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<P align="center"><FONT size="3"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
WASHINGTON, D.C. 20549</B>
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<P align="center"><FONT size="4"><B>Form&nbsp;20-F</B>
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<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>&#091;</B>&nbsp;&nbsp;&nbsp;<B>&#093;</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934<BR><BR></B></FONT></TD>
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<B>OR<BR><BR></B></FONT></TD>
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<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>&#091;X&#093;</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934<BR><BR></B></FONT></TD>
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<B>For the fiscal year ended December&nbsp;31, 2002<BR><BR></B></FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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<B>OR<BR><BR></B></FONT></TD>
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<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>&#091;</B>&nbsp;&nbsp;&nbsp;<B>&#093;</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934<BR><BR></B></FONT></TD>
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<B>for the transition period from __________ to  __________ </B></FONT></TD>
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<P align="center"><FONT size="2"><B>COMMISSION FILE NUMBER 1-14938</B>
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<P align="center"><FONT size="5"><B>Grupo Iusacell, S.A. de C.V.</B>
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<DIV align="center"><FONT size="2"><I>(Exact name of Registrant as specified in its charter)</I>
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<P align="center"><FONT size="2"><B>Iusacell Group</B><BR>
<I>(Translation of Registrant&#146;s name into English)</I>
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<P align="center"><FONT size="2"><B>United Mexican States</B><BR>
<I>(Jurisdiction of incorporation or organization)</I>
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<P align="center"><FONT size="2"><B>Prolongaci&#243;n Paseo de la Reforma 1236<BR>
Colonia Santa Fe<BR>
Delegaci&#243;n Cuajimalpa<BR>
05348 Mexico, D.F.</B><BR>
<I>(Address of principal executive offices)</I>
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<P align="center"><FONT size="2"><B>Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act.</B>
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    <TD align="center" valign="top"><FONT size="2"><B>Title of each class</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<B>Name of each exchange on which registered</B></FONT></TD>
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<HR size="1" noshade></FONT></TD>
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    <TD align="center" valign="top"><FONT size="2">American depositary shares,<BR>
each representing 100 series V shares<br><br></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
New York Stock Exchange</FONT></TD>
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    <TD align="center" valign="top"><FONT size="2">Series&nbsp;V shares</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
New York Stock Exchange*</FONT></TD>
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    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> Not for trading, but only in connection with the registration of American
depositary shares, pursuant to the requirements of the United States
Securities and Exchange Commission.</FONT></TD>
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<P align="center"><FONT size="2"><B>Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act:<br><br></B>
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<P align="center"><FONT size="2"><B>None</B>
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<P align="center"><FONT size="2"><B>Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act:<br><br></B>
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<P align="center"><FONT size="2"><B>None</B>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of outstanding shares of each of the issuer&#146;s classes
of capital or common stock as of the close of the period covered by the Annual
Report:
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    <TD align="center" valign="top"><FONT size="2">Series&nbsp;A Capital Stock<BR>
Series&nbsp;V Capital Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
961,292,484 shares<BR>
900,732,310 shares</FONT></TD>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant (1)&nbsp;has filed all reports
required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12&nbsp;months (or for such shorter period that the
registrant was required to file such reports), and (2)&nbsp;has been subject to such
filing requirements for the past 90&nbsp;days. Yes &#091;X&#093; No &#091;&nbsp;&nbsp;&nbsp;&#093;
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark which financial statement item the registrant has
elected to follow:
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;17 &#091;&nbsp;&nbsp;&nbsp;&#093; Item&nbsp;18 &#091;X&#093;
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<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

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<TR><TD colspan="9"><A HREF="#000">PART I</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">ITEM 3. KEY INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">ITEM 4. INFORMATION ON THE COMPANY</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">ITEM 8. FINANCIAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">ITEM 9. THE OFFER AND LISTING</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">ITEM 10. ADDITIONAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#012">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">PART II</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">ITEM 15. CONTROLS AND PROCEDURES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#018">ITEM 16B. CODE OF ETHICS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">PART III</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#021">ITEM 17. FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">ITEM 18. FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#023">ITEM 19. EXHIBITS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#024">SIGNATURES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#025">CERTIFICATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#026">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv1w1.txt">BY-LAWS OF GRUPO IUSACELL</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv4w3.txt">AMENDED AND RESTATED MASTER LEASE AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv4w4.txt">AMENDED AND RESTATED MASTER LEASE AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv4w5.txt">AMENDED AND RESTATED DEVELOPMENT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv4w7.txt">SECOND AMENDMENT AND WAIVER</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv4w8.txt">FIRST AMENDMENT TO SECOND AMENDMENT AND WAIVER</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv4w9.txt">SECOND AMENDMENT TO SECOND AMENDMENT AND WAIVER</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv99w7w1.txt">COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv99w8w1.txt">LIST OF SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv99w12w1.txt">CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87819exv99w12w2.txt">CERTIFICATION OF THE CHIEF FINANCIAL OFFICER</A></TD></TR>
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<P align="center"><FONT size="2"><B>TABLE OF CONTENTS</B>
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    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>PART I</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><B>1</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 3. KEY INFORMATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 4. INFORMATION ON THE COMPANY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 8. FINANCIAL INFORMATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 9. THE OFFER AND LISTING</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 10. ADDITIONAL INFORMATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>PART II</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><B>106</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
<TD align="right"><FONT size="2">107</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 15. CONTROLS AND PROCEDURES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 16B. CODE OF ETHICS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>PART III</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><B>108</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 17. FINANCIAL STATEMENTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 18. FINANCIAL STATEMENTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ITEM 19. EXHIBITS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">i</FONT>

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

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

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Factors described in this Annual Report under Item&nbsp;3, &#147;Key Information &#151;
Risk Factors,&#148; could cause actual results to differ materially from such
forward-looking statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Iusacell&#148; means </B><B><I>Grupo Iusacell, S.A. de C.V. </I></B><B>This company was formerly
known as </B><B><I>Nuevo Grupo Iusacell, S.A. de C.V. </I></B><B>Unless the context otherwise
requires, &#147;we&#148;, &#147;our&#148; or &#147;us&#148; refers to Iusacell.</B>
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Under Item&nbsp;4, &#147;Information on the Company&#148;, &#147;we&#148;, &#147;our&#148; or &#147;us&#148; refers to
Iusacell and its subsidiaries, unless the context otherwise requires.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Certain terms are defined the first time they are used in this Annual
Report. The &#147;Glossary of Telecommunications Terms&#148; that begins immediately
following Item&nbsp;19, &#147;Exhibits&#148; provides definitions of certain technical terms
used herein.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;30, 2000, Bell Atlantic Corporation, Iusacell&#146;s principal
shareholder, which holds its interest in Iusacell through various subsidiaries,
acquired GTE Corporation in a merger of equals, renaming itself as &#147;Verizon
Communications Inc.&#148; The names of the subsidiaries which hold Iusacell capital
stock directly remained unchanged. The term &#147;Verizon&#148; in this Annual Report
refers to Verizon Communications Inc. or its subsidiaries, as the context
requires. We continue to use the term &#147;Bell Atlantic&#148; in this Annual Report to
refer to Bell Atlantic Corporation and its subsidiaries in connection with
events prior to June&nbsp;30, 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term &#147;Vodafone&#148; in this Annual Report refers to Vodafone Group Plc or
its subsidiaries, as the context requires.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise specified, all references to &#147;U.S. dollars&#148;, &#147;U.S.
Dollars&#148;, &#147;dollars&#148;, &#147;U.S.$&#148; or &#147;$&#148; are to United States dollars, and
references to &#147;Ps.&#148; and &#147;pesos&#148; are to Mexican pesos. We publish our financial
statements in pesos that are adjusted to reflect changes in purchasing power
due to inflation. Thus, unless otherwise specified, our financial data is
presented in constant pesos with purchasing power as of December&nbsp;31, 2002.
Actual amounts may vary from amounts presented in this Annual Report due to
rounding.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will provide without charge to each person to whom this Annual Report
is delivered, upon written or oral request, a copy of any or all of the
documents incorporated by reference into this Annual Report (not including the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Written requests for such copies should be
directed to <I>Grupo Iusacell, S.A. de C.V.</I>, Prolongaci&#243;n Paseo de la Reforma
1236, Colonia Santa Fe, Delegaci&#243;n Cuajimalpa, 05348 Mexico, D.F., Attention:
Carlos Moctezuma, Investor Relations Manager. E-mail requests may be directed
to investor.relations@iusacell.com.mx. Telephone requests may be directed to
011-52-55-5109-5759.
</FONT>

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

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "PART I" -->
<DIV align="left"><A NAME="000"></A></DIV>

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

<!-- link2 "ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B>
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>DIRECTORS AND SENIOR MANAGEMENT</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Not applicable.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>B.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>ADVISERS</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Not applicable.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>C.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>AUDITORS</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Not applicable.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</B>
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Not applicable.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "ITEM 3. KEY INFORMATION" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 3. KEY INFORMATION</B>
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>SELECTED FINANCIAL DATA</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables present selected consolidated financial data of
Iusacell and its consolidated subsidiaries. We have derived this data from the
audited consolidated financial statements of Iusacell as of December&nbsp;31, 2002,
2001, 2000, 1999 and 1998. The financial information presented for fiscal
years ended December&nbsp;31, 2002, 2001 and 2000 was derived from our audited
consolidated financial statements, which we refer to as the Consolidated
Financial Statements, appearing elsewhere in this Annual Report, and you should
read this information in conjunction with the Consolidated Financial
Statements.
</FONT>

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

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

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Bulletin B-10 requires restatement of all financial
statements to constant pesos as of the date of the most recent balance sheet
presented. Accordingly, we have restated all data in the Consolidated
Financial Statements and in the selected financial data set forth below in
constant pesos with purchasing power as of December&nbsp;31, 2002. We have not
reversed the effect of these inflation accounting principles in the
reconciliation of Iusacell&#146;s net profit (loss)&nbsp;and stockholders&#146; equity to U.S.
GAAP.
</FONT>

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

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note 23 to the Consolidated Financial Statements presents the principal
differences, other than inflation accounting, between Mexican GAAP and U.S.
GAAP applicable to us and contains a reconciliation of Iusacell&#146;s net profit
(loss)&nbsp;and stockholders&#146; equity to U.S. GAAP.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>As of and for the Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>(Thousands of constant pesos as of December 31, 2002,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(Thousands of U.S.</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>except
per share and operating&nbsp;data)<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars, except per</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>share and
operating&nbsp;data)<SUP>(2)</SUP></B></FONT></TD>
</TR>

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

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

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

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Services</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,307,589</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,530,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,497,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,955,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,933,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">473,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telephone equipment sales and other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">506,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">525,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">558,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">641,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">593,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,814,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,055,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,056,304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,597,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,526,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">530,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of services</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,035,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,291,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,547,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,619,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,533,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">147,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of telephone equipment sales
and other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">271,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">324,031</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">376,288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">399,644</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">488,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">46,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,306,230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,615,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,923,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,019,355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,021,119</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">193,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,508,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,439,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,132,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,577,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,505,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">336,291</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,455,532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,737,201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,033,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,195,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,817,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">174,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,073,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,713,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,546,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,768,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,247,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215,546</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">450 project write-down</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,325,508</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">325,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,686</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,346,384</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,641</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(447,447</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(60,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(457,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(43,868</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income (expense), net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">179,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(27,720</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">301,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,038,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">854,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Foreign exchange loss (gain), net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,129,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(191,267</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(237,606</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,028,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">98,676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain from monetary position</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(916,914</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(795,818</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(476,396</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(281,823</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(415,625</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(39,868</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">514,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(636,691</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">579,806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">335,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,513,148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">145,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity participation in net profit
(loss)&nbsp;of associated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57,247</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,767</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,741</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(934</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">(Loss) income before assets tax,
income tax, minority interest and
extraordinary item</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,647,938</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">541,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,048,020</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(388,766</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,980,201</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(189,948</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Asset tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">159,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">111,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">486,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">646,227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from continuing operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">before minority interest and</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">extraordinary item</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,734,663</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(105,144</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,213,266</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(543,515</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,100,671</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(201,504</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,563</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from continuing operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">before extraordinary item</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,727,038</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(83,581</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,195,867</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(521,641</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(199,908</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Extraordinary item<SUP>(3)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">486,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of the adoption of</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">the new accounting pronouncement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">(Loss) gain from discontinued
operations<SUP>(4)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(24,908</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,846</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net (loss)&nbsp;profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,751,946</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">401,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,186,497</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(528,488</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(199,908</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">(Loss) per share from continuing
operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.54</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.06</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.86</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.35</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.12</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.11</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net (loss)&nbsp;profit per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.56</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.85</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.35</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.12</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.11</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average number of shares
outstanding</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,121,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,286,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,396,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,495,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,862,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,862,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B><I>U.S. GAAP: </I></B><SUP>(5)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,838,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,055,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,056,304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,451,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,352,569</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">513,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating (loss)&nbsp;profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,139,268</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(93,639</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(458,259</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(497,496</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(384,404</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(36,873</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net (loss)&nbsp;profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,740,479</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">288,189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,200,451</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(855,206</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,913,649</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(183,563</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic
and diluted (loss) profit<BR>per
share<SUP>(6)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.55</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.86</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.57</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.10</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">2</FONT>

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

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>As of and for the Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>(Thousands of constant pesos as of December 31, 2002,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(Thousands of U.S.</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>except
per share and operating data)<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars, except per</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>share and operating</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>data)<SUP>(2)</SUP></B></FONT></TD>
</TR>


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

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

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Working capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,622,976</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">973,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(719,683</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">368,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(91,594</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(8,786</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property and equipment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,168,516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,141,460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,038,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,008,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,367,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">898,544</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,408,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,836,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,413,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,516,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,122,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,450,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,014,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,518,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,437,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,767,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,396,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">805,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,951,734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,304,525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,008,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,571,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,365,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">514,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,660,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,684,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,154,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,139,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,139,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">684,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B><I>U.S. GAAP:</I></B><B><SUP>(5)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Working capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,824,083</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">728,262</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,013,877</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">156,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(249,638</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(23,920</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property and equipment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,943,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,141,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,812,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,762,699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,178,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">880,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,946,144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,362,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,969,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,050,527</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,082,478</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,542,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,028,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,524,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,437,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,767,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,396,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">805,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">39,759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,954,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,172,640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,674,618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,610,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,890,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">469,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

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

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EBITDA<B><SUP>(7)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,052,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,702,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,098,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,708,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,789,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">171,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EBITDA margin<B><SUP>(8)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital expenditures<B><SUP>(9)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,371,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,060,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,273,021</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,094,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">850,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">301,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,038,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">854,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ratio of earnings to fixed
charges<B><SUP>(10)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Cash Flow Data:<SUP>(11)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net resources (used)&nbsp;provided by
operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">920,314</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,379,664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,573,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,176,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(488,970</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(46,904</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net resources used in investing
activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,655,078</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,756,110</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,054,597</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,860,735</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(419,066</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(40,198</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net resources provided by financing
activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,891,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,416,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">822,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">396,940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">628,886</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B><I>U.S. GAAP:</I></B><B><SUP>(5)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by operating
activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,302,994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">913,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,280,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,148,985</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net used in investing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,429,872</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,148,416</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,362,591</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,974,864</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(829,146</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(79,534</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by financing
activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,283,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,316,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,536,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,587,495</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">495,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47,482</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Covered POPs<B><SUP>(12)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66,712,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67,591,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,376,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">89,917,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,356,654</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,356,654</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Subscribers<B><SUP>(13)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Postpaid</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">277,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">352,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">442,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">404,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">356,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">356,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">478,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">970,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,238,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,451,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,725,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,725,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total subscribers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">755,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,322,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,681,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,855,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,081,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,081,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross subscriber additions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">747,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">788,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,092,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,051,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,122,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,122,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average subscribers<B><SUP>(14)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">742,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,290,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,637,481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,721,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,091,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,091,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average monthly postpaid churn<B><SUP>(15)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.58</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.96</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.51</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.76</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.55</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.55</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Penetration<B><SUP>(16)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.13</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.96</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.46</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.10</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.28</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.28</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average
monthly MOUs per<BR>subscriber<B><SUP>(17)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Nominal average monthly mobile
wireless revenue per subscriber<B><SUP>(18)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>




<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Nominal cost to acquire a new
subscriber<B><SUP>(19)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,677</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,419</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">232.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In accordance with Mexican GAAP, financial data for all periods
covered by the Consolidated Financial Statements, as well as the other
financial data presented in this Annual Report, unless otherwise
indicated, has been restated in constant pesos with purchasing power as
of December&nbsp;31, 2002. Restatement of peso amounts is made by
multiplying the relevant nominal peso amount for the relevant period by
the inflation index for the period from the end of the period to which
such nominal peso amount relates through December&nbsp;31, 2002. The
inflation indices used in this Annual Report are 1.3505 for 1998, 1.2024
for 1999, 1.1036 for 2000 and 1.0570 for 2001.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">3</FONT>

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



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(2)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Peso amounts were converted to U.S. dollars at the noon buying rate
reported by the Federal Reserve Bank of New York for December&nbsp;31, 2002,
which was Ps.10.425 per U.S.$1.00. Such conversions should not be
construed as representations that the peso amounts actually represent
such U.S. dollar amounts or could be converted into U.S. dollars at the
rate indicated, or at all.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In determining the peso amounts of our U.S. dollar-denominated obligations
at December&nbsp;31, 2002 in the Consolidated Financial Statements under
Mexican GAAP, however, we applied the exchange rate published by <I>Banco de
M&#233;xico </I>(the Mexican Central Bank) on December&nbsp;31, 2002, which was
Ps.10.439 per U.S.$1.00. The difference between the noon buying rate
reported by the Federal Reserve Bank of New York and the <I>Banco de M&#233;xico</I>
exchange rate causes certain inconsistencies between references to U.S.
dollar amounts in this Annual Report and the actual outstanding U.S.
dollar amounts of our U.S. dollar-denominated obligations. For example,
our actual total debt outstanding, excluding trade notes payable, at
December&nbsp;31, 2002 was U.S.$804.3&nbsp;million. In preparing the Consolidated
Financial Statements, we multiplied this dollar amount by Ps.10.439 (the
<I>Banco de M&#233;xico </I>exchange rate at December&nbsp;31, 2002) to arrive at
Ps.8,396.0&nbsp;million of total debt, excluding trade notes payable. For
purposes of this Annual Report, we have converted this peso amount to U.S.
dollars for the convenience of the reader by dividing it by Ps.10.425 (the
noon buying rate reported by the Federal Reserve Bank of New York at
December&nbsp;31, 2002) to arrive at U.S.$805.4&nbsp;million of total debt,
excluding trade notes payable.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As a result of the combined effect of the restatement of the financial
data in constant pesos with purchasing power as of December&nbsp;31, 2002 and
the translation of peso amounts into U.S. dollars, the amounts shown for
certain balance sheet items are not equal to the actual amounts
outstanding.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(3)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">For 1999, the extraordinary item represents the utilization of tax
loss carryforwards available to us which, under Mexican GAAP in effect
at the time, was required to be classified as an extraordinary item.
Under U.S. GAAP, the utilization of tax loss carryforwards is recorded
as a component of tax expense.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(4)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In December 1998, we discontinued the operations of our subsidiary
<I>Cellular Solutions de M&#233;xico, S.A. de C.V.</I>, which sold cellular handset
accessories. This subsidiary transferred all of its existing
inventories as of December&nbsp;31, 1998 to another one of our subsidiaries
and terminated all of its employees during January and February 1999.
See Note 19 to the Consolidated Financial Statements. Under U.S. GAAP,
the closing of this subsidiary does not constitute a discontinued
operation under Accounting Principles Board Opinion (&#147;APB Opinion&#148;) No.
30. Accordingly, the gain (loss)&nbsp;from discontinued operations is
recorded as operating income (expense).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(5)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">See Note 23 to the Consolidated Financial Statements.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(6)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Diluted (loss)&nbsp;profit per share for the years ended December&nbsp;31,
1998, 2000, 2001 and 2002 is equal to basic (loss)&nbsp;profit per share as
the potential drawdowns and conversions under the subordinated
convertible facility with Bell Atlantic and the shares outstanding under
the executive employee stock purchase plan are excluded from the
computation of diluted (loss)&nbsp;profit per share because to include them
would have been antidilutive for the periods presented. For the year
ended December&nbsp;31, 1998, the number of potentially antidilutive shares
that were excluded from the computation of diluted (loss)&nbsp;profit per
share to account for the drawdowns and conversions under the facility
with Bell Atlantic were 69,285,714 shares, and for the year ended
December&nbsp;31, 1999, the shares outstanding under the executive employee
stock purchase plan were 7,695,235, and 6,485,124, for each of the years
ended December&nbsp;31, 2000, 2001 and 2002.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Diluted (loss)&nbsp;profit per share for the year ended December&nbsp;31, 1999 is
equal to basic (loss)&nbsp;profit per share.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We have never paid dividends, nor do we contemplate paying dividends in
the foreseeable future. Accordingly, we have not included in these
tables a line item for dividends declared per share.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(7)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">EBITDA as used in this Annual Report is operating profit (loss)&nbsp;plus
the sum of depreciation and amortization and is presented because we
believe that EBITDA provides useful information regarding our debt
service ability. EBITDA should not be considered in isolation or as a
substitute for our consolidated income statements or the consolidated
statements of changes in financial position prepared in accordance with
Mexican GAAP or as a measure of profitability or liquidity. EBITDA as
presented in this Annual Report (under both Mexican GAAP and U.S. GAAP)
differs from EBITDA as defined in the instruments governing Iusacell&#146;s
14 1/4% senior notes due 2006 and Iusacell Celular&#146;s 10% senior notes
due 2004 and Iusacell Celular&#146;s senior refinancing secured loan (as
defined herein). In particular, EBITDA in this Annual Report has not
been reduced to reflect the additional expenses that Iusacell Celular
would have incurred had it expensed the cost of cellular telephones it
gives to its postpaid customers rather than amortized such cost over 12
months, in accordance with its current practice under Mexican GAAP.
EBITDA is not (i)&nbsp;a measure determined under U.S. GAAP, (ii)&nbsp;an
alternative to U.S. GAAP operating income (loss)&nbsp;or net income (loss),
or (iii)&nbsp;a measure of liquidity
or cash flows as determined under U.S. GAAP. EBITDA does not represent
discretionary funds. EBITDA, as calculated by us, may not be comparable
to similarly titled measures reported by other companies.
</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">4</FONT>

