restructuring and recapitalization were consummated on April 29, 2002. As a
result, and pursuant to the capital restructuring described in "Principal
Shareholders -- Capital restructuring," our series A and A1 shareholders, voting
together as a class, now appoint five directors. The remaining four directors
are appointed by our series B and B1 shareholders, voting together as a class.
Pursuant to the terms of the securityholders agreement described in "Item 7.
Major Shareholders and Related Party Transactions -- A. Major Shareholders --
Securityholders agreement," which became effective upon the consummation of the
debt restructuring and recapitalization. The series B and B1 directors are now
selected from among nominees proposed by Nexus -- Banc of America Fund II, L.P.,
a major shareholder which we refer to in this Annual Report as "Nexus."

      Series N2 shareholders have the right to appoint an observer to our Board
of Directors for so long as the series N2 preferred shares represent at least 3%
of the outstanding capital stock of the Company or, so long as any series N2
preferred stock remain outstanding and at least U.S.$17.5 million aggregate
principal amount of the new notes remain outstanding. This observer, who will
not be a member of the Board of Directors, has the right to attend meetings of
the Board of Directors but is not entitled to vote. In the event Mexican foreign
ownership restrictions are lifted, the series N2 shareholders will be entitled
to appoint one director, provided the series N2 shares represent at least 10% of
Maxcom's outstanding capital stock.

      The following table presents information concerning our directors prior to
the debt restructuring and recapitalization (ages as of December 31, 2001):
NAME                                             POSITION                          AGE
----                                             --------                          ---
Adrian Aguirre Gomez.............   Series A Director and Chairman of the Board    51
Maria Guadalupe Aguirre Gomez....   Series A Director                              53
Maria Trinidad Aguirre Gomez.....   Series A Director                              41
Marco Provencio Munoz............   Series A Director                              43
Gilberto Solis Silva(1)..........   Series A Director                              54
Michael R. Coltrane..............   Series B Director                              55
Jacques Gliksberg................   Series N Director                              44
Sebastian Valdez.................   Series N Director                              40
Salvatore A. Grasso..............   Series N Director                              44
46
(1)   Mr. Gilberto Solis Silva is an alternate series A director, substituting
      for Mr. Salvador Alva, who resigned in February 2002.

      The following table presents information concerning our current directors
(ages as of December 31, 2001):
NAME                                             POSITION                                    AGE
----                                             --------                                    ---
Adrian Aguirre Gomez.............   Series A and A1 Director and Chairman of the Board        51
Maria Guadalupe Aguirre Gomez....   Series A and A1 Director                                  53
Maria Trinidad Aguirre Gomez.....   Series A and A1 Director                                  41
Marco Provencio Munoz............   Series A and A1 Director                                  43
Gilberto Solis Silva.............   Series A and A1 Director                                  54
Roberto Chute....................   Series B and B1 Director                                  28
Jacques Gliksberg................   Series B and B1 Director                                  44
Pedro Querio(1)..................   Series B and B1 Director                                  35
Salvatore A. Grasso..............   Series B and B1 Director                                  44
(1)   Mr. Pedro Querio is series B and B1 director, substituting for Mr. Barry
      R. Rubens, who resigned in April 2002.

      Miguel Sepulveda Martinez, Raul Sanchez Rucobo, Maria Elena Aguirre Gomez
and Raul Guijarro de Pablo are alternate series A and A1 directors. Marco Viola,
Michael Hajjar Jorge Cervantes and Roberto Engels are alternate series B
directors. Enrique Boillini is the board observer for the series N-2
shareholders. Gonzalo Alarcon Iturbide is the secretary of the Board.

      Adrian, Maria Guadalupe, Maria Trinidad and Maria Elena Aguirre Gomez are
siblings. Gilberto Solis Silva is the spouse of Maria Elena Aguirre Gomez. Raul
Guijarro de Pablo is the spouse of Maria Trinidad Aguirre Gomez. Miguel
Sepulveda Martinez is the spouse of Maria Guadalupe Aguirre Gomez.

      Set forth below is a brief biographical description of our directors:

      ADRIAN AGUIRRE GOMEZ has been a series A (now A and A1) director and
Chairman of the Board of Maxcom since Maxcom's incorporation in February 1996.
Mr. Aguirre also sits on the Board of Directors of Corporativo en
Telecomunicaciones, S.A. de C.V., a subsidiary of Maxcom, Grupo Empresarial de
Telecomunicaciones, S.A. de C.V., Operadora Plusgamma, S.A. de C.V. (formerly
known as Recover, S.A. de C.V.), Corporacion Plusgamma, S.A. de C.V. (formerly
known as Laguna Real, S.A. de C.V.) and Fundacion Teleton. He has been the
Chairman of the Board since December 1992 for Operadora Plusgamma, S.A. de C.V.
In addition, he has been a member of the Consulting Board of UNICEF Mexico since
1997. Previously, Mr. Aguirre was CEO of Grupo Radio Centro, S.A. de C.V. from
November 1968 to May 24, 1999 and a Director until May 1999. Mr. Aguirre is a
certified public accountant and holds an undergraduate degree in accounting from
the Instituto Tecnologico Autonomo de Mexico (ITAM).

      MARIA GUADALUPE AGUIRRE GOMEZ has been a series A director (now A and A1)
of Maxcom since June 1999. She also sits on the Board of Directors of Sport and
Terapy Center, S.A. de C.V., Operadora Plusgamma, S.A. de C.V. (formerly
Recover, S.A. de C.V.), Corporacion Plusgamma, S.A. de C.V. (formerly known as
Laguna Real, S.A. de C.V.). Previously, Ms. Aguirre sat on the Board of
Directors of Majurame, S.A. de C.V. and Cable Centro, S.A. de C.V. from February
1997 to April 1999 and was an Alternate Director of Grupo Radio Centro, S.A. de
C.V., from July 1998 to May 1999. In her capacity as Alternate Director, Ms.
Aguirre had both director and management responsibilities. Ms Aguirre holds an
undergraduate degree in communications from the Universidad Ibero Americana.

      MARIA TRINIDAD AGUIRRE GOMEZ has been a series A director (now A and A1)
of Maxcom since May 1998. She also sits on the Board of Directors of Talento
Arte Visual, S.A. de C.V., Promotora de Radiodifusion del Sureste, S.A. de C.V.,
Promotora de Publicidad del Sureste, S.A. de C.V. and Publicidad y Promocion del
Sureste, S.A. de C.V. Previously, Ms. Aguirre was an Alternate Director of Grupo
Radio Centro, S.A. de C.V. from March 10, 1997 to May 7, 1999. Ms. Aguirre holds
an undergraduate degree in communications from the Universidad Iberoamericana.

                                       47
MARCO PROVENCIO MUNOZ has been a series A (now A and A1) director of
Maxcom since May 2001. He is also a partner and head of the public relations
practice at the consulting firm MBD: Mexico Business Development. During 2000,
Mr. Provencio was the press secretary and the spokesman for the then Mexican
President Mr. Ernesto Zedillo. He served 14 years in the Ministry of Finance and
Public Credit where he held various positions, including Director General for
International Financial Affairs. Mr. Provencio worked also for three years for
the Foreign Affairs Ministry, where he was appointed under-secretary for
Economic and Multicultural Affairs. Mr. Provencio holds an undergraduate degree
in economics from the Universidad Interamericana and a master's degree in
economics and public affairs from the Woodrow Wilson School at Princeton
University.

      GILBERTO SOLIS SILVA has been a series A (now A and A1) director of Maxcom
since February 2002. Prior to that Mr. Solis was an alternate series A director.
He also is the Secretary of the Board of Radiocomunicacion Profesional, S.A. de
C.V., Radiocomunicacion Enfocada, S.A. de C.V. and Radiocomunicacion Saltillo,
S.A. de C.V. Previously, Mr. Solis sat on the Board of Directors of Grupo Radio
Centro, S.A. de C.V. from 1990 to 1998. Mr. Solis holds an undergraduate degree
in geological engineering from the UNAM.

      MICHAEL R. COLTRANE was a series B director and Vice Chairman of Maxcom
from August 1997 until April 2002. Mr. Coltrane is President, Chief Executive
Officer and Director of CT Communications, Inc. He also sits on the Board of
Directors of Palmetto MobileNet, L.P., Access/On Multimedia, First Charter
Corporation, and Northeast Medical Center. Mr. Coltrane is Vice Chairman of
First Charter Corporation, the parent company of First Charter National Bank and
Chairman of the United States Telecom Association. Previously, Mr. Coltrane
served for more than six years as Executive Vice President of First Charter
National Bank. Mr. Coltrane holds an undergraduate degree from Davidson College
and a master's degree in business administration from the Wharton School of
Business of the University of Pennsylvania.

      JACQUES GLIKSBERG was a series N director of Maxcom from May 1998 until
April 2002, and has been a series B and B1 director since then. He also sits on
the Board of Directors of Acme Paging, L.P., Bank America International
Investment Corporation, Structured Intelligence LLP, Organizacion Rescarven,
C.A. (Venezuela), Vesper Holdings, Velocom and Difusion Panoramica S.A. de C.V.
Mr. Gliksberg has been a managing partner of Bank of America Equity Partners
since 1994. Mr. Gliksberg holds a Bachelor of Arts degree in Economics and
Political Science from the University of Rochester and a master's degree in
business administration from the J. L. Kellogg Graduate School of Management of
Northwestern University, Chicago, Illinois.

      SEBASTIAN VALDEZ was a series N director of Maxcom from October 2000 until
April 2002. He is Vice President of BancBoston Capital Inc. and President of
BancBoston Investments Microserving Holdings, Inc. Further, he is on the Board
of Directors of Grupo Embotelladores De Sureste S.A. de C.V., Recovery
International Group Holdings and BancBoston Investments Microserving Holdings,
Inc. Prior to joining us, Mr. Valdez spent four years as Vice President Loan
Syndicate for BancBoston Securities, Inc. He was also a Vice President at the
BankBoston Precious Metals division. Mr. Valdez joined BankBoston's Buenos Aires
branch in 1985. Mr. Valdez holds an undergraduate degree from Instituto
Tecnologico de Buenos Aires, Argentina.

      SALVATORE A. GRASSO was a series N director of Maxcom from May 1998 until
April 2002, and a series B and B1 director since then. He also sits on the Board
of Directors of Bachow and Associates, Inc. Mr. Grasso is currently Managing
Director and Chief Financial Officer of Bachow and Associates, Inc., Chief
Financial Officer of Bachow Innovative Master Fund, Ltd. and Paul S. Bachow
Co-Investment Fund, LP. Further, he is the Vice-President of Bachow/Coastel
Operations, Inc., Bala Equity, Inc., Bachow Co-Investment, Inc, Bachow 39 GHz,
Inc., Bala Equity IV, Inc., Bachow Innovative Equity, LC, Bachow/Coastal, LLC,
Bachow/Coastal, Inc., Bachow Investment Partners III, LP, Bachow Co-Investment,
Inc., Bachow Strategic Partners, LLC. He is also a Partner in Bala Equity
Partners, L.P., Bachow Co-Investment, L.P., Bachow Innovative Partners, L.P.,
Bachow Innovative Equity, L.P., Bachow Strategic Partners, L.P. and Bachtel
Development, L.P. Mr. Grasso holds a bachelor of science degree in accounting
from St. Joseph's University and is a certified public accountant in the state
of Pennsylvania.

      SALVADOR ALVA was a series A director from May 2001 until February 2002.
Mr. Alva has worked in different divisions of PepsiCo. where he has been
President of Grupo Gamesa from 1996 to date. Prior to that Mr. Alva was General
Manager for Latin America for the International Division of Alegro from 1985 to
1996. Mr. Alva is a Chemical Engineer from the Universidad Nacional Autonoma de
Mexico and holds a master's degree in business administration from the
Universidad de las Americas.

                                       48
_
      PEDRO QUERIO has been a series B and B1 director since June 2002. He also
sits on the Board of Directors of Eki Discount (Argentina), Outdoor Advertising,
Microlending, Structured Intelligence and Difusion Panoramica, S.A. de C.V. Mr.
Querio has been working since 1997 for Banc of America Equity Partners - Latin
America. Prior to that, Mr. Querio worked at Booz Allen & Hamilton in Buenos
Aires, Argentina for one year, and for Merchant Bankers Asociados also in Buenos
Aires, Argentina for four years, where he received extensive expertise in
mergers an acquisitions and, corporate finance for capital risk funds of the
group. Mr. Querio holds a Bachelor of Arts degree from the Universidad Catolica
de Argentina and a master's degree in management from J.L. Kellog Graduate
School of Management of Northwestern University, Chicago, Illinois.

      ROBERTO CHUTE, has been a series B and B1 director since April 2002. Mr.
Chute sits on the Board of Directors of Difusion Panoramica, a Mexican outdoor
advertising company, and Eki Discount, an Argentinean discount store chain. Mr.
Chute has been an associate of Bank of America Equity Partners since September
2001. Previously, Mr. Chute worked for Goldman, Sachs, Techint and Strat
Management Consulting. Mr. Chute holds an industrial engineering degree from the
Instituto Tecnologico de Buenos Aires, Argentina and a master's degree in
business administration from the J. L. Kellogg Graduate School of Management of
Northwestern University, Chicago, Illinois.

      BARRY RUBENS, was a series B and B1 director until April 2002. Mr. Rubens
has been a Senior Vice President, the Chief Financial Officer, Secretary and
Treasurer of CT Communications, Inc. since 1995. Mr. Rubens was Vice-President
for External Affairs of the same company from 1992 to 1995. Prior to this, Mr.
Rubens was a senior manager in Ernst & Young's telecommunications practice in
Washington, D.C. Mr. Rubens serves on the executive committee of BellSouth
Carolinas PCS, LLC, as a director of Carolinas FiberNet and as an officer and
board member of Wireless One of North Carolina, LLC.

EXECUTIVE OFFICERS

      In April 2001, Mr. Fulvio del Valle was appointed as Chief Executive
Officer. In February 2001, Mr. Eduardo Patron was appointed as Chief Marketing
Officer. In May 2001, Mr. Rene Sagastuy was appointed as Chief Operating Officer
and Mr. Ricardo Arevalo was appointed as Chief Information System Officer. In
June 2001, Ms. Eloisa Martinez was appointed Chief Financial Officer. In
September 2001, Mr. Francisco Soroa de las Cuevas was appointed Vice-President
of Corporate Communications and Public Relations.

      The following table sets forth our current executive officers (ages as of
December 31, 2001):
NAME                                             POSITION                      AGE
----                                             --------                      ---
Fulvio del Valle.................   President and Chief Executive Officer      52
Rene Sagastuy....................   Chief Operating Officer                    41
Eloisa Martinez..................   Chief Financial Officer                    42
Eduardo Patron...................   Chief Marketing Officer                    44
Ricardo Arevalo Ruiz.............   Chief Information Systems Officer          37
Francisco Soroa de las Cuevas....   Vice-President, Corporate Communications
                                    and Public Relations                       48
Carlos Castro Paniagua...........   Vice-President, Human Resources            51
Cesar A. Castillo Guerra.........   Chief Commercial Operations Officer        38
Set forth below is a brief biographical description of each of our
executive officers not otherwise provided above:

      FULVIO V. DEL VALLE has been the President and Chief Executive Officer of
Maxcom since April 2001. Prior to joining Maxcom, Mr. del Valle was President of
Iusacell since June 1997 and a member of its Board of Directors since June 1998.
From August 1996 until June 1997, Mr. del Valle served as President of the
non-wireline cellular companies in Regions 3 (Norcel) and 4 (CedeTel). For more
than 20 years prior, Mr. del Valle served in senior Latin America region
executive positions for several multinational positions for several
multinational corporations. Mr. del Valle was employed by AMP Inc. as regional
director, Latin America, from January 1996 through July 1996 and as President,
Mexico, from August 1992 until December 1995. From September 1986 until July
1992, Mr. del Valle
                                       49
served as Regional Director for South America, Electronic Division, for DuPont
Latin America Corp. and from March 1980 through August 1986, he served as
general manager, Latin American North Region, for National Semiconductor Corp.
Mr. del Valle holds an undergraduate degree in electrical engineering from the
Instituto Politecnico Nacional of Mexico and a master's degree in physics from
Virginia Polytechnic Institute.

      RENE SAGASTUY has been Chief Operating Officer to Maxcom since May 2001.
Prior to joining Maxcom, Mr. Sagastuy served for one year as Director of
Operations for Johnson Controls in Mexico, a U.S. public company with 19
manufacturing sites in Mexico. Mr. Sagastuy also served as operations, strategic
planning, manufacturing and project manager and director of several companies in
Mexico, including Avex Electronics, AMP de Mexico, S.A. de C.V. and the
Jefferson Smurfit Group in Mexico. Mr. Sagastuy holds a bachelor's degree in
civil engineering from the Universidad Iberoamericana in Mexico and a master's
degree in Business Administration form the Instituto Technologico Autonomo de
Mexico.

      ELOISA MARTINEZ has been Chief Financial Officer since June 2001. Prior to
joining Maxcom, Ms. Martinez served for two years as Financial Planning and
Control Director and two years as Assistant to the Chief Financial Officer at
Iusacell. Previously, Ms. Martinez worked for 12 years at IBM Corporation in
Mexico and in the United States, where she held the positions of Controller,
Internal Audit Manager, Corporate Internal Auditor and Business Control and
Planning Analyst. Ms. Martinez holds a bachelor's degree in Business
Administration from the Instituto Politecnico Nacional in Mexico City and a
master's degree in Business Administration from the Instituto Tecnologico de
Estudios Superiores de Monterrey.

      EDUARDO PATRON has been Chief Marketing Officer of Maxcom since February
2001. Prior to joining Maxcom, Mr. Patron served for 14 years as Marketing
Director, Assistant General Manager and in several other positions for Kraft
Foods in Mexico, a subsidiary of Phillip Morris. Previously, Mr. Patron worked
as Promotion and Merchandising Manager for Alfa Alimentos, S.A. de C.V., a food
company, and as an account executive for A. C. Nielsen. Mr. Patron holds an
Industrial Engineering degree from the Universidad Iberoamericana in Mexico.

      RICARDO AREVALO RUIZ has been Chief Information Systems Officer since
April 2001. Prior to joining Maxcom, Mr. Arevalo served as Vice-President,
Information Systems and Chief Information Officer of Iusacell from August 1997
to May 2001. Mr. Arevalo also served as Vice President, Information Systems, as
Chief Information Officer and as Director, Systems Development of Grupo Iusacell
Cellular during the previous two years. Before then, Mr. Arevalo served as
Director of Information Systems, Materials, Logistics and Customer Service of
AMP de Mexico, S.A. de C.V. from May 1993 until August 1997. Mr. Arevalo was
also the Information Systems Manager for Tequila Cuervo, S.A. de C.V. from
October 1990 until May 1993. Mr. Arevalo has an undergraduate degree in computer
sciences and a diploma in marketing from the Instituto Technologico y de
Estudios Superiores de Monterrey.

      FRANCISCO SOROA DE LAS CUEVAS has been Vice-President of Corporate
Communications and Public Relations since September 2001. Prior to joining
Maxcom, he held the same position at Nissan Mexicana for two years and at
Iusacell for three years. Mr. Soroa has also served as Director of Public
Relations for Pepsico de Mexico and Director of Public Relations and Press
Secretary of the State of Puebla. Mr. Soroa de las Cuevas holds a bachelor's
degree in International Relations, a Business Management Communications degree
from the Universidad de las Americas and a Human Resources Management degree
from Michigan University. He holds a bachelor's degree in International
Relations from the Universidad de las Americas.

      CARLOS CASTRO PANIAGUA has been Vice-President of Human Resources since
March 2001. Prior to joining Maxcom, Mr. Castro served as Director of Human
Resources at Gillette de Mexico for twelve years and as Director of Corporate
Human Resources at Phillips Mexicana for two years. Mr. Castro also served at
Gillette de Mexico as engineering manager and production manager. Mr. Castro
holds an industrial degree from the Centro Nacional de Ensenanza Tecnico
Industrial.

      CESAR A. CASTILLO GUERRA has been Chief Commercial Operations Officer
since May 2002. Prior to joining Maxcom, Mr. Castillo served at Axtel, S.A. de
C.V. as Vice-President for the North Region, Vice-President of Mexico City and
Vice-President of Sales and Service from February 2000 to April 2002. He also
served as Director of Sales and Customer Care for the same company from January
1999 to February 2000. From May 1998 to January 1999, Mr. Castillo served at
Iusacell where he was Director of Strategic Alliances and Channels (Marketing).
Mr. Castillo was Director of Strategic Alliances and Alternate Channels for
Alestra between May

                                       50
1996 and April 1998. Mr. Castillo holds a CPA degree from the Instituto
Tecnologico de Estudios Superiores de Monterrey - Monterrey Campus, as well as a
master's degree in business administration with specialization in marketing,
from the same University.

B. COMPENSATION

GENERAL

      For the year ended December 31, 2001, our executive officers received an
aggregate compensation (including bonuses and severance payments) of
approximately Ps.28.1 million. These amounts represent 6.5% of Maxcom's total
selling, general and administrative expenses for 2001.

      Through December 31, 2001, members of our Board of Directors received
options to purchase up to 250 series N shares at an exercise price of U.S.$0.01
per share, each time the member attended a Board of Directors or an Operating
Advisory Committee meeting. The Chairman of the Board received options to
purchase up to 500 series N shares at an exercise price of U.S.$0.01 per share
each time he attended. There were two Board of Directors meetings and six
Operating Advisory Committee meetings during 2001. In 2001, we granted to our
directors options to purchase a total of up to 26,000 series N shares.

      Starting January 1, 2002, members and the Chairman of the Board will
receive options to purchase up to 2,500 and 5,000 series N shares, respectively,
at an exercise price of U.S.$0.01 per share, for each meeting attended. Both the
2001 and the 2002 options vest immediately.

OLD EXECUTIVE STOCK OPTION PLAN

      We implemented an executive compensation plan that included bonuses and
stock options on our C/N CPOs (which are described in note (1) under "Item 7.
Major Shareholders and Related Party Transactions -- A. Major Shareholders").
Upon the completion of the capital restructuring described in "Principal
Shareholders -- Capital restructuring," beneficiaries under the plan will now
receive series N shares in exchange for their series C shares.

      We granted 142,250, 583,000 and 206,820 options in 1999, 2000 and 2001,
respectively for the services rendered during the years 1998, 1999 and 2000.
Options granted had exercise prices of U.S.$8.70, U.S.$10.45 and U.S.$12.55,
respectively, which were the then estimated fair market values. Of these
options, 356,108 had vested and 12,424 had been forfeited at December 31, 2001.

NEW EXECUTIVE STOCK OPTION PLAN

      We are implementing a new executive stock plan, covering services rendered
during the years 2001, 2002 and 2003. The plan will be divided into four levels,
depending on the ranking of the different members of management. We expect that
there will initially be 80 participants in the plan. Participants in the top
three levels will be guaranteed a minimum number of options for series N stock.
The granting of options for the fourth level, which is comprised of the
junior-most management, will be discretionary.

      The number of options granted will depend on certain revenue and operating
cash flow targets. There will be a bonus portion of the plan that will be
allocated to individual executives at the discretion of management and the Board
of Directors. Vesting will be 20% upon allocation and 20% per year for the next
four years. Options will be granted during the second quarter of 2002, 2003 and
2004 at exercise prices of U.S.$0.4927, U.S.$0.5912 and U.S.$0.7094,
respectively.

      For the options granted during the second quarter of 2002, we are
finalizing the details of the implementation of this plan, including a Board of
Directors resolution approving the beneficiaries and the execution of the plan
with a Mexican trustee in charge of managing the plan.

      The number of options that we expect to be granted under the stock option
plan for our Chief Executive Officer will depend on revenue and cash flow
targets, and other factors such as the success of the debt restructuring,

                                       51
additional capital raising and the obtainment of certain regulatory approvals.
In addition, the vesting will be over a two-year period from the grant date with
an exercise price of U.S.$0.4927 per share for all shares.

      The maximum aggregate number of shares of series N stock that can be
distributed under the new executive stock plan (which includes the Chairman of
the Board and Chief Executive Officer plan), including potential bonuses, will
be 25.9 million shares of series N stock, which is equivalent to about 11.6% of
our capital stock on a fully diluted basis, after giving effect to the exchange
offer (assuming all old notes are exchanged) and the private equity investment.

C.    BOARD PRACTICES

      The members of our Board of Directors are elected annually at our ordinary
general meeting of shareholders. All board members hold the positions for one
year and may be reelected.

      Our Board of Directors established an Operating Advisory Committee
responsible for advising the Board on, and overseeing, Maxcom's operations. The
Operating Advisory Committee is currently comprised of Adrian Aguirre, Jacques
Gliksberg, Salvatore Grasso, Roberto Chute and Fulvio del Valle.

      Under the Mexican Companies Law (Ley General de Sociedades Mercantiles),
we are required to have at least one statutory auditor (comisario), who is
elected by our shareholders at the annual ordinary general shareholders'
meeting. C.P. Juan Manuel Ferron is our statutory auditor. The primary role of
the statutory auditor is to report to our shareholders at the annual ordinary
general shareholders' meeting regarding the accuracy, sufficiency and reasonable
basis of the financial information presented to such shareholders by the Board
of Directors.

      Our executive officers are appointed by the Board of Directors for an
indefinite term and may be removed by the Board at will, provided the
corresponding severance payments are made in accordance with Mexican labor law
and the applicable labor contract.

      Members of the Board of Directors are not entitled to any benefits upon
termination.

D.    EMPLOYEES

      As of December 31, 2001, we had 660 employees. Of these, 119 employees
were unionized and covered by the terms of a collective bargaining agreement
that we entered into with the National Union of Telecommunications,
Communications, Cybernetics, Electric, Electronic and Similar Products Workers
of the Mexican Republic (Sindicato Nacional de Trabajadores de
Telecomunicaciones, Telefonia, Comunicaciones, Cibernetica, Productos
Electricos, Electronicos, Similares y Conexos de la Republica Mexicana). This
agreement is renewable every year and next expires on March 31, 2002. We have
not experienced any strikes or work stoppages and believe that our relations
with our employees are satisfactory.

E.    SHARE OWNERSHIP

      None of our directors or officers owns more than 1% of our shares,
excluding the shares held by the Aguirre Gomez family, which are described below
in "Principal Shareholders."

      The only agreement that we currently maintain for purposes of compensating
our employees with our capital stock is our old executive stock option plan,
described above under " -- B. Compensation."

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.    MAJOR SHAREHOLDERS

      The following table presents the equity structure of Maxcom at December
31, 2001:

                                       52
SERIES A STOCK    SERIES B STOCK      SERIES C STOCK(1)    SERIES N STOCK(1)       TOTAL
                                -----------------   ----------------    -----------------   -----------------    -----------------
                                 NUMBER       %      NUMBER      %       NUMBER       %      NUMBER       %       NUMBER       %
NAME OF STOCKHOLDER             OF STOCK    OWNED   OF STOCK   OWNED    OF STOCK    OWNED   OF STOCK    OWNED    OF STOCK    OWNED
-------------------             --------    -----   --------   -----    --------    -----   --------    -----    --------    -----
Aguirre Gomez Family(2)......  1,276,428   100.0%                        405,064     7.2%     405,064     7.2%    2,086,556    15.2%
CT Global
   Telecommunications,
   Inc.......................                      1,226,372   100.0%    515,953    10.9%     515,953    10.9%    2,258,279    16.4%
BankAmerica International
   Investment Corporation....                                          1,577,582    28.1%   1,577,582    28.1%    3,155,164    22.9%
Bachow Investment
   Partners III, LP..........                                          1,166,568    20.8%   1,166,568    20.8%    2,333,136    17.0%
Latinvest Strategic
   Investment Fund, L.P......                                            671,964    12.0%     671,964    12.0%    1,343,928     9.8%
BancBoston Investments, Inc..                                            658,702    11.7%     658,702    11.7%    1,317,404     9.6%
LA Strategic Capital Partners II                                         175,287     1.3%     175,287     1.3%      350,573     2.5%
Other Investors..............                                            451,702     8.0%     451,702     8.0%      903,404     6.6%
                               ---------   -----   ---------   -----   ---------     ---    ---------   -----    ----------   -----
                               1,276,428   100.0%  1,226,372   100.0%  5,622,822     100%   5,622,822   100.0%   13,748,444   100.0%
(1)   The series C and series N stock were deposited into a trust, which issued
      C/N CPOs and which will be terminated upon the consummation of the
      exchange offer. Upon implementation of the capital restructuring, all
      current series C shares will be converted into series N shares, the C/N
      CPO Trust will be terminated and the C/N CPOs will be cancelled.

(2)   The shares of Maxcom controlled by the Aguirre Gomez family are held
      individually or through trusts or corporations.

SHARE OWNERSHIP UPON DEBT RESTRUCTURING AND RECAPITALIZATION

         The following table presents Maxcom equity structure after giving
effect to the consummation of our debt restructuring and recapitalization on
April 29, 2002:
SERIES A    SERIES A1  SERIES B    SERIES B1  SERIES N    SERIES N1    SERIES N2                     %
NAME OF SHAREHOLDER        SHARES      SHARES     SHARES      SHARES     SHARES      SHARES       SHARES       TOTAL         OWNED
                          ---------   ---------   ---------  ---------  ----------  -----------  ----------   -----------    ------
Current shareholders(1).  1,276,428               1,226,372             11,245,644                             13,748,444      7.90%
New investors(2)........              6,088,896              5,848,209              122,468,441               134,405,546     77.00%
Old note holders(3).....                                                                         26,459,820    26,459,820     15.10%
                          ---------   ---------   ---------  ---------  ----------  -----------  ----------  ------------    ------
   Subtotal.............  1,276,428   6,088,896   1,226,372  5,848,209  11,245,644  122,468,441  26,459,820   174,613,810    100.00%
                          =========  ==========  ==========  =========  ==========  ===========  ==========  ============    =======
(1)   Current shareholders include all the shareholders mentioned in the table
      above.

(2)   New investors include those investors who participate in the private
      equity investment. These investors include some of the current
      shareholders (and affiliates of our current shareholders) such as certain
      members of the Aguirre Gomez family, Nexus and BAS Capital Funding
      Corporation, and certain first-time equity investors.

(3)   Old note holders are those who exchange their old notes in the exchange
      offer.

         In addition, we have issued options for the purchase of up to 33.2
million series N shares. See " -- Outstanding options and warrants."

         The following table presents Maxcom's equity structure after giving
effect to the consummation of the debt restructuring, the recapitalization and
the implementation of the capital restructuring, on a fully diluted basis:

                                       53
SERIES A   SERIES A1  SERIES B    SERIES B1  SERIES N      SERIES N1    SERIES N2                    %
NAME OF SHAREHOLDER        SHARES     SHARES     SHARES      SHARES     SHARES        SHARES       SHARES       TOTAL        OWNED
                          ---------  ---------   ---------  ---------  ----------    -----------  ----------   -----------   -------
Current shareholders....  1,276,428              1,226,372             11,245,644                               13,748,444     6.44%
New investors...........             6,088,896              5,848,209               122,468,441                134,405,546    62.97%
Old note holders........                                                                          26,459,820    26,459,820    12.40%
Options and warrants....                                               38,820,624                               38,820,624    18.19%
                          ---------  ---------   ---------  ---------  ----------    -----------  ----------   -----------    ------
   Subtotal.............  1,276,428  6,088,896   1,226,372  5,848,209  50,066,268   122,468,441   26,459,820   213,434,434   100.00%
                          ========= ==========  ==========  =========  ==========   ===========  ===========   ===========   =======
THE CAPITAL RESTRUCTURING

         We obtained an authorization from the Mexican Foreign Investment Bureau
(Direccion General de Inversion Extranjera) to increase our ability to issue
neutral investment shares for up to 95% of our total capital stock and to
simplify our equity structure.

         Under the capital restructuring, we liquidated the existing C/N CPO
trust and canceled the corresponding C/N CPOs. Additionally, the series C stock
was converted at an exchange ratio of one - to - one into series N stock. As a
result, the holders of the C/N CPOs have become the direct holders of two shares
of series N stock for each C/N CPO.

         Additionally, we issued the following series of stock:

         -    Series A1 common voting stock with preferred liquidation rights;

         -    Series B1 common voting stock with preferred liquidation rights;

         -    Series N1 preferred stock with limited voting rights; and

         -    Series N2 preferred stock with limited voting rights.

         The holders of our series A stock and series A1 preferred stock voting
together as a class have the ability to elect the majority of the Board of
Directors. All series A stock and A1 preferred stock are beneficially owned,
directly or indirectly, by several members of the Aguirre Gomez family,
including Adrian Aguirre Gomez, Maria Guadalupe Aguirre Gomez, Maria Elena
Aguirre Gomez, and Maria Trinidad Aguirre Gomez. Pursuant to our amended
by-laws, our amended series A stock and A1 preferred stock represent 51% of our
voting stock and may only be held by Mexican nationals.