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



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Our reconciliation of EBITDA to consolidated net profit (loss)&nbsp;under
Mexican GAAP as of December&nbsp;31, 2002, 2001 and 2000, is as follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>




<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EBITDA</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
<TD align="right"><FONT size="2">Ps. 1,789,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps. 2,708,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps. 2,098,842</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,247,065</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,768,521</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,546,289</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Integral financing cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,513,148</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(335,344</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(579,806</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity participation in net (loss)
gain of associated companies and
net (loss)&nbsp;gain on sale of equity
investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,741</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,767</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets tax and income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(120,470</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(154,749</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(165,246</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit from discontinued operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of the adoption of
the new accounting pronouncements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,847</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"></FONT></DIV></TD>
 <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2"><HR size="1" noshade></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
<TD><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2"><HR size="1" noshade></FONT></TD>
    <TD><FONT size="2"></FONT></TD>
   <TD><FONT size="2">&nbsp;</FONT></TD>
<TD><FONT size="2">&nbsp;</FONT></TD>
 <TD align="right"><FONT size="2"><HR size="1" noshade></FONT></TD>
    <TD><FONT size="2"></FONT></TD></TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss for the year</FONT></DIV></TD>
 <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2">(Ps. 2,084,037</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
<TD><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2">(Ps. 528,488</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
   <TD><FONT size="2">&nbsp;</FONT></TD>
<TD><FONT size="2">&nbsp;</FONT></TD>
 <TD align="right"><FONT size="2">(Ps. 1,186,497</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>


</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"></FONT></DIV></TD>
 <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2"><HR size="4" noshade></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
<TD><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2"><HR size="4" noshade></FONT></TD>
    <TD><FONT size="2"></FONT></TD>
   <TD><FONT size="2">&nbsp;</FONT></TD>
<TD><FONT size="2">&nbsp;</FONT></TD>
 <TD align="right"><FONT size="2"><HR size="4" noshade></FONT></TD>
    <TD><FONT size="2"></FONT></TD></TR>

</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(8)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">EBITDA margin is calculated by dividing EBITDA by the total revenues
for the respective period.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(9)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Capital expenditures include fixed asset purchases, capitalized labor
costs, the capitalization of interest costs related to long-term debt
incurred in connection with the acquisition of property, plant and
equipment, trade-in credits received from Lucent Technologies for
exchanging our previous analog network for a digital and analog network
supplied by Lucent Technologies and, in some cases, the net value of
long distance fiber acquired in swaps for Iusacell long distance fiber.
In 1999 and 2000, pursuant to a waiver from its bank lenders, and
beginning in 2001, pursuant to the terms of its senior refinancing
secured loan, Iusacell Celular excluded capitalized interest cost from
capital expenditures in determining its compliance with capital
expenditure limitations set forth in its debt covenants. Pursuant to
waivers from its lenders, Iusacell Celular excluded Lucent trade-in
credits from capital expenditures in determining its compliance with the
capital expenditures limitations set forth in its debt covenants. See
Item&nbsp;5, &#147;Operating and Financial Review and Prospects &#151; Liquidity and
Capital Resources &#151; Capital Expenditures.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(10)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The ratio of earnings to fixed charges covers continuing operations.
For this purpose, earnings are calculated as income or loss before taxes
plus (i)&nbsp;integral financing cost, including amortization of capitalized
interest, (ii)&nbsp;the interest portion of annual rent expense and (iii)
losses from less than 50%-owned affiliates. Fixed charges include the
expensed and capitalized portions of integral financing cost. Earnings
were insufficient to cover fixed charges in 1998, 2000, 2001 and 2002.
The fixed charge coverage deficiency for the years ended December&nbsp;31,
1998, 2000, 2001 and 2002 amounted to Ps.2,736.0&nbsp;million (U.S.$262.5
million), Ps.966.1&nbsp;million (U.S.$92.7&nbsp;million), Ps.295.5&nbsp;million
(U.S.$28.3&nbsp;million), and Ps.2,945.9&nbsp;million (U.S.$282.6&nbsp;million)
respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(11)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Under Mexican GAAP, the cash flow data represents changes in
financial position and has been adjusted for inflation and includes
certain non-cash items, such as monetary gains and losses and foreign
exchange gains and losses and, as a result, is not comparable to U.S.
GAAP cash flow data. Under U.S. GAAP, the effect of inflation
adjustments has been included in the separate line item &#147;Gain on net
monetary position and foreign exchange losses&#148; in Note 23 to the
Consolidated Financial Statements.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(12)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Covered POPs is the aggregate number of POPs in the geographic
regions in which we have concessions for wireless services and whom we
therefore have the potential to serve. POPs means points of presence,
or population, for a given area based on census data published by
Mexico&#146;s National Institute of Statistics, Geography and Information
Processing (<I>Instituto Nacional de Estad&#237;stica, Geograf&#237;a e Inform&#225;tica</I>).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(13)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Unless otherwise indicated, subscribers refers to the total number of
mobile wireless customers included in our subscriber base in the
geographic regions we cover at the end of the respective periods.
Mobile wireless subscribers for the periods presented includes cellular
subscribers and PCS subscribers. In December 2001, we began providing
limited commercial PCS services in Monterey and Tijuana and in 2002 in
other cities of regions 1 and 4. A prepaid customer is included as a
subscriber if, at the end of the period, such customer&#146;s telephone
number has not yet been deactivated. See Item&nbsp;4, &#147;Information on the Company &#151; Business Overview
&#151; Mobile Wireless Services &#151; Prepaid Customers.&#148;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">5</FONT>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(14)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Average subscribers represents the rolling monthly average number of
subscribers for the respective periods.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(15)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Average monthly postpaid churn for a given period is calculated by
dividing the sum of all postpaid subscribers disconnected during such
period by the sum of the beginning-of-month postpaid subscribers for
each of the months in such period, expressed as a percentage. See Item
4, &#147;Information on the Company &#151; Business Overview &#151; Mobile Wireless
Services &#151; Postpaid Customers&#148; and Item&nbsp;5, &#147;Operating and Financial
Review and Prospects &#151; Results of Operations.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(16)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Penetration represents the end-of-period subscribers divided by the
end-of-period population in the geographic regions we cover, expressed
as a percentage.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(17)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Effective January&nbsp;1, 2000, we changed the methodology by which we
determine average monthly minutes of use (MOUs). Under the current
methodology, average monthly MOUs per subscriber for a given period are
calculated by dividing total MOUs (which includes minutes of use from
incoming calls to postpaid customers, which had previously been
excluded) for the period by the sum of the monthly average number of
subscribers for each of the months in such period. Average monthly MOUs
for 1999, which were 77 under the methodology used in 1998 and 1999,
have been restated under the current methodology. See Item&nbsp;5,
&#147;Operating and Financial Review and Prospects &#151; Results of Operations.&#148;
When reporting average monthly MOUs per subscriber, we include &#147;incoming
calls only&#148; prepaid subscribers and the MOUs they generate.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(18)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Effective January&nbsp;1, 2000, we changed the methodology by which we
determine nominal average monthly mobile wireless revenue per subscriber
(ARPU). Under the current methodology, ARPU for a given period is
calculated by dividing the sum of the nominal monthly revenues and other
cellular revenues (excluding revenues generated from the sale of
handsets and accessories to postpaid customers) for each of the months
in the period by the sum of the monthly average mobile wireless
subscribers for each of the months in such period. ARPU for 1999, which
was Ps.346.0 under the methodology effective in 1998, has been restated
under the current methodology. See Item&nbsp;5, &#147;Operating and Financial
Review and Prospects &#151; Results of Operations.&#148; When reporting ARPU, we
include &#147;incoming calls only&#148; prepaid subscribers and the revenue they
generate.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(19)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Through December&nbsp;31, 1999, nominal cost to acquire a new subscriber
represented sales, marketing and advertising costs associated with
postpaid plans, plus the costs of cellular phones we gave to postpaid
customers, for the respective period (in nominal pesos) divided by the
gross postpaid customer additions for such period. Effective January&nbsp;1,
2000, we changed the methodology by which we determine nominal cost to
acquire a new subscriber and more accurately reflect postpaid customer
acquisition costs. The new methodology includes only handset subsidies
and sales commissions and excludes allocations of advertising and
overhead costs. Nominal cost to acquire a new subscriber for 1999,
which was Ps.3,527.0 under the old methodology, has been restated under
the new methodology. Nominal cost to acquire a new subscriber for 1998
has not been restated under the new methodology.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Exchange Rates</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise specified, this Annual Report contains translations of
peso amounts into U.S. dollars solely for the convenience of the reader based
on the exchange rate reported by the Federal Reserve Bank of New York as its
noon buying rate for pesos, which we refer to as the Noon Buying Rate. At
December&nbsp;31, 2002, the Noon Buying Rate was Ps.10.425 per U.S.$1.00. These
currency conversions should not be construed as representations that the peso
amounts actually represent such dollar amounts. Additionally, these
conversions should not be construed as representations that these peso amounts
have been, could have been or could be converted into U.S. dollars at those or
any other rates of exchange.
</FONT>



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



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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the high, low and average Noon Buying Rates
expressed in nominal pesos per U.S. dollar for each of the years ended December
31, 1998, 1999, 2000, 2001 and 2002. The Noon Buying Rate on June&nbsp;24, 2003 was
Ps.10.532 per U.S.$1.00.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Noon Buying Rate<sup>(1)</sup></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Average<sup>(2)</sup></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.240</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.562</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.183</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.972</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(1)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><I>Source: </I>Federal Reserve Bank of New York</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(2)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Average of month-end rates for annual data.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the high and low Noon Buying Rates
expressed in nominal pesos per U.S. dollar for each of the previous six months.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="56%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="9"><FONT size="1"><B>Noon Buying Rate<sup>(1)</sup></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="9"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Month end</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December&nbsp;31, 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January&nbsp;31, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February&nbsp;28, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.064</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March&nbsp;31, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.661</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April&nbsp;30, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.770</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May&nbsp;31, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(1)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><I>Source: </I>Federal Reserve Bank of New York.</FONT></TD>
</TR>
</TABLE>

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

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


<P align="left"><FONT size="2"><B>C. </B>&nbsp;&nbsp; <B>REASONS FOR THE OFFER AND USE OF PROCEEDS</B>
</FONT>

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


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


<P align="left"><FONT size="2"><B>Risk Factors Relating to Iusacell</B>
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><b><I>We are a holding company and can pay our liabilities only through the
cash flow from our subsidiaries or out of the proceeds of our financings.
Our obligations, including under Iusacell&#146;s 14 1/4% senior notes due 2006
are structurally subordinated to those of our subsidiaries&#146;
creditors.</I></b></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell is a holding company with no significant assets other than the
stock of our subsidiaries.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to pay our obligations, we must rely on income from dividends and
other cash flow from our subsidiaries or debt or equity financings. Because we
are a holding company, the claims of our creditors are structurally
subordinated to the claims of our subsidiaries&#146; creditors with respect to the
assets of such subsidiaries. At December&nbsp;31, 2002, our consolidated
subsidiaries&#146; total indebtedness, including trade notes payable,
was Ps.4,851.2&nbsp;million (U.S.$465.3&nbsp;million) and may increase in the future.
For a description of some of our obligations and liabilities, see Item&nbsp;5,
&#147;Operating and Financial Review and Prospects &#151; Liquidity and Capital
Resources.&#148;
</FONT>
<P align="center"><FONT size="2">7</FONT>

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



<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our current debt agreements prevent our subsidiaries from paying
distributions or dividends or making cash available to us until at least
December 2006, except for those payments of dividends or loans or advances at
such times and in such amounts as shall be necessary to permit Iusacell to pay
scheduled interest (including any tax gross-up) and principal payments as and
when due in respect of our 14 1/4% senior notes due 2006, which we refer to as
the Iusacell senior notes, so long as (i)&nbsp;no event of default has occurred and
is continuing, scheduled interest (including any tax gross-up) as and when due
in respect of any notes issued to refinance the Iusacell senior notes and (ii)
no event of default has occurred and is continuing in an aggregate amount of up
to U.S.$5.0&nbsp;million to discharge our liabilities incurred in the ordinary
course of business. On April&nbsp;28, 2003, Iusacell Celular&#146;s senior refinancing
secured loan was amended, and a temporary waiver and consent was granted by the
lenders. As part of such amendment, Iusacell Celular temporarily agreed not to
make any restricted payment, loan or advance to, or repay any loan or advance
from any affiliate, including Iusacell. Dividends and cash flow from our
subsidiaries are therefore severely restricted by the terms of the outstanding
debt of our subsidiaries and the restrictive covenants that govern the debt.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless we are able to successfully restructure our consolidated
indebtedness, our ability to access the debt and equity capital markets or
obtain third party financing will be significantly reduced or eliminated. As
described below, Iusacell Celular is in default under its senior refinancing
secured loan and we did not make the interest payment due on the Iusacell
senior notes which was due on June&nbsp;1, 2003 and an event of default would exist
upon the expiration of the grace period on July&nbsp;1, 2003. Consequently, our
foreign and local currency corporate credit rating has been lowered to default
levels<B>. </B>Our principal shareholders are under no obligation to provide
financial resources to us, and have not indicated that they are prepared to do
so. Therefore, unless we can successfully restructure our consolidated debt,
we believe that we will be unable to satisfy our liabilities. A material
unsatisfied liability at the holding company level could lead us to bankruptcy
or reorganization.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>We are in default of our obligations under the Iusacell senior notes
which will enable the holders of such notes to accelerate our repayment
obligations after the expiration of a grace period.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not generate sufficient cash flows from our operations to make the
June&nbsp;1, 2003 U.S.$25.0&nbsp;million interest payment on the Iusacell senior notes
and, as a result, we did not make that payment. We have a 30-day grace period
to make the payment before an event of default will occur. Since we do not
anticipate making the June&nbsp;1, 2003 interest payment within the grace period, an
event of default under the indenture governing the Iusacell senior notes, which
we refer to as the Iusacell indenture, will occur and the holders of the
Iusacell senior notes will have the right to declare our indebtedness under the
Iusacell senior notes immediately due and payable. In addition, the right of
such holders to accelerate our repayment obligations under the Iusacell senior
notes will cause an event of default under the terms of Iusacell Celular&#146;s
senior refinancing secured loan and the lenders could declare the indebtedness
due thereunder immediately due and payable. If the lenders under the senior
refinancing secured loan decide to accelerate the indebtedness, this will
result in an event of default under the indenture (the &#147;Iusacell Celular
indenture&#148;) governing the 10% senior notes due 2004 issued by Iusacell Celular
(the &#147;Iusacell Celular senior notes&#148;), which will permit the holders of such
notes to accelerate Iusacell Celular&#146;s repayment obligations under the Iusacell
Celular senior notes. Also, should the foregoing defaults occur, the
cross-default provisions contained in our various other credit agreements may
also be triggered.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that the holders of the Iusacell senior notes or the lenders
under the senior refinancing secured loan choose to accelerate the maturity of
their debt, neither we nor Iusacell Celular would have the cash resources to
repay such amounts. Due to the depressed state of the value of
telecommunication assets and the structural subordination of the claims of the
holders of the Iusacell senior notes to those of our subsidiaries&#146; creditors,
it is unlikely that the value of the assets held by our subsidiaries will be
sufficient to first satisfy their creditors and then the claims of our creditors, including the holders of the Iusacell senior
notes, which could lead us to bankruptcy or reorganization. For a further
description of our status as a holding company, see the risk factor entitled
&#147;We are a holding company and can pay our liabilities only through the cash
flow from our subsidiaries or out of the proceeds of our financings. Our
obligations, including under the Iusacell senior notes, are structurally
subordinated to those of our subsidiaries&#146; creditors.&#148; For a further
description of some of our obligations and liabilities, see Item&nbsp;5, &#147;Operating
and Financial Review and Prospects &#151; Liquidity and Capital Resources.&#148; If an
acceleration of the Iusacell senior notes and the senior refinancing secured
loan occurs, the value and market price of our equity would be significantly
adversely affected and our equity holders could lose their entire investment.
</FONT>
<P align="center"><FONT size="2">8</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><b><I>If Iusacell Celular does not receive an extension of the temporary
amendment and waiver to Iusacell Celular&#146;s senior refinancing secured loan,
the lenders under that loan will be able to accelerate Iusacell Celular&#146;s
repayment obligations.</I></b></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first half of 2003, Iusacell Celular exceeded the permitted
leverage ratio (as defined in the senior refinancing secured loan) of 2.50. On
April&nbsp;28, 2003 Iusacell Celular and the lenders entered into a temporary
amendment and waiver to the senior refinancing secured loan , which we refer to
as the second amendment and waiver, to increase the permitted leverage ratio
under the senior refinancing secured loan from 2.50 to 2.70. On May&nbsp;22, 2003,
the second amendment and waiver was extended until June&nbsp;13, 2003. Most
recently, on June&nbsp;12, 2003, the second amendment and waiver was further
extended until June&nbsp;26, 2003. See Item&nbsp;5, &#147;Operating Financial Review and
Prospects &#151; Liquidity and Capital Resources &#151; Iusacell Celular Long-Term
Indebtedness &#151; Loan Covenant Waivers and Modifications.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that Iusacell Celular will be able to obtain another
extension of the second amendment and waiver on the expiration date. On June
26, 2003, if the second amendment and waiver is not further extended, Iusacell
Celular will be in default of a financial ratio covenant under the senior
refinancing secured loan, which will constitute an event of default under that
loan as if the second amendment and waiver had never been executed. As a
result, the lenders under the senior refinancing secured loan could declare the
indebtedness under that loan immediately due and payable. In addition, if the
second amendment and waiver is not further extended and the lenders thereunder
accelerate the loan, defaults would occur under the Iusacell indenture and the
Iusacell Celular indenture, which would permit the holders of the Iusacell
senior notes and the Iusacell Celular senior notes to accelerate Iusacell&#146;s
repayment obligations and Iusacell Celular&#146;s repayment obligations.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><b><I>There is substantial doubt as to our ability to continue as a going
concern due to our high level of leverage and recurring
losses.</I></b></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In its Report of Independent Accountants dated June&nbsp;13, 2003,
PricewaterhouseCoopers, S.C. stated that we are highly leveraged and have
suffered recurring losses from operations that raise substantial doubt as to
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.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, our accumulated losses were nearly the equivalent of two-thirds
of our capital stock. According to the Mexican Companies Law (<I>Ley General de
Sociedades Mercantiles</I>), an interested party may file a claim for dissolution
and force us into a liquidation process (<I>Proceso de Concurso Mercant&#237;l</I>) of our
assets if the accumulated losses exceed two-thirds of our contributed capital
during any fiscal year.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>If we are unable to service our indebtedness, we also face a
substantial risk of Mexican reorganization-related proceedings and the
suspension or termination of all or a portion of our business under our
concessions.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we default on our obligations, including the Iusacell senior notes,
some or all of our creditors will have the option of taking legal action
against us, including instituting a reorganization proceeding in Mexico.
Further, we may choose to institute a voluntary reorganization proceeding under
Mexican law. If any such proceedings were to be instituted, we could not
predict their duration. We are not aware of any regulated company of our size
that has successfully completed a restructuring under the new Mexican
reorganization law since it was passed in May 2000. A reorganization
proceeding is likely to result in significant changes to our existing
obligations which could include the cancellation or rescheduling of all or part
of those obligations. During any such proceeding, our ability to operate or manage our business, to retain employees, to maintain existing
or create new client relationships, to continue to collect payments for our
services or to obtain any type of funding or financing would likely be
materially adversely affected. Moreover, in the event of our bankruptcy, our
operating concessions which are critical to our business, may be subject to
termination. There can be no assurance that the holders of the Iusacell senior
notes would receive any meaningful recovery from a bankruptcy proceeding.

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

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>Mexican reorganization laws may not be as favorable to the holders of
the Iusacell senior notes as U.S. insolvency and bankruptcy laws.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current Mexican reorganization law is based on the largely untested
<I>Ley de Concursos Mercantiles </I>enacted in May 2000 (Law of Commercial
Reorganizations), which we refer to as the LCR, which provides for two
different and separate proceedings: conciliation and bankruptcy. The
conciliation phase lasts up to 185&nbsp;days, absent protracted litigation. This
initial term is subject to extension for two 90-day periods. The objective of
the conciliation phase is to reach an agreement between the debtor and its
creditors to restructure the indebtedness of the debtor. The bankruptcy phase
does not have a specific term within which it must be concluded. It is expected
that both proceedings are likely to require significantly more time and be
significantly more unpredictable than a reorganization or bankruptcy proceeding
under U.S. laws. If we were to be declared subject to reorganization under the
LCR, the holders of the Iusacell senior notes would have to file a claim in
Spanish against the estate of Iusacell in Federal District Court in Mexico
City, Mexico. Upon the court&#146;s recognition of a holder of an Iusacell senior
note as a creditor of Iusacell, that holder&#146;s claim would be unsecured and
would rank equally with all other unsecured claims filed against our estate.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>We may be unable to fund our capital expenditure programs, or pursue
business opportunities because our subsidiaries are highly leveraged, have
insufficient cash flow and have limited or no access to additional capital.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, our cash generated from operating activities has not been
sufficient to meet our debt service, working capital and capital expenditure
requirements. We have relied on the capital markets for new equity and debt
financing, vendor financing, borrowings and equity contributions from our
principal shareholders to meet such funding needs.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, our total consolidated indebtedness, including
trade notes payable, was Ps.8,586.3&nbsp;million (U.S.$823.6&nbsp;million), or
approximately 61.6% of our total capitalization.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the years ended December&nbsp;31, 2001 and December&nbsp;31, 2002, our earnings
were insufficient to cover our fixed charges by Ps.295.5&nbsp;million (U.S.$28.3
million) and Ps.2,945.9&nbsp;million (U.S.$282.6&nbsp;million), respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to implement our operating strategy through 2004, we will have to
incur significant capital expenditures. We expect our aggregate capital
expenditures for 2003, 2004 and 2005, not including capitalized interest, to
total approximately U.S.$435.0&nbsp;million. We anticipate that approximately
U.S.$85.0&nbsp;million of such capital expenditures will be invested during 2003,
including capital expenditures to increase the quality and coverage of our
cellular network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will need additional external funding in 2003 in order to acquire,
build out and operate our PCS network in northern Mexico, as well as to make
additional investments in the central regions and expand the advance data
network capabilities into other key cities. As we make additional investments
in our cellular network and pursue long distance and data opportunities, we
will also need additional external funding in 2004 and beyond. Furthermore,
the investments required to keep pace with technological change, such as
extended coverage on third-generation wireless telecommunication equipment,
will require additional capital resources. We cannot assure you that we will
be able to obtain such additional funds.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our declining revenues throughout 2002, the degree to which we are
leveraged and our inability to obtain additional capital may adversely affect
our ability to finance future operations, to finance necessary capital
expenditures, to compete effectively against better capitalized competitors and
to withstand downturns in our business or the Mexican economy generally. Our high level of indebtedness
could limit our ability to pursue business opportunities that may be in our
interest and in the interest of the holders of our securities.
</FONT>
<P align="center"><FONT size="2">10</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>Depreciation or devaluation of the peso relative to the U.S. dollar may
adversely affect our financial condition and results of operations.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While our sales are almost entirely denominated in pesos, the vast
majority of our obligations are denominated in U.S. dollars. As a result,
unless we enter into hedging arrangements, we are exposed to the risk of
devaluation of the peso relative to the U.S. dollar. The peso appreciated by
4.8% relative to the U.S. dollar during 2001, but depreciated by 13.9% during
2002. In the past, the peso has depreciated substantially against the U.S.
dollar and may depreciate significantly in the future.
</FONT>

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


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>We face increasing competition which may reduce our operating margins.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We face significant competition in our core mobile wireless services
business in each region in which we operate from <I>Radiom&#243;vil Dipsa, S.A. de
C.V.</I>, commonly known as Telcel. As a subsidiary of <I>Am&#233;rica M&#243;vil, S.A. de
C.V.</I>, a company spun off from <I>Tel&#233;fonos de M&#233;xico, S.A. de C.V.</I>, the former
state telephone monopoly known as Telmex, Telcel has significantly greater
internal financial and operational resources than those available to us,
nationwide cellular and personal communications services (PCS)&nbsp;concessions, a
nationwide cellular network and the ability to use Telmex&#146;s installed
telecommunications systems. Competition in the Mexican wireless industry is
substantial and we, like Telcel, bear significant promotional expenses,
including the cost of providing cellular telephones to postpaid subscribers
free of charge or at substantial discounts. In addition, competition from
Telcel has not always allowed us to implement price increases to keep pace with
inflation and has occasionally caused us to implement price rollbacks and
reductions. We also face competition from <I>Telef&#243;nica M&#243;viles Mexico, S.A. de
C.V.</I>, which we refer to as Telef&#243;nica, a subsidiary of <I>Telef&#243;nica M&#243;viles,
S.A.</I>, a Spanish telecommunications service provider, that concluded in 2002 the
acquisition of <I>Pegaso Comunicaciones y Sistemas, S.A. de C.V.</I>, which we refer
to as Pegaso, and from <I>Servicios Profesionales de Comunicaci&#243;n, S.A. de C.V.</I>,
which we refer to as Unef&#243;n, an affiliate of <I>TV Azteca, S.A. de C.V. </I>and
<I>Elektra, S.A. de C.V. </I>Both these service providers own concessions in all nine
wireless service regions in Mexico and have begun to provide service in
Mexico&#146;s principal cities.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we face increasing competition in providing long distance,
wireless local telephony and data transmission services. Competition may lead
to increases in advertising and promotional spending, along with increased
demands on access to distribution channels. These factors may lead to smaller
operating margins, greater choices for customers and increasing movement of
customers between competitors, which may make it difficult for us to retain
customers or add new customers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican government may grant additional concessions to other companies
to provide services similar to or the same as those that we provide. In
addition to Telcel and Telef&#243;nica, other competitors may also have greater
financial, corporate and other resources, which may limit our ability to
compete effectively.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>The technology we use may be made obsolete by advancements in
technology.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All companies in the global telecommunications industry must adapt to
rapid and significant changes in technology. The technology that we have
selected in our wireless business become obsolete by market demand for new or
improved digital technologies supporting wireless service or other services in
the near future. Technological changes may adversely affect our competitive
position, require substantial new capital expenditures and/or require
write-downs of obsolete technology.
</FONT>

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

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B><I>A significant portion of our accounts receivable is represented by a
small number of distributors.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our three largest distributors accounted for 52% and 44% of our net trade
accounts receivable as of December&nbsp;31, 2002 and 2001, respectively. We have
established certain measures to reduce the risk associated with this
concentration, such as certain guarantees and liens. As a result, the absolute
number of accounts to which these receivables are attributable has decreased.
Although we believe that this distributor concentration will be reduced over
time, our results of operations could be negatively affected, at least in the
short-term, if any payment defaults occur with respect to these distributors.
</FONT>


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


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>Verizon and Vodafone, our principal shareholders, announced that they
have agreed to sell all of their interest in us and, as a result, Verizon
will lose management control over our operations and Vodafone will no longer
provide us with other support services.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since Verizon (formerly known as Bell Atlantic) assumed management control
of Iusacell&#146;s Board of Directors and management, Verizon consultants and
Verizon personnel provided on a secondment basis to Iusacell have been
integrally involved in managing our day-to-day operations and defining and
implementing our long-term strategy. Verizon currently has the right and power
to elect a majority of the members of Iusacell&#146;s Board of Directors and, with
certain exceptions, to unilaterally determine Iusacell&#146;s policies and strategy.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vodafone, our other principal shareholder, provides us with management,
marketing, legal and other consulting services.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;13, 2003, <I>Movil Access, S.A. de C.V. </I>(Movil Access), a Mexican
telecommunications service provider and a subsidiary of <I>Biper, S.A. de C.V.</I>,
which is a part of <I>Grupo Salinas</I>, announced that it would commence a public
tender offer in Mexico and the United States to buy all of Iusacell&#146;s
outstanding capital stock. Verizon and Vodafone have announced that they have
agreed to tender all of their Iusacell shares to Movil Access. See Item&nbsp;4,
&#147;Information on the Company &#151; History and Development of the Company.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the National Banking and Securities Commission (<I>Comisi&#243;n Nacional
Bancaria y de Valores</I>) approves the tender offer and Verizon tenders all of its
Iusacell shares, Verizon will lose its ability to manage us. Verizon will then
no longer be in a position to determine our policies and strategies, provide
personnel to us on a secondment or consulting basis, manage our operations or
provide the technical support, as well as operating synergies that we have
historically relied on. We cannot predict the strategy that we will implement
following any such management change. In addition, if Vodafone tenders all of
its Iusacell shares, Vodafone will no longer provide us with management and
other services.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>The sale of Verizon&#146;s interest and Vodafone&#146;s interest in us will
constitute a change of control and, as a result, we may be required to
repurchase all or part of the Iusacell senior notes and Iusacell Celular&#146;s
senior notes and we may be in default of our obligations under Iusacell
Celular&#146;s senior refinancing secured loan.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The sale of our shares by Verizon and Vodafone will constitute a change of
control under the Iusacell Celular indenture and the Iusacell indenture. As a
result, each holder of the Iusacell Celular senior notes may require Iusacell
Celular to repurchase, in whole or in part, that holder&#146;s Iusacell Celular
senior notes and each holder of the Iusacell senior notes may require Iusacell
to repurchase, in whole or in part, that holder&#146;s Iusacell senior notes. We
cannot assure you that Iusacell or Iusacell Celular will have sufficient funds
or the ability to obtain sufficient funds on a timely basis to pay for any or
all of the debt that each may have to repurchase as a result of this change of
control.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, under Iusacell Celular&#146;s senior refinancing secured loan, the
sale of our shares by Verizon and Vodafone will constitute a change of control,
which would constitute a default and, unless the default is waived, the lenders
under that loan would have the right to declare all amounts outstanding under
that loan immediately due and payable. If the lenders accelerate amounts due
under that loan, we cannot assure you that Iusacell Celular will have sufficient funds or the ability to obtain sufficient funds on a timely
basis to pay for those amounts due under that loan, and the value and market
price of our securities would be significantly adversely affected.
</FONT>
<P align="center"><FONT size="2">12</FONT>

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


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>The Mexican government may impose additional conditions on our
concessions or may take them away.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide our services pursuant to concessions granted by the Mexican
government. Our activities are subject to significant government regulation
and supervision. The concessions may be subject to additional conditions or
may not be renewed when they expire. The conditions for renewal, however, are
not fully defined. The Mexican government also reserves the right to revoke,
temporarily seize or expropriate concessions or assets related to a concession
for reasons, among others, of public interest, such as war, national disaster
or significant public disturbances. Moreover, the Mexican government may grant
additional concessions to potential competitors to provide services similar to
those that we provide. Any of these developments or other government action
could reduce the value of Iusacell&#146;s concessions and adversely affect our
financial condition and results of operations.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>Our financial statements may not give you the same information as
financial statements prepared under U.S. generally accepted accounting
principles.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mexican companies listed on the Mexican Stock Exchange, including
Iusacell, must prepare their financial statements in accordance with Mexican
GAAP. Mexican GAAP differs in certain significant respects from U.S. GAAP,
including, but not limited to, the treatment of minority interest, purchase
accounting, deferred income taxes, capitalization of pre-operating costs,
accounting for derivative financial instruments, gains from the exchange of
non-monetary assets, the provisioning for the consolidation of facilities and
sale-leaseback transactions. In particular, all such Mexican companies must
incorporate the effects of inflation directly in their accounting records and
in published financial statements. The effects of inflation accounting under
Mexican GAAP are not eliminated in the reconciliation to U.S. GAAP, as these
inflation-adjusted figures are considered a more meaningful presentation than
historical cost-based financial reporting for both Mexican and U.S. accounting
purposes. For this and other reasons, the presentation of Mexican financial
statements and reported earnings may differ from that of companies in other
countries. See Note 23 to our Consolidated Financial Statements.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>The general political and economic conditions in Mexico may adversely
affect our business, financial condition and results of operations.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a Mexican company, and most of our operations are in Mexico. As a
result, our business, financial condition and results of operations may be
significantly affected by the general condition of the Mexican economy, by
devaluation of the peso, by inflation and high interest rates in Mexico, or by
political or economic developments in Mexico. The Mexican economy contracted
at a rate of 0.3% in 2001 and grew at an annual rate of only 0.9% in 2002.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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,
disparity of wealth and high unemployment. These economic conditions
substantially reduced the purchasing power of the Mexican population and, as a
result, the demand for telephony services.
</FONT>

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

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

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>If the Mexican government imposes exchange controls, we may not be able
to purchase imported goods or make dividend, principal and interest payments
in U.S. dollars.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the past, the Mexican economy has experienced balance of payment
deficits and shortages in foreign exchange reserves. While the Mexican
government does not currently restrict the ability of Mexican or foreign
persons or entities to convert pesos to foreign currencies generally, and U.S.
dollars in particular, it has done so in the past and could do so again in the
future. We cannot assure you that the Mexican government will not institute a
restrictive exchange control policy in the future. Any such restrictive
exchange control policy could prevent or restrict access to U.S. dollars or
other foreign currencies to purchase imported goods and to meet our U.S. dollar
obligations, such as the payment of dividends or principal and interest under
our debt securities.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>Payment of judgments entered against us will be in pesos, which may
expose holders of our debt securities to exchange rate risks.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a proceeding to enforce our obligations under any debt securities is
brought in Mexico, Mexican law permits us to pay a resulting judgment in pesos.
Under the Mexican Monetary Law, an obligation payable in Mexico in a currency
other than pesos may be satisfied in pesos at the exchange rate in effect on
the date when payment is made.
</FONT>

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


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">would be converted into pesos at the exchange rate prevailing at
the time of the court&#146;s declaration of <I>concurso mercantil </I>and then to
<I>Unidades de Inversi&#243;n</I>, which are denominated in pesos and adjusted
periodically for inflation by the Bank of Mexico, and payment would
occur at the time claims of the court-recognized creditors are
satisfied subject to the priority established by law; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">would not be otherwise adjusted to take into account devaluation of
the peso against the U.S. dollar occurring after the court&#146;s
declaration.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>The additional 10% tax on telecommunications services approved by the
Mexican Congress may adversely affect the ability of wireless companies,
including Iusacell, to attract new customers.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 2002, the Mexican Congress approved a surcharge that
assesses an additional 10% federal excise tax on certain wireless
telecommunications services. The tax resulted in a 10% increase in the monthly
bills of postpaid mobile wireless customers and in the cost of prepaid cards in
denominations of Ps.200.0 (U.S.$19.18) or more for the year 2002. In February
2002, we filed an injunctive action (<I>amparo</I>) challenging the Mexican
government&#146;s implementation of the tax. In October 2002, we received a
preliminary ruling in our favor by a Federal Judge, and the Mexican government
subsequently filed an appeal. In June 2003, Mexico&#146;s Supreme Court rejected
the appeal and affirmed the ruling in favor of Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, the Mexican government implemented a modified version of the
additional 10% excise tax on certain wireless telecommunications services,
which was approved by the Mexican Congress. In March 2003, we filed an
injunctive action challenging this implementation. Until this injunctive
action is resolved, we will continue to pay the full modified additional 10%
excise tax to the Finance Ministry. In the prepaid segment, the modified
version of the additional 10% excise tax is being applied to every prepaid plan
with an airtime per-minute rate of more than Ps.3.50 (U.S.$0.34), which differs
from the 2002 initiative that taxed prepaid cards with a face value equal to or
in excess of Ps.200.0 (U.S.$19.18).
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="98%"><FONT size="2"><B><I>High inflation rates in Mexico may decrease demand for our services
while increasing our costs.</I></B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In recent years, Mexico has experienced high levels of inflation. The
annual rate of inflation, as measured by the Mexican National Consumer Price
Index, was 9.0%, 4.4% and 5.7% in 2000, 2001, 2002, respectively, and was 1.3%
for the three-month period ended March&nbsp;31, 2003. High inflation rates can
adversely affect our business and results of operations in the following ways:
<P align="center"><FONT size="2">14</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Inflation can adversely affect consumer purchasing power, thereby
adversely affecting consumer demand for our services and products; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To the extent inflation exceeds our price increases, our prices and
revenues will be adversely affected in &#147;real&#148; terms.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "ITEM 4. INFORMATION ON THE COMPANY" -->
<DIV align="left"><A NAME="004"></A></DIV>

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


<P align="left"><FONT size="2"><B>A.</B>&nbsp;&nbsp; <B>HISTORY AND DEVELOPMENT OF THE COMPANY</B>
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell&#146;s commercial name is &#147;Grupo Iusacell,&#148; but our operating
subsidiaries market their products under the single <I>Iusacell</I>&#153; brand name.
Iusacell currently operates primarily in Mexico under Mexican legislation,
including, among others, the 1995 Telecommunications Law (<I>Ley Federal de
Telecomunicaciones</I>), the 1993 Foreign Investment Law (<I>Ley de Inversi&#243;n
Extranjera</I>), the Mexican Securities Market Law (<I>Ley del Mercado de Valores</I>) and
the Mexican Companies Law (<I>Ley General de Sociedades Mercantiles</I>). Our
participation in the U.S. capital markets also makes us subject to certain
securities laws of the United States. See &#147;&#151; Business
Overview &#151; Government
Regulation&#148; for a discussion of certain of the regulations to which we are
subject.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May 1998, a separate subsidiary of Iusacell acquired, in an auction,
concessions for frequencies to provide PCS services in Region 1 (which includes
the city of Tijuana) and Region 4 (which includes the city of Monterrey) in
northern Mexico for approximately Ps.493.2&nbsp;million (in nominal terms)
(U.S.$49.8&nbsp;million, using the applicable exchange rate as of the date of the
purchase). Iusacell started to offer commercial services in those two cities
in December 2001. During 2002, Iusacell expanded its PCS network in Regions 1
and 4 to the main cities and connecting roads covering approximately 65% of the
total POPs in these regions.
</FONT>

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

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

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

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1997, Iusacell Celular entered into an agreement with
subsidiaries of Lucent Technologies, Inc. pursuant to which Iusacell Celular
agreed (i)&nbsp;to replace its existing analog wireless cellular network with a new
Lucent Technologies digital and analog network for a minimum consideration of
U.S.$188.0&nbsp;million which was completed in August 1999 and (ii)&nbsp;to continue
acquiring network equipment and services under the agreement in order to
improve its digital and analog network. Through December&nbsp;31, 2002, Iusacell
Celular has purchased approximately U.S.$433.1&nbsp;million of network equipment and
services under this agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;6, 1999, Iusacell launched an offer to exchange two classes of
Iusacell voting ordinary shares for the four classes of Iusacell Celular
ordinary shares then outstanding on a one-for-one basis. Iusacell completed
this offer on August&nbsp;10, 1999 and, as a result, Iusacell acquired 99.5% of the
outstanding Iusacell Celular shares. On January&nbsp;31, 2000, Iusacell launched a
second exchange offer for the purpose of exchanging American depositary shares
representing Iusacell&#146;s series V shares for the balance of American depositary
shares representing Iusacell Celular&#146;s series D and series L shares on a
one-for-one basis. Iusacell completed this offer on February&nbsp;29, 2000 and, as
a result, Iusacell held 99.9% of the outstanding Iusacell Celular shares. In
May 2001, Iusacell Celular effected a reverse stock split of 1 new Iusacell
Celular share for every 30,000 old Iusacell Celular shares. As a result of
this reverse split, Iusacell now holds 100% of the capital stock of Iusacell
Celular.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;29, 1999, Iusacell Celular entered into a series of agreements
with <I>MATC Celular, S. de R.L. de C.V.</I>, the Mexican subsidiary of American Tower
Corporation, which we refer to as MATC Celular, with respect to Iusacell
Celular&#146;s existing towers and future tower needs. Under these agreements,
which were amended in May 2002, MATC Celular, among other things, is required
to build towers or find space on existing towers, which Iusacell Celular&#146;s
subsidiaries lease. The term of the lease is 10&nbsp;years with two five-year
renewal periods. As of May&nbsp;30, 2003, Iusacell Celular&#146;s subsidiaries lease
from MATC Celular 715 sites, including 320 transfer sites and a number of
built-to-suit sites and co-locations.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;19, 2001, Iusacell Celular completed the acquisition of a 78.3%
ownership interest in Portatel for Ps.595.3&nbsp;million (U.S.$57.1&nbsp;million).
Iusacell Celular reached an agreement to acquire the remaining 21.7% ownership
interest in Portatel for Ps.168.9&nbsp;million (U.S.$16.2&nbsp;million) and closed the
acquisition of this remaining ownership interest on February&nbsp;8, 2002. Portatel
is engaged in the wireless communications business and holds the concession to
provide cellular services in Region 8, which covers the states of Yucatan,
Campeche, Quintana Roo, Chiapas and Tabasco in southern Mexico. On November
2001, Iusacell completed a rights offering to holders of its outstanding Series
A and V shares and Series&nbsp;V American Depositary Shares (ADSs) for the aggregate
amount of U.S.$100.0&nbsp;million. The proceeds were used to finance the
acquisition of Region 8 and the PCS deployment in Regions 1 and 4.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over the last three full fiscal years, excluding the effects of inflation
accounting, capitalized interest and certain non-cash trade-in credits, we have
invested approximately U.S.$518.7&nbsp;million in capital expenditures, primarily
for our cellular communications network, long distance network and billing,
customer care and administrative systems. See Item&nbsp;5, &#147;Operating and Financial
Review and Prospects &#151; Liquidity and Capital Resources &#151; Capital Expenditures.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first quarter of 2003, we invested approximately US$1.0&nbsp;million
in our cellular regions to expand our coverage. In 2003, we plan to invest,
subject to a successful completion of our restructuring efforts, approximately
U.S.$85.0&nbsp;million in capital expenditures, not including capitalized interest,
to increase the coverage and improve the quality of and enhance the features
available through our cellular and long distance networks, and to improve our
billing and customer care systems. All of this capital equipment will be
deployed in Mexico. We expect to finance our capital expenditures in 2003
through funds from our operations, vendor and project financing and the capital
markets. See Item&nbsp;5, &#147;Operating and Financial Review and Prospects &#151; Liquidity
and Capital Resources &#151; Capital Expenditures.&#148;
</FONT>