         Although the Aguirre Gomez family holds 51% of the voting stock through
the series A stock and A1 preferred stock, and has the power to elect the
majority of the Board of Directors, its ability to control Maxcom is
substantially limited by the terms of the securityholders' agreement described
below under " -- Securityholders agreement." The holders of our series B stock
and series B1 preferred stock voting together have the right to elect four
directors of our nine-member Board of Directors. However, pursuant to the terms
of the securityholders agreement, the series B and B1 director are elected from
among nominees proposed by Nexus.

         The holders of our series N2 preferred stock have the right to appoint
an observer to the Board of Directors for so long as (i) the series N2 preferred
shares represent at least 3% of the outstanding capital stock of Maxcom or (ii)
there is at least one share of series N2 preferred stock remain outstanding and
at least U.S.$17.5 million aggregate principal amount of the new notes remain
outstanding. This observer, who is not a member of the Board of Directors, has
the right to attend meetings of the Board of Directors but is not entitled to
vote.

OUTSTANDING OPTIONS AND WARRANTS

         As of the date hereof, we have authorized the issuance of options and
warrants for the purchase of up to 38.8 million series N shares. Each option
entitles the holder to purchase one series N share or, so long as the C/N CPO
trust is in existence, either a series N or a series C share but in the form of
a C/N CPO. The following table presents information concerning the stock options
and warrants authorized and outstanding:

                                       54
PERCENTAGE
                                                                        NUMBER OF     EXERCISE PRICE          OF OPTIONS
NAME OF OPTION HOLDER                                                    OPTIONS         PER SHARE             VESTED %
---------------------                                                    -------         ---------             --------
Nissho Iwai American Corporation(1)...........................             337,472    U.S.$   10.87               100
CT Global Telecommunications, Inc. (operating services)(2)....           1,105,779             3.06               100
Bachow & Associates, Inc. (strategic assistance services)(3)..             442,312             3.06               100
Amsterdam Pacific LLC.........................................              24,426             8.70               100
1998-2000 Executive Stock Option Plan.........................             575,000    8.70 to 12.50                38
2001-2003 Executive Stock Option Plan.........................          18,120,000     0.49 to 0.71                 0
UBS Warburg LLC(4)............................................              89,244             0.01               100
Donaldson, Lufkin & Jenrette Securities Corporation(4)........              22,312             0.01               100
Predecessor old notes warrantholders(5).......................             764,938             0.01               100
Gian Carlo Pecchioni(6).......................................              10,000             0.01               100
Adrian Aguirre(7).............................................           3,626,959             0.49                52
Fulvio Del Valle stock option plan............................           7,730,177             0.49                 0
Fulvio Del Valle (bonuses)(8).................................           3,957,588             0.01                51
Eduardo Patron (signing bonus)................................             108,100             0.01               100
Rene Sagastuy (signing bonus).................................              54,050             0.01               100
Ricardo Arevalo (signing bonus)...............................              54,050             0.01               100
Eloisa Martinez (signing bonus)...............................              43,240             0.01               100
Francisco Soroa (signing bonus)...............................              36,105             0.01               100
Signing bonus reserve for new officers........................             407,103             0.01                 0
BankAmerica International Investment Corporation
     (management services)(9).................................             249,781             0.01               100
LA Strategic Capital Partners II (management services)(10)....              27,754             0.01               100
Bachow & Associates, Inc. (management services)(11)...........             277,535             0.01               100
Directors compensation........................................             756,699             0.01                 3
                                                                  ----------------
    Total.....................................................          38,820,624
(1)      These options were issued in 1998 as partial compensation for vendor
         financing.

(2)      We authorized the issuance of options to purchase up to 250,000 series
         N shares at U.S.$8.70 per share in May 1998 as compensation for
         operating services. Pursuant to the proposed capital restructuring, we
         have authorized the issuance of options to purchase up to an additional
         855,779 series N shares at an exercise price of U.S.$3.06 per share and
         to reduce the exercise price of the original options to U.S.$3.06 per
         share as partial anti-dilution protection. See " -- B. Related party
         transactions -- Operation services" and " -- Option grants to
         shareholders."

(3)      We authorized the issuance of options to purchase up to 100,000 series
         N shares at U.S.$8.70 per share in May 1998 as compensation for
         strategic assistance services. Pursuant to the proposed capital
         restructuring, we have authorized the issuance of options to purchase
         up to an additional 342,312 series N shares at an exercise price of
         U.S.$3.06 per share and to reduce the exercise price of the original
         options to U.S.$3.06 per share as partial anti-dilution protection. See
         " -- B. Related party transactions -- Strategic assistance services"
         and " -- B. Related party transactions -- Management services."

(4)      These warrants were issued in March 2000 as partial compensation for
         underwriting services related to the issuance of units comprised of our
         predecessor old notes and warrants.

(5)      These warrants were issued as part of the March 2000 offering of our
         units comprised of our predecessor old notes and warrants.

(6)      Mr. Pecchioni is a former Chief Executive Officer of Maxcom. These
         options, which are partial compensation for his services, have been
         exercised; however, the issuance of the underlying shares is subject to
         certain corporate and regulatory approvals.

(7)      We issued options to purchase up to 375,000 series N shares at a strike
         price varying between U.S.$8.70 and U.S.$12.50 per share pursuant to
         the old executive stock option plan described in "Item 6. Directors,
         Senior

                                       55
Management and Employees -- B. Compensation -- Old executive
         stock option plan." Pursuant to the proposed capital restructuring, we
         have authorized the issuance of options to purchase up to 3,251,959
         series N shares at an exercise price of U.S.$0.49 and to reduce the
         exercise price of the original options to U.S.$0.49 per share as
         partial anti-dilution protection.

(8)      These options relate to signing, performance and special bonuses. The
         number of options presented represent the maximum number of options
         that could be earned if all incentive targets are met. See "Item 6.
         Directors, Senior Management and Employees -- B. Compensation -- New
         execution stock option plan."

(9)      We issued options to purchase up to 42,300 series N shares at U.S.$0.01
         per share in May 2001 as compensation for management services provided
         during 2000. Pursuant to the proposed capital restructuring, we have
         authorized the issuance of options to purchase up to an additional
         207,481 series N shares at an exercise price of U.S.$0.01 per share as
         partial anti-dilution protection. See " -- B. Related party
         transactions -- Management services."

(10)     We issued options to purchase up to 4,700 series N shares at U.S.$0.01
         per share in May 2001 as compensation for management services provided
         during 2000. Pursuant to the proposed capital restructuring, we have
         authorized the issuance of options to purchase up to an additional
         23,053 series N shares at an exercise price of U.S.$0.01 per share as
         partial anti-dilution protection. See " -- B. Related party
         transactions -- Management services."

(11)     We issued options to purchase up to 47,000 series N shares at U.S.$0.01
         per share in May 2001 as compensation for management services provided
         during 2000. Pursuant to the proposed capital restructuring, we have
         authorized the issuance of options to purchase up to an additional
         230,535 series N shares at an exercise price of U.S.$0.01 per share as
         partial anti-dilution protection. See " -- B. Related party
         transactions -- management services."

SECURITYHOLDERS AGREEMENT

         On August 18, 2000, Maxcom executed an amended and restated
securityholders agreement with our shareholders to, among other things, reflect
the then restructuring of our capital stock and to provide that the exchange of
series C stock and series N stock for CPOs may not adversely affect in any
manner the rights granted to the holders of the series N stock under the
original securityholders agreement.

         The securityholders agreement was again amended and restated in
connection with our recapitalization. All of the holders of series A stock,
series A1 preferred stock, series B stock, series B1 preferred stock, series N
stock and series N1 preferred stock are parties to the securityholders
agreement, which sets forth certain corporate governance and the transfer or
sale of such securities. The primary purpose of the securityholders agreement is
to confirm the rights and obligations under the proposed by-laws of each of the
parties to such agreement. Accordingly, with certain limited exceptions, the
terms of the new securityholders agreement are substantially the same as the
terms of the proposed by-laws as applicable to the holders of series A stock,
series A1 preferred stock, series B stock, series B1 preferred stock, series N
stock and series N1 preferred stock.

         In particular, the new securityholders agreement provides that we are
managed by a Board of Directors composed of nine members and nine alternate
members. Five members are designated by holders of a majority of the series A
stock and the series A1 preferred stock, voting together as a single class, and
the remaining four members are designated by the holders of our series B stock
and series B1 preferred stock voting together. However, the series B and B1
directors are selected from among nominees proposed by Nexus.

         Pursuant to the new securityholders agreement, Maxcom is required to
deliver to certain significant holders of series A, B and N stock and series A1,
B1 and N1 preferred stock financial statements and other information reasonably
requested by such shareholders.

         In addition, the new securityholders agreement provides, among other
things, approval of key matters (which will require the affirmative vote of both
Nexus and the Board, inclusive the approval of at least one director designated
by Nexus), restrictions on transfers, rights of first offer, participation
rights, and rights and obligations

                                       56
with respect to public offerings. For further description of corresponding
provisions of the proposed by-laws see "Item 10. Additional Information -- B.
Memorandum and articles of association."

B.       RELATED PARTY TRANSACTIONS

GENERAL POLICY

         Our general policy is that we will not, and will not permit our
subsidiaries to, enter into any contract or transaction with or for the benefit
of any affiliate (other than transactions between us and our subsidiary), which
is not at a price and on other terms at least as favorable to Maxcom or our
subsidiaries as those which could be obtained on an arm's-length basis from an
unaffiliated third party.

OPERATION SERVICES

         On October 17, 1997, we entered into an operating agreement with CT
Global Telecommunications, Inc., our series B shareholder. This agreement was
amended and restated as of May 21, 1998 and October 1, 1999 and was terminated
on December 31, 2000. Under this agreement, CT Global was responsible for:

         -    the planning, supervision, implementation and management of our
              network construction and operations and for the transfer of
              responsibility to us following the start-up phase;

         -    the management, advice and assistance for the overall direction,
              planning, coordination and supervision of our day-to-day telephone
              operations;

         -    the provision of our Chief Operating Officer, other management and
              other CT Global employees with appropriate experience and
              training;

         -    the design and supervision of the implementation of focused
              marketing and sales services;

         -    the planning, coordination and supervision of our operational
              financial affairs, including the preparation of an annual
              operating budget; and

         -    the training of personnel to enable us to assume direct
              responsibility for all operations.

         -    From October 1, 1999 through December 31, 2000, CT Global was
              responsible for:

         -    continuing to provide us with advisory, consulting and support
              services; and

         -    the administrative responsibilities for all employees seconded to
              us.

         In addition, we paid CT Global U.S.$4.6 million and U.S.$3.7 million
for reimbursement of expenses related to the secondment of several management-
level employees during 1999 and 2000, respectively.

         Finally, CT Global earned options to purchase 250,000 series N shares
as incentive compensation for meeting certain start-up and operational targets.
The exercise price for these is U.S.$8.70 per share, provided that the maximum
value that CT Global may realize upon the exercise of the options may not exceed
U.S.$40.00 per share. For each of 1999 and 2000, we paid CT Global U.S.$0.9
million for its services. No amounts were paid in 2001.

         In addition, as part of the proposed capital restructuring described in
"--A. Major Shareholders--Proposed capital restructuring", we have authorized
the issuance of options in favor of CT Global to purchase up to 855,779 series N
shares at an exercise price of U.S.$3.06 per share and to reduce the exercise
price of the original options to U.S.$3.06 per share as partial anti-dilution
protection. See "--A. Major Shareholders--Outstanding options and warrants."

STRATEGIC ASSISTANCE SERVICES

                                       57
On May 21, 1998, we entered into a strategic assistance agreement with
Bachow & Associates, Inc., an affiliate of one of our current principal
shareholders. The agreement provided that Bachow would help us to:

         -    develop and implement a budget model template for our annual
              operating and capital budgets;

         -    evaluate and assist in the choice and implementation of a
              financial accounting system;

         -    develop a template for the monthly Board of Directors operational
              reporting package;

         -    evaluate and assist in the choice and implementation of a customer
              billing system;

         -    design a sales and marketing plan; and

         -    provide training and guidance to our Chief Financial Officer.

         This agreement expired on April 1, 1999. For 1999, we paid Bachow
              U.S.$0.2 million for its services. In addition, Bachow received
              options to purchase 100,000 series N shares at a strike price of
              U.S.$8.70 per share. In accordance with the terms of the strategic
              assistance agreement, Bachow may elect to have the Company finance
              up to 95% of the exercise price with a seven-year term
              non-recourse loan that will be secured by the stock. The maximum
              value that Bachow may realize upon the exercise of the options may
              not exceed U.S.$40.00 per share.

INCENTIVE FOR CAPITAL CONTRIBUTIONS

         Our Board of Directors resolved on February 15, 2000, that those
shareholders who commit to make or cause to be made a U.S.$35.0 million capital
contribution by September 30, 2000 be compensated for providing such commitment.
This capital contribution, which occurred in August 2000, was a condition to the
offering of the notes. The committing shareholders, which include the Aguirre
Gomez family, CT Global Telecommunications, Inc., BankAmerica International
Investment Corporation, LA Strategic Capital Partners II, Bachow Investment
Partners III, L.P. and BancBoston Investments, Inc., received warrants to
purchase an aggregate of 70,002 series N stock, at an exercise price of
U.S.$0.01 per share. As a result of a capital restructuring implemented in
February 2000, the series N stock, if purchased, were automatically converted
into C/N CPOs on a two-to-one basis. All warrants were exercised in June 2000.

ADVERTISING

         In 2001, we paid an aggregate of Ps.6.2 million to Operadora Plusgamma
S.A. de C.V., a company controlled by certain members of the Aguirre Gomez
family, for administrative services and advertising time purchased by Operadora
Plusgamma from Grupo Radio Centro, which is an operator of a network of radio
stations located throughout Mexico and a company owned by other family members
of the Aguirre Gomez family.

         We have also tentatively agreed, conditioned on the consummation of the
exchange offer, to purchase U.S.$3.0 million of advertising time over the Grupo
Radio Centro radio network from Operadora Plusgamma. The amount of advertising
time that we will receive will be determined by an independent expert. The
Aguirre Gomez family will use the U.S.$3.0 million proceeds that will be
received by Operadora Plusgamma from this agreement to purchase series A1 stock
pursuant to the private equity investment.

MANAGEMENT SERVICES

         In May 2001, Bank America International Investment Corporation, Bachow
& Associates, Inc. and LA Strategic Capital Partners II, which are principal
shareholders (or affiliates of principal shareholders in the case of Bachow)
received options to purchase an aggregate of 94,000 series N shares at an
exercise price of U.S.$0.01 for management services rendered in 2000, during the
term of vacancies in the offices of Chief Executive Officer, Chief Operating
Officer and Chief Marketing Officer.

         In addition, as part of the proposed capital restructuring described in
" -- A. Major Shareholders -- Proposed capital restructuring", we have
authorized the issuance to the same partners of options to purchase 461,069

                                       58
series N shares at an exercise price of U.S.$0.01 per share partial
anti-dilution protection. See "--A. Major Shareholders--Outstanding Options and
Warrants."

C.       INTEREST OF EXPERTS AND COUNSEL

         Not applicable.

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

         We are not currently party to any material legal proceedings.

DIVIDEND POLICY

         Our current policy is to reinvest profits into our operations. In
addition, the indenture that will govern the terms of the new notes allows us to
pay cash dividends only if we meet the following conditions:

         -    a minimum consolidated leverage ratio of less than 3.75 to 1.00;

         -    a minimum fixed charge coverage ratio of 2.00 to 1.00;

         -    no default (as defined in the indenture) must have occurred and be
              continuing or result from the payment of the cash dividend; and

         -    the cash dividend payments do not exceed an amount determined in
              the indenture based on, among other things, cash flow generated
              from operations or equity offerings and consolidated interest
              expense.

         B.   SIGNIFICANT CHANGES

          Except for the debt restructuring and recapitalization described in
"Item 5. Operating and Financial Review and Prospects -- Recent Developments,"
no significant change has occurred affecting our results or financial conditions
since December 31, 2001.

ITEM 9.  THE OFFER AND LISTING

A.       OFFER AND LISTING DETAILS

         Maxcom's stock is not traded on any stock exchange. Maxcom's series N-2
CPOs were issued to holders of old notes as part of the exchange described in
"Item 5. Operating and Financial Review and Prospects -- Recent Developments."
This exchange was made pursuant to Section 3(a)(9) of the Securities Act of
1933, as amended. Otherwise, Maxcom's stock has never been publicly offered in
the United States or anywhere.

B.       PLAN OF DISTRIBUTION

         Not applicable.

C.       MARKETS

         None of Maxcom's securities are traded on any stock exchange.

                                       59
D.       SELLING SHAREHOLDERS

         Not applicable.

E.       DILUTION

         Not applicable.

F.       EXPENSES OF THE ISSUE

         Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A.       SHARE CAPITAL

         Not applicable.

B.       MEMORANDUM AND ARTICLES OF ASSOCIATION

GENERAL

         Maxcom was incorporated on February 28, 1996, under the name "Amaritel,
S.A. de C.V." as a variable capital corporation (sociedad anonima de capital
variable) established under the laws of Mexico. Maxcom was registered in the
Public Registry of Commerce of the Federal District of Mexico under folio no.
210585 on June 11, 1996. Amaritel changed its name to "Maxcom
Telecomunicaciones, S.A. de C.V." on February 9, 1999.

         Maxcom was formed for the purpose of installing, operating and
exploiting a public telecommunications network granted by the Mexican federal
government for the provision of local and long distance telephone services.

         Maxcom's corporate purposes are found under Article Two of its by-laws.
The duration of Maxcom's existence under our by-laws is indefinite.

         The following table sets forth our capital structure as of December 31,
2001:
% OF TOTAL CAPITAL
CLASS OF STOCK                                            NUMBER OF STOCK            STRUCTURE
--------------                                            ---------------            ---------
Series A Stock....................................         1,276,428                   9.3%
  Series B Stock....................................         1,226,372                   8.9%
  Series C Stock....................................         5,622,822                  40.9%
  Series N Stock....................................         5,622,822                  40.9%
                                                            ----------                 -----
            Total...................................        13,748,444                 100.0%
Our series A stock, which represent 51% of our voting stock, may only
be subscribed, paid for and held by Mexican investors. All of our series A stock
is held directly or indirectly by members of the Aguirre Gomez family. The
remaining 49% of our voting stock is held by CT Global Telecommunications, Inc.,
a Delaware corporation, which holds 100% of all the issued and outstanding
series B shares of Maxcom. The series C stock was voting stock that generally
voted as directed by the holders of the series A stock. Series N stock is
limited voting stock that is not computed for purposes of determining the
foreign investment percentage under the Mexican Foreign Investment Law. The
series B, C and N stock could be subscribed, paid for and held by Mexicans and
non-Mexican investors.

         Our series C stock and series N stock were deposited in a trust which
issued C/N CPOs with each such C/N CPO representing one series C share and one
series N share. Upon the approval by the Mexican Foreign Investment Bureau, this
trust was terminated and the corresponding C/N CPOs were cancelled. In
connection therewith, all series C stock were converted into series N stock, and
the prior holders of C/N CPOs now hold series N stock

                                       60
directly (two series N stock for each cancelled CPO). Our series A and B stock
remain outstanding following consummation of our capital restructuring.

         After giving effect to the consummation of the debt restructuring, the
recapitalization and the capital restructuring, our capital structure now is
follows:
% OF TOTAL CAPITAL
      CLASS OF STOCK                              NUMBER OF STOCK         STRUCTURE
      --------------                              ---------------         ---------
Series A ...............................       1,276,428                0.7%
      Series A1 Preferred Stock ..............       6,088,896                3.5%
      Series B ...............................       1,226,372                0.7%
      Series B1 Preferred Stock ..............       5,848,209                3.4%
      Series N ...............................      11,245,644                6.4%
      Series N1 Preferred Stock ..............     122,468,441               70.1%
      Series N2 Preferred Stock ..............      26,459,820               15.2%
                                                   -----------              -----
            Total ............................     174,613,810              100.0%
In connection with our capital restructuring, we issued four new
classes of stock: the series A1, B1, N1 and N2 preferred stock. The series A1
and B1 preferred stock have full voting stock and the series N1 and N2 preferred
stock have limited voting stock. The series N1 and N2 preferred stock are not
computed for purposes of determining the foreign investment percentage under the
Mexican Foreign Investment Law and may be subscribed, paid for and held by
Mexican and non-Mexican investors. Our series N2 preferred stock have been
deposited into the CPO trust, which is administered by Banco Nacional de Mexico,
S.A. who is also the holder of record of the series N2 preferred stock. The
trust is managed by a technical committee, a majority of the members of which
are designated by Maxcom. The technical committee has the authority to direct
the trustee to, among other things, waive preemptive rights otherwise provided
by Mexican law. Each CPO represents one series N2 preferred stock.

         Our series A stock and series A1 preferred stock, which may only be
subscribed, paid for and held by Mexican investors, collectively represent about
51% of our voting stock, and all of our series A and series A1 stock are held
directly or indirectly by members of the Aguirre Gomez family. The series B
stock and the series B1 preferred stock represent 49% of our voting stock and
may be subscribed, paid for and held by Mexican and non-Mexican investors.

VOTING RIGHTS

         Under our amended by-laws, the holders of series A stock, series A1
preferred stock, series B stock and series B1 preferred stock are entitled to
vote on all matters submitted to a vote of the shareholders, with each share of
series A stock, series A1 preferred stock, series B stock and series B1
preferred stock being entitled to one vote. In addition, under our proposed
by-laws, holders of series N stock have no voting rights and holders of series
N1 and N2 preferred stock have limited voting rights.

         Holders of series N1 preferred stock will vote together as a separate
class in connection with:

         --       any amendment to the proposed by-laws that adversely and
                  disproportionately affects the economic characteristics (i.e.,
                  conversion right, liquidation right and dividend right) of the
                  series N1 preferred stock as compared to the series N2
                  preferred stock; and

         --       any amendment to the section of the proposed by-laws relating
                  to the voting rights of series N1 preferred stock.

         In addition, holders of series N2 preferred stock will vote together as
a separate class in connection with:

         --       determining whether a sale of all or substantially all of the
                  consolidated assets of Maxcom or a merger, recapitalization,
                  reorganization or consolidation of Maxcom, immediately after
                  which the shareholders of Maxcom beneficially own less than
                  50% of the voting power or equity securities of

                                       61
the surviving entity will not be deemed a liquidation event
                  with respect to the series N2 preferred stock;

         --       any amendment to the by-laws that adversely and
                  disproportionately affects the economic characteristics (i.e.,
                  conversion right, liquidation right and dividend right) of the
                  series N2 preferred stock as compared to the series N1
                  preferred stock;

         --       any amendment to the by-laws that adversely affects the right
                  of the holders of a majority of the series N2 preferred stock
                  to designate an observer (or, in the circumstance described
                  below, a member) to the board of directors;

         --       any amendment to the by-laws that adversely affects the rights
                  of the observer designated by the series N2 preferred stock to
                  receive, subject to any restrictions imposed by applicable
                  law, copies of any written materials distributed to the
                  holders of series A and B stock and series A1 and B1 preferred
                  stock simultaneously with such holders;

         --       certain amendments to the by-laws that impose additional
                  transfer restrictions or conditions on the series N2 preferred
                  stock, except to the extent necessary to comply with
                  applicable law;

         --       any amendment to the by-laws that adversely affects the
                  co-sale rights or obligations of holders of series N2
                  preferred stock;

         --       any amendment to the by-laws that adversely affects the forced
                  sale rights or obligations of holders of series N2 preferred
                  stock; and

         --       any amendment to the section of the by-laws of Maxcom relating
                  to the voting rights of series N2 preferred stock.

         Shareholders' meetings may be called by the Board of Directors, its
Chairman, Vice-Chairman or Secretary, the statutory auditor or Nexus or, in
certain cases, by a Mexican court of competent jurisdiction. In addition, the
Board of Directors or the statutory auditor 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 that period have not considered the items mentioned in Article 181
of the Mexican Companies Law. Notice of meetings must be published in the
Official Gazette of the Federation or in a newspaper of general circulation in
Mexico City or by written notice given to each shareholder of record 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 depositing, at least 24
hours before the time set for holding the shareholders' meeting, such shares
with Maxcom's corporate secretary or with a Mexican bank or other qualified
institution. If entitled to attend the meeting, a shareholder may be represented
by proxy or a power-of-attorney.

         Shareholders' meetings may be ordinary, extraordinary or special.
Extraordinary general meetings are called to consider the matters specified in
Article 182 of the Mexican Companies Law, and principally include increases or
reductions of capital stock, amendments to the by-laws, dissolution, issuance of
bonds or preferred stock, merger, spin-off, transformation from one type of
company to another, change in nationality and change of corporate purpose.

         General meetings called to consider all matters other than those
mentioned above are ordinary meetings. An ordinary general meeting of the
shareholders of Maxcom 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, principally including the election of
directors, the report of the Board of Directors regarding the performance of
Maxcom, containing the financial statements of Maxcom for the preceding fiscal
year and the declaration of dividends, if any.

         Special meetings for each class of stock may be held to elect the
members or observers of the Board of Directors representing those shareholders
and to address other matters relating to the relevant series.

                                       62
Under our by-laws, the quorum on a first call, and each call
thereafter, for an ordinary general shareholders' meeting is at least a majority
of the voting shares. The quorum on a first call for extraordinary shareholders'
meetings, and each call thereafter, is at least a majority of the shares having
a right to vote at such meetings. Except for purposes of certain key matters to
be voted upon as a separate class by each of the holders of series N1 and series
N2 preferred stock, series N stock, and series N1 and N2 preferred stock are not
considered voting shares for purposes of determining the quorum at ordinary
general or extraordinary shareholders' meetings. The quorum on a first call for
special shareholders' meetings, and each call thereafter is at least a majority
of the shares of the respective series for which the special meeting is being
held.

         Resolutions of ordinary general and special shareholders' meetings may
be adopted by the affirmative vote of the majority of shares present at the
meeting, except as to certain matters described below. Resolutions of general
extraordinary shareholders' meetings held on a first call, and each call
thereafter may be adopted by the affirmative vote of at least a majority of the
shares having a right to vote at such meetings.

         Under Mexican law, holders of 33% of Maxcom's 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 meeting at
which such action was taken, by showing that the challenged action violates
Mexican law or Maxcom's by-laws.

         Under Mexican law, an action for civil liabilities against a member or
members of the Board of Directors may be initiated by a shareholders'
resolution. In the event shareholders decide to bring an action, the person or
persons against whom the action is brought will immediately cease to be members
of the Board of Directors. Additionally, shareholders representing not less than
33% of the outstanding shares of Maxcom may directly take such action against
members of the Board of Directors, provided that:

         --       such shareholders have not voted in favor of a resolution
                  approved at the relevant shareholders' meeting pursuant to
                  which it was resolved not to take any action against the
                  directors who are to be sued; and

         --       the claim in question covers the total amount of damages
                  alleged to have been caused to Maxcom as well as to the
                  individual plaintiffs' interests.

         Any recovery of damages will be for the benefit of Maxcom and not the
shareholders bringing the action.

         Under Mexican law, any shareholder or director who has a conflict of
interests in connection with any matter must abstain from voting at the relevant
shareholders' or board of directors' meeting, respectively. Any shareholder or
director who votes on a business transaction where its interests conflict with
those of Maxcom may be liable for damages if the transaction would not have been
approved without such shareholder's or director's vote.

         The terms of compensation of the members of the Board of Directors must
be approved at a shareholders' meeting.

APPROVAL OF KEY MATTERS

         Our amended by-laws provide that the approval of each of the key
matters described below will require the approval in advance of both Nexus,
solely in its capacity as a shareholder, and the board of directors; provided
that the approval of the board of directors will require the affirmative vote of
at least one director designated by Nexus.

         Key matters generally include the following:

         --       the incurrence or assumption by the company and/or any of its
                  subsidiaries of any indebtedness (including capitalized lease
                  obligations) or other liabilities exceeding U.S.$10,000,000;

         --       the issuance of any equity securities of the company or any of
                  its subsidiaries;

         --       the sale, transfer, exchange or other disposal of all or a
                  significant portion of the assets or equity securities of the
                  company or any of its subsidiaries;

                                       63
--       any assignment by the company or any of its subsidiaries for
                  the benefit of creditors or the voluntary commencement of any
                  bankruptcy or insolvency proceedings;

         --       the establishment by the company or any of its subsidiaries of
                  any non-wholly-owned-subsidiary or the making by the company
                  or any of its subsidiaries of any loans or advances to,
                  guarantees for the benefit of, or investments in, any person
                  or entity other than a wholly-owned subsidiary;

         --       the declaration of dividends on, or the making of any other
                  distributions in respect of, any of its capital stock, other
                  than dividends and distributions by a direct or indirect
                  wholly-owned subsidiary of the company to its parent;

         --       the acquisition of any equity securities of the company or any
                  of its subsidiaries;

         --       the entering into any transaction with any restricted persons;

         --       the election, appointment or removal of the Chief Executive
                  Officer, the General Managers of any business units, the Chief
                  Operating Officer, the Chief Financial Officer, the Director
                  of Marketing and the Chief Engineer (or any other individual
                  with a similar or more senior title or position), and the
                  approval of salary, compensation and benefit or other similar
                  plans for such key executives;

         --       the approval of the company's and its subsidiaries' annual
                  business plan and annual budget for each fiscal year;

         --       the entering by the company or any of its subsidiaries into
                  any new line of business (other than the main corporate
                  purpose of the company);

         --       any agreement that would restrict the company's or any of its
                  subsidiaries' right or ability to perform the provisions of
                  its by-laws (Estatuto) or any agreements or instruments to
                  which it is a party;

         --       the manner in which the shares or other interests of any
                  subsidiary or entity owned by the company shall be voted at
                  shareholders' meetings called for key matters;

         --       any amendments to the concessions/licenses granted by the
                  Mexican authorities, by-laws and certain other specified
                  agreements;

         --       the subdivision or combination, in any manner, of the
                  outstanding shares of one class or series of shares, unless
                  the outstanding shares of the other class or series of shares
                  of the company shall also be proportionately subdivided or
                  combined in a similar manner;

         --       the grant to any person or entity of the right to request the
                  company to register securities; and

         --       any commitment or agreement to do any of the foregoing.

BOARD OF DIRECTORS

         Our Board of Directors is composed of nine members, five of whom are
designated by the holders of series A stock and series A1 preferred stock and
four of whom are designated by the holders of series B stock and series B1
preferred stock. Pursuant to the terms of the securityholders agreement
described in "Principal Shareholders -- Securityholders agreement," it will be a
qualification that each series B and B1 director be elected from the nominees
selected by Nexus. One alternate is also designated for each member of the Board
of Directors.

         Prior to the consummation of a qualified public offering, the holders
of series N2 preferred stock or the new class of voting preferred stock into
which the series N2 preferred stock is convertible are generally entitled to
designate one observer to the Board of Directors. With certain exceptions, the
observer has the right to attend meetings of the Board of Directors and receive
information distributed to the company's directors and copies of any

                                       64
written materials distributed to the holders of series A and B stock and series
A1 and B1 preferred stock. The observer, who is not a member of the Board of
Directors, is also entitled to attend meetings of any committee of the Board of
Directors authorized to act on behalf of the full Board of Directors. The
observer has no right to vote at any meeting of the Board of Directors or any
committee of the Board of Directors. The holders of series N2 preferred stock or
the new class of preferred stock into which such series N2 preferred stock is
converted are permitted to designate an observer to the Board of Directors for
so long as either:

         --       the series N2 preferred stock, or such other voting preferred
                  stock represents at least 3% of the issued and outstanding
                  capital stock of Maxcom; or

         --       there are any shares of series N2 preferred stock outstanding
                  and at least U.S.$17.5 million principal amount of the new
                  notes outstanding.

         Upon a change in the applicable laws in Mexico permitting a majority of
our Board of Directors to be composed of non-Mexicans, the holders of series N2
preferred stock, or such other voting preferred stock into which the Series N2
preferred stock is convertible, will be entitled to designate and elect a full
member of the Board of Directors (in lieu of the observer) for so long as series
N2 preferred stock, or such voting preferred stock, represents at least 10% of
the total capital stock of the company then outstanding. If the series N2
preferred stock, or such other voting preferred stock, declines below this
threshold, the class will again be permitted to designate an observer.

DIVIDENDS

         At the annual ordinary general meeting of shareholders of Maxcom, the
Board of Directors will typically submit the financial statements of Maxcom for
the previous fiscal year, together with a report by the Board of Directors, to
the general ordinary shareholders' meeting for their approval. The holders of
series A and B stock and holders of series A1 and B1 preferred stock will
determine the allocation of Maxcom's net profits for such fiscal year. At least
5% of such net profits must be allocated to a legal reserve, which is not
available for distribution except as a stock dividend, until the amount of the
legal reserve equals 20% of Maxcom's paid-in capital stock. Additional amounts
may be allocated to other reserve funds as the shareholders determine. The
remaining balance of net profits, if any, is available for distribution as
dividends.

         The series N2 preferred stock (on an as-converted basis) are entitled
to receive dividend payments, if any, and rank pari passu with the series A1, B1
and N1 preferred stock with respect to dividend rights. Maxcom will pay no
dividends on any class of capital stock that is junior to the series N2
preferred stock unless it also pays dividends to holders of series N2 preferred
stock.

         Maxcom does not anticipate that it will declare and pay dividends in
the foreseeable future.

LIQUIDATION RIGHTS

         In the event that we are dissolved or liquidated, one or more
liquidators must be appointed at an extraordinary general shareholders' meeting
to wind up our affairs. Except as provided below, all fully paid and outstanding
shares of capital stock will be entitled to share ratably in all assets
remaining after payment of liabilities. Partially paid shares will be entitled
to participate in a liquidation, dissolution or winding up in the same manner as
they would in a dividend or distribution.

         However, under our amended by-laws, upon any liquidation, dissolution
or winding up of Maxcom, holders of series N2 preferred stock will be entitled
to receive liquidation proceeds in preference to the holders of the series A, B
and N stock and pari passu with the holders of series A1, B1 and N1 preferred
stock on a pro rata basis in an amount equal to the greater of:

         --       U.S.$0.4927 per share, as adjusted for stock splits, stock
                  dividends and similar events, plus the accretion of such
                  amount at a cumulative rate of 12% per year compounded
                  semi-annually; and

         --       the amount that holders of series N2 preferred stock would
                  have received if they had converted all of their series N2
                  preferred stock into series N stock (or, to the extent the
                  series N stock has been

                                       65
converted, to the class of stock the series N stock is
                  converted into) immediately prior to the liquidation event.

         A sale of all or substantially all of the consolidated assets of
Maxcom, or a merger, recapitalization, reorganization or consolidation of
Maxcom, immediately after which the shareholders of Maxcom beneficially own less
than 50% of the voting power or the equity securities of the surviving entity,
will be deemed to be a liquidation event with respect to the series N2 preferred
stock, unless the holders of at least a majority of the series N2 preferred
stock deem that such event does not constitute a liquidation event with respect
to their shares.

         A waiver of this deemed liquidation event by holders of series N2
preferred stock will not impair the liquidation rights of holders of series A1,
B1 and N1 preferred stock.

         The liquidation preference rights will not be retained in the event of
an optional conversion or mandatory conversion into common stock in connection
with a qualified public offering.

CHANGES IN SHARE CAPITAL

         An increase of our 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
our capital stock may be effected until all previously-issued shares of capital
stock have been fully paid. A reduction of our capital stock may be effected to
absorb losses, to redeem shares, or to release shareholders from payments not
made.

         Increases in capital may not result in the series N stock and series N1
and N2 preferred stock representing more than 95% in the aggregate of the
outstanding capital stock of Maxcom. The series N stock and the series N1 and N2
preferred stock currently represent 91.7% of our outstanding capital stock.

         The fixed portion of our capital stock may only be increased or
decreased by resolution of an extraordinary general meeting of shareholders and
an amendment to our by-laws. The variable portion of our capital stock may be
increased or decreased by resolution of an extraordinary general meeting of
shareholders.

PREEMPTIVE RIGHTS

         In the event of a capital increase through the issuance of new shares
for payment in cash or in kind, as a matter of Mexican law, a holder of shares
has a preferential right to subscribe for a sufficient number of new shares to
maintain the holder's existing proportion of shares held.

         Shareholders have a preemptive right to subscribe for shares, except:

         --       in connection with mergers or spin-offs;

         --       on the conversion of convertible debentures; or

         --       issuances of shares pursuant to a public offering, if a
                  general extraordinary shareholders' meeting called for such
                  purpose so approves and other requirements specified in
                  Article 81 of the Mexican Securities Law are satisfied,
                  including obtaining the approval of the Mexican National
                  Banking and Securities Commission.

         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 but may be waived at the moment of
issuance of such shares.

         The series N2 preferred stock are held in a limited purpose trust
administered by Banco Nacional de Mexico, S.A., who is also the holder of
record. The CPO trust is managed by a technical committee, a majority of the
members of which is appointed or designated by Maxcom, which has the authority
to direct the trustee to, among other things, waive any applicable preemptive
rights. See " -- Description of the CPO trust."

                                       66
We may not be able to offer additional shares of capital stock to
holders of the CPOs pursuant to preemptive rights granted to our shareholders in
connection with any future issuance of stock, unless a registration statement
under the Securities Act is effective or an exemption from the registration
requirements is available. Whenever we are required to make a preemptive rights
offering to the holders of the series N2 preferred stock, we will evaluate the
costs and potential liabilities associated with any such registration statement,
the benefits to the holders of CPOs, and any other factors that we consider
appropriate and then we will determine whether or not to file such registration
statement. If we determine that we will not be able to offer the holders of CPOs
the right to subscribe for additional shares of capital stock, we will direct
the trustee of the CPO trust to waive its preemptive rights as the holder of
record of the series N2 preferred stock.

         Our by-laws and securityholders agreement provide that if the trustee
of the CPO trust waives the preemptive rights in connection with a share
issuance, the holders of series N1 preferred stock will also waive their
preemptive rights with respect to such issuance. Although the holders of series
N1 preferred stock must waive their statutory preemptive rights, such holders
will be permitted to participate directly in the share subscription or if
otherwise permitted to do so.

OPTIONAL CONVERSION RIGHTS

         The series N2 preferred stock are convertible, in whole or in part, at
the option of the holder into series N stock at any time prior to the earlier
of:

         --       the consummation of a public offering; and

         --       the elimination of certain foreign ownership restrictions
                  under Mexican law so as to permit the unrestricted ownership
                  and/or control of Maxcom by non-Mexicans.

         Upon a public offering, the series N2 preferred stock (as well as new
voting preferred stock issued pursuant to a mandatory conversion related to the
elimination of certain foreign ownership restrictions under Mexican law) will be
convertible, in whole or in part, at the option of the holder into the same
class of equity securities offered in such public offering.

         In addition, the series A1, B1 and N1 preferred stock are convertible,
in whole or in part, at the option of the holder, at such time, and on such
terms, as the series N2 preferred stock.

MANDATORY CONVERSION

         Upon a qualified public offering, all, but not less than all, the
series N2 preferred stock (as well as new voting preferred stock issued pursuant
to a mandatory conversion related to the elimination of certain foreign
ownership restrictions under Mexican law) will be convertible at the option of
Maxcom into the same class of equity securities offered in such qualified public
offering.

         In addition, all, but not less than all, of the series A1, B1 and N1
preferred stock will be convertible at the option of Maxcom at such time and on
such terms, as the series N2 preferred stock.

         Upon the elimination of certain foreign ownership restrictions under
Mexican law so as to permit the unrestricted ownership and/or control of Maxcom
by non-Mexicans, the series N2 preferred stock will automatically convert into a
new voting preferred stock. This new voting preferred stock will retain the same
liquidation preference rights of the series N2 preferred stock and the right to
appoint either a member of the Board of Directors or, if such new voting
preferred stock represents less than 10% of the outstanding capital stock of
Maxcom, an observer to the Board of Directors.

ANTI-DILUTION PROTECTION AND CONVERSION PRICE ADJUSTMENTS

         If Maxcom issues any shares of common equity or securities convertible
into common equity (other than certain permitted issuances) for consideration
per share of less than either (i) the conversion price, which will initially be
U.S.$0.4927 per share, in effect immediately prior to that time or (ii) the then
fair market value of the stock sold, then, until December 31, 2002, full ratchet
anti-dilution protection will apply, and, thereafter,

                                       67
institutional weighted average anti-dilution protection will apply to the
preferred stock, as more fully described below. This anti-dilution protection
will no longer be available after the preferred stock is converted into common
stock.

         The following permitted issuances will not trigger the anti-dilution
protections:

         --       any rights, options and warrants granted or issued, or
                  authorized to be granted or issued, to certain employees,
                  directors, consultants and vendors of Maxcom and its
                  subsidiaries, as of March 5, 2002, or under any management
                  incentive plan approved by the Board of Directors, including
                  the affirmative vote of at least one of the directors selected
                  from Nexus appointees.

         --       any securities issued pursuant to the private equity
                  investment and up to U.S.$3.8 million of securities issued
                  within one year of the consummation of the private equity
                  investment at or above U.S.$0.4927 per share;

         --       any shares issued upon the exercise or conversion of any of
                  the foregoing; and

         --       any of the capital stock issued in connection with a
                  conversion of any of the series A1, B1, N1 or N2 preferred
                  stock.

         Full-ratchet anti-dilution protection means that the conversion price
will be automatically reduced to the lowest consideration at which any share of
capital stock has been issued or sold.

         Institutional weighted average anti-dilution protection means that the
conversion price will be reduced to the lower of:

         --       an amount equal to (A) the sum of (i) the product derived by
                  multiplying the conversion price in effect immediately prior
                  to such issuance or sale by the number of "common shares
                  deemed outstanding," as defined below, immediately prior to
                  such issue or sale, plus (ii) the aggregate consideration
                  (expressed as a net price per share), if any received by
                  Maxcom upon such issue or sale, divided by (B) the number of
                  common shares deemed outstanding immediately after such issue
                  or sale; and

         --       the conversion price determined by multiplying the conversion
                  price in effect immediately prior to such issuance or sale by
                  a fraction, the numerator of which will be the sum of (i) the
                  number of the common shares deemed outstanding immediately
                  prior to such issue or sale multiplied by the then market
                  value of the then fair market value of the common stock of
                  Maxcom then outstanding as of the date of such issuance or
                  sale plus (ii) the aggregate consideration, if any, received
                  by Maxcom upon such issuance or sale and the denominator of
                  which shall be the product derived by multiplying the then
                  fair market value of the common stock of Maxcom by the number
                  of common shares deemed outstanding immediately after such
                  issue or sale.

         For the purposes of the foregoing calculations, the term "common shares
deemed outstanding" means the currently outstanding capital stock of Maxcom plus
all shares of capital stock issuable upon the exercise of options and warrants
or conversion of convertible securities. Whenever Maxcom grants options or
issues securities convertible into the capital stock of the company, the issue
price will be the sum of the per share consideration received by the company
upon the grant or issue of the option or convertible security plus any per share
additional consideration that the company will receive upon exercise or
conversion of such option or convertible security.

         Determinations of fair market value will be made in good faith by the
Board of Directors so long as the issuance is for cash consideration (and
without any associated service arrangements) and at least 70% of the shares
issued are to persons who are not then shareholders of Maxcom. Otherwise, Maxcom
at its expense will obtain the opinion of an internationally recognized or
nationally recognized in the United States financial advisory firm or investment
bank to be selected by Maxcom as to the fair value of the shares to be issued
and any non-cash consideration for such shares.

         The conversion price will also be adjusted for any stock splits or
combinations.

                                       68
Following any adjustment of the conversion price of the series N2
preferred stock, Maxcom will deliver notice to the CPO trustee of the adjustment
setting forth the calculation of the adjustment. In addition, upon the written
request of the CPO trustee, Maxcom will furnish or cause to be furnished to the
CPO trustee a certificate setting forth (i) a summary of all adjustments and
readjustments to the conversion price, (ii) the conversion price for the series
N2 preferred stock then in effect, and (iii) the number of shares of capital
stock into which the series N2 preferred stock is then convertible.

RIGHT OF FIRST REFUSAL

         Except in connection with a sale of at least 50.1% of the total equity
of Maxcom, a public offering or a transfer to an affiliate or a certain other
permitted transferee, if a Maxcom shareholder other than certain significant
shareholders, who we refer to as the "investors," intends to sell its capital
stock, then shareholders other than the investors and the holders of the series
N2 preferred stock (but only with respect to their series N2 preferred stock)
will have the right to purchase such capital stock. This right of first refusal
will terminate upon the earlier of:

         --       a sale or transfer of at least 50.1% of the total capital
                  stock of Maxcom or the sale of all or substantially all of the
                  consolidated assets of Maxcom in one or more related
                  transactions to an independent third party or parties, or

         --       the elimination of certain foreign ownership restrictions
                  under Mexican law so as to permit the unrestricted ownership
                  and/or control of Maxcom by non-Mexicans.

RIGHT OF FIRST OFFER

         Except in connection with a sale of at least 50.1% of the total equity
of Maxcom, a public offering or a transfer to an affiliate or a certain other
permitted transferee, in the event any investor intends to transfer any series
A1, B1 or N1 preferred stock, or securities received in a conversion of such
preferred stock, such investor must offer to sell such securities to each other
investor holding more than one percent of the aggregate series A1, B1 and N1
preferred stock, or securities received in a conversion of such preferred stock,
then outstanding. This right of first offer will terminate upon the earlier of:

         --       a qualified public offering;

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving at least 50.1% of the total capital stock of
                  Maxcom or a sale of all or substantially all of the
                  consolidated assets of Maxcom in one or more related
                  transactions to an independent third party or parties.

CO-SALE RIGHTS AND FORCED SALE OBLIGATIONS

Co-sale rights

         If holders of series A1, B1 or N1 preferred stock intend to sell, alone
or together with any other shareholder of Maxcom, at least 50.1% of the total
capital stock of Maxcom in one or more related transactions to an independent
third party or parties, then holders of series N2 preferred stock will, except
in certain circumstances, have the right to participate in any such sale on a
pro rata basis with the sellers. Holders of series N2 preferred stock will be
entitled to sell such shares generally on the same terms and conditions as the
selling shareholder. This co-sale right will terminate upon the consummation of
the earlier of

         --       a qualified public offering; or

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving a transfer of at least 50.1% of the total
                  capital stock of Maxcom or a sale of all or substantially all
                  of the consolidated assets of Maxcom to an independent third
                  party or parties in one or more related transactions.

         In connection with any sale or transfer of any of our equity
securities, debt securities with equity features or other securities convertible
into equity securities, shareholders other than holders of series N-2 preferred
stock may

                                       69
participate in such sale on a pro rata basis at a price and on terms
substantially the same as the selling securityholder. However, these co-sale
rights will not apply to a sale or transfer of no more than 7,000,000 shares of
preferred stock. This co-sale right will terminate upon the consummation of the
earlier of:

         --       a qualified public offering; or

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving a transfer of at least 50.1% of the total
                  capital stock of Maxcom or a sale of all or substantially all
                  of the consolidated assets of Maxcom to an independent third
                  party or parties in one or more related transactions.

Forced sale obligations

         If Nexus desires to transfer at least two-thirds of the beneficial
ownership of the total capital stock of Maxcom then outstanding, in one or more
related transactions to an independent third party or parties, on terms and
conditions approved by Nexus, then all shareholders of Maxcom (including holders
of series N2 preferred stock) may be forced by Nexus to sell a proportionate
share of their series N2 preferred stock. Such shareholders will be entitled to
sell such shares generally on the same terms and conditions as the selling
shareholders.

         If Nexus desires to sell all or substantially all of the consolidated
assets of Maxcom in one or more related transactions to an independent third
party or parties on terms and conditions approved by Nexus, then all
shareholders of Maxcom (including holders of series N2 preferred stock) may be
forced by Nexus to vote in favor of, consent to and raise no objections against
such asset sale.

         Holders of series N2 preferred stock may not be forced to participate
in, or vote for, any of the foregoing transactions unless:

         --       the consideration for such sale is paid in cash and/or freely
                  tradeable, exchange -- listed equity securities; and

         --       the value of such consideration on a per share basis is not
                  less than the then applicable liquidation preference for each
                  share of series N2 preferred stock.

         These forced sale obligations will terminate upon the consummation of
the earlier of:

         --       a qualified public offering; or

         --       the sale or transfer of any series A1, B1 or N1 preferred
                  stock involving a transfer of at least 50.1% of the total
                  capital stock of Maxcom or a sale of all or substantially all
                  of the consolidated assets of Maxcom to an independent third
                  party or parties in one or more related transactions.

Other provisions

         In both the case of a co-sale and a forced sale, the holders of series
N2 preferred stock will not be required to execute any ancillary documents.
However, to the extent the proceeds from any such sale will be subject to any
expense, escrow, holdback or indemnification obligation, the selling
shareholders assume this obligation on a pro rata basis. The amount of any such
obligation of each shareholder in connection with a participation in a sale or a
forced sale will be limited to the maximum amount of proceeds that the such
holder is entitled to receive. Shareholders participating in a sale or forced to
sell may provide the purchaser with different assurances or collateral for their
indemnification obligations. As a result, some shareholders may be permitted to
sign an indemnification agreement or give a guarantee while others may be
subject to a hold back of their sale proceeds.

         It is possible that both the participation rights and forced sale
obligations will be triggered by a single transaction. In this event, the
participation rights will not apply.

         In the event that the participation rights or forced sale obligations
have been triggered, we will prepare, and to the extent applicable, file with
the appropriate regulatory authority, with the advice of U.S. counsel, any
notices or offering material required by our by-laws or applicable Mexican and
U.S. federal and state securities laws to be

                                       70
delivered to the beneficial owners of the series N2 preferred stock and to cause
such documents to be delivered to the CPO trustee in sufficient quantities for
distribution to the beneficial owners of the series N2 preferred stock.

RIGHTS AND OBLIGATIONS WITH RESPECT TO PUBLIC OFFERINGS

Registration rights

         Nexus at any time and from time to time may request that Maxcom take
all requisite action, at its expense, to register one or more series of Maxcom's
equity securities under applicable Mexican securities laws, rules and
regulations or applicable U.S. federal and state securities laws. However, the
initial demand by Nexus shall be a public offering that is expected to yield
aggregate net proceeds of at least U.S.$10.0 million.

         Holders of series N1 preferred stock and series A1 and B1 stock will
have the right to participate (piggyback) in any registration statement filed
pursuant to the Securities Act for a public offering other than an initial
public offering. However, the registration rights will be subject to customary
cutback provisions.

Cooperation in connection with an underwritten offering

         During the period commencing on Maxcom's initial public offering that
is not a qualified public offering and ending on the earlier to occur of
eighteen months after the consummation of such initial public offering or the
consummation of Maxcom's first qualified public offering, at the request of one
or more holders of series N2 preferred stock, or of any class of stock into
which the series N2 preferred stock has been converted, and at such holders'
expense Maxcom will cooperate one time only with the efforts of such holders to
effect an underwritten offering of their stock, provided that such offering is
for at least U.S.$5.0 million in net proceeds. In addition, the underwriter must
be reasonably acceptable to Maxcom and Maxcom may delay such underwritten
offering for up to six months if it is then separately in the process of
preparing a qualified public offering. Maxcom will not be obligated to prepare
any offering memorandum or registration statement in connection with such
offering.

Listing rights

         After a public offering, at the request of any holder of series N2
preferred stock, or any class into which the series N2 preferred stock has been
converted, Maxcom will, at its expense, use commercially reasonable efforts, to
cause the shares into which the series N2 preferred stock has been converted or
is convertible, including any CPOs representing such shares, to be listed on
each securities exchange or the NASD automated quotation system, as applicable,
on which similar securities of Maxcom, including certificates of participation
representing the beneficial ownership of such similar securities are then
listed. In connection with any such listing, Maxcom will, if required, also
register such securities with the National Registry of Securities and
Intermediaries of the National Banking and Securities Commission of Mexico.

Lock-up restrictions

         We may, under certain circumstances, impose a limitation on the
transfer of series N2 preferred stock, which provides that such stock may not be
transferred after notice from Maxcom, which may not be more than 30 days prior
to the expected effective date of Maxcom's first qualified public offering until
the 180th day after such effective date. Maxcom may not impose this restriction
on the transfer of series N2 preferred stock if more than 20% of the securities
being registered in connection with the qualified public offering are for the
account of Maxcom's shareholders. In addition, this restriction on transfer may
not be more restrictive than any restrictions placed on all other shareholders.

TRANSFER OF CPOS AND TRANSFER RESTRICTIONS

         The series N2 preferred stock and any shares of capital stock into
which series N2 preferred stock is converted will be deposited in the CPO trust
and may not be transferred separate from the CPOs representing such securities.
The CPOs may be transferred without restriction under U.S. federal securities
laws by persons who are not affiliates of Maxcom. However, no market currently
exists for the CPOs and Maxcom does not currently plan to list the CPOs on any
exchange for trading. In certain circumstances Maxcom may be required to list
the CPOs on a

                                       71
securities exchange and to cooperate one time only with efforts of holders of
the CPOs to effect an underwritten offering. Maxcom may impose limitations on
the transfer of CPOs for a period after the consummation of a qualified public
offering. See " -- Rights and obligations with respect to public offerings."

         Until the earlier of a qualified public offering or a sale of the
company, no holder of series A, B or N stock and series A1, B1 or N1 preferred
stock may transfer such shares without the prior approval of both Nexus, solely
in its capacity as a shareholder, and the Board, which Board approval will
require the affirmative vote of at least one Nexus director.

         Until a qualified public offering, in the event that certain
significant holders of series A1, B1 and N1 preferred stock desire to transfer
such shares, such holders will be obligated to first offer to sell such shares
to other holders of Series A1, B1 or N1 preferred stock at the same price, terms
and conditions offered to the initial proposed transferees.

         Upon the effectiveness of changes in certain Mexican regulations, other
holders of series A, B and N stock and series A1, B1 and N1 preferred stock who
desire to transfer such shares will be obligated to first offer to sell such
shares to other series A, B and N stock and series A1, B1 and N1 preferred stock
at the same price, terms and conditions offered to the initial proposed
transferees.

         Under our telecommunications concessions and By-laws, the SCT has 90
days to object to any transfer, subscription or conveyance of 10% or more of our
capital stock with the exception of:

         --       transfers related to series N stock and N1 and N2 stock and
                  any successor stock; and

         --       subscriptions made pursuant to the exercise of a shareholder's
                  preemptive rights, as long as the percentage participation of
                  the shareholders in the capital stock of Maxcom does not vary.

OTHER PROVISIONS

Forfeiture of stock

         Under our amended by-laws, the current or future foreign shareholders
of Maxcom firmly undertake with the Ministry of Foreign Relations (Secretaria de
Relaciones Exteriores) to consider themselves as Mexican nationals with respect
to the stock of Maxcom that they may acquire or own, as well as with respect to
the properties, rights, concessions, securities or interests owned by Maxcom, or
the rights and obligations derived from the agreements entered with the Mexican
authorities to which Maxcom is a party. The current or future foreign
shareholders of Maxcom firmly undertake not to invoke the protection of their
government, under penalty of forfeiting such shares to the benefit of the
Mexican nation.

Dissolution

         Pursuant to the Mexican Companies Law and our by-laws, we may be
dissolved upon the occurrence, among other things, of any of the following
events:

         --       the impossibility of continuing with our current line of
                  business;

         --       the resolution of our shareholders at an extraordinary general
                  shareholders' meeting;

         --       the reduction of the number of our shareholders to fewer than
                  two; and

         --       the loss of two thirds of our capital stock.

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

                                       72
which its interest conflicts with that of Maxcom may be liable for damages if
the transaction would not have been approved without such shareholder's vote.

Director conflicts of interest

         Under Mexican law, any member of the Board of Directors who has a
conflict of interest with Maxcom in any transaction must disclose such a 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 a provision may be liable for damages
caused to Maxcom. Additionally, members of the Board of Directors may not
represent any shareholders at any shareholders' meeting.

DESCRIPTION OF THE CPO TRUST

General

         The series N2 preferred stock have been deposited by Maxcom in a
limited purpose trust which is administered by Banco Nacional de Mexico, S.A.
under a trust agreement. We refer to the trust as the "CPO trust" and the
trustee of the CPO trust as the "CPO trustee." The CPO trustee is the holder of
record of the series N2 preferred stock and any securities into which the series
N2 preferred stock may be converted.

         The CPO trustee issued Certificados de Participacion Ordinarios, or
"CPOs", which are negotiable instruments under Mexican law that give their
holders the economic rights and voting rights of the series N2 preferred stock
or any other shares of capital stock into which the series N2 preferred stock
may be converted, which we refer to together as the "deposited securities."

         The CPOs are initially held in book-entry form through DTC, and a
nominee of DTC is the holder of record of a global CPO certificate. See "Book -
Entry, Delivery and Form" above. Our amended by-laws provide that we will obtain
all governmental approvals required in connection with the conversion of the
series N2 preferred stock held in the CPO trust to other securities of Maxcom.

         The following is a description of (i) certain provisions included in
the CPO trust agreement and (ii) applicable provisions of the Law of Negotiable
Instruments and Credit Transactions (Ley General de Titulos y Operaciones de
Credito). This is a summary description and does not purport to be complete and
is qualified in its entirety by reference to the CPO trust agreement and the
provisions of Mexican law referred to in such description.

Purpose

         The main purpose of the CPO trust is to have the CPO trustee, as record
holder of the deposited securities and upon the instructions of the technical
committee described below under "Administrator of the CPO trust," waive or not
exercise any statutory preemptive rights that it may have from time to time to
subscribe for additional shares of Maxcom capital stock. As the record holder of
the deposited securities, the CPO trustee exercises certain rights attached to
such securities in order to preserve to the largest extent possible the economic
and voting rights that would otherwise be held directly by the beneficial owners
of the CPOs.

Waiver of statutory preemptive rights

         The trustee of the CPO trust will waive statutory preemptive rights
with respect to deposited securities when, in the sole judgment of the technical
committee of the CPO trust, as described below, the exercise of such preemptive
rights would require that the shares so subscribed be registered pursuant to the
Securities Act, unless Maxcom decides to register such shares. If the exercise
of the preemptive rights is possible without registration under the Securities
Act (or Maxcom decides to carry out such registration) and the holders of CPOs
provide the CPO trustee with the necessary funds, the CPO trustee will subscribe
for the corresponding number of shares, which will be held in the CPO trust, and
deliver additional CPOs in respect of such additional deposited securities to
the subscribing CPO holders. Under Mexican law preemptive rights may not be
transferred separately from the underlying shares.

Voting and economic rights

                                       73
The holders of CPOs are not entitled to directly exercise any voting or
economic rights with respect to the deposited securities. Such voting rights are
exercisable only by the CPO trustee pursuant to the instructions of the holders
of CPOs. The holders of CPOs will be entitled to receive dividend distributions,
if any, from Maxcom through the CPO trustee. DTC will receive the distributions
and will make distributions to the beneficial owners of the CPOs. In the event
of a forced sale the trustee of the CPO trust will cause the series N2 preferred
stock to be delivered in connection with any such sale and will distribute to
the record holder of the CPOs the proceeds from such sale subject to any
holdbacks required pursuant to the terms of any such sale. The CPO trustee will
also deliver deposited securities in connection with the exercise of the co-sale
rights and will distribute to the record holders of the CPOs the proceeds from
sale subject to any holdbacks required pursuant to the terms of any such sale.
See " -- Co-sale rights and forced sale obligations" above.

         If a distribution by Maxcom consists of a dividend in shares, such
shares will be transferred to the CPO trustee, and held in the CPO trust, and
the CPO trustee will distribute to the holders of CPOs in proportion to their
holdings, additional CPOs to represent the additional deposited securities
received by the CPO trustee as such dividend.

         The holders representing a majority of the outstanding CPOs will be
entitled to appoint the board observer, or in certain circumstances, a member of
the Board of Directors. See " -- Board of Directors."

Administration of the CPO trust

         The CPO trust is administered by the CPO trustee under the direction of
a technical committee, which consists of three members, two members of which are
designated by Maxcom and one by the holders of CPOs.

Common representative

         The majority of holders of CPOs have the right to appoint a common
representative, whose duties include, among others: verification of the due
execution and terms of the CPO trust agreement; verification of the existence of
the deposited securities; authentication, by its signature, of the certificate
evidencing the CPOs, exercise of the rights of the CPO holders in connection
with the payment of any dividend or distribution related to the deposited
securities to which such CPO holders are entitled; and undertaking of any other
action required to protect the rights, actions or remedies to which CPO holders
may be entitled to under the CPO trust.

Transfer

         CPO holders may sell their interest in CPOs. Sales of CPOs may be
subject to Mexican taxes. Neither Maxcom nor the CPO trustee will have any
liability in connection with any such sale. CPO holders may not sell the
deposited securities separately from the CPOs.

Term and termination

         The maximum term of the CPO trust is thirty years, but it may be
terminated at any moment by recommendation of the technical committee, in which
case the deposited securities will be delivered to the CPO holders.

Fees

         The fees of the CPO trustee for the administration of the CPO trust,
and the fees of the common representative for acting in such capacity, are paid
by Maxcom.

C.       MATERIAL CONTRACTS

CONCESSIONS

         In February 1997, we obtained a concession to provide local telephony
services covering Mexico City and the Gulf region and long distance services
nationwide from the Mexican government. We also obtained a

                                       74
nationwide point-to-point and three regional point-to-multipoint microwave
concessions in October 1997. In September 2001, our local telephony concession
was expanded to cover all of Mexico. For a description of our concessions, see
"Item 4. Information on the Company -- B. Business review -- Supervision and
regulation of the Mexican telecommunications industry -- Our concessions."

INTERCONNECTION AGREEMENTS

         In November 1998, we entered into a local interconnection agreement
with Telmex. We have also signed reciprocal interconnection agreements with
mobile telephony providers Telcel, Grupo Iusacell and Pegaso. Finally, we have
signed long distance interconnection agreements with Telmex, Alestra, Bestel,
Protel and Iusatel. For a description of these interconnection agreements, see
"Item 4. Information on the Company -- B. Business review -- Supervision and
regulation of the Mexican telecommunication industry -- Interconnection."

LUCENT SUPPLY AGREEMENT

         On September 5, 1997, Maxcom executed a purchase and sales agreement
with subsidiaries of Lucent Technologies, Inc. pursuant to which Maxcom may
purchase from Lucent products, services and software. Through December 31, 2000,
Maxcom has purchased approximately U.S.$62.6 million.

NEC SUPPLY AGREEMENT

         On October 15, 1998, Maxcorn executed a master agreement for the
purchase and sale of equipment and services with Nec de Mexico, S.A. de C.V.
pursuant to which Maxcom may purchase from Nec de Mexico certain services and
equipment for the installation, operation and exploitation of its
telecommunications network. Through December 31, 2000, Maxcom has purchased
approximately U.S.$5.5 million.

HEWLETT-PACKARD SUPPLY AGREEMENT

         On November 3, 1998, Maxcom executed a supply and services agreement
with Hewlett-Packard de Mexico, S.A. de C.V. pursuant to which Hewlett-Packard
agreed to provide to Maxcom telecommunications solutions and services. The
obligations under this agreement have been substantially fulfilled. Maxcom paid
U.S.$18 million for these solutions and services.

METRO NET CAPACITY SALES AGREEMENT

         On April 28, 2000, Maxcom executed a metropolitan network capacity sale
agreement with Metro Net, S.A. de C.V. (which was amended on December 21, 2000)
for an aggregate amount of U.S.$7.2 million pursuant to which Maxcom purchased
from Metro Net (i) the exclusive and unlimited right to use certain backbone
fiber optic capacity of 6 (six) fiber optic strands of Metro Net's metropolitan
rings in Mexico City, and (ii) an option to acquire the exclusive and unlimited
right to use additional backbone fiber optic capacity of 6 (six) fiber optic
strands.

CPO TRUST AGREEMENT

         On April 25, 2002, Maxcom and its shareholders executed an irrevocable
trust agreement with Banco Nacional de Mexico, S.A. acting as trustee for the
issuance of ordinary participation certificates, also known as "CPOs," each
representing one series N2 share of the capital stock of Maxcom with liquidation
preference rights. For a description of this agreement, see "Item 10. Additional
Information -- B. Memorandum and Articles of Association -- Description of the
CPO Trust."

SECURITYHOLDERS' AGREEMENT

         On April 29, 2002, Maxcom executed an amended and restated
securityholders' agreement with the shareholders of the Company to, among other
things, reflect the restructuring of the capital stock of Maxcom. For a
description of the securityholders' agreement, see "Item 7. Major Shareholders
and Related Party Transactions -- A. Major shareholders -- Securityholders'
agreement."

INDENTURES

                                       75
Old Indenture

         On March 17, 2000, Maxcom and its subsidiaries, entered into an
Indenture with The Bank of New York, acting as trustee, which governs the terms
and conditions of the issuance by Maxcom of U.S.$300 million 13-3/4% senior
notes due April 1, 2007. The Indenture restricted Maxcom's ability to incur
indebtedness by requiring that Maxcorn meet minimum consolidated leverage and
fixed charge coverage ratios. In addition, the Indenture limited Maxcom's
ability to pay dividends, repurchase subordinated debt, redeem its capital
stock, dispose of assets and make investments, among other things. All of these
restrictions were eliminated as a result of the exchange offer and
U.S.$15,590,000 aggregate amount of notes under the indenture remains
outstanding.

New Indenture

         On April 29, 2002, Maxcom and its subsidiaries entered into an
Indenture with The Bank of New York acting as a Trustee, which governs the terms
and conditions of the issuance by Maxcom of U.S.$165,078,150 senior notes due
2007. This Indenture has substantially the same restrictions the old indenture
had before they were eliminated pursuant to the exchange offer.

WARRANT AGREEMENT

         On March 17, 2000, Maxcom entered into a warrant agreement with The
Bank of New York, acting as warrant agent, pursuant to which Maxcom agreed to
issue warrants to purchasers of 13-3/4% senior notes due April 1, 2007 for the
purchase of up to 764,938 series N shares, convertible into 382,469 CPOs. The
exercise price for each warrant, which entitled the purchaser to receive 2.54979
series N shares, was U.S.$0.01. These warrants were offered as an incentive to
the purchasers of the notes.