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;13, 2003, Movil Access, a Mexican telecommunications service
provider and a subsidiary of <I>Biper, S.A. de C.V.</I>, which is a part of <I>Grupo
Salinas</I>, announced that it would commence a public tender offer in Mexico and
the United States to buy all of Iusacell&#146;s outstanding capital stock, which
includes all of Iusacell&#146;s outstanding series A and series V shares (including
all of Iusacell&#146;s outstanding American depositary shares representing series V
shares), for U.S.$10.0&nbsp;million. In Mexico, Movil Access would offer a price of
Ps.0.05712180 (or the U.S. dollar equivalent) per series A share and
Ps.0.05712180 (or the U.S. dollar equivalent) per series V share. In the
United States, Movil Access would offer the U.S. dollar equivalent of
Ps.5.712180 per American depositary share representing series V shares.
Iusacell&#146;s two principal shareholders, Verizon (which owns a 39.4% interest in
Iusacell) and Vodafone (which owns a 34.5% interest in Iusacell), have
announced that they have agreed to tender all of their Iusacell shares to Movil
Access. The tender offer is subject to approval by the National Banking and
Securities Commission (<I>Comisi&#243;n Nacional Bancaria y de Valores</I>).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have not been any public takeover offers by us for the shares of
other companies during 2002 and 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive offices are located at Prolongaci&#243;n Paseo de la
Reforma 1236, Colonia Santa Fe, Delegaci&#243;n Cuajimalpa, 05348, Mexico, D.F.,
which is also where we are domiciled. Our telephone number is (5255)
5109-4400. Our agent in the United States is Puglisi &#038; Associates, 850 Library
Avenue, Suite&nbsp;204, P.O. Box 885, Newark, Delaware 19715. Our Internet website
address is www.iusacell.com. The information on our website is not
incorporated into this Annual Report.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a wireless telecommunications services provider in Mexico with
nearly 2.1&nbsp;million mobile wireless customers at December&nbsp;31, 2002,
approximately 83% of which are prepaid customers. We hold and operate
concessions in the 800 megahertz (MHz) band to provide cellular wireless
services in five contiguous geographic regions comprising all of central and
southern Mexico, and in the 1900 MHz band to provide PCS wireless services in
two of the four regions in northern Mexico. Our service regions include Mexico
City, one of the world&#146;s most populous cities, and the cities of Monterrey,
Tijuana, Guadalajara, Le&#243;n, Puebla, Canc&#250;n and M&#233;rida, which when combined
represent approximately 91&nbsp;million POPs comprising 90% of Mexico&#146;s total
population.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since February 1997, Iusacell has been under the management control of
subsidiaries of Bell Atlantic (which is now Verizon). From late 1993 through
February 1997, Bell Atlantic participated substantially in the financial and
technological operations of Iusacell. Since Bell Atlantic assumed control of
our Board of Directors and management, Bell Atlantic consultants and Bell
Atlantic personnel provided on a secondment basis to Iusacell have been
integrally involved in managing our day-to-day operations and defining and
implementing our long-term strategy. The management team is supported by an
experienced group of Mexican executives and other personnel from Verizon and
Vodafone. Through December&nbsp;31, 2002, Verizon has invested approximately
U.S.$1.3&nbsp;billion for its current 39.4% economic and voting interest in
Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since Bell Atlantic took control of Iusacell&#146;s management, our subscriber
base has grown from approximately 245,000 subscribers in February 1997 to
2,081,200 subscribers as of December&nbsp;31, 2002. Of these subscribers, as of
December&nbsp;31, 2002, 356,014 were postpaid customers who purchase cellular
services pursuant to fixed-term contracts, and the remaining 1,725,186 were
customers who pay for their cellular services in advance primarily through the
purchase of prepaid calling cards. As of December&nbsp;31, 2002, approximately 69%
of these prepaid customers were &#147;incoming calls only&#148; customers who are only
able to receive incoming calls and not to make outgoing calls. These customers
generate little or no revenue. Our postpaid and prepaid subscribers who can
make outgoing calls and receive incoming calls had an average monthly cellular
revenue per subscriber (ARPU)&nbsp;during 2002 of Ps.383.0 (approximately
U.S.$36.7), with prepaid subscribers in this group having an ARPU of Ps.206.0
(approximately U.S.$19.8) during 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May 1998, we launched digital service using Code Division Multiple
Access (CDMA)&nbsp;technology, the highest-capacity commercial digital technology
available in the 800 MHz frequency band in the Mexico City area. Since August
1999, we have offered digital coverage and services in almost all areas where
we provide mobile wireless services. In January 2003, we launched the
country&#146;s first CDMA2000 1XRTT voice and high-speed data network in Mexico
City. With this advanced network, we increased voice capacity and offered
subscribers new data services such as high-speed instant messaging, e-mail and
Internet access at speeds of up to 144 kilobits per second (kbps). We offer the corporate sector mobile office capabilities and
applications designed to meet the needs of specific mobile users such as field
sales and service personnel. In addition to the core mobile wireless services,
we also provide a wide range of other telecommunications services, including
long distance, paging, wireless local telephony and data transmission services.
</FONT>
<P align="center"><FONT size="2">17</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell currently has two principal shareholders, Verizon and Vodafone.
Verizon owns a 39.4% equity interest and Vodafone owns a 34.5% equity interest
in Iusacell. For more information on Iusacell&#146;s principal shareholders, see
Item&nbsp;7, &#147;Major Shareholders and Related Party Transactions &#151; Major
Shareholders.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Movil Access recently announced that it would commence a public tender
offer in Mexico and the United States to buy all of Iusacell&#146;s outstanding
capital stock. Verizon and Vodafone announced that they would tender all of
their Iusacell shares to Movil Access. See &#147;&#151; History and Development of the
Company.&#148;
</FONT>


<P align="left"><FONT size="2"><B>Competitive Strengths</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Digital Technology Platform</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 1999, upon completion of the deployment of a CDMA digital
network in nearly all areas where we provide cellular service, we became the
first company in Mexico to make digital voice service broadly available to all
of our customers. Our PCS network is also deploying CDMA technology. In
January 2003, we commercially launched the first CDMA2000 1XRTT network in
Mexico City, providing advanced high-speed data transmission services and
wireless Internet primarily to corporate customers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the fourth consecutive year, in 2002, the Mexican telecommunications
regulator, the <I>Comisi&#243;n Federal de Telecomunicaciones </I>(Mexican Federal
Telecommunications Commission or COFETEL), performed technical audits in the
country&#146;s largest cities in order to determine whether wireless carriers are
offering acceptable network quality. In these audits, we significantly
surpassed COFETEL minimum standards for dropped calls, ineffective attempts and
set-up time to place a call by 5%, 4% and 12 seconds, respectively, in the 19
audited cities in our core cellular regions, including Mexico City.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of the services that we offer use the <I>Iusacell&#153;</I> brand name to
increase consumer awareness and customer loyalty. We believe that the high
&#147;share of voice&#148; and &#147;top of mind&#148; awareness maintained by the <I>Iusacell </I>brand
name has allowed us to make more cost-efficient marketing investments compared
with those of our competitors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The <I>Iusacell&#153;</I> brand name is recognized beyond the regions where we
currently provide service. We believe that this recognition has facilitated
our entry into Regions 1 and 4 in northern Mexico, where we hold PCS
concessions, and Region 8 in southern Mexico, and will facilitate our entry
into other markets if and when we are able to do so.
</FONT>


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

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

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

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The nine geographic regions are described in the table below.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Region Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Geographical Coverage</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Major Cities in the Region</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The states of Baja
California and Baja
California Sur and
the municipality of
San Luis Rio
Colorado in
northwestern Sonora
state
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Tijuana, Mexicali, Ensenada, Tecate
and La Paz.</FONT></TD>
</TR>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The states of
Mexico, Hidalgo and
Morelos and the
Federal District
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Mexico City, Toluca, Cuernavaca and
Pachuca.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1990, the Mexican government initiated the privatization of
Telmex, which was then the sole provider of landline local and long distance
service and competing in Cellular B-band cellular services, when it sold 20.4%
of the equity and 50.1% of the voting power in Telmex to a private consortium
for U.S.$1.76&nbsp;billion. The winning consortium consisted of <I>Grupo Carso, S.A.
de C.V.</I>, a Mexican conglomerate which owns or otherwise controls a majority of
the consortium&#146;s voting interest, SBC Communications Inc. and <I>France Telecom
S.A. </I>Subsequent to the original privatization, the Mexican government further
reduced its holdings in Telmex through additional transactions and completed
the sale process in June 1994. In 2001, Telcel and other wireless
international subsidiaries of Telmex were spun-off from Telmex to form a new
company named <I>Am&#233;rica M&#243;vil, S.A. de C.V.</I>, which is known as Am&#233;rica M&#243;vil.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Telcel holds the Cellular B-band and PCS D-band concessions in each of the
nine cellular regions and is Mexico&#146;s largest mobile wireless operator. Our
subsidiaries hold the Cellular A-band concession in Regions 5, 6, 7, 8 and 9
and the PCS E-band concession in Regions 1 and 4. Telef&#243;nica is a controlling
shareholder in <I>Baja Celular Mexicana, S.A. de C.V.</I>, <I>Movitel del Noreste, S.A.
de C.V., Telefonia Celular de Norte, S.A. de C.V.</I>, and <I>Celular de Telefonia,
S.A. de C.V.</I>, which cumulatively hold the Cellular A-band concession in Regions
1, 2, 3 and 4 and PCS band concessions nationwide.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite the significant increase in wireline and wireless penetration in
Mexico over the last four years, we believe that there remains a substantial
unmet demand for telephone services in Mexico. According to the
International Telecommunication Union, an agency of the United Nations, as
of December&nbsp;31, 2002, there were approximately 14.6 wireline telephone lines
per 100 inhabitants in Mexico, which is lower than the teledensity
rates of some other Latin American countries and substantially lower than those of
developed countries such as the United States. Due to the relatively low
wireline penetration in developing countries such as Mexico, increases in the
level of wireless penetration in these countries may be partly attributable to
users who purchase wireless services as a principal means of
telecommunications.
</FONT>
<P align="center"><FONT size="2">19</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents, for selected countries, including Latin
American countries and the United States, the number of subscribers of wireless
telephone services per 100 inhabitants as of December&nbsp;31, 2001 and December&nbsp;31,
2002:
</FONT>


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

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Wireless subscribers</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>per 100 inhabitants <sup>(1)</sup></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Country</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Spain</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">73.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">82.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Portugal</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">United States</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">45.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Chile</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Venezuela</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mexico</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Brazil</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Argentina</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(1)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><I>Source: </I>International Telecommunication Union 2003 Website.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Calling Party Pays</I>
</FONT>

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


<P align="left"><FONT size="2"><B>Mobile Wireless Services</B>
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We became the first Mexican provider of cellular telecommunications
services in 1989, when we commenced operations of our Cellular A-band network
in Region 9. Through a series of transactions from 1990 to 2002, we acquired
100% beneficial ownership interests in the entities which hold the Cellular
A-band concessions in Regions 5, 6, 7, and 8. In December 2001, we initiated
the commercial launch of our PCS services in the cities of Tijuana and
Monterrey in Regions 1 and 4 in northern Mexico. The regions we serve cover a
contiguous geographic area comprising all of the regions in central and
southern Mexico, and two of the four regions in northern Mexico, which allows
Iusacell to achieve economies of scale.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell&#146;s service regions are home to a variety of industries. Region 9
includes Mexico City, which has the greatest concentration of service and
manufacturing industries in Mexico and is also the center of Mexico&#146;s public
and financial services sectors. Region 5 includes Guadalajara, Mexico&#146;s second
largest city and the commercial and service center of western Mexico, which has
recently begun to develop as a center for the maquiladora industry.
Region 6 includes Le&#243;n, Quer&#233;taro, Aguascalientes and San Luis Potos&#237; and
has historically been dominated by the agricultural sector, although it has
recently begun to develop as an automobile manufacturing and high technology
center. Region 7 includes Puebla, Acapulco, Veracruz and Oaxaca and contains
major operations of the Mexican petrochemical and automotive industries and
significant tourist resorts and attractions. Region 8 includes
M&#233;rida, Villahermosa, Canc&#250;n, Campeche and Tuxtla Guti&#233;rrez and contains major
operations of the Mexican petroleum industry and significant tourist resorts
and attractions. Regions 1 and 4, which include Tijuana, Monterrey and Nuevo
Laredo, are centers for the maquiladora industry, manufacturing, as well as
high technology, and international trading.
</FONT>
<P align="center"><FONT size="2">20</FONT>

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


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell offers wireless communications services in a variety of plans,
which are divided into two basic groups: either &#147;postpaid&#148; &#151; where the customer
is billed monthly for the previous month based on a contracted length of
service &#151; or &#147;prepaid&#148; &#151; where the customer pays in advance for a specified
volume of use over a specified period.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, postpaid subscribers totaled 356,014, comprising
17% of our customer base. Average revenue per user (ARPU)&nbsp;in this segment was
Ps.693.0 (U.S.$66.5) as of December&nbsp;31, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell also offers a number of value-added services designed
specifically to fulfill the demands of this important group of postpaid
subscribers. We offer value added services such as voicemail, call forwarding,
call waiting, three-way calling, secretarial services and provide
English-speaking operators to serve the English-speaking market in our regions.
Iusacell also provides financial news reporting, emergency services,
entertainment information, reservations services and sports reports. Moreover,
CDMA digital postpaid customers have available caller identification, short
messaging service and data transmission services. We believe that these
value-added services help increase postpaid subscriber usage and also enhance
our market image as a full service cellular provider.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Postpaid churn measures both voluntarily and involuntarily disconnected
subscribers. Average monthly postpaid churn for a given period is calculated
by dividing the sum of all postpaid subscribers disconnected during such period
by the sum of the beginning-of-month postpaid subscribers for each of the
months in such period, expressed as a percentage. For more information, see
Item&nbsp;3, &#147;Key Information &#151; Selected Financial Data.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Voluntarily disconnected subscribers encompass subscribers who choose not
to continue with Iusacell postpaid services or choose one of our prepaid
options.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Average monthly postpaid churn for the 12&nbsp;months ended December&nbsp;31, 2002
was 3.6%. Measures taken to reduce churn include retention and loyalty
initiatives such as welcome calls, calls at maturity, anniversary calls,
proactive contract renewal campaigns, reactive retention operations and
periodic calls to customers to ensure satisfaction. In addition, we conduct
outreach calls to customers whose contracts are ending or who choose to
terminate service offering them a range of alternative service plans based on
their profile to encourage contract renewal.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In contrast to postpaid subscribers, prepaid customers typically generate
lower levels of cellular usage, have access to a limited number of value-added
services, may already own a handset, or may choose to purchase a handset with
preloaded minutes, and often are unwilling to make a fixed financial commitment
or do not have the credit profile to purchase postpaid plan cellular services.
In addition to helping customers control costs, our prepaid programs have no
monthly bill and allow customers to prepay for cellular services in cash,
credit cards and electronic means. As of December&nbsp;31, 2002, prepaid ARPU was
Ps.80.0 (US$7.7).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The prepaid program markets four different prepaid cards, each of which
credits a specific peso denomination worth of air-time usage to an account to
be used for outgoing and long distance incoming calls over a specified period
of times.
</FONT>



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



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

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


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; continue to be prepaid customers of Iusacell by purchasing another
card or otherwise recharge the airtime in their accounts;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; become postpaid customers of Iusacell; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; become either postpaid or prepaid customers of another wireless service provider.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;VIVA prepaid customers normally have 60&nbsp;days to use an activated prepaid
card (except for prepaid cards in denominations of Ps.450.0, which we refer to
as Ps.450.0 prepaid cards and which provide their holders 90&nbsp;days to use an
activated card), activate a new card or otherwise recharge the airtime in their
account. If the customer has not activated a new card or recharged the airtime
in its account at the end of 60&nbsp;days (or in the case of Ps.450.0 prepaid cards,
90&nbsp;days), the balance of the VIVA customer&#146;s account becomes zero, and the
customer loses the ability to make outgoing calls for an additional period of
305&nbsp;days (or in the case of Ps.450.0 prepaid cards, 275&nbsp;days). During this
305-day period (or 275-day period, as applicable), a VIVA customer will be able
to receive local incoming calls, but not to make outgoing calls, thereby
becoming an &#147;incoming calls only&#148; customer. If the customer activates a new
card or recharges the airtime in its account within the 305-day period (or
275-day period, as applicable), the customer&#146;s account automatically returns to
normal status, and a new 60- or 90-day period, as applicable, begins.
Otherwise, once the 305-day period (or 275-day period, as applicable) lapses,
the customer&#146;s telephone number is deactivated.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 1999, in order to evaluate whether we would be able to generate
additional revenues from &#147;incoming calls only&#148; customers for previously
purchased cards, we extended the period of time to use an activated card and
activate a new card from 185&nbsp;days to April&nbsp;30, 2000 for &#147;incoming calls only&#148;
customers who otherwise would have lost service before that date. Beginning
May&nbsp;1, 2000, we decided to return to our prior policy of maintaining &#147;incoming
calls only&#148; customers for only 185&nbsp;days and began to turn over &#147;incoming calls
only&#148; prepaid customers who had reached the 185-day limit without activating a
new prepaid card. In July 2001, we reduced the initial period for spending an
activated prepaid card and activating a new card from 185&nbsp;days to the current
60&nbsp;days (or 90&nbsp;days in the case of Ps.450.0 prepaid cards). As a result, at
the time, approximately 345,000 subscribers were transferred to the &#147;incoming
calls only&#148; prepaid customer status.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, Iusacell had approximately 1,186,000 &#147;incoming calls
only&#148; customers. The substantial majority of &#147;incoming calls only&#148; customers
generate little or no traffic. Iusacell&#146;s prepaid subscribers had an average
monthly revenue per subscriber during 2002 of Ps.79.0 (approximately U.S.$7.6).
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 1999, we substantially completed the installation of the VIVA
prepaid operating system. The VIVA platform tracks customer turnover better
than its predecessor system. This operating system, together with initiatives
to increase the number of distribution points for prepaid cards, adjust
commissions to encourage distributors to sell prepaid cards in higher
denominations, improve customer care and otherwise improve the convenience of
the prepaid program, has enhanced our ability to add and retain prepaid
customers and has increased usage. In 2000, we implemented two important tools
for the sale of prepaid airtime: sales through automated teller machines at
banks and sales over the phone by dialing *AIRE. In early 2002, we introduced
a tool to sell prepaid airtime through our website.
</FONT>
<P align="center"><FONT size="2">22</FONT>

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

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

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interconnection charges owed to Telmex and long-distance charges owed to
long distance carriers as a result of roaming are the responsibility of the
host operator. In addition to higher per minute charges for airtime (as
compared to home region rates), the host operator is entitled to receive a fee
for each day roaming service is initiated. In-roaming fees and usage revenue
represented 1.3%, 1.7% and 2.4% of our total revenues during 2000, 2001 and
2002, respectively. Out-roaming charges represented 6.2%, 4.9% and 3.8% of
Iusacell&#146;s total revenues during 2000, 2001 and 2002, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have more than 60 agreements with U.S., Canadian and other foreign
operators to provide our subscribers with international roaming capabilities.
These operators include Verizon International affiliates such as Verizon
Wireless, Movilnet in Venezuela, Codetel in the Dominican Republic, Telus in
Canada and Puerto Rico Telephone Company as well as AT&#038;T Wireless, Sprint and
Cingular Wireless. In addition, we provide, through the National Automatic
Cellular Network, automatic call delivery throughout most of the United States,
including Puerto Rico, whereby our subscribers may receive telephone calls from
Mexico without the caller having to dial access codes. Currently, our
customers are able to roam in over 2,000 municipalities in the United States
and Canada, as well as in 85 other countries in the Americas, Europe, Asia,
Africa and the Pacific. In the first half of 2003, we launched the
international short message services (&#147;SMS&#148;) with the main carriers in the U.S.
and Canada enabling our customers to send messages.
</FONT>


<P align="left"><FONT size="2"><B>Personal Communications Services</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of our strategy to develop a nationwide wireless footprint, in
1998 we won auction concessions giving us the right to provide PCS wireless
services in Regions 1 and 4 in northern Mexico. We paid approximately Ps.493.2
million (in nominal terms) (U.S.$49.8&nbsp;million, using the applicable exchange
rate as of the date of the purchase) for these concessions in June and
September 1998. These two regions include several industrial cities, including
Tijuana in Region 1 and Monterrey in Region 4, and cover approximately 11.0% of
Mexico&#146;s total population. In the second quarter of 2000, we initiated PCS
network operations and service was available in Tijuana
and Monterrey. In 2001, we spent approximately Ps.215.8&nbsp;million
(U.S.$20.7&nbsp;million) in the commercial deployment of PCS services in Tijuana and
Monterrey, which we launched in December 2001. In 2002, we spent approximately
Ps.252.3&nbsp;million (U.S.$24.2&nbsp;million) for the build out and commercial
deployment of PCS services in selected areas of 8 new cities in Regions 1 and
4, including Ensenada, Mexicali, Saltillo, Nuevo Laredo and Reynosa, covering
approximately 65% of the total POPs in those two regions by December 2002. In
2003, subject to obtaining financing, we expect to spend less than U.S.$1.0
million in Regions 1 and 4. See Item&nbsp;5, &#147;Operating and Financial Review and
Prospects &#151; Liquidity and Capital Resources &#151; Capital Expenditures.&#148;
</FONT>
<P align="center"><FONT size="2">23</FONT>