D.       EXCHANGE CONTROLS

         The peso fluctuates freely against the U.S. dollar. The Mexican Central
Bank intervenes occasionally in the market to stabilize the exchange rate.
Mexico had an exchange control system from 1982 until November 11, 1991. Under
this system, Mexican residents and companies were entitled to purchase, and
required to sell, foreign currencies for certain purposes at a controlled rate
of exchange that was established daily by the Mexican Central Bank (Banco de
Mexico). Transactions to which the controlled rate applied included payments for
virtually all merchandise imports, revenues from virtually all merchandise
exports, royalty payments and payments of principal, interest and related
expenses with respect to indebtedness to foreign creditors registered with the
Mexican government. For all transactions to which the controlled rate did not
apply, foreign currencies could also be purchased, if they were available, at
the then prevailing domestic free market rate for the type of transaction.

         From November 11, 1991 to October 20, 1992, the Mexican Central Bank
permitted a free market rate to fluctuate according to supply and demand within
a moving band. In late December 1994, the Mexican government responded to
exchange rate pressures first by increasing by 15% the upper limit of the
peso/U.S. dollar exchange rate band and then, two days later, allowing the peso
to fluctuate freely against the U.S. dollar. By December 31, 1994, the peso/U.S.
dollar exchange rate, which had been Ps.3.47 to U.S.$1.00 on December 19, 1994
was Ps.5.00 to U.S.$1.00. The peso continued to devalue significantly through
1998, closing at Ps.9.901 to U.S.$1.00 at December 31, 1998. Although the
peso/U.S. dollar exchange rate has remained relatively stable in the last three
years, there may be significant devaluations in the future.

         Except for the period from September through December 1982 during the
Mexican liquidity crisis, the Mexican Central Bank consistently has made foreign
currency available to Mexican private sector entities to meet their foreign
currency obligations. Nevertheless, in the event of a renewed shortage of
foreign currency, we cannot assure you that the Mexican Central Bank would
continue to make foreign currency available to private sector companies or that
foreign currency we need to service foreign currency obligations could be
purchased in the open market without substantial additional cost.

         Pursuant to the provisions of North American Free Trade Agreement, or
"NAFTA," Mexico remains free to impose foreign exchange controls on investments
made in Mexico, including those made by U.S. and Canadian investors

                                       76
E.    TAXATION

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

General

      The following is a general discussion of certain U.S. federal income tax
consequences of the exchange offer and consent solicitation that may be
relevant to you if you hold our old notes as a capital asset and are a U.S.
holder. In general, you will be a U.S. holder if you are:

      -     An individual citizen or resident of the United States;

      -     a corporation or other entity taxable as a corporation created in or
            organized under the laws of the United States or of any political
            subdivision thereof;

      -      an estate, the income of which is subject to U.S. federal
            income tax without regard to its source; or

      -     a trust, if a court within the United States is able to exercise
            primary supervision over its administration and one or more United
            States persons have the authority to control all of the substantial
            decisions of such trust.

      This summary is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as currently in effect
and all subject to change at any time, perhaps with retroactive effect. This
discussion is for general information only and does not describe all of the tax
consequences that may be relevant to you in light of your particular
circumstances or if you are subject to special tax treatment under the Code,
including, without limitation, because you are:

      -     a foreign person or entity;

      -     a tax-exempt organization, a financial institution, an insurance
            company, a regulated investment company or a dealer or broker in
            securities or currencies;

      -     a trader in securities or commodities that elects mark-to-market
            treatment;

      -     a person who holds the old notes as part of an integrated investment
            such as a straddle, hedge, constructive sale, conversion transaction
            or other risk reduction transaction;

      -     a person whose functional currency is not the U.S. dollar;

      -     a partnership or other flow-through entity (including an S
            corporation or a limited liability company treated as a partnership
            for U.S. federal income tax purposes);

      -     a person subject to the alternative minimum tax; or

      -     a person who owns or will own directly, indirectly or by attribution
            10% or more (by voting power) of our voting stock or 10% or more (by
            value) of our outstanding capital stock.

      The summary does not include any discussion of the tax laws of any state,
locality or non-U.S. government that may be applicable to you. You should note
that no rulings have been or will be sought from the United States Internal
Revenue Service (the "IRS") with respect to any of the U.S. federal income tax
consequences discussed below, and we cannot assure you that the IRS will not
take contrary positions. You should consult your own tax advisors concerning the
application of U.S. federal income tax laws to your particular situation as well
as any consequences of the exchange offer and consent solicitation arising under
the laws of any other taxing jurisdiction.

Certain U.S. federal income tax consequences of the exchange

                                       77
In general, for U.S. federal income tax purposes, you will be treated as
the beneficial owner of the series N2 preferred stock represented by the CPOs
you receive in the exchange.

      The law is unclear as to whether any gain or loss that you realize upon
the exchange will be recognized for U.S. federal income tax purposes. The tax
consequences to you of the exchange of your old notes for new notes and CPOs
representing series N2 preferred stock will depend primarily on whether the
exchange will be treated as a "recapitalization" within the meaning of section
368(a)(1)(E) of the Code. The exchange will be treated as a tax-free
recapitalization only if the old notes that you tender in the exchange qualify
as "securities" for U.S. federal income tax purposes.

      The rules for determining whether an obligation constitutes a security are
imprecise. The term security is not defined in the Code or in the regulations
issued thereunder and has not been clearly defined by judicial decisions, which
are not entirely consistent. The determination of whether a particular debt
constitutes a security depends upon an overall evaluation of the nature of the
debt. Under applicable administrative pronouncements and judicial decisions, one
of the most significant factors considered in determining whether a particular
debt instrument is a security is its original term. In general, debt obligations
with a weighted average maturity of ten years or more are usually considered
securities and debt instruments with a weighted average maturity of less than
five years are usually not considered securities. The status of debt instruments
with a weighted average maturity of five years or more but less than ten years
is unclear. Furthermore, the maturity of a debt instrument alone is not
necessarily determinative and other factors, such as the degree of participation
in the company and continuing interest associated with the debt instrument and
the purpose of the advances, may be relevant. Although not free from doubt, we
believe that the old notes are likely to be treated as securities for U.S.
federal income tax purposes. You are encouraged to consult your own tax advisor
with respect to this issue.

      RECAPITALIZATION TREATMENT. If the exchange is treated as a
recapitalization for federal income tax purposes, you will recognize gain
realized on the exchange only to the extent of the amount of "boot" you receive
in the exchange. Any such gain should be capital gain and generally will be
long-term capital gain if the old notes have been held for more than one year at
the time of the exchange. If you realize a loss on the exchange, however, you
will not be able to recognize that loss.

      In general, you will receive boot in the exchange only if you receive
property other than our stock and securities. However, any nonqualified
preferred stock that you receive in the exchange will constitute boot. We
believe that the CPOs you will receive in the exchange will not be treated as
nonqualified preferred stock under the Code. Therefore, if the new notes qualify
as securities, you will not receive any boot in the exchange. While the issue is
not free from doubt because the new notes will have an original term of only
four years and eleven months, there is a reasonable position that the new notes
should be treated as securities for U.S. federal income tax purposes. You are
encouraged to consult your own tax advisor with regard to this issue.

      If the new notes qualify as securities, your aggregate tax basis in the
new notes and the CPOs you receive in the exchange will equal your tax basis in
your old notes. Although the method for allocating your tax basis in the old
notes between the new notes and the CPOs is unclear, the determination of the
portion of your tax basis in the old notes that should be allocated to each
category of consideration received should be based on the issue price of the new
notes (as determined below under "Certain U.S. federal income tax consequences
of holding and disposing of the new notes -- Original issue discount") and the
fair market value of the CPOs. Your holding period in the new notes and the CPOs
will include your holding period in the old notes you surrender in the exchange.

      If the new notes do not qualify as securities, the amount of boot you are
deemed to receive should be equal to the issue price of the new notes. Your tax
basis in the new notes should equal their issue price, and your tax basis in the
CPOs received in the exchange should equal your tax basis in your old notes,
less the issue price of the new notes plus any gain recognized in the exchange.
Your holding period in the new notes will begin on the day following the date of
the exchange and your holding period in the CPOs will include your holding
period in the old notes you surrender in the exchange.

      NON-RECAPITALIZATION TREATMENT. If the old notes that you exchange are not
considered securities, the transaction will not be treated as a
recapitalization. In this case, the exchange will be a fully taxable transaction
for U.S. federal income tax purposes. Accordingly, you will recognize gain or
loss equal to the difference between the

                                       78
issue price of the new notes and the fair market value of the CPOs you receive
in the exchange and your adjusted tax basis in the old notes. Any such gain or
loss recognized on the exchange of your old notes for new notes and CPOs should
be capital gain or loss and generally will be long-term capital gain or loss if
the old notes have been held for more than one year at the time of the exchange.

      The deductibility of losses, if any, realized on the exchange of your old
notes for new notes and CPOs may be subject to certain limitations. If you think
you may realize a loss, you should consult your tax advisor as to the possible
limitations on the deductibility of any such loss.

      Your adjusted tax basis in the new notes and the CPOs will equal the issue
price of the new notes and your adjusted tax basis in the CPOs will equal the
fair market value of the CPOs. Your holding period in the new notes and the CPOs
will begin on the day following the date of the exchange.

      RECEIPT OF ACCRUED INTEREST. Notwithstanding the foregoing, any property
you receive in the exchange that is attributable to accrued and unpaid interest
will not be treated as received in exchange for your old notes. Rather, such
property will be taxable to you as ordinary interest income (if you have not
previously included such interest into gross income).

      CONSEQUENCES TO NON-TENDERING HOLDERS. The proposed amendments to the old
notes may constitute a significant modification of the old notes, with the
result that, even if you do not tender your old notes, you may be deemed for
U.S. federal income tax purposes to have exchanged your old notes for a new debt
instrument. However, while the issue is not free from doubt, if you do not
participate in the exchange offer, you should not be deemed to have engaged in a
taxable exchange for U.S. federal income tax purposes as a result of the
elimination of the restrictive covenants in the indenture governing the old
notes. Therefore, you should not recognize gain or loss for U.S. federal income
tax purposes and you should have the same adjusted tax basis and holding period
in the old notes, as the case may be, after the adoption of the exchange offer
and consent solicitation as you had in the old notes immediately before such
adoption. You are encouraged to consult your own tax advisor as to the potential
tax consequences to you if you do not participate in the exchange offer.

      REPORTING REQUIREMENTS. You may be subject to certain IRS reporting
requirements in connection with your exchange of old notes for new notes and
CPOs. You are encouraged to consult your own tax advisor as to whether these
reporting requirements may be relevant to you.

Certain U.S. federal income tax consequences of holding and disposing of the
new notes

      PAYMENTS OF INTEREST AND ADDITIONAL AMOUNTS. Generally, payments of
qualified stated interest, as defined below (including Mexican withholding tax
imposed on such interest), and additional amounts (if any) would be taxable to
you as ordinary income. Payments of qualified stated interest and additional
amounts (if any) on the new notes generally are includible in your income as it
accrues or is received, in accordance with your regular method of accounting for
tax purposes.

      ORIGINAL ISSUE DISCOUNT. The treatment of original issue discount in
respect of the new notes is highly complex. You are urged to consult with your
tax advisor concerning this issue.

      General. The new notes will be treated as issued with original issue
discount for U.S. federal income tax purposes if the amount by which the "stated
redemption price at maturity" of the new notes exceeds their "issue price" by
more than a de minimis amount (generally, the product of 0.25% of the stated
redemption price at maturity and the number of full years to maturity on the
instrument). A new note's stated redemption price at maturity equals the total
amount of all principal and interest payments to be made on the new note, other
than "qualified stated interest." Qualified stated interest generally is stated
interest that is unconditionally payable at least annually at a single fixed
rate over the entire term of the note. The interest payments with respect to the
new notes do not constitute qualified stated interest because such payments are
not made at least annually.

      Your issue price in respect of the new notes received in the exchange will
depend on whether either the old notes or the new notes are "publicly-traded."
If as of the date the exchange offer is consummated, the new notes are "traded
on an established securities market" within the meaning of the applicable
regulations on or at any time

                                       79
during the sixty day period ending thirty days after the date the exchange offer
is consummated, then the issue price of such notes would equal the fair market
value established by such trading. If the new notes are not so traded, but the
old notes are so traded, then the issue price of the new notes would equal the
fair market value, established by such trading, of the old notes. If neither the
new notes nor the old notes are so traded, the issue price of the new notes
generally would be the stated principal amount of such notes. It cannot be
determined at the present time whether the new notes or the old notes will be,
at the relevant times, traded on an established securities market within the
meaning of the applicable regulations.

      The relevant Treasury Regulations are complex and highly detailed in
defining the phrase "traded on an established market." For example, it is
possible that the new notes will be treated as so traded not only if they are
listed on an exchange, but also if transfers of such new notes appear on a
computerized quotation medium. You should consult you own tax advisor with
respect to whether your old notes or new notes qualify for this purpose as
"traded on an established market."

      In the event neither the old notes nor the new notes are treated as traded
on an established securities market, the issue price of a new note will equal
its stated principal amount, only if the interest rate is equal to or greater
than the "applicable federal rate," or AFR, for the month in which the new notes
are issued. If the interest rate is less than the AFR, the issue price of a new
note will be equal to its imputed principal amount, which generally is the sum
of all payments due under the new note (including qualified stated interest)
discounted from the date of payment to the issue date of the new notes at the
AFR. Under these rules, if the new notes were issued on the date of this
exchange offer and consent solicitation, they would contain original issue
discount because the interest rate on the new notes would be less than the AFR.

      Inclusion of original issue discount in income. If the new notes are
treated as having original issue discount, you must include the original issue
discount in income as ordinary interest income as it accrues on the basis of a
constant yield to maturity. Original issue discount must be included in income
regardless of whether cash is received in respect of such income. The amount of
original issue discount includible in income by you is the sum of the "daily
portions" of original issue discount with respect to the new notes for each day
during the taxable year or portion of the taxable year on which you held such
note. The daily portion is determined by allocating to each day in any accrual
period other than the initial short accrual period and the final accrual period
an amount equal to the excess of:

      -     the product of a new note's "adjusted issue price" at the beginning
            of such accrual period and its "yield to maturity" (determined on
            the basis of compounding at the close of each accrual period and
            properly adjusted for the length of the accrual period) over

      -     the amount of qualified stated interest payments, if any, allocable
            to such accrual period.

      The yield to maturity is the discount rate that, when applied to all
payments under a new note, results in a present value equal to the issue price.
The amount of original issue discount allocable to the final accrual period is
the difference between the amount payable at maturity and the adjusted issue
price of the new note at the beginning of the final accrual period. The amount
of original issue discount allocable to the initial short period may be computed
under any reasonable method.

      The adjusted issue price of a new note at the beginning of the first
accrual period is equal to its issue price. A new note's adjusted issue price at
the beginning of any subsequent accrual period is equal to its issue price
increased by the amount of accrued original issue discount previously includible
in your gross income (and market discount, as discussed below) for each prior
accrual period and reduced by the amount of any payments previously made on the
note to you (other than payments of qualified stated interest, if any).

      Generally, upon election, you may use the constant yield to maturity
method applicable to original issue discount to determine the timing of
inclusion of all qualified stated interest (if any) and original issue discount
on the new notes, subject to certain limitations. Such an election will apply to
all debt instruments held or acquired by you on or after the beginning of the
first taxable year to which the election applies and may not be revoked without
the consent of the IRS.

                                       80
The above treatment assumes that the stated redemption price at maturity
for a note does not include any additional amounts payable on the notes. It is
possible that the IRS might disagree with this treatment and contend that the
stated redemption price at maturity should include the reasonably expected
amount of additional amounts payable on the new notes. In such case, the amount
of original issue discount on the new notes would be increased by such amount.

      However, the rules discussed below under "Premium and acquisition premium"
may reduce or eliminate the amount of original issue discount includible by you
as a holder of the new notes. For example, if your exchange of the old notes for
new notes and CPOs qualifies as a recapitalization, your basis in the new notes
may substantially exceed the issue price of such new notes (depending on your
basis in the old notes), and you may be able to reduce or eliminate the amount
of original issue discount includible with respect to such old notes.

      You should consult your tax advisor concerning the inclusion in your
taxable income of the original issue discount attributable to the new notes.

      PREMIUM AND ACQUISITION PREMIUM. If you acquire new notes for an amount
(or with a basis) less than or equal to the sum of all amounts payable on such
new notes after the acquisition date (other than payments of qualified stated
interest, if any) but in excess of their adjusted issue price (any such excess
being acquisition premium), you will be considered to have acquired the new
notes at an acquisition premium. If you do not make the election described
below, you are permitted to reduce the daily portions of original issue discount
includible in your income by a fraction, (i) the numerator of which is the
excess of your adjusted tax basis in the new notes immediately after their
acquisition over the adjusted issue price of such new notes and (ii) the
denominator of which is the excess of the sum of all amounts payable on such new
notes after the acquisition date (other than payments of qualified stated
interest, if any) over the adjusted issue price of such new notes.

      If you acquire the new notes for an amount (or with a basis) greater than
the sum of all amounts payable on such new notes after the acquisition date
(other than payments of qualified stated interest, if any) you will be
considered to have acquired the new notes at a premium. In such a case, you will
not be required to include any original issue discount in your gross income.

      You generally may elect to amortize the premium on the constant yield
method. The amount amortized in any year will be treated as a reduction of your
interest income from the new notes. The election to amortize the premium on a
constant yield method, once made, applies to all debt obligations held or
subsequently acquired by you on or after the first day of the first taxable year
to which the election applies and may not be revoked without the consent of the
IRS. If you make this election, you will be required to reduce your basis in the
new notes to the extent that any amortizable bond premium is applied to offset
your interest income on the new notes.

      MARKET DISCOUNT. If the exchange is not treated as a recapitalization, the
new notes will be considered to have been acquired with market discount if the
adjusted issue price of the new notes at the time of the exchange exceeds your
initial tax basis in the new notes by more than a specified de minimis amount
(as noted above, your initial tax basis in the new notes will depend on whether
the new notes are treated as securities for U.S. federal income tax purposes).
The excess will be treated as de minimis market discount if such amount is less
than 0.25% of the stated redemption price at maturity of the new notes
multiplied by the number of complete years to maturity from the date you
acquired such new notes, with the result that the amount of market discount will
be considered to be zero.

      The Code provides the authority for regulations to be issued by the
Treasury Department that would provide that any accrued market discount not
treated as ordinary income upon an exchange of market discount bonds in which
gain or loss is not recognized in whole or in part, such as the exchange of the
new notes and the CPOs for the old notes (if such exchange is treated as a
recapitalization, the old notes are market discount bonds and the new notes are
treated as securities for U.S. federal income tax purposes), would carry over to
the nonrecognition property received on the exchange. If such regulations are
promulgated and are applicable to this exchange, any accrued market discount not
treated as ordinary income on the exchange would carry over to the new notes and
CPOs received in the exchange. On disposition of any such notes or stock, any
gain recognized generally would be treated as ordinary income to the extent of
the amount of accrued market discount carried over thereto (unless, in the case
of the new notes, you had previously elected to include market discount in
income as it accrues). Although not free

                                       81
from doubt, it is likely that the above characterization would be required under
the Code even without the promulgation of regulations.

      Under the market discount rules, you generally will be required to treat
any partial principal payment on, and any gain realized on the sale, exchange,
retirement or other disposition of, a new note as ordinary income (generally
treated as interest income) to the extent of the market discount which accrued
but was not previously included in income during the period you held such new
note. In addition, you may be required to defer your deduction of all or a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry such new note until the maturity of the new note or its
earlier disposition in a taxable transaction.

      In general, market discount will be considered to accrue ratably during
the period from the date of acquisition to the maturity date of the new note,
unless you make an irrevocable election (on an instrument-by-instrument basis)
to accrue market discount under a constant yield method. You may also elect to
include market discount on the new note in income currently as it accrues (under
either a ratable or constant yield method), in which case the rules described
above regarding the treatment as ordinary income of gain upon the disposition of
the new note and upon the receipt of certain payments and the deferral of
interest deductions will not apply. The election to include market discount in
income currently, once made, applies to all market discount obligations acquired
by you on or after the first day of the first taxable year to which the election
applies, and may not be revoked without the consent of the IRS. Such currently
included market discount will increase your tax basis in the new note and
generally is treated as ordinary interest income for U.S. federal income tax
purposes.

      SALE, EXCHANGE OR RETIREMENT OF THE NEW NOTES. Upon the sale, exchange or
retirement of a new note, you generally will recognize capital gain or loss
equal to the difference between (i) the amount realized on the sale, exchange or
retirement (other than amounts representing accrued and unpaid interest which
are taxable as ordinary income) and (ii) your adjusted tax basis in the new
note. Such capital gain or loss recognized on the sale, exchange or retirement
of the new note generally will be long-term capital gain or loss and subject to
a maximum U.S. federal income tax rate of 20% if you held the new note for more
than one year before sale. U.S. corporations, however, are taxed on their net
capital gains at the regular corporate income tax rates. Gain or loss recognized
by you in connection with the disposition of the new notes generally will be
treated as U.S. source gain or loss.

      FOREIGN TAX CREDIT.

      Interest, original issue discount and additional amounts. Qualified stated
interest, original issue discount and additional amounts (if any) paid on the
new notes will constitute income from sources outside the United States, and,
with certain exceptions, will be grouped together with other items of passive
income, for purposes of computing the foreign tax credit allowable to you. If
the payments of qualified stated interest, original issue discount and
additional amounts (if any) were to become subject to a withholding tax imposed
by a foreign country at a rate of 5% or more, the qualified stated interest,
original issue discount and additional amounts (if any) may be considered "high
withholding tax interest" for purposes of computing the foreign tax credit. If
you are predominantly engaged in the active conduct of a banking, insurance,
financing or similar business, the payments of qualified stated interest,
original issue discount and additional amounts (if any) may be considered
"financial services income" for purposes of computing the foreign tax credit,
provided that such amounts do not constitute high withholding tax interest, as
described above.

      Effect of Mexican withholding taxes. You will be required to include the
amount of Mexican withholding taxes, if any, imposed on payments on a note
(including any additional amounts payable by our company) in gross income as
interest income. Such treatment will be required regardless of whether, as will
generally be true, our company is required to pay additional amounts so that the
amount of Mexican withholding taxes does not reduce the net amount actually
received by you as a holder of a new note.

      Subject to certain limitations, you may be entitled to a credit against
your U.S. federal income tax liability, or a deduction in computing your U.S.
federal taxable income, for the amount of Mexican taxes withheld by our company
(which, as described above, would include amounts withheld on additional amounts
paid by us with respect to Mexican taxes). However, Mexican taxes may be
deducted from your taxable income only if you do not claim a credit for any
Mexican or other foreign taxes paid or accrued in that taxable year. You may be
required to

                                       82
provide the IRS with a certified copy of the receipt evidencing payment of such
withholding tax imposed in respect of payments on the new notes in order to
claim a Mexican tax credit in respect of such Mexican withholding tax.

      Since you may be required to include in your gross income original issue
discount on the new notes in advance of any withholding of Mexican income taxes
from payments relating to the discount (which would generally occur when such
discount is paid in cash), you may not be entitled to a credit or deduction for
these Mexican withholding taxes in the year the original issue discount is
included in your gross income for U.S. federal income tax purposes, and may be
limited in your ability to credit or deduct in full the foreign taxes in the
year those taxes are actually withheld by our company. In addition, under
certain U.S. Treasury Department guidance, foreign tax credits will not be
allowed for withholding taxes imposed in respect of certain short-term or hedged
positions in securities or in respect of arrangements in which your expected
economic profit, after non-U.S. taxes, is insubstantial. You should consult your
tax advisor concerning the availability and timing of a foreign tax credit or
deduction relating to the payment of Mexican withholding taxes.

Certain U.S. federal income tax consequences of holding and disposing of the
CPOs

      DISTRIBUTIONS. Subject to the "passive foreign investment company" rules
discussed below, generally, distributions of cash or property with respect to
your CPOs (including the amount of any Mexican taxes withheld on any such
distribution) will constitute ordinary dividend income to the extent of our
company's current and accumulated earnings and profits (as determined for U.S.
federal income tax purposes), which generally will be includible in your income
on the day on which the dividends are received by the CPO trustee, and will be
treated as foreign source dividend income (generally passive income) for foreign
tax credit limitation purposes. Any distributions in excess of such earnings and
profits will constitute a nontaxable return of capital and reduce your tax basis
in such CPOs. To the extent such distributions exceed your tax basis in your
CPOs, such excess will constitute capital gain. Dividends on the CPOs will not
be eligible for the dividends received deduction allowed to U.S. corporations.

      Dividends paid in a foreign currency (including the amount of any foreign
taxes withheld therefrom) will be includible in your income in a U.S. dollar
amount calculated by reference to the exchange rate in effect on the day the
dividends are received by the CPO trustee, regardless whether the dividends are
converted into U.S. dollars. In addition, any gain or loss resulting from
currency exchange fluctuations during the period from the date the dividend is
includible in your income to the date such payment is converted into U.S.
dollars will be exchange gain or loss and will be treated as ordinary income or
loss.

      SALE, REDEMPTION OR OTHER TAXABLE DISPOSITION OF THE CPOS. Subject to the
"passive foreign investment company" rules discussed below, generally, you will,
upon the sale, redemption or other taxable disposition of your CPOs, recognize
gain or loss for U.S. federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and fair market value of property
received therefor (if the amount received is denominated in foreign currency
other than in U.S. dollars, then its U.S. dollar equivalent determined at the
spot rate on the date of the disposition) and (ii) your tax basis in your CPOs
(as determined in U.S. dollars).

      Capital gain recognized by you generally will be long-term capital gain
and subject to a federal income tax rate of 20% if you held CPOs for more than
one year before the sale. U.S. corporations, however, are taxed on their net
capital gains at the regular corporate income tax rates. Gain or loss recognized
by you in connection with the disposition of your CPOs generally will be treated
as U.S. source gain or loss.

      Generally, you will not recognize any gain or loss upon the conversion of
the CPOs into series N stock or other classes of our stock.

      PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS. In general, a foreign
corporation will be classified as a passive foreign investment company, or PFIC,
if (i) at least 75% of its gross income for the taxable year consists of passive
income or (ii) at least 50% of the average value of the corporation's assets
(determined as of the close of each quarter) in a taxable year is attributable
to assets that produce or are held for the production of passive income. For
this purpose, passive income generally includes dividends, interest, royalties,
rents (other than rents and royalties derived from the active conduct of a trade
or business and not derived from a related person), annuities and gains from
assets that produce passive income.

                                       83
Because a determination of PFIC status is a factual determination that
must be made annually at the close of each taxable year, it cannot at present be
determined with certainty whether we will become a PFIC in the current taxable
year or in future taxable years. This will depend on the sources of our income
and the relative values of our passive assets such as cash and our non-passive
assets, including goodwill. As a result of the private equity investment, we
will hold passive assets and earn passive income on funds, awaiting use in the
conduct of our business. In addition, the consummation of the exchange offer and
the resulting reduction of our outstanding liabilities may significantly affect
the relative values of our passive and active assets for PFIC purposes, due to
the specific mechanics of the PFIC calculation. Based on our projections of our
income and assets and our current plan of operation, we believe that we are not
currently a PFIC for U.S. federal income tax purposes. However, as noted above,
there can be no certainty in this regard until the close of the 2002 taxable
year, and our current belief that we are not a PFIC could be subject to change
in the future. We will make the determination of whether we are a PFIC on an
annual basis and notify you within 75 days of the end of any year in which we
become a PFIC.

      If we were to become a PFIC in any taxable year, a special tax regime
would apply to both (a) any "excess distribution" by us (generally, your ratable
share of distributions in any year that are greater than 125% of the average
annual distributions received by you in the three preceding years or your
holding period, if shorter) and (b) any gain realized on the sale or other
disposition (including a pledge) of your CPOs. Under this regime, any excess
distribution and realized gain will be treated as ordinary income and will be
subject to tax as if (a) the excess distribution or gain had been realized
ratably over your holding period in the CPOs, (b) the amount deemed realized had
been subject to tax in each year of that holding period at the highest
applicable tax rate in effect for that year and (c) the interest charge
generally applicable to underpayments of tax had been imposed on the taxes
deemed to have been payable in those years.

      You are urged to consult your own tax advisor as to the effect to you of
our company being a PFIC and the availability, if any, of either the "qualified
electing fund" or "mark-to-market" election as defined in the Code and the
regulations thereunder.

      CONTROLLED FOREIGN CORPORATION CONSIDERATIONS. If more than 50% of the
voting power of all classes of our capital stock or the total value of our
capital stock is owned, directly or indirectly, by "U.S. shareholders," we may
be treated as a controlled foreign corporation, or a CFC, under Subpart F of the
Code. U.S. shareholders are defined as citizens or residents of the United
States, United States domestic partnerships and corporations or estates or
trusts other than foreign estates or trusts, each of whom owns 10% or more of
the total combined voting power of all classes of our capital stock. The United
States generally taxes a U.S. shareholder of a CFC currently on its pro rata
share of the Subpart F income of the CFC. Such U.S. shareholder is generally
treated as having received a current distribution out of the CFC's Subpart F
income and is also subject to current U.S. tax on its pro rata share of the
CFC's earnings invested in U.S. property. In addition, gain from the sale or
exchange of stock in a CFC by a U.S. person who is or was a U.S. shareholder of
the CFC at any time during the five-year period ending with the sale or exchange
is treated as ordinary income to the extent of the CFC's earnings and profits
attributable to the stock sold or exchanged. If a foreign corporation is both a
PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC
with respect to U.S. shareholders of the CFC.

      Under the current ownership structure, we believe that we are not a CFC
for U.S. federal income tax purposes. However, because of the complexity of the
CFC rules, you should consult your own tax advisor as to the potential
application of these rules to you based on your particular circumstances.

Certain U.S. federal income tax consequences to non-U.S. holders of the new
notes and CPOs

      Subject to the discussion below concerning information reporting and
backup withholding, generally, a non-U.S. holder will not be subject to U.S.
federal income or withholding tax on distributions in respect of the new notes
or the CPOs, unless such income is effectively connected with the conduct by the
non-U.S. holder of a trade or business in the United States.

      A non-U.S. holder will generally not be subject to U.S. federal income or
withholding tax on gain realized on the sale or the other disposition of the new
notes or the CPOs unless (i) such gain is effectively connected with the conduct
of a United States trade or business by such non-U.S. holder or (ii) such
non-U.S. holder is present in the United States for 183 days or more during the
taxable year of sale or disposition and certain other conditions are met.

                                       84
Information reporting and backup withholding

      In general, if you are a non-corporate U.S. holder (or do not come within
certain other exempt categories), information reporting requirements will apply
to certain payments of principal, premium and interest on the new notes or
dividends on the CPOs and to payments of the proceeds of the sale of the new
notes or CPOs made to you.

      Additionally, if you are a non-corporate U.S. holder (or do not come
within certain other exempt categories), you may be subject to backup
withholding at a rate of 30% (reduced to 29% for taxable years 2004 and 2005 and
to 28% for taxable years 2006 and thereafter) with respect to such payments,
unless you provide your taxpayer identification number (social security number
or employer identification number), certify that you are not subject to backup
withholding and otherwise comply with applicable requirements of the backup
withholding rules. Generally, you will provide such certification on IRS Form
W-9 ("Request for Taxpayer Identification Number and Certification") or a
substitute Form W-9.

      If you do not provide your correct taxpayer identification number, you may
be subject to penalties imposed by the IRS, as well as backup withholding.
However, any amount withheld under the backup withholding rules may be allowable
as a credit against your U.S. federal income tax liability (which might entitle
you to a refund), provided that you furnish the required information to the IRS.

      A non-U.S. holder generally will be exempt from information reporting
requirements and backup withholding, but may be required to comply with
certification and identification procedures in order to obtain an exemption from
information reporting and backup withholding.

MEXICAN TAXATION

      The following is a general discussion of the material consequences of the
exchange of the old notes, the investment in the new notes and CPOs and the
investment in outstanding old notes under the Mexican Income Tax Law (Ley del
Impuesto sobre la Renta) and rules and regulations thereunder, as currently in
effect based on the advice of PricewaterhouseCoopers, our tax advisors. This
summary of certain Mexican tax considerations deals only with holders of notes
and CPOs or of a beneficial interest therein that are not residents of Mexico
for Mexican tax purposes and that do not conduct a trade or business through a
permanent establishment or fixed base in Mexico (a "Foreign Holder").

      For purposes of Mexican taxation, an individual is a resident of Mexico if
he has a permanent home in Mexico, unless he has been in another country for
more than 183 calendar days, whether consecutive or not, in any one calendar
year and can demonstrate that he has become a resident of that country for tax
purposes. A legal entity is a resident of Mexico for tax purposes if it has been
incorporated under the laws of Mexico, or has established the principal
management of its business or the base of its effective direction in Mexico. A
Mexican citizen is presumed to be a resident of Mexico for tax purposes unless
such person can demonstrate otherwise.

United States/Mexico and other tax treaties

      A Convention for the Avoidance of Double Taxation and Prevention of Fiscal
Evasion, together with a related Protocol thereto (collectively, the "Tax
Treaty"), between the United States and Mexico entered into force on January 1,
1994. Provisions of the Tax Treaty that may affect the taxation of certain U.S.
holders of notes or CPOs are summarized below. The United States and Mexico have
also entered into an agreement that covers the exchange of information with
respect to tax matters. Mexico has also entered into and is negotiating several
other tax treaties that may reduce the amount of Mexican withholding tax to
which the notes may be subject. Holders of the notes and CPOs should consult
their own tax advisors as to the tax consequences, if any, of such treaties.

Mexican tax consequences to Foreign Holders of the exchange of old notes for
new notes and CPOs

      GENERAL. A Foreign Holder will not be subject to any Mexican tax upon the
exchange of the old notes for the new notes and the CPOs, since it will be
treated by us as additional consideration for Mexican tax purposes, paid to the
Foreign Holders in exchange for their tendered old notes.

                                       85
OTHER TAXES. A Foreign Holder will not be liable for Mexican estate, gift,
inheritance or similar taxes with respect of the exchange of the old notes, nor
will such a Foreign Holder be liable for Mexican stamp, registration or similar
taxes.

Mexican tax consequences to Foreign Holders of the notes

      TAXATION OF INTEREST AND PRINCIPAL. Under the Mexican Income Tax Law,
payments of interest made by Maxcom in respect of the new notes (including
payments of principal in excess of the issue price of such notes, which, under
Mexican law, are deemed to be interest) to a Foreign Holder will generally be
subject to a Mexican withholding tax assessed at a rate of 4.9% (the "Reduced
Rate"), provided that:

      -     the notes are offered through banks or brokerage houses in a country
            with which Mexico has a tax treaty in force;

      -     the notes are registered in the Special Section of the National
            Registry of Securities and Intermediaries (Registro Nacional de
            Valores e Intermediarios); and

      -     certain periodic information requirements by the Mexican Ministry of
            Finance (Secretaria de Hacienda y Credito Publico) are complied
            with.

      -     If these conditions are not met, the applicable withholding tax rate
            will be 10%.

      FOREIGN HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING WHETHER THEY
RESIDE IN A COUNTRY THAT HAS ENTERED INTO SUCH A TREATY WITH MEXICO WHICH IS
EFFECTIVE, AND IF SO, THE CONDITIONS AND REQUIREMENTS FOR OBTAINING BENEFITS
UNDER SUCH TREATY.

      However, if the beneficial owner, either directly or indirectly,
individually or jointly with related parties, of more than 5% of the interest
derived from the related securities, is any of the following:

      -     a shareholder of the issuer who owns, directly or indirectly,
            individually or jointly with related parties, more than 10% of the
            voting stock of the issuer, or

      -     a legal entity 20% of whose stock is owned, directly or indirectly,
            individually or jointly with related parties, by the issuer,

      then, the withholding tax rate will be 35%.

      Pursuant to Rule 3.25.15 (the "Reduced Rate Rule") issued by the Mexican
Ministry of Finance (Secretaria de Hacienda y Credito Publico) on May 31, 2002
payments of interest with respect to the notes made by us to Foreign Holders,
regardless of the place of residence or the tax regime applicable to the Foreign
Holder recipient of the interest, will be subject to withholding taxes imposed
at the Reduced Rate if:

      -     the notes are registered with the Special Section of the National
            Registry of Securities and Intermediaries and copies of approval of
            such registration are provided to the Ministry of Finance;

      -      we timely file with the Ministry of Finance certain
            information relating to the issuance of the new notes;

      -     we timely file with the Ministry of Finance on a quarterly basis
            information on the amount and dates of interest payments made during
            each quarter and information representing that no party related to
            us, directly or indirectly, is the effective beneficiary of more
            than five percent (5%) of the aggregate amount of each such interest
            payment; and

      -     we maintain records that evidence compliance with the conditions set
            forth above.

                                       86
We will comply with the first two conditions set forth above and expect
that the last two conditions will also be met and, accordingly, expect to
withhold Mexican tax from interest payments on the notes at the Reduced Rate
during the effectiveness of such rule.

      However, during the fiscal year 2002, the Tax Treaty is not expected,
generally, to have any material effect on the Mexican tax consequences described
herein, because, as described above, under Mexican Income Tax Law and
regulations as currently in effect, with respect to a U.S. holder that meets the
Reduced Rate Rule requirements described above, we will be entitled to withhold
taxes in connection with interest payments under the notes at the Reduced Rate.
From 2001 and beyond, holders of the notes should consult their own tax advisors
as to the possible application of the Tax Treaty.

      Payments of interest we make on the notes to non-Mexican pension or
retirement funds will be exempt from Mexican withholding taxes, if any such fund
is:

      -     the effective beneficiary of the interest;

      -     duly incorporated under the laws of its country of origin;

      -     exempt in its country of origin from income tax on interest income;
            and

      -     registered with the Ministry of Finance for that purpose.

      Under existing Mexican law and regulations, a Foreign Holder will not be
subject to any Mexican taxes in respect of payments of principal made by us with
respect to the notes.

      TAXATION OF ADDITIONAL AMOUNTS. We have agreed, subject to specified
exceptions and limitations, to pay Additional Amounts (as such term is defined
in "Description of the Notes -- Additional amounts") to the holders of the notes
in respect of the Mexican withholding taxes mentioned above. Payments of
Additional Amounts with respect to the notes will be subject to Mexican
withholding tax at the same rate applicable to interest paid on the notes.

      Holders or beneficial owners of the notes may be requested to provide
certain information or documentation necessary to enable us to establish the
appropriate Mexican withholding tax rate applicable to such holders or
beneficial owners. In the event that the specified information or documentation
concerning the holder or beneficial owner is requested and is not provided on a
timely basis, our obligation to pay Additional Amounts will be limited.

      TAXATION OF ACCRUED INTEREST. Interest accrued that is not due and payable
under the terms applicable to the old notes before the exchange of the old notes
for the new notes will not be subject to a Mexican income tax withholding under
the terms described above, but such interest will be subject to a Mexican income
tax withholding when such interest becomes due and payable under the new notes
after the exchange of the old notes for the new notes.

      GAIN ON DISPOSITIONS. Gains resulting from the sale or other dispositions
of the notes and by a Foreign Holder will not be deemed as an income arising
from Mexican source, and therefore will not be subject to Mexican income tax.

Mexican tax consequences to Foreign Holders of the CPOs

      DISTRIBUTIONS. Dividends, either in cash or in any other form, paid with
respect to the CPOs will be subject to withholding tax based on the amount of
the distributed dividend, multiplied by a factor of 1.5385, in 2002. For
following years the factor will decrease to 1.5152, 1.4925 and 1.4706 in 2003,
2004 and 2005 and thereafter.

      DISPOSITIONS. The sale or other disposition of the CPOs by a Foreign
Holder will not be subject to any Mexican tax if the sale is carried out through
the Mexican Stock Exchange or other securities market approved by the Ministry
of Finance and Public Credit (Secretaria de Hacienda y Credito Publico). Sales
or other dispositions of the CPOs made in other circumstances would be subject
to Mexican tax, regardless of the nationality or residence of

                                       87
the transferor. However, under the Tax Treaty, a U.S. holder that is eligible to
claim the benefits of the Tax Treaty will be exempt from Mexican tax on gains
realized on a sale or other disposition of the CPOs in a transaction that is not
carried out through the Mexican Stock Exchange or such other approved securities
markets, so long as such holder did not own, directly or indirectly, 25% or more
of our outstanding shares within the twelve-month period preceding such sale or
other disposition.

Certain tax consequences to Mexican holders on the exchange or disposition of
the CPOs.

      The Mexican income tax effect for a Mexican resident holder on the taxable
disposition or exchange of the CPOs, may vary depending on the conditions of the
acquisitions, disposition or exchange of the CPOs, as well as on the
characteristics of the holders. Therefore, such holders should seek advice from
Mexican tax counsel to determine the effects on a case by case basis.

F.    DIVIDENDS AND PAYING AGENTS

      Not applicable.

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 Maxcom 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.

I.    SUBSIDIARY INFORMATION

      Not applicable.

                                       88
ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

      The old notes, which are payable at a fixed annual rate of 13 3/4%,
constituted substantially all of our outstanding indebtedness at December 31,
2001. The new notes will not accrue or pay interest until March 1, 2006, and
after March 1, 2006, the new notes will accrue interest at a fixed annual rate
of 10%. As a result, we do not currently have any significant interest rate
risk.

FOREIGN EXCHANGE RISK

      Our primary foreign currency exposure relates to our U.S.
dollar-denominated debt. A substantial portion of this debt is incurred to
finance U.S. dollar-denominated capital expenditures. Substantially all of our
debt obligations at December 31, 2001 were denominated in U.S. dollars. This
will also be true immediately after the consummation of the exchange offer.
Therefore, we are exposed to currency exchange rate risks that could
significantly affect our ability to meet our obligations. We currently do not
enter into hedging transactions with respect to these foreign currency risks,
but continue to consider the appropriateness of this option.

      The exchange rate of the peso 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 our results of operations and
financial condition, including our ability to repay or repurchase the notes. At
December 31, 2001, an immediate 10% devaluation of the peso relative to the U.S.
dollar would have increased our interest expense by approximately Ps.36.4
million over a one-year period. On a pro forma basis after giving effect on
January 1, 2001 to the consummation of the exchange offer, at December 31, 2001,
an immediate 10% devaluation of the peso relative to the U.S. dollar would have
increased our interest expense over a one-year period by approximately Ps.2.1
million.

      To the extent capital expenditures are financed with operating cash flows,
we are also exposed to foreign currency fluctuations. Substantially all of our
capital expenditures are denominated in U.S. dollars. In addition, our operating
lease for our new headquarters building is denominated in U.S. dollars. See
"Item 5. Operating and Financial Review and Prospects -- B. Liquidity and
capital resources -- Other contractual obligations" for a description of our
contractual operating lease obligations denominated in dollars.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

      Not applicable.

      Pursuant to the terms of the exchange offer the indenture governing the
old notes was amended to among other things, eliminate:

      -     all the covenants restricting the incurrence of indebtedness, the
            making of investments, the granting of loans, the payment of
            dividends, the creation of liens, the entering into transactions
            with affiliates, the undertaking of mergers, consolidation or sales,
            the disposition of assets or subsidiary stock, a change in control
            and any limitations on the transfer of funds from subsidiaries to
            Maxcom;

      -     the redemption option in the event of a change of control; and;

      -     events of default related to the non-compliance with such covenants,
            cross-defaults, adverse judgments in excess of U.S.$5.0 million and
            certain bankruptcy events.

      The modification of the restrictive covenants permits Maxcom, absent the
existence of similar covenants under other indebtedness, to take actions that
could increase the credit risks, with respect to Maxcom and its subsidiaries,
faced by the holders of the old notes or that could otherwise be adverse to the
interests of the holders of the old notes.

                                       89
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

      Maxcom is not in default under any of its obligations nor is any payment
of dividends in arrears.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

      Pursuant to the terms of the exchange offer, the indenture governing the
old notes was amended to, among other things, eliminate:

      -     all of the covenants restricting the incurrence of indebtedness, the
            making of investments, the granting of loans, the payment of
            dividends, the creation of liens, the entering into transactions
            with affiliates, the undertaking of mergers, consolidation of sales,
            the disposition of assets or subsidiary stock, a change in control
            and any limitations on the transfer of funds from subsidiaries to
            Maxcom;

      -     the redemption option in the event of a change of control; and

      -     events of default related to the non-compliance with such covenants,
            cross-defaults, adverse judgments in excess of U.S.$5.0 million and
            certain bankruptcy events.

      The modification of the restrictive covenants permits Maxcom, absent the
existence of similar covenants under other indebtedness, to take actions that
could increase the credit risks, with respect to Maxcom and its subsidiaries,
faced by the holders of the old notes or that could otherwise be adverse to the
interest of the holders of the old notes.

ITEM 15. RESERVED

      Not applicable.

ITEM 16. RESERVED

      Not applicable.

                                       90
PART II

ITEM 17. FINANCIAL STATEMENTS

      We have responded to Item 18 in lieu of responding to this Item.

                                       91
ITEM 18. FINANCIAL STATEMENTS
PAGE
                                                                                 ----
Maxcom Telecomunicaciones, S.A. de C.V. and Subsidiaries

Report of Independent Accountants..........................................      F-2
Consolidated Balance Sheets as of December 31, 2000 and 2001...............      F-4
Consolidated Statements of Operations for the period from May 1, 1999
     (commencement of operations), through December 31, 1999, and for
     the years ended December 31, 2000 and 2001............................      F-5
Consolidated Statements of Changes in Shareholders' Equity for the
     years ended December 31, 1999 2000, and 2001..........................      F-6
Consolidated Statements of Changes in Financial Position for the
     years ended December 31, 1999 2000, and 2001..........................      F-7
Notes to the Consolidated Financial Statements.............................      F-8

Financial Statement Schedules

Report of Independent Accountants on Financial Statement Schedules.........      S-I
Valuation and Qualifying Accounts..........................................      S-II
F-1
ITEM 19. EXHIBITS
PAGE
                                                                               ----
1.         Amended By-laws (estatutos) of Maxcom Telecomunicaciones,            E-1
           S.A. de C.V...................................................
2(a).      Not applicable.
2(b).
    1.     Indenture dated as of March 17, 2000 among Maxcom,                    *
           Corporativo en Telecomunicaciones, S.A. de C.V. and The Bank
           of New York, as Trustee.......................................
    2.     Indenture dated as of April 29, 2002 among Maxcom,                   E-54
           Corporativo en Telecomunicaciones, S.A., de C.V., Maxcom
           Servicios Administrativos, S.A., de C.V. and The Bank of New
           York, as Trustee..............................................
    3.     Second Supplemental Indenture dated as of April 29, 2002            E-175
           among Maxcom, Corporativo en Telecomunicaciones, S.A. de
           C.V., Maxcom Servicios Administrativos, S.A. de C.V. and the
           Bank of New York, as Trustee..................................
2(c).      Not applicable.
    1.     CPO Trust Agreement effective April 25, 2002 among Maxcom.,         E-183
           its shareholders and Banco Nacional de Mexico, S.A.,
           Institucion de Banca Multiple, Grupo Financiero Banamex
           Accival, acting as trustee....................................
    2.     Second amended and Restated Securityholders Agreement entered       E-219
           into as of April 29, 2002 among Maxcom and certain existing
           and new securityholders.......................................
4(a).      Agreement for the use of infrastructure and installation of           *
           fiber optic cable on the highways between Puebla and Mexico,
           dated August 18, 1998, between Amaritel, S.A. de C.V. (the
           predecessor of Maxcom Telecomunicaciones, S.A. de C.V.) and
           Iusatel, S.A. de C.V..........................................
4(b).      Interconnection Agreement for long distance services, dated           *
           January 22, 1999, between Amaritel and Telefonos de Mexico
           (Telmex) valid for a period of two years between February 1,
           1999 and January 1, 2001.  The agreement establishes that it
           would remain in effect after the expiration date if no
           further agreement for its termination or renewal has been
           entered into, in accordance with article 42 of the Mexican
           Telecommunications law........................................
4(c).      Local Interconnection Service Agreement, dated November 24,           *
           1998, between Amaritel, S.A. de C.V. and Telefonos de Mexico,
           S.A. de C.V...................................................
4(d).      Amendment to Local Interconnection Service Agreement, dated           *
           February 25, 1999, between Amaritel, S.A. de C.V. and
           Telefonos de Mexico, S.A. de C.V., originally entered into on
           November 24, 1998.............................................
4(e).      Metropolitan Network Capacity Sale Agreement, dated April 28,         **
           2000, between Maxcom Telecomunicaciones, S.A. de C.V. and
           Metro Net, S.A. de C.V. (including amendment dated December
           21, 2000).....................................................
4(f).      Telecommunications Service Agreement dated November 15, 1999,         *
           between Maxcom and Telefonos de Mexico, S.A. de C.V...........
4(g).      Telecommunications Service Agreement dated March 9, 1999,             *
           between Maxcom and Bestel S.A. de C.V., according to which
           Bestel will provide long distance and private calls services
           to Maxcom.....................................................
4(h).      Concession for the installation and operation of                      *
           telecommunications services granted to Amaritel, S.A. de C.V.
           by the Secretary of Telecommunications and Transport on
           December 20, 1996.............................................
4(i).      Amendment to Concession for the installation and operation of         *
           telecommunications services granted to Amaritel by the
           Secretary of Telecommunications and Transport on December 20,
           1996, dated September 8, 1999, extending the coverage of such
           concession to include various additional municipalities of
           the State of Mexico...........................................
4(j).      Amendment to Concession for the installation and operation of         *
           telecommunications services granted to Amaritel by the
           Secretary of Telecommunications and Transport on December 20,
           1996, dated December 7, 1999, authorizing Maxcom to employ
           whatever technologies it deems appropriate in providing
           telecommunications services to various municipalities.........
4(k)       and operation of telecommunications services granted to
           Amaritel, S.A. de C.V. by the Secretary of Telecommunications
           and Transport on December 20, 1996, dated September 27, 2001,
           extending the coverage of such concession to include all of
           Mexico.......................................................       E-271
4(l).      Concession for a public telecommunications network in Regions         *
           3, 5 and 8 granted to Amaritel, S.A. de C.V. by the Secretary
           of Telecommunications and Transport on April 29, 1998.........
4(m).      Concession for the operation of point-to-multipoint microwave         *
           telecommunications services in Region 5 granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on April 23, 1998...................................
4(n)       Concession for the operation of point-to-multipoint microwave         *
           telecommunications services in Region 3 granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on April 23, 1998...................................
4(o).      Concession for the operation of point-to multipoint microwave         *
           telecommunications services in Region 8 granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on April 29, 1998...................................
4(p).      Concessions for the nationwide operation of point-to-point            *
           microwave telecommunications services using five frequency
           bands in the 56 MHz bandwidth, each granted to Amaritel, S.A.
           de C.V. by the Secretary of Telecommunications and Transport
           on June 4, 1998...............................................
4(q).      Concessions for the nationwide operation of point-to-point            *
           microwave telecommunications services using two frequency
           bands in the 100 MHz bandwidth, each granted to Amaritel,
           S.A. de C.V. by the Secretary of Telecommunications and
           Transport on June 4, 1998.....................................
4(r).      Amendment to Concession for the operation of                          *
           point-to-multipoint telecommunications services in Regions 3,
           5, 8 granted to Amaritel, S.A. de C.V. by the Secretary of
           Telecommunications and Transport on April 1, 1998, dated
           October 12, 1999, regarding the start date for the initiation
           of services...................................................
4(s).      Amendment to Concession for the installation and operation of         *
           telecommunications services granted to Amaritel, S.A. de C.V.
           by the Secretary of Telecommunications and Transport on
           December 20, 1996, dated September 24, 1999 eliminating
           financial restrictions........................................
4(t).      Warrant Agreement dated as of March 17, 2000 between Maxcom           **
           Telecomunicaciones, S.A. de C.V. and The Bank of New York,
           acting as warrant agent.
5.         Not applicable.
6.         Computation of earnings per share.............................      E-285
7.         Computation of ratio of earnings to fixed charges.............      E-286
8.         No significant subsidiaries.
9.         Not applicable.
10.        None.
*    Previously filed with Registration Statement on Form F-4 No. 333-11910
     submitted on May 5, 2000.

**   Previously filed with Annual Report on Form 20-F, as amended, submitted on
     June 29, 2001 and on September 28, 2001.
GLOSSARY OF TELECOMMUNICATIONS TERMS
ADSL...............................           ADSL is a physical-layer protocol that supports up to 8 Mbps
                                                       bandwidth downstream and up to 1 Mbps upstream.  The asymmetrical
                                                       aspect of ADSL technology makes it ideal for Internet browsing, video
                                                       on demand, and remote LAN access.  Users of these applications
                                                       typically download more information than they send.  ADSL also allows
                                                       simultaneous voice communication by transmitting data signals outside
                                                       of the voice frequency range.

         Band...............................           A range of frequencies between two defined limits.

         Bandwidth..........................           The relative range of analog frequencies or digital signals that can
                                                       be passed through a transmission medium, such as glass fibers, without
                                                       distortion.  The greater the bandwidth, the greater the information
                                                       carrying capacity.  Bandwidth is measured in Hertz (analog) or Bits
                                                       Per Second (digital).

         Capacity...........................           Refers to ability to transmit voice or data over telecommunications
                                                       equipment.

         Carrier............................           A provider of telecommunications transmission services by fiber, wire
                                                       or radio.

         Centrex service....................           A business telephone service developed originally by Lucent
                                                       Technologies which offers private branch exchange type features
                                                       directly from the local telephone company central office, such as
                                                       voicemail, call pick-up group, abbreviated dialing and multi-line
                                                       hunting.

         COFETEL............................           Comision Federal de Telecomunicaciones, the Mexican Federal
                                                       Telecommunications Commission.

         Digital............................           Describes 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 /
                                                       switching technologies employ a sequence of discrete, distinct pulses
                                                       to represent information, as opposed to the continuously variable
                                                       analog signal.

         E1.................................           A digital telephony format that carries data at the rate of 2.048
                                                       Mbps (DS-1 level).  E-1 is the European and Latin American version of
                                                       North American T-1, though T-1 is 1.544 Mbps.

         Fiber optic technology.............           Fiber optic systems use laser-generated light to transmit voice, data
                                                       and video in digital format through ultra-thin strands of glass.
                                                       Fiber optic systems are characterized by large circuit capacity, good
                                                       sound quality, resistance to external signal interference and direct
                                                       interface to digital switching equipment and digital microwave
                                                       systems.  A pair of fiber optic strands using advanced transmission
                                                       technologies is capable of carrying over 258,000 simultaneous
                                                       telephone calls.  Because optical signals disperse over distance, they
                                                       must be regenerated / amplified at sites located along the fiber optic
                                                       cable.  Fiber optic systems using earlier generation fiber require
                                                       frequent intervals between regeneration / amplifier sites.  Greater
                                                       distances between regeneration / amplifier sites afforded by the use
                                                       of advanced fiber generally translate into substantially lower
                                                       installation and operating costs and fewer potential
G-1
points of failure.

         Fixed wireless local loop..........           A wireless local telephony service using the 3.4-3.7 GHz frequency
                                                       band.

         FTTH...............................           Fiber-to-the-home, reference to an all fiber-optic public telephone
                                                       network design, where broadband services are delivered to the customer
                                                       premises / network interface by fiber optic.

         Gulf region........................           115 cities and towns in eleven states in eastern Mexico, which
                                                       includes the cities of Puebla, Tampico, Veracruz, Reynosa, Cancun,
                                                       Chetumal, Merida, Ciudad del Carmen, Campeche, Coatzacoalcos and
                                                       Tuxtla Gutierrez, among others.

         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.

         ISDN...............................           Integrated Services Digital Network.  ISDN is an international
                                                       standard that provides end-to-end digital connectivity to support a
                                                       wide range of voice, data and video services.

         Kbps...............................           Kilobits per second, a measurement of speed for digital signal
                                                       transmission expressed in thousands of bits per second.

         LAN................................           Local area network, a private data communications network linking a
                                                       variety of data devices, such as computer terminals, personal computer
                                                       terminals, personal computers and microcomputers, all housed in a
                                                       defined building, plant or geographic area.

         Microwave technology...............           Although limited in capacity compared with fiber optic systems,
                                                       digital microwave systems offer an effective and reliable means of
                                                       transmitting lower volume and narrower bandwidths of voice, data and
                                                       video signals over intermediate and longer distances.  Microwaves are
                                                       very high frequency radio waves that can be reflected, focused and
                                                       beamed in a line-of-sight transmission path.  As a result of their
                                                       electro-physical properties, microwaves can be used to transmit
                                                       signals through the air, with relatively little power.  To create a
                                                       communications circuit, microwave signals are transmitted through a
                                                       focusing antenna, received by an antenna at the next station in the
                                                       network, then amplified and retransmitted.  Because microwaves
                                                       disperse as they travel through the air, this transmission process
                                                       must be repeated at repeater stations, which consist of radio
                                                       equipment, antennae and back-up power sources, located on average
                                                       every 30 kilometers along the transmission route.

         Mbps...............................           MegaBits per second.  A measurement of speed for digital signal
                                                       transmission expressed in millions of bits per second (Mbps).

         Multi-line hunting.................           A value-added service that allows for multiple calls to be received
                                                       with a single telephone number.

         PCS................................           Personal Communications Services.  PCS has come to represent two
                                                       things: first, a digital wireless communications service operating
                                                       over the 1.9 GHz band; and second, more generically, a wireless
G-2
communications service utilizing a digital network that offers typical
                                                       features such as voice, video and data applications, short messaging,
                                                       voicemail, caller identification, call conferencing and call
                                                       forwarding.  Generic PCS suppliers promote this service on the ability
                                                       of its features to be customized, or "bundled," to the needs of the
                                                       individual customers.
         Point-to-multipoint microwave
         transmission......................            A transmission using microwave technology by which a single signal
                                                       goes from one origination point to many destination points.

         Point-to-point microwave
         transmission.......................           A transmission using microwave technology by which a signal goes from
                                                       one point to another, usually connected by some dedicated transmission
                                                       line.

         POTS...............................           Plain Old Telephone Service.  The basic service supplying standard
                                                       single line telephones, telephone lines and access to the public
                                                       switched network.

         SCT................................           Secretaria de Comunicaciones y Transportes, the Mexican
                                                       Communications and Transportation Ministry.

         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.

         Teledensity........................           Teledensity is a measure of telephony service in a population.  It is
                                                       calculated by dividing the total subscriber base (number of lines in
                                                       service) by the inhabitants and multiplying by 100.  It is generally
                                                       used as a comparative measure of network development.  All teledensity
                                                       figures are reported in subscribers per 100 inhabitants.

         Web-hosting........................           A service performed by Internet service providers (also known as
                                                       ISPs) and Internet access providers (also known as IAPs) consisting in
                                                       the hosting of outside companies web pages to be displayed on the
                                                       Internet.

         xDSL...............................           XDSL is a physical-layer protocol that supports bandwidth downstream
                                                       and upstream.
G-3
SIGNATURES

      Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the registrant certifies that it meets all requirements for filing
on Form 20-F and has duly created this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                    MAXCOM TELECOMUNICACIONES, S.A. DE C.V.

                                       By:   /s/ ELOISA MARTINEZ
                                             -----------------------------------
                                             Eloisa Martinez
                                             Chief Financial Officer
DATE: June 30, 2002
MAXCOM TELECOMUNICACIONES, S.A. DE C.V. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
                                                              ----
Reports of Independent Accountants..........................  F-2
  Consolidated Balance Sheets as of December 31, 2000 and
     2001...................................................  F-4
  Consolidated Statements of Operations for the period from
     May 1, 1999 (commencement of operations) through
     December 31, 1999 and for the years ended December 31,
     2000 and 2001..........................................  F-5
  Consolidated Statements of Changes in Shareholders' Equity
     for the years ended December 31, 1999, 2000 and 2001...  F-6
  Consolidated Statements of Changes in Financial Position
     for the years ended December 31, 1999, 2000 and 2001...  F-7
  Notes to Consolidated Financial Statements for the years
     ended December 31, 1999, 2000 and 2001.................  F-8
F-1
REPORT OF INDEPENDENT ACCOUNTANTS

Mexico D.F., March 13, 2002, except for Note 23 for which the date is April 30,
2002

To the Board of Directors and Shareholders of
Maxcom Telecomunicaciones, S. A. de C. V. and Subsidiaries:

We have audited the accompanying consolidated balance sheet of Maxcom
Telecomunicaciones, S. A. de C. V. and its subsidiaries as of December 31, 2001,
and the related consolidated statement of operations, of changes in
stockholders' equity and of changes in financial position for the year then
ended 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 audit. The consolidated balance sheet of the
Company as of December 31, 2000 and the related consolidated statements of
operations for the period from May 1, 1999 (commencement of operations) through
December 31, 1999 and for the year ended December 31, 2000 and consolidated
statements of changes in shareholders' equity and changes in financial position
for the years ended December 31, 1999 and 2000 were audited by other independent
accountants whose report, dated February 12, 2001, expressed an unqualified
opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in Mexico and the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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
financial position of Maxcom Telecomunicaciones, S. A. de C. V. and its
subsidiaries at December 31, 2001, and the results of its operations, its
changes in shareholders' equity and its changes in its financial position for
the year then ended in conformity with accounting principles generally accepted
in Mexico.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is highly leveraged and has suffered recurring
losses from operations that raises substantial doubt about its ability to
continue as a going concern. In addition, under Mexican Companies Law (Ley
General de Sociedades Mercantiles), an interested party may file a claim for
dissolution of the Company and force it to liquidate, if, as is the case of the
Company, the accumulated losses exceed two thirds of its capital stock.
Management's plans in regard to these matters are also described in Note 2. In
addition, the restructuring mentioned in Note 23 improved the Company's
financial position. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

Accounting principles generally accepted in Mexico vary in certain significant
respects from the accounting principles generally accepted in the United States.
The application of the latter would have affected the determination of
consolidated net income expressed in Mexican Pesos for the year ended December
31, 2001 and the determination of consolidated stockholders' equity and
consolidated financial position also expressed in Mexican Pesos at December 31,
2001 to the extent summarized in Note 22 to the consolidated financial
statements.

PricewaterhouseCoopers
/s/ C.P. Juan Manuel Ferron
C.P. Juan Manuel Ferron
Audit Partner

                                       F-2
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Maxcom Telecomunicaciones, S.A. de C.V. and subsidiary

We have audited the accompanying consolidated balance sheets of Maxcom
Telecomunicaciones, S.A. de C.V. and subsidiary, as of December 31, 2000, and
the related consolidated statements of operations for the period from May 1,
1999 (commencement of operations) through December 31, 1999 and for the year
ended December 31 2000, consolidated changes in shareholders' equity and changes
in financial position for the years ended December 31, 1999 and 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the consolidated
financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Maxcom
Telecomunicaciones, S.A. de C.V. and subsidiary, as of December 31, 2000, the
consolidated result of its operations for the period from May 1, 1999
(commencement of operations) through December 31, 1999 and for the year ended
December 31 2000, the consolidated changes in shareholders' equity and the
changes in its financial position for the years ended December 31, 1999 and
2000, in conformity with Mexican generally accepted accounting principles
("Mexican GAAP").

Mexican GAAP vary in certain respects from accounting principles generally
accepted in the United States ("U.S." GAAP"). The application of U.S. GAAP
referred to in Note 22 would have affected the determination of consolidated net
loss expressed at the purchasing power of pesos as of December 31, 2001 for the
years ended December 31, 1999 and 2000 and the determination of the consolidated
shareholders' equity and consolidated financial position, also expressed at the
purchasing power of pesos as of December 31, 2001, as of and for the years ended
December 31, 1999 and 2000, to the extent summarized in Note 22 to the
consolidated financial statements.

These consolidated financial statements have been translated into English solely
for the convenience of the readers of this language.