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


<P align="left"><FONT size="2"><B>Long Distance Services</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 1996, we became one of Telmex&#146;s first competitors in long
distance service when we began to provide long distance services to our
cellular subscribers in Mexico pursuant to the 30-year concession which was
awarded to <I>Iusatel, S.A. de C.V. </I>(Iusatel) in October 1995 and was modified in
December 1997. Our competitors in long distance include 9 other companies
operating under concessions, including Telmex, the former long distance
monopoly. In the long distance market, we face increasing competition from
alternative providers, as well as from new technologies such as Short Message
Service (SMS)&nbsp;and internet Telephony. As a result of these factors, our long
distance line of business has contributed less to our total revenues than we
expected. We believe that competition in the Mexican long distance market has
stimulated growth in demand for long distance service.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently provide long distance service using our own switches and
transmission equipment and a combination of fiber optic lines, microwave links
and lines leased from Telmex and other carriers. At December&nbsp;31, 2002, we
provided long distance service in 52 cities to 2,096,049 customers, 2,088,241
of which were existing customers of our other services. We chose not to commit
significant marketing resources to the presubscription balloting process in
which telephone customers were asked to elect their long distance carrier,
which was conducted in cities across Mexico in 1997, 1998 and 1999 and, as a
result, we fared poorly in the initial balloting results. Under the COFETEL
rules, we are entitled to obtain exemptions annually from the presubscription
obligation for our cellular customers. We cannot ensure that we will receive
this exemption in the future. Revenues related to long distance services
represented 10.4% and 8.2% of our total revenues for 2001 and 2002,
respectively, not including dark fiber optic cable sales.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We reduced the capital investment for our long distance business by
entering into fiber optic cable swap agreements with two other long distance
companies, Marcatel and Bestel, in March 1998 and December 1998, respectively.
These agreements allowed us to acquire fibers in the long distance fiber optic
networks built by Marcatel and Bestel in central and northern Mexico in
exchange for fibers in the long distance fiber optic network we completed in
central Mexico. As a result, we obtained redundancy in central Mexico and
access to the United States border at minimal cost. We consummated the
agreement with Marcatel in July 2002. The transaction generated an
extraordinary gain of approximately Ps.53.0&nbsp;million (U.S.$5.1&nbsp;million) in the
third quarter of 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1999, Iusatel agreed to swap dark fiber optic cable in the
amount of U.S.$17.3&nbsp;million and sell approximately U.S.$7.4&nbsp;million of
additional dark fiber optic cable to <I>Telereunion, S.A. de C.V. </I>(which we refer
to as Telereunion), an affiliate of Telescape International, Inc. Upon the
execution of this swap agreement, Telereunion issued promissory notes to
Iusatel for the purchase price but defaulted on the payment of each of these
notes. In April 2001, Telereunion&#146;s U.S. parent, Telscape International, Inc.,
filed for reorganization under Chapter&nbsp;11 of the U.S. Bankruptcy Code. As part
of a settlement arrangement, on September&nbsp;17, 2001, Telereunion and Iusatel
executed an agreement whereby Telereunion transferred dark fiber optic assets
in the amount of U.S.$7.4&nbsp;million to Iusatel in exchange for full settlement of
the past notes receivable in the same amount. In 2001, we also entered into a
fiber optic cable swap agreement valued at Ps.142.7&nbsp;million (U.S.$13.7&nbsp;million)
to exchange certain long-distance fiber optic cables.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1996, Iusatel executed an agreement with Teleglobe USA, Inc. for the
exchange of international long distance traffic. On May&nbsp;28, 2002, Teleglobe
USA, Inc. filed for reorganization under Chapter&nbsp;11 of the U.S. Bankruptcy
Code. In 2000, Iusatel entered into a second agreement for the exchange of
international long distance traffic with
AT&#038;T, giving Iusatel two alternative routes to deliver international long
distance traffic, thereby reducing costs and enhancing its proportional return
traffic. In March 2002, the United States Federal Communications Commission
granted to Iusatel USA Inc., a subsidiary of Iusatel, Iusacell&#146;s long distance
services provider, a Section&nbsp;214 authorization that allows Iusacell to provide
global or limited global facilities-based and resale telecommunications
services within the U.S., except those states in which Verizon has not yet
received Section&nbsp;271 authorization and permissible international points.
Iusatel USA, Inc. has international termination traffic contracts with several
U.S. carriers including Verizon affiliates.
</FONT>
<P align="center"><FONT size="2">24</FONT>

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<P align="left"><FONT size="2"><B>Other Services</B>
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;14, 1995, Iusacell Celular and <I>Infomin, S.A. de C.V.</I>, which we
refer to as Infomin, formed <I>Infotelecom, S.A. de C.V. </I>(Infotelecom) as a joint
venture to market national and international paging services. Iusacell Celular
owns 49% of Infotelecom. See &#147;&#151;&nbsp;Government Regulation
&#151; Paging.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Infotelecom began marketing paging services in August 1996 and, at
December&nbsp;31, 2002, provided service in 34 cities including Mexico City,
Guadalajara, Monterrey, Puebla, Cuernavaca, Toluca, Quer&#233;taro, Le&#243;n, and Ciudad
Ju&#225;rez. As of December&nbsp;31, 2002, Infotelecom had 8,315 paging customers. Our
revenues from paging services represented less than 0.5% of total revenues for
each of 2001 and 2002.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate public and rural telephony programs, using available cellular
capacity. These programs provide telecommunications services through cellular
telephones in phone booths, intercity buses and rural areas. The provision of
services in this way fulfills the terms of our concessions for the provision of
cellular telephone service and uses our cellular network to provide
telecommunications coverage in areas with little or no basic service. As of
December&nbsp;31, 2002, we had 48,885 cellular telephones in service under our
public and rural telephony programs, representing a 28.7% increase compared to
37,972 cellular phones in service as of December&nbsp;31, 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, we were providing, on a trial basis pending
approval from Mexico&#146;s Ministry of Communications and Transport (<I>Secretar&#237;a de
Comunicaciones y Transportes</I>), which we refer to as the SCT, local wireless
service in the 450 MHz frequency band to 7,041 customers in selected markets in
Region 9. We do not charge our local wireless customers fees for incoming
calls.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September 1998, we determined that because of many factors, including
the impact of changing technology since the initiation of the 450 MHz fixed
local wireless project in 1994, an impairment of our investment in 450 MHz TDMA
technology had occurred. As a result, we recorded a substantial non-cash
write-down of our investment in the 450 MHz fixed local wireless project.
Given the obsolescence of our existing 450 MHz network infrastructure, we may
record a non-cash write-down of substantially all of the remaining book value
of the 450 MHz project fixed assets by the end of 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 1997, <I>Iusatelecomunicaciones, S.A. de C.V.</I>
(Iusatelecomunicaciones), Iusacell Celular&#146;s 450 MHz local wireless subsidiary,
also filed for a local wireline concession. The SCT has not yet issued this
concession. While we currently do not anticipate that the provision of local
wireline service will become a significant part of our services, we may
provide, on a case-by-case basis, local wireline telephone service as part of
our overall provision of telecommunications services.
</FONT>

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

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

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the latter part of 2001, we began providing fixed data transmission
services. We offer three types of services through our fiber optic network
calling: (i)&nbsp;private lines such as E-1, E3/DS3 and STM1 directly to carriers
and large corporate customers; (ii)&nbsp;Internet access to carriers and ISP
providers; and (iii)&nbsp;digital multiservices connection to the customer&#146;s private
branch exchange (PBX)&nbsp;to reduce costs for cellular and long distance calls to
carriers and corporate customers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2003, we commercially launched Mexico&#146;s first CDMA2000 1XRTT
voice and high-speed mobile data network in Mexico City. With this advanced
network, we have increased our voice capacity and offer subscribers new data
services such as high-speed access for internet, intranet, e-mail, instant
messaging, multiple download for multimedia applications and M2M solutions at
speeds of up to 144 kilobits per second (kbps). Our targeted customers are
primarily Mexican-based carriers and corporations.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1998, the SCT issued three 20-year concessions to
<I>Punto-a-Punto Iusacell, S.A. de C.V. </I>(Punto-a-Punto Iusacell), a joint venture
between Iusacell Celular and Mr.&nbsp;Jos&#233; Ram&#243;n Elizondo, a former director of
Iusacell Celular, for short-haul microwave frequencies in the 15 GHz and 23 GHz
frequency bands won at auction. Punto-a-Punto Iusacell paid approximately
Ps.45.0&nbsp;million (U.S.$4.3&nbsp;million) for these concessions. These frequencies
are being used to interconnect our cell sites, business customers and other
networks. Additionally, we have an obligation to provide the right to use
capacity in these frequencies to other users to enable them to install their
own microwave links.
</FONT>

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


<P align="left"><FONT size="2"><B>Seasonality</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taken as a whole, our business is not materially affected by seasonality.
</FONT>


<P align="left"><FONT size="2"><B>Sources of Revenues</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a breakdown of our total revenues by source for the years ended
December&nbsp;31, 2001 and 2002, see Item&nbsp;5, &#147;Operating and Financial Review and
Prospects &#151; Operating Results &#151; Year Ended December&nbsp;31, 2002 Compared to Year
Ended December&nbsp;31, 2001.&#148;
</FONT>


<P align="left"><FONT size="2"><B>Sales and Marketing</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our marketing strategy is directed to achieve profitable growth,
particularly in our mobile wireless business. We have focused our sales and
marketing strategy on the high-value digital customer, defined as the person
who utilizes and depends on cellular communications on a daily basis. We seek
to increase our average monthly revenue per subscriber, control and sustain our
churn rates, decrease the cost of acquiring additional postpaid and prepaid
subscribers and grow our mobile wireless subscriber base profitably.
</FONT>

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the second half of 2002, we performed a deeper segmentation in our
subscriber base. Our mobile wireless subscribers are now cataloged according
to four different usage profiles. We are implementing distribution,
advertising, customer service support and pricing plans targeted to each
specific customer segment and to increase airtime usage. Our customer
relationship management initiatives have included a variety of tools that
manage the relationship cycle from sales, to support, to billing.
</FONT>


<P align="left"><FONT size="2"><B>Distribution</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently target the various segments of our subscriber base through
five sales and distribution channels: Iusacell owned and operated customer
sales and service centers, independent distributors, a corporate sales force,
commission sales agents and telemarketing. We are aggressively increasing the
number of our points of distribution in order to acquire additional
subscribers. At December&nbsp;31, 2002, Iusacell had 58,259 points of distribution,
as compared to 46,106, 20,762, 6,522 and 2,280 at December&nbsp;31, 2001, 2000, 1999
and 1998, respectively. As of December&nbsp;31, 2002 these points of sale comprised
146 customer sales and service centers owned and operated by Iusacell, 1,654
points of sale operated by independent distributors and national retailers who
offer all of our products, and 56,459 points of sale for distribution only of
VIVA prepaid cards, also operated by independent distributors.
</FONT>

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

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

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 1998, we opened 22 new customer sales and service centers. In
1999, although we did not open any new customer sales and service centers, we
replaced one existing customer sales and service center and remodeled 16 other
existing customer sales and service centers. In 2000, we opened 14 new
customer sales and service centers and remodeled 6 other existing customer
sales and service centers. In 2001, we opened 29 new customer sales and
service centers. In 2002, Iusacell opened 11 new customer sales and service
centers. We now have a total of 146 customer sales and service centers
throughout our cellular and PCS regions. In the second half of 2002, we
decided to perform a series of revisions to our service centers, including
performance and location assessments. As a result, in 2003 and 2004, we will
perform the re-location and remodeling of all of the owned stores, and we will
continue opening stores in high-traffic areas and shopping centers nationwide.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2001 face-to-face customer service was integrated into certain of our
owned stores in an effort to further personalize the service. In 2003, we
expect to include a customer service representative in all of the stores we
own.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To service the needs of our corporate customers, we have created a direct
sales force, which, at December&nbsp;31, 2002, included 79 full-time sales
representatives. This group of trained representatives seeks to increase sales
by:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; aggressively pursuing sales opportunities in the corporate segment;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; &#147;bundling&#148; combinations of services into customized packages
designed to meet customers&#146; requirements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; developing and marketing new services to satisfy the demands of such customers; and</FONT></TD>
</TR>
</TABLE>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; educating corporate purchasing managers about alternative pricing plans and services.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These direct sales representatives are distributed along our service
regions to deliver personalized service.
</FONT>


<P align="center"><FONT size="2">27</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Independent Distributors</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to broaden our market, we maintain relationships with a broad
network of exclusive distributors and national retailers that, at December&nbsp;31,
2002, sold all of our products at 1,654 points of sale in Mexico. With the
intention of relying to a lesser extent on certain large distributors, in 2002
we began to directly contract with key distribution channels that had
previously been served via third party distributors. In addition, VIVA prepaid
cards were distributed at an additional 56,459 points of sale. In order to
ensure that our standards are maintained at all distribution points, we provide
assistance to our distributors in training, promotions and advertising. We
also provide them with information on our customer base to allow the
distributors to service our customers effectively.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We retain commission agents as a flexible sales force in all of our mobile
wireless regions. The agents function as cellular service brokers for us,
working out of their own premises to better target their customers. These
agents provide additional distribution outlets with minimal support from
Iusacell. We used to retain commission agents as a flexible sales force
throughout our regions with management from our customer sales and service
centers. This channel was redeployed in early 2003.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, Iusacell engages telemarketing service providers as a
direct marketing mechanism or to follow up on targeted outbound calls and
receive calls through an 800 number.
</FONT>


<P align="left"><FONT size="2"><B>Electronic Means</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have implemented three important electronic tools for the sale of
prepaid airtime: sales through automated teller machines at banks, sales over
the phone by dialing *AIRE and sales through our website &#151; www.iusacell.com.
Sales at ATM machines are charged against our customer&#146;s bank account by using
a personal identification number. We have implemented ATM sales at
Banamex-Citibank, BBVA Bancomer, Bital and Bancrecer. In first half of 2003,
we entered into additional ATM distribution agreements for the sale of prepaid
airtime. Sales using *AIRE and our website are charged to our customer&#146;s
credit card.
</FONT>


<P align="left"><FONT size="2"><B>Advertising</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, we launched an integrated media plan, including a repositioning
campaign, also emphasizing the benefits of our products. The effort is
supported by the <I>Iusacell</I>&#153; brand image. All product offerings have been
marketed under the single <I>Iusacell</I>&#153; brand name which was reinaugurated as
<I>Iusacell Valora tu Espacio </I>in 2002, as part of the repositioning campaign
launched in the later part of the year. This customer-oriented campaign was
focused on customer satisfaction and supported by higher value offerings.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the media plan is to inform and convince potential users
and subscribers about the benefits of the products and services offered by
Iusacell, with an emphasis on customer care and to target potential subscribers
through a coordinated print, radio, television and fixed and moving outdoor
advertising campaigns. A key element of this integrated media plan is a
periodic agency review, where the sales results of a given campaign are
evaluated. The integrated media plan enables us to negotiate more favorable
advertising rates. Television and print advertisements prominently feature an
ad-response telephone number to solicit new customer inquiries.
</FONT>


<P align="left"><FONT size="2"><B>Customer Service</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We view superior customer service as essential in order to distinguish
ourselves in the competitive Mexican wireless telecommunications market.
Postpaid customers can access dedicated support by dialing *611, where trained
customer service representatives are equipped to answer questions regarding
services and products 24 hours a day. We train our customer service
representatives to ensure that each customer receives prompt attention,
informed answers to any inquiries and satisfactory resolution of any concerns.
We believe that enhanced customer service, especially post-sales support, is
essential to developing brand loyalty and supports the efforts of our sales
force to cross-sell our services and products. Prepaid customers can access
support by dialing *VIVA.
</FONT>
<P align="center"><FONT size="2">28</FONT>


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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The VIVA prepaid operating system has improved customer satisfaction
through automated activation, automated self service menus through the
Integrated Voice Response (IVR)&nbsp;system, voice messaging and other services and
has lowered the cost of support services.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To further enhance customer service, we have installed dedicated personal
computer terminals linked to our billing system so that each customer service
representative, either at a Iusacell customer sales and service center or at a
Iusacell call center, can handle customer inquiries, billing questions and
account payments with real-time data and a full customer profile in hand.
Customer data gathered from such sources as the activation process, the billing
system and exit interviews with customers who terminate service allows us to
better tailor our marketing strategy to each customer. Along with providing
information as to how we can improve our customer service, this data is
expected to enable representatives from each of the distribution channels to
better target their sales approach to each customer when cross-selling
Iusacell&#146;s services and products. We completed the process of upgrading our
Automatic Call Distribution (ACD)&nbsp;system in the second half of 2002. At the
same time, we also completed the process of upgrading our monitoring and
workforce management systems.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1998, we opened two call centers that provide more automated and
efficient service to customers. In 2002, we consolidated these facilities into
one center that manages all customer care operations for all of our concession
areas. In order to accelerate the problem resolution process at both the call
centers and in our company owned stores, we implemented the Customer Attention
Support Team (CAST)&nbsp;program, which has been extended to all of our corporate,
medium and small business accounts, as well as government accounts. Each of
these customers has an assigned CAST, sales and collections executive. In
addition, we are in the process of dedicating a customer support function in
each company-owned store.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, we redesigned the compensation plan for customer care
representatives. Whereas our customer care representatives previously received
a fixed salary under our compensation plan, the compensation plan today is
designed to motivate the customer service force by compensating customer care
representatives based on performance as measured according to various service
indicators. This plan provides continuous training and certification and basic
salary and monetary incentives designed to encourage resolution of customer
problems, subscriber retention, loyalty, precision and quality.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2000, the certifying company, <I>Societ&#233; Generale de Surveillance
de M&#233;xico </I>(SGS), granted ISO 9002 Certification under the <I>Entidad Mexicana de
Acreditaci&#243;n </I>(EMA)&nbsp;to Iusacell&#146;s customer care process. Our most recent
quality audit was conducted in mid-2002; however, we did not seek
re-certification. At year-end 2002, we began the certification review process
for Customer Operations Performance Center (COPC)&nbsp;accreditation, which
certifies customer contact operations according to international best
practices.
</FONT>


<P align="left"><FONT size="2"><B>Pricing</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>. Iusacell offers a variety of flexible pricing options for our
mobile wireless service. The primary components of the postpaid pricing plans
include monthly fees, additional per-minute usage charges and a number of free
minutes per month. The prepaid program markets cards which credit peso amounts
to a customer&#146;s account. The cards can be used for outgoing and long distance
incoming calls over a period of 60&nbsp;days (or in the case of Ps.450.0 prepaid
cards, 90&nbsp;days). See Item&nbsp;4, &#147;Information on the Company &#151; Business Overview &#151;
Mobile Wireless Services &#151; Prepaid Customers.&#148; Most of the postpaid plans
include a selection of free cellular handsets. The prepaid plans do not
provide free cellular handsets.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We continually review market pricing in order to maintain a competitive
offer and attract customers from our target market. As a result, constant
adjustments to meet market and competitive conditions may require that we
increase or decrease prices over short periods of time. See Item&nbsp;5, &#147;Operating
and Financial Review and Prospects &#151; Trend Information &#151; Price Increases and
Rollbacks.&#148;
</FONT>

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Postpaid Plans</I>. The postpaid pricing plans are designed to target
primarily high and moderate usage postpaid subscribers. High-usage customers
are typically willing to pay higher monthly fees in exchange for larger blocks
of minutes, value-added services, a free high-end handset and lower per minute
airtime charges under a single contract. Moderate and lower-usage subscribers
typically prefer pricing options which have a lower monthly charge, fewer
minutes included, a less expensive handset and higher per minute airtime
charges than those options chosen by high-usage customers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2003, Iusacell launched a new set of postpaid value plans aimed
to position us as the best alternative for the targeted high-value market
segment. These new postpaid plans were designed according to the needs of
targeted consumer segments and are supported by advertising and marketing
campaigns that anchor the effort.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The three new postpaid value plans include a NAFTA plan, in which local
calls, as well as calls within Mexico, the U.S. and Canada, are all priced at
the same per minute rate; an unlimited nights and weekends designed to increase
cellular traffic leveraging non-peak utilization hours; and a basic plan with
affordable rates designed to compete directly with competitors&#146; plans by
incorporating higher baseline minutes. Furthermore, we offer multi-line plans
designed to fit the communication needs of small groups of users. In addition,
special cross-border plans are offered to Region 1 subscribers whereby they can
place lower priced calls across Mexico, U.S. and Canada. Finally, in Regions
1, 4 and 8, the regions we have entered most recently, we offer local plans
with competitive per minute pricing.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We offer to our corporate customers either a flexible combination of our
various service packages at a volume rate or a large pool of minutes that can
be shared among all users at a competitive per minute price.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Prepaid Plans</I>. In contrast to postpaid subscribers, prepaid customers
typically generate lower levels of cellular usage, have access to a limited
number of value-added services, generally already own a handset and often are
unwilling to make a fixed financial commitment or do not have the credit
profile to purchase postpaid plan cellular services. In addition to helping
customers control costs, our prepaid programs have no monthly bill and allow
customers to prepay for cellular services in cash.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September 1997, we introduced our VIVA prepaid service. VIVA provides
for automated reactivation and value-added services such as voice-messaging.
As of December&nbsp;31, 2002, VIVA prepaid cards were available in denominations of
Ps.100.0, Ps.150.0, Ps.250.0 and Ps.450.0. In February 2003, new prepaid cards
with aggressive prices per minute were launched in an effort to increase
airtime recharges and to respond to the new tax initiatives implemented by the
Mexican government in January 2003. See Item&nbsp;3, &#147;Key Information &#151; Risk
Factors &#151; Risk Factors Relating to Doing Business in Mexico.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Hybrid Plans</I>. In 2000, we launched a hybrid plan which features elements
of postpaid and prepaid plans targeted at high school and university-aged
youths who want the status of a cellular phone but want to control their usage.
In March 2003, we decided to discontinue the hybrid plans because of the high
level of churn experienced.
</FONT>


<P align="left"><FONT size="2"><B>Activation, Billing and Collection Procedures</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We can activate a phone within 15 minutes or less for any prepaid and
postpaid customers through the use of new technologies such as Over The Air
Service Provisioning. For postpaid customers who intend to pay their monthly
charges either with a credit card or in cash there is an automatic credit
scoring process prior to the delivery and activation of a cellular telephone.
Depending on the risk profile resulting from the credit scoring, the deposit
requirements are determined automatically.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have also implemented a system to monitor MOU levels and the number of
calls to certain geographic areas in order to identify abnormal usage by
postpaid subscribers. When abnormal usage is detected, we contact the
subscriber to determine whether such usage has been authorized. We believe
that these procedures are effective in reducing the number of billing disputes
with subscribers and losses due to cellular fraud.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Billing is currently administered using five different billing systems,
including a cellular customer care and billing system provided by <I>Schlumberger
Distribution Mexico, S.A. de C.V. </I>(SchlumbergerSema) in Regions 1, 4, 5, 6, 7,
8 and 9 which we also use for our 450 MHz fixed local wireless business, one
point of sale system that provides billing, administration and control
features, a proprietary residential long distance system, a proprietary system
for high-volume business long distance customers and a purchased system for
paging customers. We compile billing information from our switches by
electronic transfer on a half-an-hour basis for processing by our billing
systems. We have measures in place that enable us to recover billing
information that may be lost as a result of disasters.
</FONT>

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We invoice our postpaid customers at the end of each month for the
previous month&#146;s service. All customers have 21 credit days, after which they
receive an overdue balance notification, except for a select number of postpaid
customers distinguished by volume, which customers are allowed 36 credit days.
Our payment policy stipulates that after 60&nbsp;days of non-payment, lines are
suspended, and after 120&nbsp;days of nonpayment, these lines are disconnected and
considered as delinquent accounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We mitigate our credit exposure in five ways:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; for all customers, by obtaining a credit report from the <I>Bur&#243;
Nacional de Cr&#233;dito </I>(National Credit Bureau), a Mexican affiliate of
TransUnion Corporation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; by performing an automatic credit scoring and depending on the risk
profile, we may require our customers to prepay a certain number of
monthly fees;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; by requiring payment to be made by credit card;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; by establishing credit limits and portfolio segmentation, according to customers&#146; credit quality; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#149; by offering prepaid services, which eliminate all credit risk.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For 2000 and 2001, we reserved approximately 1.6% and 1.7% of our cellular
revenues in each year for doubtful accounts. For 2002, we reserved
approximately 1.1% of our revenues for doubtful accounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we also record a revenue provision for those postpaid
customers who have fallen behind on their payments and whose service had been
suspended. Toward the end of the third quarter of 1999, we changed our billing
practice for these postpaid customers. Rather than continue our policy of not
charging monthly fees upon suspension, in hopes of receiving additional
revenues from CPP tariffs for incoming local calls and from suspended customers
who ultimately pay overdue amounts and reinitiate service, we began to permit
incoming call service and continue to charge monthly fees to suspended
customers for an additional two months, but reserved a substantial portion of
the monthly fees as a revenue provision. This period was reduced to two months
in the second quarter of 2000. This change in policy resulted in additional
marginal revenue and in the increase in 1999 and 2000 reserves discussed above.
</FONT>


<P align="left"><FONT size="2"><B>Network, Equipment and IT</B>
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After a thorough analysis that we conducted in coordination with Bell
Atlantic in 1996, we elected to deploy CDMA digital technology instead of
TDMA/GSM technology. Currently, all Verizon affiliates are successfully using
CDMA technology, including those operating in the U.S. markets. CDMA offers
significantly greater call-carrying capacity, superior voice quality, longer
telephone battery life and greater fraud protection than TDMA. In addition,
CDMA is easier to upgrade than TDMA. CDMA data capabilities are superior to
any GSM/GPRS network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1997, we signed an agreement with subsidiaries of Lucent
Technologies for the replacement of Iusacell&#146;s existing analog network
equipment with Lucent Technologies analog and CDMA digital network equipment.
This replacement began in February 1998. All regions that we owned at the time
were completely swapped out as of August 1999.
</FONT>



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



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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also deployed Lucent Technologies CDMA technology in our PCS networks
in Regions 1 and 4, in northern Mexico <I>pursuant </I>to an agreement signed with
subsidiaries of Lucent Technologies on February&nbsp;11, 2002. At the end of 2002,
our PCS network was comprised of 62 cell sites in Region 4 and 44 cell sites in
Region 1, the latter being served by a virtual switch located in Region 4.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, our integrated mobile wireless network was
comprised of 7 cellular switches, 688 cellular and PCS cell sites, 123
repeaters and 32 microwave repeaters, covering 49&nbsp;million inhabitants or 57%
of Mexico&#146;s total population in Iusacell&#146;s concessioned regions. During 2002,
we added 105 new cellular cell sites and 60 PCS cell sites.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, we have 785 microwave links, all of which are owned by us, with
either SDH or PDH technology. Additionally, we have leased lines located
mainly in Regions 1, 4 and 8. In 1996, we launched long distance services,
supported by 3 switches and fiber optic links. Currently, we have 5,176
kilometers of fiber optic backbone network, in both metropolitan and long
distance segments, using SDH (STM16 capacity in the backbone) and two LD
switches operating. In 2001, we introduced the new Dense Wavelength Division
Multiplexing (DWDM)&nbsp;technology in several high-traffic segments of our fiber
optic network to increase capacity. In 2002, we expanded this technology to
three existing links of the fiber optic network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a network operations and control center (NOCC)&nbsp;in Mexico City
which oversees, administers and provides technical support to all our cellular
regions. During 2000, we implemented a new network administration system that
provides better surveillance and administration of network performance. In
2002, we installed another center for network operations in Toluca that
provides an alternative monitoring capability for the network in the event an
emergency occurs at the NOCC in Mexico City.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, we started providing two-way Short Message Service (SMS)&nbsp;and
since January 2003, we have been providing Packet Switched Data (PSD)&nbsp;services
using 3G-1XRTT standard. Currently, we provide 1XRTT services in Mexico City,
Toluca, Cuernavaca and Valle de Bravo and expect to expand our coverage by the
end of 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our strategy for the future is to improve our coverage, to focus on our
target market (according to our marketing strategy) and to maintain superior
performance and voice quality standards. We will continue to maintain
transmitting equipment to serve both analog and digital equipment. Currently,
we are marketing tri-mode cellular and PCS telephones capable of sending and
receiving both analog and digital transmissions in order to support roaming
service between our cellular and PCS regions. We will increase coverage and
optimize technology such as the 1XRTT network in order to support the latest
data applications, the Over the Air Service Provisioning Technology and
transitions to the next-generation technology for long distance communications
services.
</FONT>


<P align="left"><FONT size="2"><I>IT</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently use the JD Edwards World Software for Enterprise Resource
Planning (ERP), working mainly with various accounting and administrative
modules. We implemented this system in 1994 and have been basically using the
same version of the JD Edwards World Software since implementation. However,
in recognition of the need to upgrade our technology, to improve financial
processes and to take steps to comply with the Sarbanes-Oxley Act of 2002, we
intend on implementing a new release of the JD Edwards World Software in 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To improve the flow of information within the company, Iusacell intends on
implementing a corporate data warehouse system in 2003. This repository system
will contain all data related to business processes and will be updated on a
regular basis to ensure that available data will be preserved.
</FONT>


<P align="left"><FONT size="2"><I>Competition</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wireless mobile communication systems compete principally on the basis of
quality of telecommunications services, customer service, price, breadth of
coverage area, roaming capabilities and value-added services. Operators are
largely free to set their own rates, provided such rates are set on the basis
of cost. The offering of wireless mobile communication services in Mexico is
highly competitive with one operator, Telcel, commanding a significant share of
the market.
</FONT>

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell faces competition from Telcel, which is the largest wireless
communications provider. Telcel holds the Cellular B-band concession and PCS
D-band. In 1999, we began to face competition from the winners of 1.9 GHz
(PCS)&nbsp;spectrum in the auctions concluded in May 1998. Pegaso (now Telef&#243;nica)
commercially launched its mobile wireless PCS services in Tijuana in February
1999, initiated PCS services in Monterrey, Guadalajara and Mexico City later in
1999 and, at the end of 2002, provided PCS service in 12 cities in Mexico. In
2002, <I>Telef&#243;nica M&#243;viles, S.A. </I>(Spain) completed its acquisition of Pegaso.
<I>Telef&#243;nica M&#243;viles, S.A. </I>also operates its Cellular Band A concessions in the
northern part of Mexico through its Mexican subsidiary. In May 2002,
Telef&#243;nica announced an aggressive expansion program with over U.S.$1.5&nbsp;billion
in capital expenditures planned through 2005 to expand capacity, integrate
their concession areas and overlay a GSM network on their existing
infrastructure. Unef&#243;n launched mobile wireless services in Acapulco and
Toluca in February 2000, and now provides fixed and mobile wireless services in
those two cities, as well as in Mexico City, Guadalajara, Monterrey and 10
additional cities in Mexico.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also face competition from companies providing mobile wireless
telecommunications services using alternative existing technologies. <I>Nextel de
M&#233;xico, S.A. de C.V. </I>began marketing its enhanced specialized mobile radio
services in 1998 and covers 15 cities in Mexico.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In providing long distance telephone service, we face competition from 9
other concession holders, including Telmex and <I>Alestra S.A. de C.V. </I>and <I>Avantel
S.A. de C.V.</I>, joint venture companies in which AT&#038;T and MCI WorldCom,
respectively, have beneficial ownership interests. Presubscription balloting
in which telephone customers were asked to elect their long distance carrier
was conducted in 150 cities across Mexico in 1997, 1998 and 1999. We chose not
to commit significant marketing resources to the balloting process and fared
poorly in the initial balloting results.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In providing data transmission services, we compete for customers with
Telmex, state-owned <I>Telecomunicaciones de M&#233;xico </I>and operational long distance
companies to form a highly competitive market with more than 20 participants.
In addition, we believe that the current Mexican data transmission industry
includes over 1,000 private networks that provide data transmission services.
</FONT>


<P align="left"><FONT size="2"><B>Government Regulation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Telecommunications systems in Mexico are regulated by the SCT and by
COFETEL, a decentralized regulatory body within the SCT, pursuant to the 1995
Telecommunications Law (<I>Ley Federal de Telecomunicaciones</I>), which became
effective on June&nbsp;8, 1995. Regulations governing international long distance,
domestic long distance, local telephony, mobile and other telecommunications
services have been promulgated under the 1995
Telecommunications Law. However, some rules from the prior Law of General
Means of Communication (<I>Ley de V&#237;as Generales de Comunicaci&#243;n</I>) and the rules
promulgated under such law, including, without limitation, the
Telecommunications Rules (<I>Reglamento de Telecomunicaciones</I>) which we
collectively refer to as the Original Communications Laws, generally remain
effective if they are not inconsistent with the 1995 Telecommunications Law and
the rules promulgated under that law.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These laws and regulations define the regulatory structure applicable to
the nationwide telecommunications infrastructure and the provision of
telecommunications services. They govern, among other things:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">applications to obtain concessions to install, maintain and operate telecommunications systems;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the establishment of technical standards for the provision of telecommunications services;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the grant, revocation and modification of concessions and permits; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the auction of spectrum.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2001 and 2002, the SCT announced that the 1995 Telecommunications
Law would be amended to include new provisions related to competition, customer
protection, spectrum auctions, permits for commercialization of
telecommunication services and universal service. Reportedly, the amendments
will focus more on networks than on services. The SCT and the
telecommunications industry have been recently involved in discussions to
define the content of the new law. We cannot ensure that the initiative will
be presented to Congress for approval in 2003.
</FONT>

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

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms and conditions of concessions and permits granted under the
Original Communications Laws, which is the case for the cellular concessions
and permits granted to Iusacell and our subsidiaries, should be governed by the
Original Communications Laws and respected under the new regulatory regime
until their expiration. The 1995 Telecommunications Law may grant rights
enhancing those set forth in the Original Communications Laws. For instance,
rates charged by holders of concessions and permits granted under the Original
Communications Laws no longer require prior approval from the SCT, but only
require registration with COFETEL.
</FONT>


<P align="left"><FONT size="2"><b>Concessions and Permits</b>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To provide public telecommunications services in Mexico through a public
network, the service provider must first obtain a concession from the SCT.
Pursuant to the 1995 Telecommunications Law, concessions for public networks
may not exceed a term of 30&nbsp;years, and concessions for radioelectric spectrum
may not exceed a term of 20&nbsp;years. Concessions may be extended for a term
equivalent to the term for which the concession was originally granted, but not
to exceed such 20- or 30-year limit, as the case may be. Concessions specify,
among other things:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the type of network, system or service;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the allocated spectrum, if applicable;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the geographical region in which the holder of the concession may provide the service;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the required capital expenditure program;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the term during which such service may be provided;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the payment, where applicable, required to be made to acquire the
concession, including, where applicable, the participation of the
Mexican government in the revenues of the holder of the concession; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any other rights and obligations affecting the concession holder.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to concessions, the SCT may also grant permits for (i)
establishing, operating or exploiting telecommunications services not
constituting a public network (i.e., reselling) and (ii)&nbsp;installing, operating
or exploiting transmission-ground stations. There is no specified maximum term
for permits. Under the 1995 Telecommunications Law, only registration with the
SCT is required to provide value-added telecommunications services.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the 1995 Telecommunications Law and the 1993 Foreign Investment Law
(<I>Ley de Inversi&#243;n Extranjera</I>), concessions may only be granted to Mexican
individuals and to Mexican corporations in which non-Mexicans hold no more than
49% of their voting shares or which are not otherwise controlled by
non-Mexicans, except that, in the case of concessions for cellular
communications services, foreign investment participation may exceed 49% with
the prior approval of the Mexican Foreign Investment Commission of the Mexican
Ministry of Economy (formerly the Ministry of Commerce and Industrial
Development). The Mexican Foreign Investment Commission ruled, upon
application of Unef&#243;n, that concessions for PCS services should be treated
identically to concessions for cellular services for foreign investment
purposes. There are no foreign investment participation restrictions with
respect to operations conducted under permits.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A concession or a permit may be terminated pursuant to the 1995 Telecommunications Law upon:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">expiration of its term;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">resignation by the concession holder or the permit holder;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">34</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">revocation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">expropriation; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">dissolution or bankruptcy of the concession holder or the permit holder.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A concession or a permit may be revoked prior to the end of its term under certain circumstances, such as:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">unauthorized or unjustified interruption of service;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the taking of any action that impairs the rights of other concessionaires or permit holders;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to comply with the obligations or conditions specified in the concession or permit;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to provide interconnection services to other holders of
telecommunications concessions and permits;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">loss of the concession or permit holder&#146;s Mexican nationality in
instances in which Mexican nationality is legally required;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">unauthorized assignment, transfer or encumbrance of the concession
or permit, of any rights under the concession or permit or of assets
used for the exploitation of the concession or permit;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to pay to the Mexican government its fee for the concession
or permit or, where applicable, its participation in the revenues of
the holder of the concession or permit; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">participation of any foreign government in the capital stock of the
holder of the concession or permit.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the SCT may establish for any concession further events which
could result in revocation of that concession.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican government, through the SCT, may also temporarily seize all
assets related to a concession or permit in the event of a natural disaster,
war, significant public disturbance or threats to internal peace and for other
reasons related to preserving public order or for economic reasons. In
addition, the Mexican government has the statutory right to expropriate a
concession and assets related to its exploitation for public interest reasons.
Under Mexican law, the Mexican government is obligated to compensate the owner
of the assets in the case of a statutory expropriation or temporary seizure,
except in the event of war. If the Mexican government temporarily seizes such
assets, it must indemnify the concession or permit holder for all losses and
damages, including lost revenues.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of an expropriation, the amount of the compensation is to be
determined by appraisers. If the party affected by the expropriation disagrees
with the amount appraised, it may initiate judicial action against the Mexican
government. Should no agreement be reached on the amount of the indemnity in
the case of a seizure or expropriation, the determination will be made by an
independent appraiser. Iusacell is not aware of any instance in which the SCT
has exercised any of these powers in connection with a cellular company.
</FONT>


<P align="left"><FONT size="2"><I>The Original Concession</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our right to provide radiotelephony, local wireless and data transmission
services nationwide, as well as cellular service in Region 9, is based upon the
concession granted on April&nbsp;1, 1957, as amended, which we refer to as the
Original Concession, to <I>Servicio Organizado Secretarial, S.A.</I>, which merged
into <I>SOS Telecomunicaciones, S.A. de C.V.</I>, which we refer to as SOS. The term
of the Original Concession is 50&nbsp;years, and it expires on April&nbsp;1, 2007. The
Original Concession may, however, be revoked prior to such date in the event
that SOS fails to comply with its terms or applicable law. The Original
Concession is renewable upon timely application to the SCT, provided that SOS
has complied with all of the requirements of the Original Concession and agrees
to any new terms and conditions established by the SCT at the time of renewal.
</FONT>

<P align="center"><FONT size="2">35</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In consideration for the Original Concession, SOS must make payments to
the Mexican government equal to 5% of all gross revenues derived from services
provided through its Region 9 cellular network and payments in an amount equal
to the greater of (i)&nbsp;4% of all gross revenues and (ii)&nbsp;10% of net income, in
either case, derived from services provided through its nationwide radio
communications network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the Original Concession, SOS must continually modernize
its services. In updating its services, SOS must submit technical and economic
plans for approval by the SCT. In determining whether to approve these plans,
the SCT is authorized to consider whether the plans sufficiently address
factors such as the public interest (including, without limitation,
teledensity) and efficiency and uniformity in telecommunications throughout
Mexico.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initially, the Original Concession authorized only the installation and
commercial operation of nationwide mobile (vehicle-installed) radiotelephone
public service in the 132-144 MHz frequency range. Since then, however, the
Original Concession has been amended numerous times, allowing us to expand the
types of telecommunications services which we may offer. In 1978, the Original
Concession was amended to grant SOS an additional allocation in the 440-450 MHz
and 485-495 MHz frequency ranges in return for yielding a portion of its
132-144 MHz frequency range allocation. SOS retained the frequencies between
138 and 144 MHz.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Between 1986 and 1989, the Original Concession was further amended to
enable SOS to provide fixed rural radiotelephony service, to offer telex and
data transmission with the obligation to link its subscribers to the network
owned by Telecom, and to interconnect its radiocommunications ground stations
through satellite.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1989, SOS was authorized to install, operate and maintain a mobile
public radiocommunications network with cellular technology in the 825-835 MHz
and 870-880 MHz frequency bands in Region 9. In 1990, SOS was authorized to
carry intra-regional cellular-to-cellular communications throughout Region 9
without being required to interconnect with the long distance carrier. In
1992, SOS was authorized to provide public data transmission service nationwide
through its radio communications networks without the obligation to link its
subscribers to the Telecom network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1993, SOS was granted an additional 5 MHz band in the 800 MHz frequency
range for the provision of cellular service, due to the high volume of cellular
traffic experienced in Region 9. In the same year, SOS was authorized to
improve its radiocommunications public service in the 440-450 MHz and 485-495
MHz frequency
ranges by utilizing digital technology and to interconnect its
telecommunications systems through fiber optic, satellite and microwave
technologies. The SCT also clarified the ability, and indeed the obligation,
of SOS to interconnect customers of its nationwide radio communications network
regardless of whether such customers use fixed, mobile or portable telephones.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the 1995 Telecommunications Law, SOS applied to renew
the Original Concession in March 1997. In December 1996, we applied to divide
the Original Concession into two concessions, one relating to the provision of
cellular services over the 800 MHz frequency band in Region 9, which would not
be subject to restrictions on foreign investment, and a second relating to the
450 MHz frequencies, which would be subject to restrictions on foreign
investment. We continue negotiating the terms and conditions for such
extension and division with COFETEL.
</FONT>


<P align="left"><FONT size="2"><I>Cellular Concessions</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mexico is divided into nine cellular regions. The SCT has allocated
cellular telephone system frequencies in each region in the Cellular A-band and
the Cellular B-band. In each region, Telcel holds the Cellular B-band
concession and its cellular competitor in each region holds the Cellular A-band
concession.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Region 9, we hold the right to provide cellular service pursuant to an
authorization granted to SOS by the SCT in 1989 under the Original Concession.
In Regions 5, 6, 7 and 8, we hold the right to provide cellular service through
our subsidiaries <I>Comunicaciones Celulares de Occidente, S.A. de C.V.</I>, known as
Comcel, <I>Sistemas Telef&#243;nicos Port&#225;tiles Celulares, S.A. de C.V.</I>, known as
Portacel, <I>Telecomunicaciones del Golfo, S.A. de C.V.</I>, known as Telgolfo, and
<I>Portatel del Sureste, S.A. de C.V. </I>known as Portatel, respectively. Comcel,
Portacel, Telgolfo and Portatel each holds a 20-year concession expiring in
2010 which authorizes these subsidiaries to install, operate, maintain and
exploit mobile public radiotelephone networks with cellular technology for
commercial use in the Cellular A-band. In consideration for these
authorizations and concessions, the subsidiaries made initial payments to the
Mexican government and, in addition, must make payments as follows:
</FONT>