BDO INTERNATIONAL
/s/ BDO INTERNATIONAL
MEXICO CITY,
FEBRUARY 12, 2001

                                       F-3
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)
        (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF
            (DECEMBER 31, 2001 AND THOUSANDS OF U.S. DOLLARS ("$"))
2000           2001         2001
                                                        ------------   ------------   ---------
ASSETS
Current assets:
Cash and cash equivalents (Note 5)....................  Ps.1,119,478   Ps.  172,583   $  18,849
Restricted cash (Note 12).............................       401,326        186,803      20,402
Accounts receivable:
  Customers, net of allowance of Ps.8,670 and
     Ps.18,631 in 2000 and 2001, respectively.........        40,359         57,889       6,323
  Value-added tax refundable (Note 6).................        17,669         13,803       1,508
  Other sundry debtors................................           524         12,288       1,342
                                                        ------------   ------------   ---------
                                                              58,552         83,980       9,173
Inventory, net........................................         9,408         28,513       3,114
Prepaid expenses, net.................................        11,310         10,303       1,125
                                                        ------------   ------------   ---------
  Total current assets................................     1,600,074        482,182      52,663
Restricted cash (Note 12).............................       192,602             --          --
Frequency rights, net (Note 7)........................       110,885        104,837      11,450
Telephone network systems and equipment, net (Note
  9)..................................................     1,134,617      1,368,870     149,505
Preoperating expenses, net (Note 10)..................       252,055        221,853      24,230
Intangible assets, net (Note 11)......................       338,145        299,528      32,714
Rent deposits of Ps.27,448 in 2001 and other assets...         8,200         31,310       3,420
                                                        ------------   ------------   ---------
  Total assets........................................  Ps.3,636,578   Ps.2,508,580   $ 273,982
                                                        ============   ============   =========

                             LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Interest payable (Note 12)............................       108,682         99,138      10,828
Accrued expenses and other accounts payable...........       130,363        139,336      15,218
Customer deposits.....................................         5,769          3,754         410
Payroll and other taxes payable.......................         9,698         17,524       1,914
                                                        ------------   ------------   ---------
  Total current liabilities...........................       254,512        259,752      28,370
Long-term liabilities:
Senior notes, net (Note 12)...........................     2,920,879      2,439,834     266,473
                                                        ------------   ------------   ---------
  Total liabilities...................................  Ps.3,175,391   Ps.2,699,586   $ 294,843
                                                        ============   ============   =========
Commitments and contingencies (Notes 12, 14, 19 and
  20)
Shareholders' equity:
Capital stock, no par value (Note 15).................     1,203,306        976,096     106,607
Additional paid-in capital (Note 15 and 16)...........       128,239        102,309      11,174
Accumulated deficit (Note 17):
  Prior year's deficit................................      (247,059)      (616,301)    (67,311)
  Net loss for the period.............................      (623,299)      (653,110)    (71,331)
                                                        ------------   ------------   ---------
                                                            (870,358)    (1,269,411)   (138,642)
  Total shareholders' equity (deficit)................       461,187       (191,006)    (20,861)
                                                        ------------   ------------   ---------
  Total liabilities and shareholders' equity..........  Ps.3,636,578   Ps.2,508,580   $ 273,982
                                                        ============   ============   =========
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-4
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE PERIOD AND YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)
 (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF DECEMBER 31,
                                      2001
        (AND THOUSANDS OF U.S. DOLLARS ("$"), EXCEPT PER SHARE AMOUNTS)
1999             2000             2001            2001
                                  --------------   --------------   --------------   ------------
                                                                                       (NOTE 3)
Net revenues....................  Ps.    100,331   Ps.    277,780   Ps.    314,388   $     34,336
Operating costs and expenses:
  Network operating costs.......          49,854          112,510          150,439         16,431
  Selling, general and
     administrative expenses....         183,790          345,748          429,945         46,958
  Depreciation and
     amortization...............          84,483          209,894          268,473         29,322
                                  --------------   --------------   --------------   ------------
  Total operating costs and
     expenses...................         318,127          668,152          848,857         92,711
                                  --------------   --------------   --------------   ------------
  Operating loss................        (217,796)        (390,372)        (534,469)       (58,375)
Integral cost (income) of
  financing:
  Interest expense..............          52,671          417,592          426,956         46,631
  Interest income...............         (11,428)        (102,265)         (76,766)        (8,384)
  Gain on repurchase of debt
     (Note 12)..................              --               --         (121,249)       (13,243)
  Exchange loss (gain), net.....          10,859           11,177          (90,787)        (9,916)
  Gain on net monetary
     position...................         (22,688)         (94,069)         (82,656)        (9,028)
                                  --------------   --------------   --------------   ------------
                                          29,414          232,435           55,498          6,060
Nonrecurring charges (Note
  14)...........................              --               --           62,215          6,795
Other income (expense), net.....             151             (492)            (177)           (19)
                                  --------------   --------------   --------------   ------------
Loss before taxes...............        (247,059)        (623,299)        (652,359)       (71,249)
Asset tax (Note 19).............              --               --              751             82
                                  --------------   --------------   --------------   ------------
  Net loss......................  Ps.   (247,059)  Ps.   (623,299)  Ps.   (653,110)  $    (71,331)
                                  ==============   ==============   ==============   ============

Loss per share, basic...........  Ps.     (24.07)  Ps.     (54.37)  Ps.     (47.50)  $      (5.19)
Weighted-average shares
  outstanding...................      10,264,827       11,463,667       13,748,445     13,748,445
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-5
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)
        (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF
            (DECEMBER 31, 2001 AND THOUSANDS OF U.S. DOLLARS ("$"))
ADDITIONAL                       TOTAL
                                            CAPITAL      PAID-IN      ACCUMULATED    SHAREHOLDERS'
                                             STOCK       CAPITAL        DEFICIT         EQUITY
                                           ----------   ----------   -------------   -------------
                                           (NOTE 15)                   (NOTE 17)
Balances at December 31, 1998............  Ps.835,372   Ps. 30,777   Ps.        --    Ps. 866,149
Increase in capital stock................      10,628           --              --         10,628
Stock options (Note 16)..................          --        2,154              --          2,154
Contributions for future increases of
  capital................................          --          377              --            377
Net loss.................................          --           --        (247,059)      (247,059)
                                           ----------   ----------   -------------    -----------
Balance at December 31, 1999.............     846,000       33,308        (247,059)       632,249
Increase in capital stock................     350,069           --              --        350,069
Contributions for future increases of
  capital................................          --          100              --            100
Stock options (Note 16)..................          --      102,068              --        102,068
Warrants (Note 16).......................       7,237       (7,237)             --             --
Net loss.................................          --           --        (623,299)      (623,299)
                                           ----------   ----------   -------------    -----------
Balance at December 31, 2000.............   1,203,306      128,239        (870,358)       461,187
Increase in capital stock................      25,930      (25,930)             --             --
Losses absorbed..........................    (254,057)          --         254,057             --
New paid-in capital......................         917           --              --            917
Net loss.................................          --           --        (653,110)      (653,110)
                                           ----------   ----------   -------------    -----------
Balance at December 31, 2001.............  Ps.976,096   Ps.102,309   Ps.(1,269,411)   Ps.(191,006)
                                           ==========   ==========   =============    ===========
U.S. Dollars.............................  $  106,607   $   11,174   $    (138,642)   $   (20,861)
                                           ----------   ----------   -------------    -----------
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-6
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                             (NOTES 1, 2, 3 AND 4)

        (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF
           (DECEMBER 31, 2001 AND THOUSANDS OF U.S. DOLLARS ("$")) )
1999           2000           2001         2001
                                           -----------   ------------   ------------   ---------
                                                                                       (NOTE 3)
Operating activities:
Net loss.................................  Ps.(247,059)  Ps. (623,299)  Ps. (653,110)  $ (71,331)
Adjustments to reconcile net loss to
  resources provided by (used for)
  operating activities:
  Depreciation and amortization..........       84,483        209,894        268,473      29,322
  Nonrecurring charges...................           --             --         62,215       6,795
  Gain on repurchase of debt.............           --             --       (121,249)    (13,243)
Changes in operating assets and
  liabilities:
  (Increase) decrease in:
     Accounts receivable, net............      (32,595)        (7,764)       (17,530)     (1,915)
     Inventory, net......................       (7,644)        (1,763)       (19,106)     (2,087)
     Prepaid expenses, net...............        2,333         (5,300)         1,007         110
  (Decrease) increase in:
     Restricted cash, liabilities and
       others, net.......................       54,669       (383,508)       142,732      15,590
                                           -----------   ------------   ------------   ---------
     Resources used for operating
       activities........................     (145,813)      (811,740)      (336,568)    (36,759)
                                           -----------   ------------   ------------   ---------
Financing activities:
  Issuance of capital stock..............       10,628        357,335            917         100
  Additional paid-in capital.............        2,530         94,932             --          --
  Repurchase of debt.....................           --             --        (94,400)    (10,310)
  Proceeds from loans and notes
     payable.............................      676,031      2,011,368             --          --
                                           -----------   ------------   ------------   ---------
  Resources provided by (used in)
     financing activities................      689,189      2,463,635        (93,483)    (10,210)
                                           -----------   ------------   ------------   ---------
Investing activities:
  Preoperating expenses..................      (88,419)            --             --          --
  Investment in telephone network systems
     and equipment, net of
     dispositions........................     (692,835)      (397,503)      (472,639)    (51,621)
  Intangible assets......................      (25,104)      (308,484)        (7,307)       (798)
  Other assets...........................       (2,655)        (1,233)       (36,898)     (4,030)
                                           -----------   ------------   ------------   ---------
  Resources used for investing
     activities..........................     (809,013)      (707,220)      (516,844)    (56,449)
                                           -----------   ------------   ------------   ---------
Cash and cash equivalents:
Net (decrease) increase in cash and cash
  equivalents............................     (265,637)       944,675       (946,895)   (103,418)
Beginning balance........................      440,440        174,803      1,119,478     122,267
                                           -----------   ------------   ------------   ---------
Ending balance...........................  Ps. 174,803   Ps.1,119,478   Ps.  172,583   $  18,849
                                           ===========   ============   ============   =========
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-7
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

 (IN THOUSANDS OF MEXICAN PESOS ("Ps.") IN PURCHASING POWER AS OF DECEMBER 31,
                                      2001
        (AND THOUSANDS OF U.S. DOLLARS ("$"), EXCEPT PER SHARE AMOUNTS)

NOTE 1 -- INCORPORATION AND BUSINESS:

Maxcom Telecomunicaciones, S. A. de C. V. ("Maxcom" or the "Company"), is a
Mexican company incorporated on February 28, 1996. Its main line of business is
the construction and operation of a telephone network, with the purpose of
providing local, national and international long-distance, data and other value-
added services, and virtual private network service, within Mexico.

The Company started its commercial operations in May 1999. Therefore, from its
incorporation through April 30, 1999, the Company was in the preoperating and
development stage.

Effective February 3, 1997 (as amended December 7, 1999 and September 27, 2001),
Mexico's Ministry of Communications and Transportation (the "SCT") awarded the
Company a concession to install and operate a public telecommunication network
in Mexico. This concession is non-exclusive; its initial term is for 30 years;
and it contains certain renewal rights. The concession grants the Company the
right to provide local telephone services in the Federal District of Mexico and
in thirteen states. It also grants the Company the right to provide
long-distance, data and other value-added services nationwide, although it is
not currently providing long-distance service outside their current customer
base. In September, 2001, the SCT amended the concession for national coverage.
The Company must meet certain conditions in order for the concession to remain
effective, such as building certain networks and providing certain services by
predetermined dates, among other things.

In October 1997, the Company was awarded 7 nationwide point-to-point and three
regional point-to-multipoint microwave concessions, each for 20 years.

On November 24, 1998 (as amended March 23, 1999), the Company entered into an
agreement with Telefonos de Mexico, S. A. de C. V. ("Telmex"), through which
both parties agreed to provide interconnection services to each other's local
telecommunications network. This agreement calls for reciprocal interconnection
rates for local-to-local services through September 15, 2002.

On January 22, 1999, the Company entered into another agreement with Telmex
through which Maxcom agreed to provide Telmex with interconnection services for
Telmex's long-distance traffic. This agreement is valid through September 15,
2002, with the possibility of extension after such date.

During 1999, 2000 and 2001, the Company entered into interconnection and
reselling agreements with several other local and long distance carriers and
mobile phone companies. See Note 4.

NOTE 2 -- GOING CONCERN:

From the beginning of its commercial operations, the Company has had negative
operating cash flow and losses from operations due to its recent establishment
and the Company's initial investment in telephone network systems and equipment,
preoperating expenses and frequency rights. The recoverability of this
investment will depend on the ability of the Company to obtain financing to
complete development and on the future profitable commercial exploitation of the
telephone network.

During 2001, the Company's accumulated losses exceeded the equivalent of
two-thirds of its capital stock. According to the Mexican Companies Law (Ley
General de Sociedades Mercantiles), an interested party may file a claim for
dissolution of the Company, forcing it to liquidate.

The Company has incurred net losses of Ps.247,059, Ps.623,299 and Ps.653,110 for
the years ended December 31, 1999, 2000 and 2001, respectively. The losses were
due to higher costs of borrowing and lower-
                                       F-8
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

than-expected sales growth. During 2000, the Company issued 13 3/4% Senior Notes
with a principal amount of $300 million, maturing on April 1, 2007. Due to the
subsequent event mentioned in Note 23, the Company is able to face its cash
needs for the next year.

These factors together raise substantial doubt about the Company's ability to
continue as a going concern.

The Company has experienced significant turnover of key executive officers. For
the most part, the current management team has been with the Company since April
2001 and is dedicated to the turnaround of the business. Through 2001, the
Company's administration has worked aggressively to mitigate its financial
difficulties. The Company is undertaking the following actions:

A.  CORPORATE DEBT RESTRUCTURING --

    As mentioned in Note 23, the Company carried out a restructuring of the
    Senior Notes. As a result of these negotiations, the Company was able to
    exchange a portion of the Senior Notes for a combination of preferred stock
    and new notes with more favorable terms, such as i) interest free debt for a
    period of four years; and ii) a lower interest rate once interest does start
    to accrue.

B.  PRIVATE EQUITY INVESTMENT OF $66.2 MILLION --

    The Company received a capital infusion of $66.2 million from some of its
    existing shareholders, bondholders and certain new investors.

The consolidated financial statements do not give effect to any adjustments
which would be necessary if the Company is not able to continue as a going
concern.

NOTE 3 -- BASIS OF PRESENTATION:

A.  CONSOLIDATION --

The accompanying consolidated financial statements include the accounts of
Maxcom and subsidiaries Corporativo en Telecomunicaciones, S. A. de C. V.
("Corporativo") and Maxcom Servicios Administrativos, S. A. de C. V. ("MSA").
Both are wholly-owned Mexican subsidiaries, whose main line of business is the
rendering of administrative and technical services, mainly to Maxcom. All
intercompany balances and transactions have been eliminated in the
consolidation.

Certain prior year accounts have been reclassified for comparative presentation
purposes only.

B.  CONVENIENCE TRANSLATION --

U.S. Dollar amounts ($) shown in the consolidated financial statements have been
included solely for the convenience of the reader and were translated from
Mexican Pesos, as a matter of arithmetic computation only, at the December 31,
2001, noon-buying rate of Ps. 9.1560 per U.S.$1.00, as published by The Federal

                                       F-9
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Reserve Bank of New York. Such translation should not be construed as a
representation that the Mexican Peso amounts have been or could be converted
into U.S. Dollars at this or any other rate.

NOTE 4 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying consolidated financial statements are expressed in Mexican
Pesos, denoted by the symbol "Ps." and have been prepared in accordance with
accounting principles generally accepted in Mexico ("Mexican GAAP"). The
significant accounting policies used by the Company in the preparation of its
financial statements, including the concepts, methods and criteria related to
the recognition of the effects of inflation on the financial information, are
summarized below:

a.  RECOGNITION OF THE EFFECTS OF INFLATION --

The financial statements of the Company have been prepared in accordance with
Bulletin B-10, "Recognition of the Effects of Inflation on Financial
Information," as amended, issued by the Mexican Institute of Public Accounting
("MIPA"), which provides guidance for the recognition of the effects of
inflation.

     i.   The Company restates its income statement to reflect the purchasing
          power of the Mexican Peso as of the most recent reporting date
          (December 31, 2001), using a restatement factor derived from the
          change in the National Consumer Price Index ("NCPI") from the month in
          which the transaction occurred to the most recent year-end. Other
          financial statements have been restated to Mexican Pesos in purchasing
          power as of December 31, 2001, using the NCPI as of that date. The
          financial statements of the previous years have also been restated in
          terms of the purchasing power of the Mexican Peso as of the most
          recent reporting date, thus making them comparable, by using a
          restatement factor derived from the change in the NCPI, which for 1999
          and 2000 was 1.1376 and 1.0440, respectively. Therefore, these amounts
          differ from those previously reported.

     ii.   Shareholders' equity accounts are restated to express them in terms
           of constant Pesos. The restated amounts are determined by applying
           factors derived from the NCPI to the historical balances.

     iii.  The result on net monetary position represents the inflationary gain
           or loss, as determined by applying factors derived from the NCPI, on
           the Company's monthly net monetary assets and liabilities during the
           period.

     iv.   Integral income and cost of financing consists of interest income and
           expense, exchange gains or losses and the gain or loss on net
           monetary position. Integral income and cost of financing during the
           development stage period was capitalized to preoperating expenses.
           Once the Company commenced operations, amortization on these costs
           began over a ten-year term.

     v.   Bulletin B-12, "Statement of Changes in Financial Position," issued by
          the MIPA, specifies the appropriate presentation of the statement of
          changes in financial position when the financial statements have been
          restated in constant monetary units. Bulletin B-12 identifies the
          sources and applications of resources as the differences between
          beginning and ending financial statement balances in constant monetary
          units. The Bulletin also requires that monetary and foreign exchange
          gains and losses not be treated as non-cash items in the determination
          of resources provided by operations.

                                       F-10
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B.  CASH AND CASH EQUIVALENTS --

Cash equivalents include highly liquid short-term investments valued at market.

C.  INVENTORY --

   Materials and supplies are valued at the lower of acquisition cost on a
   weighted-average basis or net realizable value ("NRV").

D. TELEPHONE NETWORK SYSTEMS AND EQUIPMENT --

   Telephone network systems and equipment are recorded at acquisition cost and
   restated by applying factors derived from the change in the NCPI since
   acquisition date.

   Telephone network equipment for resale are valued at the lower of acquisition
   cost on a LIFO basis or NRV.

   Depreciation is calculated by the straight-line method on the restated cost
   based on the estimated useful lives of the assets. Depreciation is charged to
   results of operations. During the development stage, depreciation was applied
   to preoperating expenses.

   The Company constructs certain of its own network systems and related
   facilities. Internal costs directly related to the construction of such
   facilities are capitalized. Such internal costs capitalized during the year
   were Ps.11,227 and Ps.23,845 (including Ps.5,213 of integral cost of
   financing for 2001) in 2000 and 2001, respectively. There were none
   recognized in 1999.

   Beginning January 1, 2001, the Company elected to capitalize integral cost of
   financing attributable to assets under construction. Capitalized integral
   financing costs include interest cost, gains from monetary position and
   foreign exchange losses and are determined by reference to the Company's
   average interest cost on outstanding borrowings.

   Maintenance and repairs are expensed as incurred. Replacements and
   betterments are capitalized. The cost and related reserves of assets sold or
   retired are removed from the accounts, and any resulting gain or loss is
   reflected in results of operations.

E.  FREQUENCY RIGHTS --

   Frequency rights are recorded at acquisition cost and restated by applying
   factors derived from the change in the NCPI since acquisition date.
   Amortization is calculated by the straight-line method over the term of the
   concession (see Note 7), from the start of the Company's operations.

F.  PREOPERATING EXPENSES --

   All expenses incurred during the development stage or in specific projects in
   progress are capitalized. Such expenses are amortized on a straight-line
   basis over ten years, once the corresponding project commences operations.

G. INTANGIBLES --

   Purchased software and certain activities of developing internal-use software
   are capitalized and amortized over its expected useful lives. Other
   activities, such as training, maintenance and re-engineering, are expensed as
   incurred.

   Debt issuance costs are amortized on a straight-line basis over the
   outstanding term of the related debt.

                                       F-11
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

H. 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 future cash flows
   estimated to be generated by these assets to their respective carrying
   amounts. In the event an 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.

I.  TRANSACTIONS AND BALANCES IN FOREIGN CURRENCIES --

   Transactions in foreign currencies are recorded at the rates of exchange
   prevailing on the dates they are entered into or settled. Monetary assets and
   liabilities of Mexican companies denominated in those currencies are stated
   in Mexican Pesos at the year-end closing rate published in Mexico's Official
   Gazette. Exchange gains or losses are applied to integral cost of financing.

J.  INCOME TAX AND STATUTORY EMPLOYEES' PROFIT SHARING --

   The Company has incurred tax losses since inception and accordingly has not
   provided for income taxes and statutory employees' profit sharing.

   Starting in the year 2000, the Company adopted the guidelines of the revised
   Bulletin D-4, "Accounting for Income Tax, Assets Tax and Employees' Profit
   Sharing," issued by the MIPA. This Bulletin requires the recognition of
   deferred income tax by using the comprehensive asset and liability method.
   Under this method, deferred income taxes are calculated by applying the
   respective income tax rate to the temporary differences between the financial
   statements' carrying amounts and the tax basis of existing assets,
   liabilities and tax losses. An analysis of the corresponding effects is shown
   in Note 19.

   In July 2000, the MIPA issued Circular 54, "Bulletin D-4 Interpretations,"
   which is intended to clarify certain concepts in connection with the
   guidelines and application of D-4.

   Through December 31, 1999, deferred income tax was recognized by using the
   partial liability method, which consisted of calculating deferred income tax
   only for significant distinct and non-recurring temporary differences arising
   from the carrying amount of related assets and liabilities and their
   respective tax basis.

K. MANAGEMENT ESTIMATES --

   Generally accepted accounting principles require that, in preparing a
   company's financial statements, management make estimates and assumptions
   that affect the reported amounts of assets and liabilities and disclose
   contingent assets and liabilities at the date of the financial statements.
   Actual results could differ from those estimates.

L.  FINANCIAL INSTRUMENTS --

   The Company's financial instruments consist principally of cash and cash
   equivalents, restricted cash, accounts receivable and payable, and notes
   payable. The carrying amounts of such financial instruments, as reflected in
   the balance sheet, approximate their fair value as of December 31, 2000 and
   2001, except for long-term debt. Long-term debt is stated at its face value;
   however, at December 31, 2001, its fair value was 20% of face value, based on
   quoted market prices.

                                       F-12
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

   In February 2000, the MIPA issued Bulletin C-2, "Financial Instruments,"
   which is effective as of January 1, 2001. Bulletin C-2 provides guidance for
   recognizing, measuring and disclosing financial assets and liabilities,
   including accounting for derivative instruments and certain hedging
   transactions. Bulletin C-2 requires that all derivative financial instruments
   be recorded in the balance sheet at their fair values and changes in the fair
   value of financial instruments are recorded in each period in the income
   statement. There was no effect on the financial position of the Company upon
   adoption.

M. REVENUE RECOGNITION --

   The Company recognizes revenues from telephone services provided to
   customers, from the sale of customer-premise equipment, from services
   provided to other telephone-service companies (such as interconnection
   services), and from installation charges.

   Revenues from services provided to customers, including maintenance, are
   recognized in the month the service is rendered.

   Revenues from the sale of customer-premise equipment are recognized at the
   time of the sale and delivery and installation of such equipment.

   Revenues from interconnections services are recognized on an accrual basis.
   The Company has entered into agreements with several telephone carriers with
   a "bill and keep" feature. Under this arrangement, if the imbalance between
   local calls originated by the other carrier and terminated by Maxcom and
   calls originated by Maxcom and terminated by the other carrier during a month
   does not exceed 70%, then no interconnection fee amounts are payable by the
   net user of interconnection services. If the imbalance exceeds 70% in any
   given month, the net user incurs a liability per minute. If the Company fails
   to maintain a significant percentage of residential users, then the "bill and
   keep" arrangement will be terminated and asymmetrical interconnection rates
   may apply.

   The Company also has interconnection agreements for mobile and long distance
   services with other carriers, however, they do not incorporate a bill and
   keep feature.

   Service activation and installation revenues are deferred and recognized over
   the life of the contract.

   Advances from customers are classified as current liabilities until they are
   refunded. When the contract is rescinded, these deposits are applied to any
   outstanding balance.

   For the year ended December 31, 2001, the three largest customers accounted
   for more than 23% of revenues. Management believes that this concentration
   will be reduced over time as the size of operations grow. However, revenues
   could be negatively affected, at least in the short term, if one or more of
   these customers cancel their contract.

   The Company creates a reserve for 90% of any receivable due over 90 days,
   except for high volume customers, whose accounts are 100% reserved for once
   they reach 30 days past due.

N. STOCK-BASED COMPENSATION --

   At December 31, 1999, 2000 and 2001, the Company had several stock option
   transactions (Note 16). Since Mexican GAAP does not have specific guidance to
   value and record transactions of this nature, the Company adopted accounting
   principles generally accepted in the United States ("U.S. GAAP") pursuant to
   Mexican Bulletin A-8, "Supplementary Application of International Accounting
   Standards." Bulletin A-8 recommends the application of another promulgation
   when such instances arise. Accounting Principles Board ("APB") Opinion 14,
   "Accounting for Convertible Debt and Debt Issued with Stock Purchase
   Warrants," APB Opinion 25," Accounting for Stock Issued to Employees," and
   Financial

                                       F-13
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

   Accounting Standards Board ("FASB") Statement 123, "Accounting for
   Stock-Based Compensation," have been applied to the warrant and stock option
   grants.

   In accordance with APB 25, the Company recognizes compensation expense for
   its employee stock option plan using the intrinsic-value method of
   accounting. Under the terms of the intrinsic-value method, compensation cost
   is the excess, if any, of the market price of the stock at the grant date, or
   other measurement date, over the amount an employee must pay to acquire the
   stock.

   In accordance with FAS 123, compensation expense for stock options and
   warrants given to non-employees was determined based on fair value using the
   Black Scholes valuation model.

   Debt with detachable warrants is accounted for using APB 14. A portion of the
   proceeds from the issuance of such debt is allocated to additional paid-in
   capital against debt discount. The allocation is based on the relative fair
   value of the debt versus the warrants. The debt discount is subsequently
   amortized over the outstanding term of the debt on a straight-line basis,
   which does not materially differ from the interest method. Amortization
   expense recognized for the years ended December 31, 2000 and 2001 was
   Ps.9,157 and Ps.2,262, respectively.

O.  ADVERTISING AND PROMOTIONAL COSTS --

   The Company expenses costs of advertising and promotions as incurred.
   Advertising and promotional expenses were Ps.19,030 , Ps.17,641 and Ps.20,715
   in 1999, 2000 and 2001, respectively.

P.  SEGMENT REPORTING --

   The International Accounting Standards Committee's IAS No. 14, "Segment
   Reporting" ("IAS 14"), is applicable to Mexican companies under Bulletin A-8.
   IAS 14 requires that companies look to their internal organizational
   structure and internal reporting system for purposes of identifying segments.
   For all years presented the Company operates only one segment and does not
   have any particular geographical location. The revenue by geographical
   location included in Note 21 is a specific disclosure required by the SCT in
   the Company's concession title.

Q.  NEW ACCOUNTING STANDARDS --

   In August 2000, the MIPA issued Bulletin B-4, "Comprehensive Income," which
   became effective January 1, 2001. This Bulletin sets forth new guidelines for
   reporting and disclosing comprehensive income and its components. Based on
   this Bulletin, comprehensive income includes net income for the year and
   other items which, in accordance with other bulletins, are recorded directly
   in shareholders' equity and which are not a result of shareholders'
   transactions, such as contributions, reductions or distributions of capital.
   Currently, the Company does not have any components of other comprehensive
   income other than net income.

   During 2000, the MIPA issued a revised 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. 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.

     As discussed in Note 4.l. above, during 2000, the MIPA issued Bulletin C-2,
     "Financial Instruments," which requires companies to recognize all
     financial instruments, including derivative contracts, as either assets or
     liabilities in the balance sheet and to measure them at fair value. The
     Company has not entered into derivative contracts either to hedge existing
     risk or for speculative purposes. Accordingly, the Company did not have a
     material effect on its financial statements upon adoption of this Bulletin.

                                       F-14
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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 of
     commitments. The revised Bulletin C-9 states that (i) all contingent assets
     that have a practically 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 cannot be accounted for in the financial statements and are not
     required to be disclosed. Bulletin C-9 requires disclosure of committed
     amounts when it represents significant fixed asset additions. The
     provisions of Bulletin C-9 are required to be applied beginning on January
     1, 2003, although early adoption is recommended. Management is currently
     evaluating the impact that the adoption of Bulletin C-9 will have on its
     consolidated financial statements.

     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 preoperating
     costs should be expensed as a period cost, unless they could be classified
     as development costs. Bulletin C-8 requires that intangible assets,
     including previously existing intangible assets, with indefinite useful
     lives should not be amortized, but must be tested for impairment annually.
     Intangible assets with finite useful lives must 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.
     Management is currently evaluating the impact that the adoption of Bulletin
     C-8 will have on its consolidated financial statements.

NOTE 5 -- CASH AND CASH EQUIVALENTS:

Investments maturing within 30 days at December 31 consist of:
2000          2001
                                                              ------------   ----------
Bank of America: $22,710 and $2,725 in certificates of
  deposit, bearing annual interests at 6.32% and 1.68%,
  respectively..............................................  Ps.  227,609   Ps. 24,913
HSBC Republic: $72,375 and $13,090, in a 5.94% and 1.875%,
  respectively, in a certificate of deposit.................       725,372      119,673
Paine Webber Incorporated: $15,192 and $983 in money market
  instruments, bearing interest at 6.71% and 2.23% per
  annum.....................................................       152,266        8,991
Cash........................................................        14,231       19,006
                                                              ------------   ----------
                                                              Ps.1,119,478   Ps.172,583
                                                              ============   ==========
NOTE 6 -- VALUE-ADDED TAX REFUNDABLE:

Value-Added Tax ("VAT") is levied on goods and services acquired, at a standard
rate of 15%. VAT does not usually represent an additional cost to business
enterprises because the amounts paid will be offset against the VAT liability of
the Company generated on the billing to customers. Because the Company has paid
VAT on investments, costs and expenses incurred, the VAT paid has resulted in a
tax overpayment subject to refund. This tax is being refunded on a regular
basis.

                                       F-15
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7 -- FREQUENCY RIGHTS:

Frequency rights at December 31 consist of the following:
2000         2001
                                                              ----------   ----------
Frequency rights............................................  Ps.120,965   Ps.120,966
Less -- Accumulated amortization............................     (10,080)     (16,129)
                                                              ----------   ----------
                                                              Ps.110,885   Ps.104,837
                                                              ==========   ==========
On October 3, 1997, the Mexican federal government granted the Company
concessions to use and exploit different bands of the radio-electric spectrum
and to establish point-to-point and point-to-multi-point microwave links. The
concession became effective February 28, 1998, and will run through to the year
2018.

For the years ended December 31, 1999, 2000 and 2001, the Company recorded
amortization expense of Ps.4,031, Ps.6,049 and Ps.6,049, respectively.

NOTE 8 -- TRANSACTIONS WITH RELATED PARTIES:

     For the period ended December 31, related party expense transactions were
as follows:
1999        2000        2001
                                                              ---------   ---------   --------
Transactions:
  Office and site lease(1)..................................  Ps. 2,717   Ps.   196   Ps.   --
  Compensation in connection with the operation agreement
     and other expenses with CT Global Telecommunications,
     Inc.(2)................................................     76,029      37,282      1,221
  Strategic assistance agreement and other expenses to
     Bachow and Associates(3)...............................      2,092       1,772        464
  Advisory fee and other expenses to certain
     shareholders(4)........................................        941       1,112        229
  Travel expenses to BancBoston(5)..........................        181          93        246
  Advertising and other management services to Operadora
     Plusgamma(6)...........................................      1,946         660      6,295
                                                              ---------   ---------   --------
                                                              Ps.83,906   Ps.41,115   Ps.8,455
                                                              =========   =========   ========
Related party payables, classified within accrued expenses and other accounts
payable, as of December 31 consist of:
2000     2001
                                                              ------   ------
Compensation in connection with the operation agreement
     and other expenses with CT Global Telecommunications,
     Inc....................................................  Ps.500   Ps. --
  Strategic assistance agreement and other expenses to
     Bachow and Associates..................................      --      133
  Expenses to BancBoston....................................      41       --
  Advertising and other management services expense to
     Operadora Plusgamma(6).................................      --      796
                                                              ------   ------
                                                              Ps.541   Ps.929
                                                              ======   ======
---------------

(1) The Company leases a site, such site is located within the installations of
    Radio Centro Group which is controlled by the family of one of the
    shareholders.

(2) For the year 2000, expense relates to operative consulting services provided
    from warrant holders. For 2001, expense relates to the refund of travel
    expenses for board meetings.

(3) The Company entered into an agreement in which Bachow and Associates, a
    shareholder, provided it with strategic advisory services.

                                       F-16
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) Services provided during 2000 by Bachow and Associates, BancAmerica
    International Investment Corporation and L.A. Strategic Capital Partners II
    LLP, all of which were shareholders

(5) Refund of travel expenses to certain shareholders.

(6) Advertising paid to a company owned by the family of one of the
    shareholders.

NOTE 9 -- TELEPHONE NETWORK SYSTEMS AND EQUIPMENT, NET:

Telephone network systems and equipment, net at December 31 consists of:
USEFUL LIFE
                                                             2000           2001         (YEARS)
                                                         ------------   ------------   -----------
Office furniture.......................................  Ps.    6,194   Ps.    8,513        10
Transportation equipment...............................        15,882         28,286         4
Engineering equipment..................................         9,323          9,356        10
Computer equipment.....................................        29,113         44,119      3.33
Telecommunication equipment and network................       786,899        917,650        10
Electronic equipment...................................       194,803        203,472      3.33
Radio equipment........................................       196,635        224,107        10
Leasehold improvements.................................        54,661         84,861        20(1)
Other..................................................         6,044          8,662        10
                                                         ------------   ------------
                                                            1,299,554      1,529,026
Construction in process:
  Telecommunications...................................        27,973        162,907
Capitalized internal costs.............................        11,227         35,072        10
Less: Accumulated depreciation and amortization........      (204,137)      (358,135)
                                                         ------------   ------------
                                                         Ps.1,134,617   Ps.1,368,870
                                                         ============   ============
---------------

(1) Or life of the lease, whichever is shorter.

During 2001, the Company wrote-off Ps.8,612, net of accumulated amortization of
Ps.1,322, in leasehold improvements related to its vacancy of its original
building lease.

For the years ended December 31, 1999, 2000 and 2001, the Company recorded
depreciation and amortization (of leaseholds) expense of Ps.58,269, Ps.140,659
and Ps.186,309, respectively.

NOTE 10 -- PREOPERATING EXPENSES:

For the years ended December 31, 1999, 2000 and 2001, the Company recorded
amortization expense of Ps.19,911, Ps.30,217 and Ps.30,191, respectively.
Accumulated amortization was Ps.50,128 and Ps.80,319 as of December 31, 2000 and
2001, respectively.

                                       F-17
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11 -- INTANGIBLES:

Intangibles as of December 31 consist of:
2000         2001
                                                              ----------   ----------
Software licenses...........................................  Ps. 17,665   Ps. 39,367
Infrastructure rights.......................................     132,718      119,412
Debt issuance costs and other assets........................     217,335      211,891
                                                              ----------   ----------
                                                                 367,718      370,670
Accumulated amortization....................................     (29,573)     (71,142)
                                                              ----------   ----------
                                                              Ps.338,145   Ps.299,528
                                                              ==========   ==========
For the years ended December 31, 1999, 2000 and 2001, the Company recorded
amortization expense of Ps.2,269, Ps.32,968 and Ps.45,925, respectively. This
included Ps.714, Ps.3,048 and Ps.6,396 of software amortization expense,
respectively.

NOTE 12 -- LONG-TERM DEBT:

Long-term debt as of December 31 consists of:
2000           2001
                                                              ------------   ------------
$275,000 ($300,000 in 2000) 13.75% Senior Notes due April,
  2007......................................................  Ps.3,006,726   Ps.2,514,132
Less -- Discount (net of accumulated amortization)..........       (85,847)       (74,298)
                                                              ------------   ------------
                                                              Ps.2,920,879   Ps.2,439,834
                                                              ============   ============
On March 17, 2000, Maxcom issued $300 million Senior Notes, maturing on April 1,
2007. The main characteristics of these Notes are as follows: (a) unsecured
senior obligations of the Company; (b) pari passu in right of payment to all
existing and future senior indebtedness of the Company; (c) senior in right of
payment to any future subordinated obligations of the Company; (d) subject to
registration with the Securities and Exchange Commission ("SEC"), pursuant to a
Registration Rights Agreement; and (e) unconditionally guaranteed by Corporativo
and MSA. These notes accrue interest at the rate of 13.75% per annum (14.46%
including the withholding tax effect according to prevailing tax regulations in
the year 2001) and are payable semiannually in arrears on April 1 and October 1,
commencing on October 1, 2000. During May and June of 2001, the Company spent
U.S.$10 million for the repurchase in the open market of U.S.$25 million of
notes. As a result, the Company recognized a pre-tax gain of Ps.121,249.

RESTRICTED CASH:

Additionally, the first four semiannual scheduled interest payments were secured
pursuant to a Pledge and Escrow Agreement in a trust, through an historical
deposit of Ps.728,414 ($77.9 million). The trust is invested in a portfolio of
U.S. government securities. The portfolio was in an amount intended to be
sufficient to fulfill said first four payments. As of December 31, 2000 and
2001, this fund amounted to approximately Ps.593.9 and Ps.186.8 million ($59 and
$20 million), respectively, which is presented as restricted cash. After the
mentioned payments, the remaining balance of the fund, if any, will be released
from the pledge.

On September 29, 2000, the Notes were exchanged pursuant to a transaction
registered with the SEC for Series "B" Senior Notes, with substantially
identical terms to those of the old notes, except that the Series "B" can be
freely traded in the open market.

The indenture contains restrictive covenants including: limitations on
indebtedness; limitations on investments, the redemption of capital stock,
prepayment of subordinated obligations and granting of loans;

                                       F-18
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

restrictions on distributions from restricted subsidiaries; limitations on sales
of assets and subsidiary stock; limitation on affiliate transactions; limitation
of sale or issuance of capital stock of restricted subsidiaries; limitations on
liens; limitation on sale/leaseback transactions; and restrictions on mergers
and consolidations, among other items. If an event of default occurs and is
continuing, the trustee or the holders of 25% in principal amount of the
outstanding notes may declare the principal and accrued, but unpaid, interest on
all the notes to be due and payable. As of December 31, 2001, the Company had
complied with all the covenants.

NOTE 13 -- EMPLOYEES BENEFITS:

As of December 31, 2000 and 2001, the Company had the following labor
obligations:

A.  INDEMNITIES TO EMPLOYEES --

   Employees who are dismissed without cause are entitled to severance
   compensation determined in accordance with the provisions of Mexico's Federal
   Labor Law.

B.  SENIORITY PREMIUMS --

   In the event of dismissal without cause, retirement after 15 years of service
   or death, employees are entitled to a seniority premium determined in
   accordance with the provisions of Mexico's Federal Labor Law.

     As of December 31, 2000 and 2001, these items were not significant because
     the seniority of the vast majority of the Company's employees was less than
     two years.

NOTE 14 -- NONRECURRING CHARGES:

Nonrecurring charges at December 31 consist of:
2001
                                                              ---------
Inventory write-off(1)......................................   Ps.6,575
Maintenance contract(1).....................................      3,409
Lease penalty reserve(2)....................................      6,731
Installation expense write-off(3)...........................     13,364
Fixed asset write-off(1)....................................     32,136
                                                              ---------
                                                              Ps.62,215
                                                              =========
---------------

(1) New management wrote-off certain assets and recognized the cost of an
    overdue maintenance contract which no longer are useful for their revised
    objectives.

(2) The Company maintains an operating lease on its headquarters. During 2001,
    the Company vacated a portion of such leased building and moved its
    headquarters to a new building. However, the previous lease has a term of 15
    years, which commenced on October 1, 1998. The Company is looking for a
    sublessor to take over the commitment. In the meantime, the Company
    continues to make payments for the whole of this previous lease. The Company
    is liable for a penalty fee for early termination, the amount of which is
    dependent on the length of time it has actually been leasing the building.

(3) Installation costs that were originally capitalized were reversed to the
    extent they related to customers who are no longer part of the Company's
    customer base.

                                       F-19
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 15 -- CAPITAL STOCK:

Under Mexico's Federal Telecommunications Law and Foreign Investment Law, no
more than 49% of the full voting capital stock of a Mexican corporation holding
a concession to provide local and long-distance telecommunication services may
be held by foreigners.

The capital stock is represented by registered shares with no par value, which
are divided into Series "A", "B" and "C" common shares and Series "N"
limited-voting shares. Series "A" shares may only be subscribed to, acquired or
owned by Mexicans, Series "B" shares may be freely subscribed to and Series "C"
shares can only be subscribed to, acquired or owned by the agent acting as
trustee of a Neutral Investment Trust. Series "N" shares, which may also be
freely subscribed to, are limited-voting shares. Series "C" and "N" shares are
deposited in the Neutral Investment Trust, which in turn issues Certificados de
Participacion Ordinarios ("CPO's"). Series "C" and "N" shares may not be
computed for purposes of determining the foreign-investment percentage under the
terms of the Foreign Investment Law. In compliance with a ruling of the Mexican
Foreign Investment Authorities, in accordance with the Foreign Investment Law
and the Company bylaws, Series "B" shares may not represent more than 49% of the
voting right shares; Series "C" shares may not represent more than 44.5% of the
Company's total outstanding capital stock; and Series "N" shares may not
represent more than 44.5% of the Company's total outstanding capital stock.

The Extraordinary Shareholders' Meeting, held on February 21, 2000, resolved to
modify the equity structure of the Company by converting 50% of Series "N"
shares into new shares of Series "C" shares, at a rate of 1:1. The new Series
"C" shares have full voting and economic rights. They can only be subscribed by
the agent acting as trustee of a Neutral Investment Trust incorporated in
accordance with Mexico's Foreign Investment Law. The trust in turn issues CPOs.
Statutorily, the Trustee must vote the Series "C" shares in the same manner as
the majority of the Series "A" shares are voted. The corporate governance of the
Company remains unaffected.

The same shareholders' meeting also approved the conversion of 255,000 Series
"A" shares into 127,500 Series "C" shares and 127,500 Series "N" shares and the
conversion of 245,000 Series "B" shares into 122,500 Series "C" shares and
122,500 Series "N" shares.

The Extraordinary Shareholders' Meetings, held on June 5 and September 29, 2000,
resolved the following:

1.  To increase the capital stock in an amount of $35 million by issuing
    3,355,446 shares, of which 1,677,723 were Series "C" shares and 1,677,723
    were Series "N" Shares. The shareholders paid $10.44 for each share or its
    equivalent in Mexican Pesos at the exchange rate published in the Official
    Gazette on the day of the payment.

2.  To cancel 4,660,000 Series "N" shares which had previously been authorized
    by the Company to fulfill commitments of the Company in accordance with
    several stock options and warrants agreements (Note 16).

3.  To issue 1,679,866 nominative Series "C" shares and 1,679,866 Series "N"
    shares to be held authorized but not outstanding to fulfill the commitments
    derived from the stock options and warrant agreement (Note 16).

                                       F-20
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, the Company's outstanding shares were:
1999         2000         2001
                                                           ----------   ----------   ----------
Capital stock:
  Series "A".............................................   1,531,428    1,276,428    1,276,428
  Series "B".............................................   1,471,373    1,226,373    1,226,373
  Series "C".............................................          --    5,622,822    5,622,822
  Series "N".............................................   7,320,190    5,622,822    5,622,822
                                                           ----------   ----------   ----------
  Total issued and outstanding...........................  10,322,991   13,748,445   13,748,445
Authorized and not outstanding:
  Series "C".............................................          --    1,679,866    1,679,866
  Series "N".............................................   4,660,000    1,679,866    1,679,866
                                                           ----------   ----------   ----------
  Total authorized.......................................  14,982,991   17,108,177   17,108,177
Of the total outstanding shares, 765,714 Series "A" shares and 763,113 Series
"B" shares represent the minimum fixed portion, with no withdrawal rights, of
Maxcom's capital stock, while the remaining "A", "B", "C" and "N" Series shares
represent the variable portion of the capital stock.

Under the May 1998 Securityholders Agreement, as amended and restated on August
18, 2000, if the Company registers any equity securities for a primary or
secondary public offering prior to May 21, 2002, it must permit parties to the
Securityholders Agreement to include their shares in such an offering. The
Company will bear all expenses of any primary or secondary public offering,
other than the fees of counsel to the holders of the registration rights and any
underwriting commission or discounts. If the Company does not register the
equity securities in a primary or secondary public offering prior to May 21,
2005, the Series "N" shareholders will have the right to retain an investment
banker to: (a) sell substantially all of the assets of the Company; (b) merge or
consolidate into another company; or (c) require parties to the Shareholders
Agreement to sell their shares and distribute the proceeds to the shareholders.

As of December 31, the Company's capital stock consists of:
2000          2001
                                                              ------------   ----------
Capital stock...............................................    Ps.966,732   Ps.926,916
Restatement for effects of inflation........................       262,465       49,180
                                                              ------------   ----------
  Total capital stock.......................................     1,229,197      976,096
Expenses incurred in connection with private placement......       (19,084)          --
Restatement for effects of inflation........................        (6,807)          --
                                                              ------------   ----------
                                                              Ps.1,203,306   Ps.976,096
                                                              ============   ==========
On the October 16, 2001 Shareholders' Meeting, the capital stock was reduced to
absorb the accumulated losses of Ps.254,057.

NOTE 16 -- STOCK OPTIONS:

A.  EMPLOYEE STOCK OPTION PLANS

   i.  Executive stock option plan --

        In May 1998, the Company implemented an executive stock option plan.
        This plan provides that the Company grant options, on every April 1,
        commencing in 1999 through April 2001, to its executive

                                       F-21
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

       officers. Under this plan, a technical committee determines the executive
        officers to whom options to purchase Series "N" shares are granted, as
        well as the terms of those options.

        Generally, options are awarded once certain criteria have been met and
        vest either immediately or over four years (20% upon grant and 20% each
        year thereafter). In the event the employee ceases to be employed by the
        Company, all unvested options are forfeited. Options expire ten years
        from the date of grant.

        On April 1, 1999, 2000 and 2001, the Company granted 142,250, 583,000
        and 206,820 options at $8.70, $10.40 and $12.55 per share, respectively.

   ii.  Board of Directors

        Each member of the Board is entitled to received options to purchase 250
        CPOs at an exercise price of $0.02 per CPO, each time the member attends
        a Board meeting. The Chairman of the Board is entitled to receive 500
        CPOs each time (s)he attends a meeting. One CPO is convertible to one
        series "C" share and one series "N" share.

        Options vest immediately and expire ten years from the date of grant.

Based on APB Opinion No. 25, compensation expense is determined based on the
market or fair-value price of the stock at the measurement date less the amount,
if any, that the employee is required to pay for the stock.

In connection with the above described plans, the Company recorded unearned
deferred compensation expense of Ps.11,007. This amount will be amortized over
the related vesting period. The Company recognized compensation expense of
Ps.9,398, Ps.681 and Ps.1,316 during 1999, 2000 and 2001.

Pursuant to the additional disclosure requirements of FAS 123, the fair value of
options and warrants granted to directors and officers were calculated on the
respective grant dates using the Black Scholes model with the following
assumptions:
FISCAL YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                              1999   2000   2001
                                                              ----   ----   ----
Expected dividend yield.....................................    --     --     --
Expected stock price volatility.............................    --     --     --
Risk-free interest rate.....................................  5.15%  6.35%  4.67%
Expected life of options....................................     5      5      5
If the Company had elected to recognize compensation cost based on the fair
value at the date of grant, consistent with the method as prescribed by FAS 123,
net loss for the years ended December 31 would have changed to the pro forma
amounts indicated below:
1999          2000          2001
                                                        -----------   -----------   -----------
Net loss:
  As reported........................................   Ps.(247,059)  Ps.(623,299)  Ps.(653,110)
  Pro forma..........................................      (248,388)     (625,603)     (652,455)
EPS:
  As reported........................................   Ps.  (24.07)  Ps.  (54.37)  Ps.  (47.50)
  Pro forma..........................................        (24.20)       (53.11)       (47.46)
F-22
MAXCOM TELECOMUNICACIONES, 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 years ended
December 31, is presented below (in thousands of shares):
1999                 2000                 2001
                                          ------------------   ------------------   ------------------
                                                   WEIGHTED-            WEIGHTED-            WEIGHTED-
                                                    AVERAGE              AVERAGE              AVERAGE
                                                   EXERCISE             EXERCISE             EXERCISE
                                          SHARES     PRICE     SHARES     PRICE     SHARES     PRICE
                                          ------   ---------   ------   ---------   ------   ---------
Outstanding at beginning of year........    --       $  --      138      $ 8.70       714     $10.12
  Granted...............................   242        5.11      593       10.27     1,008      13.25
  Exercised.............................   100        0.01       10        0.01        --         --
  Forfeited.............................     4        8.70        7        9.54         1      11.01
                                           ---       -----      ---      ------     -----     ------
Outstanding at the end of the year......   138        8.70      714       10.12     1,721      11.95
                                           ---       -----      ---      ------     -----     ------
Options exercisable at end of year......    28        8.70      174        9.88       447       8.28
                                           ---       -----      ---      ------     -----     ------
Weighted-average fair value of options
  granted during the year (expressed in
  U.S. Dollars).........................             $3.42               $ 2.28               $ 0.21
                                                     =====               ======               ======
The following table summarizes the stock options outstanding for employees (in
thousands of shares):
OUTSTANDING               EXERCISABLE
                                                 -----------------------------   ------------------
                                                            WEIGHTED-AVERAGE              WEIGHTED-
                                                          --------------------             AVERAGE
                                    RANGE OF              REMAINING   EXERCISE            EXERCISE
                                     PRICES      NUMBER     LIFE       PRICE     NUMBER     PRICE
                                   -----------   ------   ---------   --------   ------   ---------
December 31, 1999............  $      8.70    138       9.25       $ 8.70      28      $ 8.70
                                   -----------    ---       ----       ------     ---      ------

    December 31, 2000............  $8.70-10.45    714       9.06       $10.12     174      $ 9.88
                                   -----------    ---       ----       ------     ---      ------

    December 31, 2001............  $      0.01     87       9.41       $ 0.01      87      $ 0.01
                                    8.70-10.45    713       8.06        10.12     319        9.98
                                   12.55-15.06    921       9.28        14.50      41       12.55
                                   -----------    ---       ----       ------     ---      ------
B.  WARRANTS FOR SERVICES RENDERED

   i.  Nissho Iwai American Corp. stock options:

        On March 24, 1998, the Company granted options to Nissho Iwai for
        337,471 Series "N" shares at fixed exercise prices per share of $10.87,
        vesting immediately and expiring March 2005. These options were issued
        in connection with a financing agreement and their cost was to be
        amortized over the 7-year life of the financing. However since the
        financing agreement terminated in March of 2000, the remaining
        unamortized balance was expensed in 2000.

   ii.  CT Global Telecommunications, Inc. ("CTGT") stock options:

        On May 21, 1998, CTGT was given the opportunity to earn up to 250,000
        Series "N" shares at an exercise price of $8.70. These options will
        expire two years after CTGT disposes of its equity participation in
        Maxcom. CTGT's rights to these options are subject to certain
        performance objectives. On this basis, the Company granted CTGT 50,000
        and 77,500 immediately vested Series "N" shares during 1999 and 2000
        (none in 2001), respectively. The cost of these options was expensed as
        granted. The shares subject to this options agreement are limited to a
        maximum gain of $40.00 per share.

                                       F-23
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

   iii.  Bachow and Associates ("Bachow") stock options:

        On May 21, 1998, Bachow was given the opportunity to earn up to 100,000
        Series "N" shares at an exercise price of $8.70 expiring two years after
        Bachow Investment Partners III L.P. disposes of its current equity
        participation in Maxcom. Bachow's right to exercise the options was
        subject to performance objectives. As of December 31, 2000, Bachow had
        accomplished all objectives, which gave it the right to exercise the
        total of the options (30,000 in 1998 and 70,000 in 2000). The cost of
        these options was expensed as granted. The shares subject to this
        options agreement are limited to a maximum gain of $40.00 per share.
        Bachow may elect to have the Company finance up to 95% of the exercise
        price with a 7-year term non-recourse loan that will be secured by the
        shares upon exercise. Bachow will pay the Company 5% of the $870 cost.
        During 1999 and 2000, Bachow advanced the $44 towards the exercise of
        its options and such amount is reflected in additional paid-in capital.

        In addition, on April 28, 2000, the Company issued options to purchase
        94,000 shares at an exercise price of $0.01 for management services
        rendered from Bachow, L.A. Strategic Partners II LLP and BancAmerica
        International Investment Corporation. The cost of these options was also
        expensed as incurred.

   iv.  Warrants in connection with the offering of the Notes:

        The Company granted the bondholders, initial purchasers and underwriters
        of the Senior Notes up to 876,491 warrants to purchase an equivalent
        amount of Series "N" shares at an exercise price of $0.01 per share (or
        $0.02 per CPO). The cost of these warrants was valued at approximately
        $9.3 million. The fair value of the warrants was compared to the fair
        value of the Notes to calculated the proportionate discount to the
        Notes. This discount is being amortized as additional interest expense
        over the life of the Senior Notes.

        All options in connection with these warrants vest immediately and
        expire 7 years from the date of grant.

The fair value of options for services rendered was determined using the Black
Scholes options pricing model and resulted in a non-cash charge of approximately
Ps.1,583, Ps.4,553 and Ps.1,458, which was recognized as expense during the
years ended December 31, 1999, 2000 and 2001.

A summary of the changes of the stock options for non-employees for the years
ended December 31 is presented below (in thousands):
1999                 2000                 2001
                                              ------------------   ------------------   ------------------
                                                       WEIGHTED-            WEIGHTED-            WEIGHTED-
                                                        AVERAGE              AVERAGE              AVERAGE
                                                       EXERCISE             EXERCISE             EXERCISE
                                              SHARES     PRICE     SHARES     PRICE     SHARES     PRICE
                                              ------   ---------   ------   ---------   ------   ---------
Outstanding at beginning of year........   414      $10.47       464     $10.28     1,582      $3.83
    Granted.................................    50        8.70     1,188       1.09        --         --
    Exercised...............................    --          --        70       0.01        --         --
                                               ---      ------     -----     ------     -----      -----
    Outstanding at the end of the year......   464       10.28     1,582       3.83     1,582       3.83
                                               ---      ------     -----     ------     -----      -----
    Options exercisable at end of year......   464       10.28     1,582       3.83     1,582       3.83
                                               ---      ------     -----     ------     -----      -----
    Weighted-average fair value of options
      granted during the year (expressed in
      U.S. Dollars).........................            $ 4.75               $ 8.79                $  --
                                                        ======               ======                =====
F-24
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the stock options outstanding for non-employees
(in thousands):
OUTSTANDING               EXERCISABLE
                                                      -----------------------------   ------------------
                                                                 WEIGHTED-AVERAGE              WEIGHTED-
                                                               --------------------             AVERAGE
                                         RANGE OF              REMAINING   EXERCISE            EXERCISE
                                          PRICES      NUMBER     LIFE       PRICE     NUMBER     PRICE
                                        -----------   ------   ---------   --------   ------   ---------
December 31, 1999.................  $8.70-10.87    464       5.27       $10.28     464      $10.28
                                        -----------    ---       ----       ------     ---      ------
    December 31, 2000.................  $      0.01    970       6.51         0.01     970        0.01
                                         8.70-10.87    612       4.79       $ 9.90     612      $ 9.90
                                        -----------    ---       ----       ------     ---      ------
    December 31, 2001.................  $      0.01    970       5.51         0.01     970        0.01
                                         8.70-10.87    612       3.79       $ 9.90     612      $ 9.90
                                        -----------    ---       ----       ------     ---      ------
NOTE 17 -- ACCUMULATED DEFICIT:

Dividends, either in cash or other forms, paid by the Company will be subject to
income tax in accordance with the Mexican Income Tax Law if the dividends are
paid from earnings that have not been subject to Mexican income taxes computed
on an individual company basis under the provisions of the Mexican Income Tax
Law, as follows:

     Dividends paid to companies resident in Mexico will be subject to a 35%
     income tax to be paid by the companies paying the dividend and applied to
     the result of multiplying the dividends paid by a factor of 1.5385.

     Dividends paid to individuals or foreign residents will be subject to a
     withholding tax of 5% applied to the result of multiplying the dividends
     paid by a factor of 1.5385 (1.5150 if dividends are paid to Mexican
     individuals from earnings that have been subject to Mexican income taxes).

The Company has never generated distributable profits. Any dividends will be
paid in Mexican Pesos.

NOTE 18 -- POSITION IN FOREIGN CURRENCY:

As of December 31, the Company's foreign-currency position was:
2000          2001
                                                              -----------   -----------
U.S. dollars:
Assets......................................................  $   170,799   $    47,290
Liabilities.................................................      320,945       317,977
                                                              -----------   -----------
  Net liabilities in U.S. dollars...........................  $  (150,146)  $  (270,687)
                                                              ===========   ===========
Exchange rate at end of the year (Ps. per U.S.$1.00)........  Ps.  9.6000   Ps.  9.1423
                                                              -----------   -----------
The Company currently does not hedge any of its foreign-denominated assets or
liabilities.

NOTE 19 -- INCOME TAX, ASSET TAX AND TAX-LOSS CARRYFORWARDS:

The Company has had tax losses since inception and accordingly has not been
subject to current income taxes or provided for deferred income taxes. The
difference between taxable income for income tax and pre-tax income for
accounting purposes is due principally to the inflation adjustments recognized
for income tax purposes, translation effects due to the remeasurement into
dollars, the difference between book and tax

                                       F-25
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

depreciation and amortization, and temporary differences for certain items that
are reported in different periods for financial reporting and income tax
purposes.

Asset tax is calculated at a 1.8% rate on the net value of certain assets and
liabilities and is due only when the asset tax exceeds the income tax amount
payable. The asset tax paid can be recovered over the following 10 years, if and
when income taxes exceed asset tax during such year. The Mexican tax government
waives this tax for the first two years of a company's operations.

The components of deferred income tax assets (liabilities) at December 31 are as
follows:
2000          2001
                                                              -----------   -----------
CURRENT:
Bad debt allowance..........................................        3,035         6,521
Inventory...................................................       (3,293)       (9,979)
Prepaid expenses............................................           --        (3,165)
                                                              -----------   -----------
     Total current..........................................         (258)       (6,623)
                                                              -----------   -----------
NON-CURRENT:
Telephone network equipment and leasehold improvements,
  net.......................................................      (68,968)     (184,357)
Frequency rights............................................       (4,331)       (7,055)
Tax on assets...............................................           --         8,679
Intangible assets...........................................      (14,337)       (3,088)
Preoperating expenses, net..................................      (80,973)      (69,307)
Tax loss carryforwards......................................      363,732       630,621
                                                              -----------   -----------
     Total non-current......................................      195,123       375,493
                                                              -----------   -----------
Net deferred income tax assets before valuation allowance...      194,865       368,870
Valuation allowance.........................................     (194,865)     (368,870)
                                                              -----------   -----------
     Net deferred income tax assets (liabilities)...........  Ps.      --   Ps.      --
                                                              ===========   ===========
In accordance with Mexico's Income Tax Law, tax losses are subject to
restatement by inflation and may be carried forward against future taxable
profit of the subsequent ten years. As of December 31, 2001, the Company's
restated cumulative tax losses were:
EXPIRATION
FISCAL YEAR INCURRED                              AMOUNT         YEAR
--------------------                           ------------   ----------
1996.........................................  Ps.    6,583      2006
1997.........................................        23,489      2007
1998.........................................       151,011      2008
1999.........................................       383,517      2009
2000.........................................       514,923      2010
2001.........................................       729,185      2011
                                               ------------
                                               Ps.1,808,708
                                               ------------
F-26
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 20 -- COMMITMENTS AND CONTINGENCIES:

At December 31, 2001, the Company had the following commitments:

The Company maintains operating leases on buildings, sites, poles, and office
furniture. The Company recorded leasing expense of Ps.27,435, Ps.28,766 and
Ps.63,553 in 1999, 2000 and 2001. One of the Company's building lease has an
escalation clause for inflation. The monthly payment of Ps.1,087 is to be
multiplied by the NCPI for the respective year for the remaining 15 year term.
The schedule of estimated future minimum lease payments is as follows:
2001
                                                              ---------
2002........................................................  Ps.32,248
2003........................................................     14,158
2004........................................................      8,821
2005........................................................      7,735
2006 and thereafter.........................................     25,018
                                                              ---------
                                                              Ps.87,980
                                                              =========
The Company entered into a new 5-year, renewable building lease on July 26,
2001, which is denominated in U.S. Dollars. The schedule of future minimum lease
payments on said lease and other U.S. Dollar denominated leases is as follows:
2001
                                                              -------
2002........................................................  $ 3,797
2003........................................................    2,675
2004........................................................    2,613
2005........................................................    2,551
2006 and thereafter.........................................    3,051
                                                              -------
                                                              $14,687
                                                              =======
NOTE 21 -- REVENUE BY GEOGRAPHICAL LOCATION:

The Company's concession title requires a revenue report by geographic location:
CENTER-
SERVICES                                                     METROPOLITAN    SOUTH       TOTAL
--------                                                     ------------   --------   ----------
Year ended December 31, 1999:
  Local....................................................   Ps.29,964     Ps.2,363   Ps. 32,327
  Long distance............................................      55,545          662       56,207
  Rent of dedicated links..................................         506           --          506
  Sales of customer premise equipment......................       1,474          539        2,013
  Lease of capacity........................................         673           --          673
  Other....................................................       8,403          202        8,605
                                                              ---------     --------   ----------
                                                              Ps.96,565     Ps.3,766   Ps.100,331
                                                              =========     ========   ==========
F-27
MAXCOM TELECOMUNICACIONES, S. A. DE C. V. AND SUBSIDIARIES

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CENTER-
SERVICES                                                    METROPOLITAN     SOUTH       TOTAL
--------                                                    ------------   ---------   ----------
Year ended December 31, 2000:
  Local...................................................   Ps.155,773    Ps.30,342   Ps.186,115
  Long distance...........................................       78,656        4,969       83,625
  Rent of dedicated links.................................        2,568           --        2,568
  Sales of customer premise equipment.....................          719          719        1,438
  Lease of capacity.......................................          494           --          494
  Other...................................................        1,911        1,629        3,540
                                                             ----------    ---------   ----------
                                                             Ps.240,121    Ps.37,659   Ps.277,780
                                                             ==========    =========   ==========
CENTER-
SERVICES                                                    METROPOLITAN     SOUTH       TOTAL
--------                                                    ------------   ---------   ----------
Year ended December 31, 2001:
  Local...................................................   Ps.183,610    Ps.76,718   Ps.260,328
  Long distance...........................................       19,797       15,136       34,933
  Rent of dedicated links.................................        2,271           --        2,271
  Sales of customer premise equipment.....................        3,599        1,735        5,334
  Lease of capacity.......................................          187           --          187
  Other...................................................       10,092        1,243       11,335
                                                             ----------    ---------   ----------
                                                             Ps.219,556    Ps.94,832   Ps.314,388
                                                             ==========    =========   ==========
F-28
NOTE 22 - SIGNIFICANT DIFFERENCES BETWEEN MEXICAN AND U.S. GAAP:
---------------------------------------------------------------

The Company's consolidated financial statements are prepared in accordance with
Mexican GAAP, which differ in certain significant respects from accounting
principles generally accepted in the United States of America ("U.S. GAAP"). The
Mexican GAAP consolidated financial statements include the effects of inflation
as provided for under Bulletin B-10 of MIPA. The application of Bulletin B-10
represents a comprehensive measure of the effects of price level changes in the
Mexican economy, and is considered to result in a more meaningful presentation
than historical cost-based financial reporting for both Mexican and U.S.
accounting purposes. Therefore, the following reconciliation to U.S. GAAP does
not include the reversal of such inflationary effects.

The principal differences between Mexican GAAP and U.S. GAAP other than
inflation accounting, are presented in the following pages with an explanation,
where appropriate, of the effects on consolidated net income and shareholders'
equity. Reconciling items are presented net of any gain or loss from monetary
position.

The following is a summary of the adjustments to net loss and shareholders'
equity as of and for the years ended December 31, 1999, 2000 and 2001:
YEARS ENDED DECEMBER 31,                                   1999           2000           2001
-------------------------------------------------   -----------    -----------    -----------
Net loss under Mexican GAAP                         (Ps.247,059)   (Ps.623,299)   (Ps.653,110)
adjustments:
Preoperating expenses  (Note 22a.)                      (90,906)          --             --
Amortization of preoperating expenses (Note 22a.)        19,911         30,217         30,191
Capitalization of interest (Note 22b.)                   20,661         16,085            (91)
Depreciation of capitalized interest (Note 22b.)         (3,164)        (5,002)        (5,800)
Amortization of frequency rights (Note 22c.)             (3,320)            77            403
Installation revenues (Note 22d.)                          --             --           (5,417)
Installation costs (Note 22e.)                             --             --          (16,845)
                                                    -----------    -----------    -----------
Total U.S. GAAP adjustments                             (56,818)        41,377          2,441
                                                    -----------    -----------    -----------
Net loss under U.S. GAAP                            (PS.303,877)   (PS.581,922)   (PS.650,669)
                                                    -----------    -----------    -----------
Weighted-average common shares outstanding,
basic and diluted                                    10,264,827     11,463,667     13,748,445
                                                    -----------    -----------    -----------
Net loss per share under U.S. GAAP                  (Ps.  29.60)   (Ps.  50.76)   (Ps.  47.33)
                                                    ===========    ===========    ===========
F-29
BALANCES AS OF DECEMBER 31,                             1999        2000        2001
---------------------------                           --------    --------    --------
Shareholders' equity (deficit) under Mexican GAAP   Ps.632,249  Ps.461,187  (Ps.191,006)
accumulated adjustments:
Preoperating expenses (Note 22a.)                     (302,173)   (302,173)    (302,173)
Amortization of preoperating expenses (Note 22a.)       19,911      50,128       80,319
Capitalization of interest (Note 22b.)                  41,984      58,069       57,978
Depreciation of capitalized interest (Note 22b.)        (4,224)     (9,226)     (15,026)
Amortization of frequency rights (Note 22c.)           (10,838)    (10,761)     (10,358)
Installation revenues (Note 22d.)                         --          --         (5,417)
Installation costs (Note 22e.)                            --          --        (16,845)
                                                    ----------  ----------  -----------
Total U.S. GAAP adjustments                           (255,340)   (213,963)    (211,522)
                                                    ----------  ----------  -----------

Shareholder's equity (deficit) under U.S. GAAP      Ps.376,909  Ps.247,224  (Ps.402,528)
                                                    ==========  ==========  ===========
Provided below is an analysis of changes in shareholders' equity (deficit) under
U.S. GAAP:
Years ended
                                                                DECEMBER 31,

                                                      1999          2000           2001
                                                   --------      --------       --------
Balance at the beginning of the year             Ps.667,627     Ps.376,909     Ps.247,224
Net loss under U.S. GAAP                           (303,877)      (581,922)      (650,669)
Increase in capital stock                            10,628        350,069           --
New paid in capital                                    --             --              917
Contributions for future
increases of capital                                    377            100           --
Stock options and warrants                            2,154        102,068           --
                                                 ----------     ----------     ----------

Balance at the end of the year                   Ps.376,909     Ps.247,224    (Ps.402,528)
                                                 ==========     ==========    ===========
a. PREOPERATING EXPENSES:
   ---------------------

Under Mexican GAAP, all expenses incurred while a company or a project is in the
preoperating or development stages are capitalized. Such capitalized expenses
are amortized on a straight-line basis after operations commence for a period
not exceeding 10 years. Under U.S. GAAP, such preoperating expenses are expensed
as incurred and reported in accumulated deficit during the development stage in
shareholders' equity.

b. CAPITALIZATION OF INTEREST:
   --------------------------

In accordance with Mexican GAAP, capitalization of the integral cost of
financing (which is comprised of interest expense, foreign exchange gains or

                                      F-30
losses and monetary gain related to the debt) incurred during the period of
construction and installation of an asset is optional. The cost capitalized is
limited to the specific financing obtained for the construction of the related
asset. The Company did not capitalize any amount in 2000 and 1999, but did in
2001 (Note 4d).