<P align="center"><FONT size="2">36</FONT>

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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent of Gross Revenues Payable</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Subsidiary</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>To Mexican Government</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Comcel</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Portacel</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telgolfo</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Portatel</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By the terms of their concessions, Comcel, Portacel, Telgolfo and Portatel
must continually modernize their services after receiving approval of their
technical and economic plans from the SCT. In determining whether to approve
these plans, the SCT is authorized to consider whether the plans sufficiently
address factors such as the public interest (including, without limitation,
teledensity) and efficiency and uniformity in telecommunications throughout
Mexico. These concessions may be revoked or terminated prior to their
expiration dates in the event the concession holder fails to comply with the
conditions established in the concessions or applicable law. The concessions
may, however, be renewed for a term equal to the original term upon timely
application to the SCT, provided that the concession holder had complied with
all of the requirements of its concession and agrees to any new terms and
conditions established by the SCT at the time of such renewal.
</FONT>


<P align="left"><FONT size="2"><I>PCS Concessions</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 1998, the SCT granted to <I>Iusacell PCS, S.A. de C.V.</I>, which we
refer to as Iusacell PCS, which is a joint venture between Iusacell and Jos&#233;
Ram&#243;n Elizondo Anaya, a former director of Iusacell Celular, in which Iusacell
originally held a 94.9% equity interest and a 49% voting interest, a concession
for the installation and exploitation of a public network to provide fixed and
local mobile access and a concession of 1.9 MHz frequencies in Region 1 (which
includes the city of Tijuana) and Region 4 (which includes the city of
Monterrey), for a renewable 20-year term. Under the terms of its concession,
Iusacell PCS is committed to cover at least 20% of the
total population in those regions by the end of the third year of the
concession and 50% of the total population in those regions by the end of the
fifth year of the concession. We started PCS network operations and service
was available in the second quarter of 2000 and commercial operations in the
fourth quarter of 2001, and we are currently in compliance with the coverage
commitments under our concession. Upon our application, in November 2000, the
SCT granted Iusacell PCS an exemption for five years from the obligation to
take part in the long distance carrier selection by a pre-subscription process.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2002, and upon request by Iusacell PCS, COFETEL granted an
authorization to transfer Iusacell PCS&#146;s rights and obligations under the PCS
concession to <I>Iusacell PCS de M&#233;xico, S.A. de C.V. </I>which we refer to as
Iusacell PCS de M&#233;xico, a wholly-owned subsidiary of Iusacell PCS. The PCS
concession was transferred to Iusacell PCS de M&#233;xico for consideration in the
aggregate amount of Ps.669.0&nbsp;million (U.S.$64.2&nbsp;million). If Iusacell PCS de
M&#233;xico fails to pay such amount on or before December&nbsp;31, 2003, Iusacell PCS
would have the right to revoke the transfer and keep the concession, subject to
the authorization of COFETEL.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;14, 1995, Iusacell Celular and Infomin formed Infotelecom as a
joint venture to market national and international paging services. Infomin
has a concession, which expires on July&nbsp;20, 2009, to provide nationwide paging
services in Mexico. Although the joint venture agreement between Iusacell
Celular and Infomin contemplates that Infomin will ultimately transfer its
paging concession to Infotelecom, Infomin&#146;s paging concession prohibits foreign
ownership of more than 49% of the voting shares of the entity holding the
concession. Infomin, therefore, would be unable to contribute its paging
license to the joint venture so long as Verizon continued to control the
management of Iusacell and Iusacell Celular continued to hold more than 49% of
the voting shares of Infotelecom.
</FONT>

<P align="center"><FONT size="2">37</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to eliminate this obstacle to the transfer of the paging
concession to Infotelecom, in December 1998 we sold a 2% interest in
Infotelecom to Mr.&nbsp;Jos&#233; Ram&#243;n Elizondo, a former director of Iusacell Celular.
As a result, we currently hold a 49% interest in Infotelecom. Infotelecom is
required to make monthly payments to Infomin equal to 5% of all gross revenues
for the preceding month. This payment represents the amount which Infomin as
concession holder must pay to the SCT for the right to provide paging service.
In 2000, Infomin received governmental approval to transfer its paging
concession to Infotelecom. We expect the transfer of the concession to be
implemented in 2003. The financial statements of Infotelecom are consolidated
with the financial statements of Iusacell. See Note 2 to the Consolidated
Financial Statements.
</FONT>


<P align="left"><FONT size="2"><I>Long Distance</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our right to provide international long distance services is based upon a
long distance concession granted by the SCT to Iusatel, on October&nbsp;16, 1995.
The term of the long distance concession is 30&nbsp;years and may be renewed upon
timely application to the SCT, for an equal period of time, provided that
Iusatel complies with certain requirements. Upon our application, the SCT and
COFETEL modified this concession on December&nbsp;17, 1997, authorizing a change in
the coverage requirements and increasing flexibility in the choice of
transmission technology.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the modified concession, Iusatel is required to comply with
technical specifications and had to serve using its own infrastructure a
minimum of 11 specified cities by July&nbsp;31, 1998, 26 additional specified cities
by December&nbsp;31, 1999 and another 13 additional specified cities by December&nbsp;31,
2000. Iusatel complied with its coverage commitments in all cities except for
Saltillo in Region 4. Therefore, in 2001 the SCT substituted Tlaxcala for
Saltillo in our coverage commitment, and we are currently in compliance with
all our coverage commitments.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 1997, the Mexican Foreign Investment Commission conditioned
its approval of Bell Atlantic assuming management control over Iusacell Celular
upon the requirement, among others, that we transfer at least 51% of the voting
shares of Iusatel to Mexican investors on terms acceptable to the Mexican
Foreign Investment Commission. In November 1998, we complied with this
requirement by having Mr.&nbsp;Elizondo agree to subscribe to 5.1% of the capital
stock of Iusatel, comprising 51% of the voting shares thereof. We retained a
94.9% equity interest in Iusatel, including a 90% equity interest through the
ownership of neutral limited voting stock (<I>inversi&#243;n
neutra</I>) and a 49% voting interest representing a 4.9% equity interest.
The financial statements of Iusatel are consolidated with the financial
statements of Iusacell. See Note 2 to the Consolidated Financial Statements.
</FONT>


<P align="left"><FONT size="2"><I>Local Telephony</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe our right to provide local telephony service is derived from
the Original Concession. The Original Concession, as granted, permitted SOS to
provide radiocommunications service to vehicle-mounted terminal equipment
nationwide.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1986, the SCT amended the Original Concession to authorize SOS to
provide fixed public radiotelephony service in rural areas nationwide in
accordance with plans to be approved by the SCT. In 1990, the
Telecommunications Rules were promulgated by the Mexican government which
further modified the Original Concession.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These regulations classified radiocommunications services on the basis of
the networks used to provide such services rather than on the basis of
subscriber terminal equipment. Radiocommunications networks are generally
classified as either &#147;fixed&#148; or &#147;mobile.&#148; Our radiocommunications network is a
mobile network. In 1993, the SCT clarified the ability, and indeed the
obligation, of SOS to interconnect customers of its nationwide
radiocommunications network regardless of whether such customers use fixed,
mobile or portable telephones.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Original Concession, the commencement of construction and
marketing of local wireless service in the 450 MHz frequency band on a
commercial basis requires the prior approval of the SCT. We have never
received the SCT&#146;s approval of our technical and economic plans for local
wireless service in the 450 MHz frequency band.
</FONT>

<P align="center"><FONT size="2">38</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, Iusacell Celular has reached an agreement with the SCT on a
technical process by which we can provide local wireless service in the 450 MHz
frequency band in some of the existing service regions and has received a right
of first refusal to acquire the concessions to provide local wireless service
in such regions.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September 1998, we determined that, because of many factors, including
the impact of changing technology since the initiation of the 450 MHz fixed
local wireless project in 1994, an impairment of our investment in 450 MHz TDMA
technology had occurred. As a result, we recorded a substantial non-cash
write-down of our investment in the 450 MHz fixed local wireless project.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 1998, Mr.&nbsp;Elizondo agreed to subscribe 5.1% of the capital
stock of Iusatelecomunicaciones, the Iusacell Celular subsidiary which provides
local wireless service in the 450 MHz frequency band on a trial basis,
comprising 51% of our total voting shares. We retained a 94.9% equity interest
in Iusatelecomunicaciones, including a 90% equity interest through the
ownership of neutral limited voting stock (<I>inversi&#243;n neutra</I>) and a 49% voting
interest representing a 4.9% equity interest. The financial statements of
Iusatelecomunicaciones are consolidated with the financial statements of
Iusacell. See Note 2 to the Consolidated Financial Statements.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our right to offer telex and provide public data transmission service
throughout Mexico is derived from the Original Concession. We use our
allocations in the 138-144 MHz, 440-450 MHz and 485-495 MHz frequency bands and
excess capacity in our cellular microwave backbone in Region 9 to provide data
transmission services.
</FONT>


<P align="left"><FONT size="2"><I>Dedicated Microwave Circuit Services Permit</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;8, 1993, the SCT authorized SOS to use its microwave network&#146;s
excess capacity to provide dedicated circuit services. In accordance with the
terms of this permit, these dedicated microwave circuits cannot be
interconnected to public exchange networks, and the service must only be
provided through the links of the microwave network authorized by the SCT. On
February&nbsp;1, 1994, the SCT authorized SOS to carry voice, data and video
conferencing through these dedicated circuit services.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;17, 1993, SOS was granted a permit to provide through its public
network the following value-added telecommunications services to its cellular
subscribers:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">secretarial service;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">voice mail; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">data transmission.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term of this permit is the same as that of the authorization for using
the Region 9 cellular network through which the value-added services are to be
provided. Under this permit SOS is required to make annual payments to the
Mexican government equal to 5% of all gross revenues derived directly from the
provision of these services. In October 1994, Comcel, Telgolfo and Portacel
were each granted a permit to provide secretarial services under the same terms
granted to SOS, including the making of the annual payments to the Mexican
government.
</FONT>


<P align="left"><FONT size="2"><b>Foreign Ownership Restrictions</b>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the 1995 Telecommunications Law and the 1993 Foreign
Investment Law, holders of concessions to provide telecommunications services
in Mexico, excluding providers of cellular service, cannot have a majority of
their voting shares owned by, and cannot be otherwise controlled by, foreign
persons. In February 1997, the Mexican Foreign Investment Commission
conditioned its approval of Verizon assuming management control over Iusacell
upon the requirement that, within a renewable period of 180&nbsp;days, Iusacell
would transfer at least 51% of the voting shares of Iusatelecomunicaciones and
Iusatel to Mexican investors on terms acceptable to the Mexican Foreign
Investment Commission. The Mexican Foreign Investment Bureau twice extended
the transfer deadline.
</FONT>

<P align="center"><FONT size="2">39</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 1998, we complied with this requirement by transferring 51% of
the voting shares of these two subsidiaries to Mr.&nbsp;Elizondo by means of a
subscription to capital. We retained 49% of the voting shares of these
subsidiaries, representing 4.9% of their capital. We also hold an additional
90% of the capital of these subsidiaries through the ownership of neutral
limited voting stock (<I>inversi&#243;n neutra</I>) that does not constitute voting shares
for purposes of the Mexican foreign investment laws. Consequently, we hold a
94.9% equity interest in these two subsidiaries, whose financial results we
consolidate.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To participate in the auctions for concessions for microwave frequencies
concluded in September 1997, we formed Punto-a-Punto Iusacell, a joint venture
with Mr.&nbsp;Elizondo. The Mexican Foreign Investment Bureau approved a capital
structure substantially similar to that authorized for Iusatel and
Iusatelecomunicaciones for the microwave joint venture. The financial
statements of Punto-a-Punto Iusacell are consolidated with the financial
statements of Iusacell. See Note 2 to the Consolidated Financial Statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to participate in the auctions for concessions for 1.9 GHz PCS
frequencies concluded in May 1998, we formed Iusacell PCS, another joint
venture with Mr.&nbsp;Elizondo. The Mexican Foreign Investment Bureau approved a
capital structure substantially similar to that authorized for Iusatel,
Iusatelecomunicaciones and Punto-a-Punto Iusacell, and we retained a right to
acquire Mr.&nbsp;Elizondo&#146;s interest in the event we are allowed to do so by the
Mexican Foreign Investment Commission.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000, the Mexican Foreign Investment Commission ruled, upon application
of Unef&#243;n, that concessions for PCS frequencies, like concessions for cellular
frequencies, may be held by entities in which foreign persons have a majority
of the voting shares. Iusacell applied for similar treatment for Iusacell PCS
and its subsidiary. On July, 2002 the Mexican Foreign Investment Commission
authorized Iusacell to own a majority of the voting shares on Iusacell PCS and
Iusacell PCS de Mexico. On September, 2002, Iusacell converted its neutral
limited voting stock in Iusacell PCS into voting shares. Although Mr.&nbsp;Elizondo
holds a minority interest in Iusacell PCS, we expect to exercise our right to
acquire Mr.&nbsp;Elizondo&#146;s interest sometime in the future.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, in December 1998 Mr.&nbsp;Elizondo acquired a 2% interest in
Infotelecom, from Iusacell Celular. As a result, we currently hold only 49% of
this entity, complying with the condition precedent necessary to allow our
other partner, Infomin, a Mexican controlled company, to transfer its paging
concession to Infotelecom, as previously agreed.
</FONT>


<P align="left"><FONT size="2"><B>Rates for Telecommunications Services</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Original Communications Laws, SCT approval was required for
rates charged for all basic and certain value-added cellular services and for
data transmission services. Historically, the SCT permitted rate increases
based on the cost of service, the level of competition, the financial situation
of the carrier and macroeconomic factors. Carriers were not allowed to
discount the rates authorized by the SCT, although operators occasionally
waived activation fees on a promotional basis. Interconnection rates were also
authorized by the SCT. All terms of interconnection (such as point of
interconnection) other than interconnection rates were negotiated between the
regional non-wireline cellular carriers and Telmex under the SCT&#146;s supervision.
Rates for dedicated circuit services through microwave networks, and dedicated
circuits and private networks through satellites were not regulated under the
Original Communications Laws.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the 1995 Telecommunications Law, rates for telecommunications
services, including cellular and long distance services, are now freely
determined by the providers of such services. Providers are prohibited from
adopting discriminatory practices in the application of rates. In addition,
the SCT is authorized to impose specific rate requirements on those companies
determined by the Federal Competition Commission to have substantial market
power. All tariffs for telecommunications services, other than value-added
services, must be registered with COFETEL prior to becoming effective.
</FONT>

<P align="center"><FONT size="2">40</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2001, we negotiated a rate reduction with Telmex that decreases
both long distance and local cellular interconnection charges from U.S.$0.0330
to U.S.$0.0125 per minute. Additionally, we negotiated with Telmex the terms
regarding payment for the projects Telmex undertook to prepare its long
distance network for competition. We paid Telmex a fixed payment of
approximately U.S.$13.0&nbsp;million and agreed to pay a U.S.$0.0053 per minute,
usage based surcharge to the local wireline interconnection rate for the next
four years for long distance calls terminated in Telmex&#146;s local networks.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2001, Telmex, Alestra and Avantel reached an agreement to
further reduce the long distance interconnection rate from U.S.$0.0125 per
minute to U.S.$0.00975 per minute. We negotiated with Telmex to obtain similar
terms for both our long distance business and local cellular interconnection
rate and these terms have been maintained until 2003.
</FONT>


<P align="left"><FONT size="2"><B>United States Regulation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1982, Bell Atlantic, like other regional Bell operating companies, was
subject to a consent decree which we refer to as the Decree, resulting from
anti-trust litigation between the United States Department of Justice against
AT&#038;T. The Decree required AT&#038;T to divest itself of its local telephone
companies. Under the Decree, Bell Atlantic was prohibited, with certain
limited exceptions, from providing interLATA (long distance)
telecommunications, engaging in the manufacture of customer premises equipment
(CPE), or engaging in the manufacture or sale of telecommunications equipment.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Telecommunications Act of 1996 (hereinafter referred to as the &#147;1996
Act&#148;), which became effective on February&nbsp;8, 1996, includes provisions that
open local telephony markets to competition and permitted regional Bell
operating companies, such as the local operating telephone companies of the
former Bell Atlantic, to provide interLATA services (long distance), video
programming and to engage in manufacturing, under certain conditions. Under
the 1996 Act, the former Bell Atlantic was allowed to provide certain interLATA
(long distance) services immediately upon enactment, including interLATA (long
distance) services permitted under the Decree, interLATA (long distance)
services originating outside the states where its subsidiaries provide local
exchange telephone services and interLATA (long distance) services that are
&#147;incidental&#148; to other permitted business such as wireless services.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, the ability of Verizon and its affiliates to engage in businesses
previously prohibited by the Decree, including providing interLATA (long
distance) services originating in the states where the former Bell Atlantic
subsidiaries provide local exchange telephone service, and manufacturing CPE or
telecommunications equipment, is largely dependent on satisfying certain
conditions contained in the 1996 Act and related regulations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since Iusacell is a Verizon affiliate, its operations must comply with the
terms of the Decree. In 1986 and 1993, Bell Atlantic obtained waivers under
the Decree that allowed it to conduct business outside the United States,
subject to certain exceptions and restrictions. Under such exceptions and
restrictions, a foreign telecommunications entity (FTE)&nbsp;affiliated with
Verizon, such as Iusacell, could not provide interexchange (long distance)
telecommunications services between points in the United States or own any
international telecommunications facilities in the United States.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As to telecommunications traffic between the United States and a foreign
country, an FTE could provide only the foreign &#147;half&#148; of such traffic. An FTE
was prohibited from discriminating in handling traffic to and from the United
States and was limited as to interests it could own in international cable
systems and satellite facilities to and from the United States. Finally, an
FTE was prohibited from exporting to the United States any telecommunications
equipment or CPE manufactured outside the United States.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 1996 Act eliminated certain restrictions under the Decree including:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">restrictions that precluded an FTE from providing the U.S. &#147;half&#148;
of traffic originating in a foreign country;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">restrictions on exporting to the United States telecommunications
equipment or CPE manufactured outside the United States; and</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">restrictions on providing interLATA (long distance)
telecommunications services between points in the United States or
international long distance service originating in the United States,
and from owning international telecommunications facilities in the
United States subject to the same conditions that Verizon must satisfy
under the 1996 Act and any regulations promulgated thereunder with
respect to interLATA (long distance) telecommunications services
originating in the states in which the former Bell Atlantic local
exchange subsidiaries provide service.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">41</FONT>

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




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the 1996 Act, we may now provide both the foreign &#147;half&#148; and the
United States &#147;half&#148; of telecommunications traffic originating in Mexico (or
any other foreign country) and may now carry international telecommunications
traffic which, although routed through the United States, neither originates
nor terminates in the United States. In addition, we may carry United States
originated traffic bound for Mexico (or other foreign countries) so long as the
traffic originates outside the states where the former Bell Atlantic
subsidiaries provide local exchange telephone service, except from those states
where Verizon has obtained Section&nbsp;271 approval and subject to having
appropriate authority under Section&nbsp;214 of the United States Communications Act
of 1934.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1996, Iusatel applied for and received authorization under Section&nbsp;214
of the Communications Act to become a facilities-based provider of
international long distance services from the United States. This Section&nbsp;214
authorization was transferred to a Peralta Group entity in January 1997 in
order not to delay the proposed change of control from the Peralta Group to
Bell Atlantic. In 2002, Iusatel USA, Inc., a subsidiary of Iusatel, applied
for and received authorization under Section&nbsp;214 of the Communications Act to
become a facilities-based provider of international long distance services from
the United States.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other laws of the United States may restrict activities of Iusacell by
virtue of Verizon&#146;s ownership interest, including laws and regulations that
restrict trade with, and investments in, specific countries, as well as the
United States Foreign Corrupt Practices Act. The Foreign Corrupt Practices Act
is also applicable to Iusacell because its securities are listed on the New
York Stock Exchange.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Iusacell Shareholders&#146; Agreement contains provisions designed to
require us to refrain from taking any actions that would cause Verizon to be in
violation of applicable law.
</FONT>