Under U.S. GAAP, capitalization of interest is required for certain qualifying
assets that require a period of time to get them ready for their intended use.
The amount of interest to be capitalized is that portion of the interest cost
incurred during the asset acquisition period that theoretically could have been
avoided if expenditures for the assets had not been made, and is not limited to
indebtedness directly attributable to the 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.

c. FREQUENCY RIGHTS:
   ----------------

Under Mexican GAAP, frequency rights are being amortized by the straight-line
method over the term of the concession, from the date the Company commenced
operations.

Under U.S. GAAP, this item should be amortized during the term of the concession
beginning at the granting date of the concession by the SCT.

d. INSTALLATION REVENUES:
   ----------------------

Under Mexican GAAP, installation revenues may be recognized when the service is
rendered.

Under U.S. GAAP, installation revenues and direct installation costs are
deferred and amortized over the the expected customer life. Prior to 2001,
installation revenues were not material.

e.  INSTALLATION COSTS:
    ------------------

Under Mexican GAAP, installation costs not charged to customers are capitalized
and amortized on a straight-line basis over 20 years.

Under U.S. GAAP, direct installation costs are deferred and amortized over the
expected customer life, four years. Prior to 2001, installation costs were not
material.

f. EXTINGUISHMENT OF DEBT:
   ----------------------

As more fully explained in Note 12, during 2001, the Company extinguished
U.S.$25.0 million in debt through a repurchase and recognized a related pre-tax
gain of Ps.121,249, which is included in integral income of financing. Under
U.S. GAAP, such extinguishment, net of tax of Ps.42,437, would have been
reflected as an extraordinary item in the consolidated income statement.

                                      F-31
g. OPERATING INCOME:
   ----------------
Mexican GAAP allows certain nonrecurring charges, such as asset write-offs,
to be classified as non-operating

Under U.S. GAAP, such items are considered part of operating income. Under U.S.
GAAP, consolidated operating loss would have been Ps.295,275, Ps.365,080, and
Ps.531,937 for the years ended December 31, 1999, 2000, and 2001.

h. DEFERRED INCOME TAXES:
   ---------------------

As mentioned in Note 4j. as of January 1, 2000, the Company adopted revised
Bulletin D-4. Under the new method of Bulletin D-4, the Company recognized
future tax consequences based on the difference between the financial statements
and tax bases of assets and liabilities -temporary differences- as of the date
of the financial statements. Through 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 originate, and benefits form tax loss carryforwards were not allowed
to be recognized before the period in which the carryforward is utilized. For
purposes of the reconciliation to U.S. GAAP, the Company has applied Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS
109), for all periods presented.

FAS 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 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.

FAS 109 requires deferred tax assets to be reduced by a valuation allowance if,
based on the weight of available evidence, including cumulative losses in recent
years, it is more likely that not that some portion or all of the deferred tax
assets will no be realized. Accordingly, the Company has established a valuation
allowance for the full amount of the deferred tax assets.

                                      F-32
The components of the deferred tax asset applying FAS 109 consist of the
following:

DECEMBER 31,                                   2000                2001
------------                                   ----                ----

Net deferred tax asset recorded under
Mexican GAAP, before valuation
allowance (*)                                   202,657            368,870

Impact of U.S. GAAP adjustments:
Accruals                                              -             13,113
Frequency rights                                      -              2,470
Telephone network system and equipment             (298)                 -
Preoperating expenses                            88,221                  -
Tax-loss carryforwards                           (7,785)                 -
Installation revenues                                 -              1,896
Installation costs                                    -             (5,896)
Capitalized interest                                  -            (16,334)
Valuation allowance                            (282,795)          (364,119)
                                          -------------      --------------
Net deferred tax asset                    Ps.         -         Ps.      -
                                          =============      ==============

(*) For Mexican GAAP purposed, 100% of this asset was eliminated.

i. STATEMENT OF CHANGES IN FINANCIAL POSITION:
   ------------------------------------------

Under Mexican GAAP, the Company presents statements of changes in financial
position in constant Mexican Pesos. This presentation identifies the generation
and application of resources representing differences between beginning and
ending financial statement balances in constant Mexican pesos.

Under U.S. GAAP, pursuant to FAS No. 95, "Statement of Cash Flows" ("FAS 95"), a
statement of cash flows is a required component of a complete set of financial
statements in lieu of a statement of changes in financial position. FAS 95
establishes specific presentation requirements and additional disclosures but
does not provide guidance with respect to inflation adjusted financial
statements. Based on requirements of the SEC, the effect of inflation
restatements and foreign exchange gains and losses on cash flow related to
financing and operating activities has been included in the line item, "Monetary
gain", and the effect of inflation on cash balances has been included in a
separate line item after cash flows from investing activities.
Years ended December 31,

                                                      1999                2000               2001
                                                      ----                ----               ----
Operating activities:
Net loss under U.S. GAAP                          (Ps. 303,877)    (Ps.581,922)     (Ps.650,669)
Adjustments to reconcile net loss to
net cash flow provided by operating activities:
Depreciation and amortization                           72,760         184,598           243,679
Gain on repurchase of debt                              -                 -             (121,249)
Fixed asset write-offs                                  -                 -               38,711
Allowance for doubtful accounts                          3,231           8,389            10,326
F-33
Monetary (loss) gain                                   (22,714)        (94,069)          (77,588)
Non recurring charges                                   -               -                 23,504
Allowance of inventory obsolescence                     -               -                    528
Unrealized foreign exchange loss, net                  -                30,060            51,597
                                                  ------------    ------------      ------------
                                                      (250,600)       (452,944)         (481,161)
Changes in operating assets and liabilities:

Restricted cash                                        (21,259)       (566,986)          192,602
Accounts receivable                                    (23,690)          5,785           (30,992)
Inventory                                               (7,644)         (2,393)          (19,688)
Prepaid expenses                                        (4,775)         (5,693)              532
Accrued interest                                         6,134         108,682             -
Accrued expenses and other accounts payable             68,972         171,021           (24,903)
                                                  ------------    ------------      -------------

Cash flow used in operating activities                (232,862)       (742,528)         (363,610)
                                                  ------------    ------------      -------------

Financing activities:
Proceeds from debt and notes payable                   718,463       2,797,683            57,324
Payments of notes payable                               -             (749,783)            -
Increase in capital stock                              142,242         426,874             -
Repurchase of debt                                       -              -                (94,400)
Increase in additional paid-in capital                  33,307          97,671           -
                                                  ------------    ------------      ------------

Cash flow provided by (used in) financing
 activities                                            894,012       2,572,445           (37,076)
                                                  ------------    ------------      -------------

Investing activities:
Acquisition of fixed assets                           (737,704)       (598,758)         (455,794)
Other assets                                           (44,495)       (187,163)          (44,205)
                                                  ------------    ------------      -------------

Cash flow used in investing activities                (782,199)       (785,921)         (499,999)
                                                  -------------   ------------      -------------

Cash and cash equivalents:
Effect of inflation and exchange rate changes
on cash and cash equivalents                          (144,588)        (99,321)          (46,210)

Net (decrease) increase in cash
and cash equivalents                                  (265,637)        944,675          (946,895)
Cash and cash equivalents at
beginning of the year                                  440,440         174,803         1,119,478
                                                  ------------    ------------      ------------

Cash and cash equivalents at end of year          Ps.  174,803    Ps.1,119,478        Ps.172,583
                                                  ============    ============      ============
Interest paid                                     Ps.   48,884    Ps.  262,035        Ps.396,415
                                                  ============    ============      ============
Taxes paid                                        Ps.    -        Ps.     -           Ps.    751
                                                  ============    ============      ============
Supplemental disclosures of non-cash activities   Ps.    -        Ps.     -           Ps.  -
                                                  ============    ============      ============
j. RECENT U.S. ACCOUNTING PRONOUNCEMENTS:
   -------------------------------------

In July 2001, the FASB issued FAS No. 141, "Business Combination" which
supercedes APB opinion No. 16, "Business Combinations" and amends or supersedes
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
combination accounted for by the purchase method that are completed after June
30, 2001. FAS No. 141 addresses financial accounting and reporting for business

                                      F-34
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 to business combinations. To date, management
has not entered into any business combinations.

In July 2001, the FASB also issued FAS No. 142, "Goodwill and Other Intangible
Assets" which supersedes 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 does not expect
the adoption of this Standard will have a material impact on its financial
position.

The FASB also recently issued FAS No. 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets". The objectives of FAS No.
143 are to establish accounting standards for the recognition and measurement of
tangible long-lived asset retirement obligations and their associated asset
retirement costs. FAS No. 143 is effective for fiscal years beginning after June
30, 2002. The Company does not expect the adoption of this standard will have a
material impact on its financial position.

In 2001, the FASB issued FAS No. 144, "Accounting for the Impairment of
Long-Lived Assets" which supersedes FAS No. 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". FAS No. 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.
The Company does not expect the adoption of this standard will have a material
impact on its financial position.

In April of 2002, the FASB issued FAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". As a result, companies will not longer be allowed to classify
gains and losses from extinguishments of debt as extraordinay items unless they
meet the criteria of APB No. 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 No. 30 shall be reclassified on a go forward basis. In addition,
FAS No. 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 FAS No. 28 or 98, as applicable, instead of FAS No.
13. The provisions of this statement with regard to FAS No. 4 will be effective
for fiscal years beginning after May 15, 2002, and those for FAS No. 13 will be
effective for transactions ocurring after May 15, 2002. The Company is currently
evaluating the effect this provision will have on its financial position.

                                      F-35
k. CONDENSED CONSOLIDATING FINANCIAL INFORMATION:
   ---------------------------------------------

As mentioned in Note 10, in March 2000 the Company issued U.S.$300 million of
senior unsecured notes (the "Notes") as part of its financing program. The Notes
are joint and severally guaranteed on a senior subordinated, unsecured, full and
unconditional basis, pursuant to a guarantee by the Company's subsidiaries,
Corporativo and MSA ("Guarantor subsidiaries"). The subsidiaries guarantee is
full and unconditional.

The Company has not presented separate financial statements and other
disclosures concerning the Guarantor Subsidiaries because management has
determined that such information is not material to investors.
MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------
Balance Sheet as of December 31, 1999:

Cash and cash equivalents and restricted cash    Ps.174,416     Ps.    387      Ps.    -       Ps.    -      Ps.  174,803
Short- and long-term restricted cash                 21,259              -             -              -            21,259
Accounts receivable, net                             79,111          5,511             -         (5,381)           79,241
Inventory, net                                        7,644              -             -              -             7,644
Prepaid expenses, net                                 4,672            103             -              -             4,775
Frequency rights, net                               116,934              -             -              -           116,934
Telephone network system and equipment, net         897,381              -             -              -           897,381
Preoperating expenses, net                          282,275              -             -              -           282,275
Other assets                                         48,841            119             -            273            49,233
                                               ------------     ----------      --------       --------      ------------
Total assets                                   Ps.1,632,533     Ps.  6,120      Ps.    -      (Ps.5,108)     Ps.1,633,545
                                               ============     ==========      ========       ========      ============
Total liabilities                                 1,000,284          6,393             -         (5,381)        1,001,296
                                               ------------     ----------      --------       --------      ------------

Shareholders' Equity:

Capital stock and additional paid-in capital        879,308             74             -            (74)          879,308
Accumulated deficit                                (247,059)          (347)            -            347          (247,059)
                                               ------------     ----------      --------       --------      ------------
Total shareholders' equity                          632,249           (273)            -            273           632,249
                                               ------------     ----------      --------       --------      ------------
Total liabilities and shareholders' equity     Ps.1,632,533     Ps.  6,120      Ps.    -      (Ps.5,108)     Ps.1,633,545
                                               ============     ==========      ========       ========      ============

Total shareholders' equity  (deficit) under
Mexican GAAP                                        632,249           (273)            -            273           632,249
Preoperating expenses                              (302,173)             -             -              -          (302,173)
Amortization of preoperating expenses                19,911              -             -              -            19,911
Capitalization of interest                           41,984              -             -              -            41,984
Amortization of capitalized interest                 (4,224)             -             -              -            (4,224)
Amortization of frequency rights                    (10,838)             -             -              -           (10,838)
                                               ------------     ----------      --------       --------      ------------
Total shareholders' equity (deficit) under
U.S. GAAP                                      Ps.  376,909    (Ps.    273)     Ps.    -       Ps.  273      Ps.  376,909
                                               ============     ==========      ========       ========      ============
F-36
MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------
Statements of Operations for the year ended
December 31, 1999:

Revenues                                       Ps.  100,331    P.  100,474      Ps.    -     (Ps.100,474)   Ps.    100,331
Operating cost and expenses                        (317,211)      (101,364)            -         100,448          (318,127)
Integral (income) cost of financing                 (29,651)           245             -              (8)          (29,414)
Other (income) expense                                 (528)           134             -             545              (151)
                                               ------------    -----------      --------       ---------     -------------
Net (loss) income                             (Ps.  247,059)  (Ps.     511)     Ps.    -       Ps    511    (Ps.   247,059)
                                               ============    ===========      ========       =========     =============

Net (loss) income for the year under
Mexican GAAP                                  (Ps.  247,059)  (Ps.     511)     Ps.    -       Ps.   511    (Ps.   247,059)

Preoperating expenses                               (90,906)             -             -               -           (90,906)
Amortization of preoperating expenses                19,911              -             -               -            19,911
Capitalization of interest                           20,661              -             -               -            20,661
Amortization of capitalized interest                 (3,164)             -             -               -            (3,164)
Amortization of frequency rights                     (3,320)             -             -               -            (3,320)
                                               ------------    -----------      --------       ---------     -------------
Net (loss) income for the year under
U.S. GAAP                                     (Ps.  303,877)  (Ps.     511)     Ps.    -       Ps.   511    (Ps.   303,877)

Statement of Changes in Financial Position
for the Year Ended December 31, 1999:

Net (loss) income                             (Ps.  247,059)  (Ps.     511)     Ps.    -       Ps.   511    (Ps.   247,059)
Depreciation and amortization                        84,483              -             -               -            84,483
                                               ------------    -----------      --------       ---------     -------------
                                                   (162,576)          (511)            -             511          (162,576)
                                               ------------    -----------      --------       ---------     -------------
Net change in working capital                        16,224            969             -            (430)           16,763
                                               ------------    -----------      --------       ---------     -------------
Resources (used in) provided by
operating activities                               (146,352)           458             -              81          (145,813)
                                               ------------    -----------      --------       ---------     -------------

Financing activities:
Issuance of capital stock                            10,628              -             -               -            10,628
Additional paid-in-capital                            2,530              -             -               -             2,530
Proceeds from loans and notes payables              676,031              -             -               -           676,031
                                               ------------    -----------      --------       ---------     -------------
Resources provided by financing activities          689,189              -             -               -           689,189
                                               ------------    -----------      --------       ---------     -------------
Investing activities:
Preoperating expenses                               (88,419)             -             -               -           (88,419)
Telephone network systems and equipment            (699,978)             -             -           7,143          (692,835)
Other assets                                        (20,424)          (111)            -          (7,224)          (27,759)
                                               ------------    -----------      --------       ---------     -------------
Resources used in investing activities             (808,821)          (111)            -             (81)         (809,013)
                                               ------------    -----------      --------       ---------     -------------

Cash and cash equivalents:
(Decrease) increase during the period              (265,984)           347             -               -          (265,637)
Beginning balances                                  440,400             40             -               -           440,440
                                               ------------    -----------      --------       ---------     -------------
Ending balances                                Ps.  174,416    Ps.     387      Ps.    -       Ps.     -     Ps.   174,803
                                               ============    ===========      ========       =========     =============
Balance Sheet as of December 31, 2000:

Cash and cash equivalents and restricted
cash                                           Ps.1,118,569    Ps.     909      Ps.    -       Ps.     -     Ps. 1,119,478
Short- and long-term restricted cash                593,928              -             -               -           593,928
Accounts receivable, net                             71,822          9,056             -         (22,326)           58,552
Inventory,  net                                       9,408              -             -               -             9,408
Prepaid expenses                                     24,843              -             -         (13,533)           11,310
Frequency rights, net                               110,885              -             -               -           110,885
Telephone network system and
equipment, net                                    1,134,617              -             -               -         1,134,617
Preoperating expenses, net                          252,055              -             -               -           252,055
Intangible assets, net                              338,012            133             -               -           338,145
Other assets                                          8,200              -             -               -             8,200
                                               ------------    -----------      --------       ---------     -------------
Total assets                                   Ps 3,662,340    Ps.  10,098      Ps.    -      (Ps.35,859)    Ps. 3,636,578
                                               ============    ===========      ========       =========     =============
Total liabilities                                 3,201,152         12,335             -         (38,096)        3,175,391
                                               ------------    -----------      --------       ---------     -------------
F-37
MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------
Shareholders' Equity:
Capital stock and additional paid-in capital      1,331,545             74             -            (74)        1,331,545
Accumulated deficit                                (870,358)        (2,311)            -          2,311          (870,358)
                                               ------------     ----------      --------     ----------      ------------
Total shareholders' equity                          461,187         (2,237)            -          2,237           461,187

Total liabilities and shareholders' equity     Ps.3,662,339     Ps. 10,098      Ps.    -    (Ps. 35,859)     Ps.3,636,577
                                               ============     ==========      ========     ==========      ============

Total shareholders' equity under Mexican
GAAP                                                461,187         (2,237)            -          2,237           461,187

Preoperating expenses                              (302,173)             -             -              -          (302,173)
Amortization of preoperating expenses                50,128              -             -              -            50,128
Capitalization of interest                           58,069              -             -              -            58,069
Amortization of capitalized interest                 (9,226)             -             -              -            (9,226)
Amortization of frequency rights                    (10,761)             -             -              -           (10,761)
                                               ------------     ----------      --------     ----------      ------------
Total shareholders' equity under U.S. GAAP     Ps.  247,224    (Ps.  2,237)     Ps.    -     Ps.  2,237      Ps.  247,224
                                               ============     ==========      ========     ==========      ============

Statements of Operations for the year ended
December 31, 2000:

Revenues                                       Ps.  277,780     Ps.171,110      Ps.    -    (Ps.171,110)     Ps.  277,780
Operating cost and expenses                        (666,374)      (172,888)            -        171,110          (668,152)
Integral (income) cost of financing                (233,262)           850             -            (23)         (232,435)
Other (income) expense                               (1,443)        (1,033)            -          1,984              (492)
                                               ------------     ----------      --------     ----------      ------------
Net (loss) income                             (Ps.  623,299)   (Ps.  1,961)     Ps.    -     Ps.  1,961     (Ps.  623,299)

Net (loss) income for the year under
Mexican GAAP                                  (Ps.  623,299    (Ps.  1,961)     Ps.    -     Ps.  1,961     (Ps.  623,299)

Preoperating expenses                                     -              -             -              -                 -
Capitalization of interest                           16,085              -             -              -            16,085
Amortization of preoperating expenses                30,217              -             -              -            30,217
Amortization of frequency rights                         77              -             -              -                77
Amortization of capital interest                     (5,002)             -             -              -            (5,002)
                                               ------------     ----------      --------     ----------      ------------
Net loss (income) for the year under
U.S. GAAP                                      Ps. (581,922)   (Ps.  1,961)     Ps.    -      Ps.  1,961     Ps. (581,922)
                                               ============     ==========      ========      ==========     ============

Statement of Changes in Financial Position
for the Year Ended December 31, 2000:

Net (loss) income                             (Ps.  623,299)   (Ps.  1,961)     Ps.    -     Ps.  1,961     (Ps.  623,299)
Depreciation and amortization                       209,894              -             -              -           209,894
                                               ------------     ----------      --------     ----------      ------------
                                                   (413,405)        (1,961)            -          1,961          (413,405)
                                               ------------     ----------      --------     ----------      ------------
Net change in working capital                      (398,877)         2,503             -         (1,961)         (398,335)

Resources (used in) provided by operating
activities                                         (812,282)           542             -              -          (811,740)
                                               ------------     ----------      --------     ----------      ------------
Financing activities:
Issuance of capital stock                           357,335              -             -              -           357,335
Additional paid-in-capital                           94,932              -             -              -            94,932
Proceeds from loans and notes payables            2,011,368              -             -              -         2,011,368
                                               ------------     ----------      --------     ----------      ------------
Resources provided by financing activities        2,463,635              -             -              -         2,463,635

Investing activities:
Telephone network systems and equipment            (397,503)             -             -              -          (397,503)
Intangible assets                                  (308,464)           (20)            -              -          (308,484)
Other assets                                         (1,233)             -             -              -            (1,233)
                                               ------------     ----------      --------     ----------      ------------
Resources used in investing activities             (707,200)           (20)            -              -          (707,220)
                                               ------------     ----------      --------     ----------      ------------
Cash and cash equivalents:

Increase (decrease) during the period               944,153            522             -              -           944,675
Beginning balances                                  174,416            387             -              -           174,803
                                               ------------     ----------      --------     ----------      ------------
Ending balances                                Ps.1,118,569     Ps.    909      Ps.    -     Ps.      -      Ps.1,119,478
                                               ============     ==========      ========     ==========      ============
F-38
MAXCOM      CORPORATIVO     SERVICIOS     ELIMINATION    CONSOLIDATED
                                                   ------      -----------     ---------     -----------    ------------
Balance Sheet as of December 31, 2001:

Cash and cash equivalents and restricted
cash                                           Ps.  151,466    Ps.   3,288     Ps. 17,829     Ps.       -          172,583
Short- and long-term restricted cash                186,803              -              -               -          186,803
Accounts receivable, net                             90,034           (467)        (5,588)              -           83,979
Inventory, net                                       28,513              -              -               -           28,513
Prepaid expenses, net                                10,303              -              -               -           10,303
Frequency rights, net                               104,837              -              -               -          104,837
Telephone network system and equipment,
net                                               1,368,870              -              -               -        1,368,870
Preoperating expenses, net                          221,854              -              -               -          221,853
Intangible assets, net                              299,430             97              -               -          299,528
Other assets                                         31,283             28              -               -           31,311
                                               ------------    -----------     ----------     -----------    -------------
Total assets                                   Ps.2,493,393    Ps.   2,946     Ps. 12,241     Ps.            Ps. 2,508,580
                                               ============    ===========     ==========     ===========    =============
Total liabilities                                 2,684,399          4,713         11,959           1,484        2,699,586
                                               ------------    -----------     ----------     -----------    -------------

Shareholders' Equity:
Capital stock and additional paid-in
capital                                           1,078,405             74             51            (125)       1,078,405
Accumulated deficit                              (1,269,411)        (1,840)           231           1,609       (1,269,411)
                                               ------------    -----------     ----------     -----------    -------------
Total shareholder's equity                         (191,006)        (1,766)           282           1,484         (191,006)
                                               ------------    -----------     ----------     -----------    -------------
Total liabilities and shareholders' equity     Ps.2,493,393    Ps.   2,946     Ps. 12,241     Ps.       -    Ps. 2,508,580
                                               ============    ===========     ==========     ===========    =============

Total shareholders' equity under
Mexican GAAP                                  (Ps.  191,006)  (Ps.   1,766)    Ps.    282     Ps.   1,484   (Ps.   191,006)

Preoperating expenses                              (302,173)             -              -               -         (302,173)
Amortization of preoperating expenses                80,319              -              -               -           80,319
Capitalization of interest                           57,978              -              -               -           57,978
Amortization of capitalized interest                (15,026)             -              -               -          (15,026)
Amortization of frequency rights                    (10,358)             -              -               -          (10,358)
Installation revenues                                (5,417)             -              -               -           (5,417)
Installation costs                                  (16,845)             -              -               -          (16,845)
                                               ------------    -----------     ----------     -----------    -------------
Total shareholders' equity  under U.S. GAAP   (Ps.  402,528)  (Ps.   1,766)    Ps.    282     Ps.   1,484   (Ps.   402,528)
                                               ============    ===========     ==========     ===========    =============

Statement of Operations for the year ended
December 31, 2001:

Revenues                                       Ps.  314,388    Ps. 133,465     Ps.103,075        (236,540)         314,388
Operating cost and expenses                        (849,258)      (133,249)      (102,892)        236,542         (848,857)
Integral (cost) income of financing                 (55,361)          (183)            46               -          (55,498)
Other                                               (62,879)           438              2            (704)         (63,143)
                                               ------------    -----------     ----------     -----------    -------------
Net (loss) income                             (Ps.  653,110)   Ps.     471     Ps.    231    (Ps.     702)  (Ps.   653,110)
                                               ============    ===========     ==========     ===========    =============

Net (loss) income for  the year under
Mexican GAAP                                  (Ps.  653,110)   Ps.     471     Ps.    231    (Ps.     702)  (Ps.   653,110)
Preoperating expenses                                     -              -              -               -                -
Amortization of preoperating expenses                30,191              -              -               -           30,191
Capitalization of interest                              (91)             -              -               -              (91)
Amortization of capitalized interest                 (5,800)             -              -               -           (5,800)
Amortization of frequency rights                        403              -              -               -              403
Installation revenue                                 (5,417)             -              -               -           (5,417)
Installation costs                                  (16,845)             -              -               -          (16,845)
                                               ------------    -----------     ----------     -----------    -------------
Net (loss) income for the year under
U.S. GAAP                                     (Ps.  650,669)   Ps.     471    (Ps.    231)   (Ps.     702)  (Ps.   650,669)

Statement of Changes in Financial Position
for the year ended December 31, 2001:

Net (loss) income                             (Ps.  653,110)   Ps.     471     Ps.    231    (Ps.     702)  (Ps.   653,110)
Non recurring charges                                62,215              -              -               -           62,215
Gain on repurchase of debt                         (121,249)             -              -               -         (121,249)
Depreciation and amortization                       268,473              -              -               -          268,473
                                               ------------    -----------     ----------     -----------    -------------
Net change in working capital                        86,946           1908         17,547             702          107,103
                                               ------------    -----------     ----------     -----------    -------------
Resources (used in) provided by operating
activities                                         (356,725)         2,379         17,778               -         (336,568)
                                               ------------    -----------     ----------     -----------    -------------
Financing activities                                    917              -              -               -              917
Repurchase of debt                                  (94,400)             -              -               -          (94,400)
                                               ------------    -----------     ----------     -----------    -------------
F-39
Resources used in financing activities          (93,483)          -           -               -           (93,483)
                                             ----------     ----------    -----------    -----------   ----------

Investing activities:

Telephone network systems and equipment        (472,639)          -           -                -         (472,639)
Intangible assets                                (7,307)          -           -                -           (7,307)
Other assets                                    (36.949)          -                51          -          (36,898)
                                             ----------     ----------    -----------    -----------   ----------

Resources (used in) provided by investing
activities                                     (516,895)         -                 51          -         (516,844)
                                             ----------     ----------    -----------    -----------   ----------

Cash and cash equivalents:

(Decrease) increase during the period          (967,103)         2,379         17,829          -         (946,895)

Beginning balances                            1,118,569            909            -            -        1,119,478
                                             ----------     ----------    -----------    -----------   ----------

Ending balances                              Ps.151,466     Ps.  3.288     Ps. 17,829    Ps.   -       Ps.172,583
                                             ==========     ==========    ===========    ===========   ==========
Note 23 - Subsequent event

On April 30, 2002, the Company announced the consummation of the exchange offer
for its 13-3/4% Series B Senior Notes due 2007 and a U.S.$66.2 million private
equity investment. Holders tendered U.S.$259,410,000 in principal amount of
Series B Senior Notes, representing 94.3% of all such notes outstanding. These
holders received in exchange an aggregate of U.S.$165,078,150 in principal
amount of New Senior Notes due March 1, 2007, bearing 0% interest through March
1, 2006, and 10% annual interest in the last year. Tendering holders also
received an aggregate of 26,459,820 series N2 convertible preferred stock, with
an initial liquidation preference of U.S.$0.4927 per share and limited voting
rights, in the form of Mexican Trust Certificates known as "CPOs". Private
equity investees received 6,088,896 and 5,848,209 shares of Series A1 and B1,
respectively, common voting stock with preferred liquidation rights and
122,468,441 Series N1 preferred stock with limited voting rights. In addition,
options to purchase an additional 33.2 million series N shares were granted.
Series B Senior Notes in an aggregate principal amount of U.S.$15,590,000 remain
outstanding.

Under Mexican GAAP in effect prior to revised Bulletin C-9 (see Note 4a.),
troubled debt restructuring are not specifically addressed. Therefore, the new
debt and equity which are issued are recorded at face value and nominal value,
respectively, with any difference between theses amounts and the carrying value
of the old debt being reflected as additional paid in capital. Interest on the
new debt is recognized according to cash flow terms of the arrangement. With
respect to the unamortized debt issuance costs of the old debt, they may
continue to be amortized over the maturity of the new debt when the stated
interest rate on the new debt is lower than that of the debt it replaces. If
this occurs, costs incurred to effect the restructuring are expensed
immediately. Under Mexican GAAP, the Company expects to recognize a loss of
approximately Ps.79,785 for professional fees and warrants granted, a reduction
in liabilities of Ps.785,632 and an increase in stockholders equity of
Ps.1,324,736 in 2002.

                                      F-40
The unaudited pro forma condensed balance sheet under Mexican GAAP of the
Company as of December 31, 2001 after giving effect to certain pro forma
adjustments is as follows:

       ASSETS
       Current assets                                              Ps. 993,819
       Property and equipment, net                                   1,363,548
       Other assets                                                    684,996
                                                                  ------------
       Total assets                                               Ps.3,042,363
                                                                  ============

       LIABILITIES AND SHAREHOLDERS' EQUITY
       Interest payable                                           Ps.      357
       Other current liabilities                                       160,614
       Senior notes, net                                             1,654,203
       Capital stock and additional paid in capital                  2,870,782
       Accumulated deficit                                          (1,643,593)
                                                                   -----------
       Total liabilities and shareholders' equity                 Ps.3,042,363
                                                                  ============

                                      F-41
[BDO LETTERHEAD]

                                  ON SCHEDULE

TO THE BOARD OF DIRECTORS AND SHAREHOLDER
OF MAXCOM TELECOMUNICACIONES, S.A. DE C.V.

The audits referred to in our report to MAXCOM Telecomunicaciones, S.A. de C.V.
dated February 12, 2001. Which is contained in the document constituting part
of this annual Report included the audit of the document constituting part of
this annual Report included the audit of the schedule listed under item 21 for
each of the years ended December 31, 1998, 1999 and 2000. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based upon our audits.

In our opinion, such schedule present fairly, in all material respects, the
information set forth therein

BDO INTERNACIONAL

/s/ BDO INTERNATIONAL

MEXICO CITY
FEBRUARY 12, 2001

                                      S-I
Maxcom Telecomunicaciones, S.A. DE C.V.

                 Schedule II- Valuation and Qualifying Accounts

                         Year Ended 1999, 2000 and 2001

              (Amounts expressed in Million of Mexican Pesos (Ps.)
                 with Purchasing Power as of December 31, 2001)
Balance at    Charged to     Charged
                                  beginning of   cost and       to other                     Balance at
                                    period       expenses       accounts     Deductions    end of period
Allowance for doubtful accounts
                                     1999            --       Ps. 3,094.7        --         Ps. 3,094.7
                                     2000      Ps. 3,094.7    Ps. 9,674.3   Ps. (4,464.0)   Ps. 8,305.0
                                     2001      Ps. 8,305.0    Ps.17,103.3   Ps. (6,777.1)   Ps.18,630.6

Allowance for obsolete and
slow-moving inventories
                                     1999            --          --              --              --
                                     2000            --          --              --              --
                                     2001     Ps.    --       Ps.   582.0   Ps.  --         Ps.   582.0

Allowance for  lease penalty
                                     1999            --          --              --              --
                                     2000            --          --              --              --
                                     2001     Ps.    --       Ps. 6,731.0    Ps. --         Ps. 6,731.0
S-II