<P align="center"><FONT size="2">42</FONT>

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<P align="left"><FONT size="2"><B>C. ORGANIZATIONAL STRUCTURE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a description of our two current principal shareholders, Verizon and
Vodafone, see Item&nbsp;7, &#147;Major Shareholders and Related Party Transactions &#151;
Major Shareholders.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Grupo Iusacell, S.A. de C.V. </I>is a holding company for the shares of <I>Grupo
Iusacell Celular, S.A. de C.V. </I>and several other subsidiaries. The following
table shows our direct and indirect subsidiaries, their principal lines of
business, their countries of incorporation and the percentages of our ownership
interest and voting power as of December&nbsp;31, 2002.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% direct and</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>% direct and</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Country of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>indirect economic</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>indirect voting</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Subsidiary</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Line of Business</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Incorporation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>interest</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Grupo Iusacell Celular, S.A. de C.V.</I></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Operating cellular
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusacell PCS, S.A. de C.V.</I></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Holding company for
<I>Iusacell PCS de
M&#233;xico, S.A. de C.V.</I>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">94.9</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusacell PCS de M&#233;xico, S.A. de C.V.</I><SUP>(1)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Regions 1 and 4 PCS
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">94.9</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusacell Infraestructura, S.A. de C.V.</I></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Microwave financing
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusacell Arrendadora, S.A. de C.V.</I></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Leasing
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusacell Infraestructura de
M&#233;xico, S.A. de C.V.</I></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Microwave financing
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>SOS Telecomunicaciones, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Region 9 cellular
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Comunicaciones Celulares de Occidente,
S.A. de C.V.</I><SUP>(5)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Region 5 cellular
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Sistemas Telef&#243;nicos Port&#225;tiles
Celulares, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Region 6 cellular
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Telecomunicaciones del Golfo,
S.A. de C.V. </I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Region 7 cellular
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusacell, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Sales and marketing
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Sistecel, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Administrative services
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusatel, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Long distance
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">94.9</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Iusatel USA, Inc.<SUP>(3)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Long distance U.S
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">United States
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">94.9</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusatelecomunicaciones, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Local wireless
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">94.9</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Grupo Iusacell Nicaragua, S.A.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Inactive
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Nicaragua
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Punto-a-Punto Iusacell, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Microwave transmission
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">94.9</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Infotelecom, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Paging
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">49.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Inmobiliaria Montes Urales 460,
S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Real estate
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Iusanet, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Services
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Editorial Celular, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Publishing
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">40.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">40.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Grupo Portatel, S.A. de C.V.</I><SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Region 8 cellular
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><I>Portatel del Sureste, S.A. de C.V.</I><SUP>(4)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Region 8 cellular
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Mexico
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Mexican Cellular Investment, Inc.<SUP>(2)</SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Holding company for
<I>Comunicaciones
Celulares de
Occidente, S.A. de
C.V.</I>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">United States
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">100.0</FONT></TD>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><SUP>(1)</SUP> Held indirectly through <I>Iusacell PCS, S.A. de C.V.</I></FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><SUP>(2)</SUP> Held through <I>Grupo Iusacell Celular, S.A. de C.V.</I></FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><SUP>(3)</SUP> Held through <I>Iusatel, S.A. de C.V.</I></FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><SUP>(4)</SUP> Held through <I>Grupo Portatel, S.A. de C.V.</I></FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><SUP>(5)</SUP> Held through Mexican Cellular Investment, Inc.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">43</FONT>

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



<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of the above companies, including those in which we own directly or
indirectly a minority voting interest, except for <I>Editorial Celular, S.A. de
C.V.</I>, are consolidated with the financial statements of Iusacell. See Note 2
to the Consolidated Financial Statements.
</FONT>


<P align="left"><FONT size="2"><B>D. PROPERTY, PLANT AND EQUIPMENT</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, we operated in our service regions a total of 146
customer sales and service centers, 582 cellular cell sites, 126 repeaters, 32
cellular microwave transmission repeaters, 106 PCS cell sites, 14 fixed local
wireless 450 MHz cell sites, 69 paging antennas, 7 switches for cellular and
PCS service, 1 switch for local wireless service and 3 switches for long
distance service.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generally lease the land and cellular tower space where our customer
sales and service centers, cell sites, antennas, microwave transmission
equipment and switching centers are located. We own and lease administrative
offices in Mexico City as well as in Guadalajara, Le&#243;n, Guanajuato, Puebla,
Monterrey, M&#233;rida, Tijuana and Ciudad Ju&#225;rez. We generally own our cellular
network equipment, subject to liens.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;29, 1999, Iusacell Celular entered into a series of
agreements, which were amended in May 2002, with MATC Celular with respect to
Iusacell Celular&#146;s existing towers and future tower needs. As of May&nbsp;30, 2003,
Iusacell Celular&#146;s subsidiaries lease from MATC Celular 715 sites, including
320 transfer sites, a number of built-to-suit sites and co-locations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the book value of our property and equipment,
before accumulated depreciation of Ps.7,021.5&nbsp;million (U.S.$673.5&nbsp;million),
consisted of the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="54%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(in thousands of constant pesos</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>as of December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>and millions of U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Property and Equipment</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and facilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="right"><FONT size="2">Ps.1,721.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$165.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Communications equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,571.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,110.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Furniture and fixtures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Transportation equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Computer equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,770.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">169.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular rental telephones</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Land</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">72.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Construction in progress</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">783.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;5, &#147;Operating and Financial Review and Prospects &#151; Liquidity and
Capital Resources &#151; Capital Expenditures&#148; for a discussion of our planned
capital expenditures and existing encumbrances on our property and equipment.
See also Notes 4 and 8 to the Consolidated Financial Statements.
</FONT>

<!-- link2 "ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You should read the following discussion and analysis in conjunction with
the Consolidated Financial Statements included elsewhere in this Annual Report.
Unless otherwise indicated, all financial information in this Annual Report is
presented in constant pesos with purchasing power as of December&nbsp;31, 2002. The
U.S. dollar translations provided in this Annual Report are, unless otherwise
indicated, calculated at the Noon Buying Rate at December&nbsp;31, 2002, which was
Ps.10.425 per U.S.$1.00. Sums may not add due to rounding.</I>
</FONT>

<P align="center"><FONT size="2">44</FONT>

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

<P align="left"><FONT size="2"><B>A. OPERATING RESULTS</B>
</FONT>


<P align="left"><FONT size="2"><B>General</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion and analysis is intended to help you understand
and assess the significant changes and trends in the historical results of
operations and financial condition of Iusacell and its subsidiaries and the
factors affecting our financial resources.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Consolidated Financial Statements have been prepared in accordance
with Mexican GAAP, which differs in certain significant respects from U.S.
GAAP. Note 23 to the Consolidated Financial Statements provides a description
of the principal differences between Mexican GAAP and U.S. GAAP as they relate
to Iusacell. Note 23 to the Consolidated Financial Statements also provides a
reconciliation to U.S. GAAP of Iusacell&#146;s net income (loss)&nbsp;for the years ended
December&nbsp;31, 2000, 2001 and 2002 and of stockholders&#146; equity as of December&nbsp;31,
2001 and 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a Mexican company, we maintain our financial records in pesos.
Pursuant to Bulletin B-10, &#147;Recognition of the Effects of Inflation on
Financial Information,&#148; and Bulletin B-12, &#147;Statement of Changes in Financial
Position,&#148; issued by MIPA, Iusacell&#146;s financial statements are reported in
period-end pesos to adjust for the inter-period effects of inflation. The
presentation of financial information in period-end, or constant, currency
units is intended to eliminate the distorting effect of inflation on the
financial statements and to permit comparisons in comparable monetary units.
Bulletin B-10 requires us to restate non-monetary assets, non-monetary
liabilities and the components of stockholders&#146; equity using the INPC. We have
not eliminated the effects of these inflation accounting principles in the
reconciliation to U.S. GAAP. See Note 23 to the Consolidated Financial
Statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except where otherwise indicated, financial data for all periods in the
Consolidated Financial Statements and throughout this Annual Report have been
restated in constant pesos as of December&nbsp;31, 2002, in accordance with the
fifth amendment to Bulletin B-10. References in this Annual Report to &#147;real&#148;
amounts are to inflation-adjusted pesos and references to &#147;nominal&#148; amounts are
to unadjusted historical pesos. In calendar years 2000, 2001 and 2002, the
rates of inflation in Mexico, as measured by changes in the INPC, were 9.0%,
4.4% and 5.7%, respectively. The inflation indices used are 1.1036 for 2000
figures and 1.0570 for 2001 figures.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In reporting under Mexican GAAP and in accordance with Bulletin B-10, we
are required to quantify all financial effects of operating and financing the
business under inflationary conditions. For presentation purposes, &#147;integral
financing cost (gain)&#148; refers to the combined financial effects of:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">net interest expense or interest income;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">net foreign exchange gains or losses; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">net gains or losses on monetary position.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net foreign exchange gains or losses reflect the impact of changes in
foreign exchange rates on monetary assets and liabilities denominated in
currencies other than pesos. A foreign exchange loss arises if a liability is
denominated in a foreign currency which appreciates relative to the peso
between the time the liability is incurred and the date it is repaid, as the
appreciation of the foreign currency results in an increase in the amount of
pesos required to repay the specified amount of the foreign currency liability.
We incurred a foreign exchange loss in 2000 and 2002 on our U.S. dollar
denominated debt as the peso depreciated against the U.S. dollar. A foreign
exchange gain arises if a liability is denominated in a foreign currency which
depreciates relative to the peso between the time the liability is incurred and
the date it is repaid, as the depreciation of the foreign currency results in a
decrease in the amount of pesos required to repay the specified amount of the
foreign currency liability. In 2001, we incurred a foreign exchange gain on
our U.S. dollar denominated debt as the peso appreciated against the U.S.
dollar.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The gain or loss on monetary position refers to the gains and losses
realized from holding net monetary liabilities or assets and reflects the
impact of inflation on monetary liabilities and assets. For example,
a gain on  monetary position results from holding net monetary liabilities during
periods of inflation, such as in 2000, 2001 and 2002, as the purchasing power
of the peso declines over time.

</FONT>
<P align="center"><FONT size="2">45</FONT>

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




<P align="left"><FONT size="2"><B>Devaluation and Inflation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mexico experienced a severe economic crisis following the devaluation of
the peso in December 1994, when the Mexican government first allowed the peso
to fluctuate freely against the U.S. dollar. The value of the peso generally
continued to decline during subsequent years, depreciating by 54.8% relative to
the U.S. dollar in 1995 and by 22.7% in 1998. The peso has generally recovered
in recent years, depreciating by 1.5% and 13.7% against the U.S. dollar in 2000
and 2002, respectively, and appreciating by 4.8% in 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation of the value of the peso has contributed to sharp increases
in inflation. Inflation, which had been 7.1% in 1994 as measured by changes in
the INPC, increased to 52.0% and 27.7% in 1995 and 1996, respectively. After a
reduction to 15.7% in 1997, inflation was 18.6% for the year 1998. Since then,
inflation has declined to 12.3% in 1999, 9.0% in 2000, 4.4% in 2001 and 5.7% in
2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the past, devaluation and depreciation of the peso as well as inflation
have negatively affected our results of operations and financial condition and
may do so in the future.
</FONT>


<P align="left"><FONT size="2"><B>Impact of Devaluation and Inflation on our Results of Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The general economic conditions in Mexico resulting from the devaluation
of the peso and the resulting inflation have had, and may have, an overall
negative impact on our results of operations primarily as a result of the
following factors:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Peso devaluations result in a decrease in the purchasing power of
Mexican consumers, resulting in a decrease in the demand for all goods
and services, including cellular telephony;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Due to competitive market conditions and the overall state of the
Mexican economy, we have not been able to increase our prices in line
with the inflation rate;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Significant inflation leads to an upward restatement of our assets,
resulting in a substantial increase in depreciation and amortization
expense; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Given our net U.S. dollar liability position, devaluation of the
peso as compared to the U.S. dollar results in the recording of net
foreign exchange losses, and appreciation of the peso as compared to
the U.S. dollar results in the recording of net foreign exchange gains.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
&#147;&#151; Liquidity and Capital Resources &#151; Certain Hedging Activities&#148; and
Item&nbsp;11, &#147;Quantitative and Qualitative Disclosures about Market Risk&#148; for a
description of contracts we use to hedge against the devaluation of the peso
and inflation.
</FONT>


<P align="left"><FONT size="2"><B>Tower Monetization</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1999, Iusacell Celular entered into a series of agreements
with MATC Celular. These agreements, which were amended in May 2002, among
other things, gave MATC Celular the right to acquire approximately 350 existing
Iusacell Celular non-strategic towers. We sold and leased back a total of 76
non-strategic towers to MATC Celular for approximately Ps.101.0&nbsp;million in net
gains in 2002. During 2001 and 2002, we sold and leased back a total of 320
non-strategic cellular towers to MATC Celular and fulfilled our contractual
obligation under the existing agreements. Iusacell Celular has no further
commitment with MATC Celular to sell additional towers. Iusacell Celular is
leasing back the sold towers from MATC Celular and subleasing them to its
operating subsidiaries.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The difference between the sale price and book value of the towers sold is
being recorded as a reduction in operating expense. In 2002, we recorded an
expense reduction under Mexican GAAP of Ps.101.0&nbsp;million in connection with our
sale of 76 towers to MATC Celular. However, the leasing of the towers from
MATC Celular results in an increase in our operating expenses, which we experienced in
2002. Under U.S. GAAP, the gain was deferred and recognized on a pro-rata
basis over the life of the lease. See Note 23 to the Consolidated Financial
Statements for a further discussion.

</FONT>
<P align="center"><FONT size="2">46</FONT>

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




<P align="left"><FONT size="2"><B>Results of Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents results of operations data for the years
ended December&nbsp;31, 2001 and 2002.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="54%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Change</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>(In millions of constant</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31, 2002 pesos except percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,597.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,527.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,019.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,021.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,195.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,817.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,768.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,247.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(18.8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">325.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">101.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(69.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(60.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(457.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(658.4</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Integral financing gain (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">335.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,513.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(351.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net (loss)&nbsp;profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(528.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,084.0</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(294.3</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B><I>Revenues</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues consist of service revenues and telephone equipment and
other revenues. Our cellular service revenues are principally derived from the
provision of mobile wireless telephone service (cellular and PCS) in Mexico.
Our cellular service revenues also include revenues attributable to in-roaming
and long distance service revenue generated by our mobile wireless subscribers,
revenues from the provision of telecommunication services in Mexico other than
mobile wireless telephone service, including long distance service revenues
from non-mobile subscribers&#146; and revenues from the provision of data
transmission, and paging services. Our service revenues include all Bulletin
B-10 inflation adjustments on all service revenue line items, whether mobile
wireless service revenues or other service revenues. Telephone equipment and
other revenues consist primarily of revenues from the sales of mobile telephone
equipment and accessories, as well as revenues attributable to out-roaming and
revenues from the sale of dark fiber optic cable. Revenues attributable to
out-roaming are passed through to the applicable host operator.
</FONT>


<P align="left"><FONT size="2"><B>Year Ended December&nbsp;31, 2002 Compared to Year Ended December&nbsp;31, 2001</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents the sources of our revenues for the years
ended December&nbsp;31, 2001 and 2002:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Change</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>(In millions of constant pesos as of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>December 31, 2002, except percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Service revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,955.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,933.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">89.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telephone equipment and other revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">641.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">593.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7.5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,597.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,527.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">47</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below presents service revenues by source for the years ended
December&nbsp;31, 2001 and 2002:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Change</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>(In millions of constant pesos as of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>December 31, 2002, except percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Airtime<B><SUP>(2)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,002.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,640.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12.1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Monthly fees</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,842.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,518.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long Distance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">686.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">436.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(36.4</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value-added services and in-roaming<SUP>(3)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">423.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">338.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total service revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,955.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,933.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17.2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B><SUP>(1)</SUP> </B>Figures include intercompany eliminations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B><SUP>(2)</SUP> </B>Airtime includes amounts billed to other carriers for incoming
minutes under CPP, additional outgoing postpaid minutes to those
included in the package contracted for and prepaid outgoing minutes net
of unbilled minutes. Incoming and outgoing airtime is charged on a
per-minute basis.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B><SUP>(3)</SUP> </B>Includes fees for value-added services, such as call waiting, call
transfer, emergency service, secretarial service and three-way calling,
and revenues from premiums for surety bonds, insurance-related charges
payable by subscribers, rural and public telephony and Iusacell&#146;s
cellular magazines, as well as in-roaming service revenue. Does not
include charges for related airtime. Customers using SMS value-added
services such as news, weather, sports and entertainment reports are
charged only for airtime. These revenues are therefore included in
airtime.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The customer base increased 12.2% in 2002, growing from 1,855,166
customers in 2001 to 2,081,200 in 2002. The 2002 growth occurred primarily
during the first half of the year as management focused on increasing the
prepaid customer base. During the second half of the year, both gross and net
additions declined comparatively, reflecting the new emphasis on high-value
customers. Year over year subscriber growth was negatively impacted by this
change in strategy. A high churn rate, particularly in the prepaid and
&#147;incoming calls only&#148; base, combined with continued economic pressures on
Mexican consumption contributed to the decline.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid customers increased 18.9% in 2002, from 1,451,091 customers in
2001 to 1,725,186 in 2002. The increase in 2002 reflects our efforts at that
time to expand that segment. &#147;Incoming calls only&#148; prepaid customers, the
substantially majority of whom generate little traffic, grew by 54.5% in 2002,
from 768,076 customers in 2001 to 1,186,962 in 2002. Revenues from these
customers do not have certain costs associated with them which we incur in
connection with postpaid customers, such as sales commissions, advertising and
bad debt expenses. A prepaid customer is included as a customer if the
customer&#146;s telephone number remains activated at the end of the reporting
period. During the third quarter 2001, we reduced the initial period for using
an activated prepaid card from 185&nbsp;days to 60&nbsp;days effective July&nbsp;1, 2001. If
a customer has not activated a new card or recharged the airtime in its account
at the end of 60&nbsp;days, the balance of the customer&#146;s account becomes zero, and
the customer loses the ability to make outgoing calls for an additional period
of 305&nbsp;days. During the third quarter 2001, we began to turn over &#147;incoming
calls only&#148; prepaid customers who had reached the end of the additional 305-day
period without activating a new card or otherwise recharging the airtime in
their accounts. In February 2003, in coordination with the launch of
promotional prepaid cards, we extended the initial period for using an
activated Ps.450.0 prepaid card from 60&nbsp;days to 90&nbsp;days.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, postpaid customers declined 11.9% to 356,014 or 17.1% of total
subscribers, due to lower gross additions and increased disconnections of
customers. The December&nbsp;31, 2002 postpaid subscriber data includes
approximately 48,885 public telephony customers who are considered postpaid
customers due to the contractual nature of their service.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross additions for 2002 totaled 1,122,024 customers, which represents a
6.7% increase over 2001. These additions were mainly derived from the
strategic focus on prepaid additions during the first half of 2002. During the
second half of 2002, however, we implemented a strategic shift, which triggered
sales of higher-value products through changes in the commission structure, but actually resulted in a
decrease in gross additions during the second half of 2002, particularly in the
low and ultra-low value prepaid segments.
</FONT>

<P align="center"><FONT size="2">48</FONT>

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



<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Average monthly churn for the year declined from 3.9% in 2001 to 3.4% in
2002, although churn increased during the second half of the year as we
actively sought to remove non- or low-revenue producing prepaid customers.
Postpaid subscriber churn decreased from an average monthly level of 3.8% in
2001 to 3.6% in 2002. We have adopted strict collection procedures to reduce
bad debt expense and have implemented new activation policies and retention
programs.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of higher gross additions and lower average churn, net
additions increased 29.9%, from 173,947 customers in 2001 to 226,034 in 2002.
This includes the extraordinary removal during the third quarter of 2002 of
47,415 customers who were determined to be inactive prepaid users and were not
taken into consideration in the blended churn rate for the year.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total service revenues decreased by 17.2% to Ps.4,933.6&nbsp;million in 2002,
from Ps.5,955.5&nbsp;million in 2001, representing 89.3% and 90.3% of total revenues
in 2002 and 2001, respectively. Service revenues decreased as a result of
fewer postpaid customers and lower nominal average monthly cellular revenue per
customer (ARPU).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Monthly fees from postpaid subscribers decreased 17.6% in 2002 from
Ps.1,842.4&nbsp;million in 2001 to Ps.1,518.3&nbsp;million in 2002. Monthly fees
decreased primarily due to fewer postpaid customers and an increase in the
number of hybrid subscribers as a proportion of the total postpaid base,
particularly during the first half of 2002. Airtime revenues decreased 12.1%
from Ps.3,002.8&nbsp;million in 2001 to Ps.2,640.7&nbsp;million in 2002, primarily as a
result of fewer postpaid subscribers. Long distance cellular revenue decreased
by 36.4% from Ps.686.4&nbsp;million in 2001 to Ps.436.4&nbsp;million in 2002. This
decrease is the result of fewer postpaid subscribers and a higher proportion of
incoming only subscribers in the prepaid subscriber base.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Blended average monthly minutes of use (MOUs) for 2002 decreased 25.0%,
from 84 minutes to 63 minutes, primarily due to a higher proportion of prepaid
customers in our subscriber base and reduced consumption. Among postpaid
customers, average monthly MOUs decreased 14.4%, from 250 minutes in 2001 to
214 minutes in 2002, mainly due to the increased proportion of hybrid customers
who have lower consumption patterns than the remainder of the postpaid customer
base. Average MOUs increased 3.6% among prepaid customers, from 28 minutes in
2001 to 29 minutes in 2002, primarily due to promotions aimed at increasing use
by higher value customers in the prepaid customer base.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ARPU decreased 28.5% from Ps.267.0 in 2001 to Ps.191.0 in 2002, as a
result of lower average MOUs and the higher proportion of prepaid customers in
our customer base. Postpaid ARPU decreased 13.2% from Ps.798.0 in 2001 to
Ps.693.0 in 2002, primarily as a result of a higher proportion of hybrid
customers in our customer base. Prepaid ARPU declined 11.1% from Ps.90.0 in
2001 to Ps.80.0 in 2002, due to a higher proportion of lower revenue generating
customers in the customer base during the first half of the year.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Telephone Equipment and Other Revenues</I>. Telephone equipment and other
revenues decreased 7.5% in 2002, from Ps.641.7&nbsp;million in 2001 to Ps.593.4
million in 2002. This decrease was primarily due to lower postpaid gross sales
and lower revenues from out-roaming in 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Sales</I>. </FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of sales includes cost of services, cost of
telephone equipment and other costs. Total cost of sales remained relatively
flat in 2002 at Ps.2,021.1&nbsp;million. As a percentage of total revenues, cost of
sales increased to 36.6% compared to 30.6% in 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Services</I>. Cost of services includes taxes and fees on revenues
payable to the Mexican government, interconnection costs, and technical costs
such as maintenance, repair costs, lease expenses, salaries of technical
personnel and utilities on a pro-rata basis. As a percentage of total
revenues, cost of services increased to 27.7% in 2002 from 24.6% in 2001,
although in absolute peso terms, Iusacell&#146;s cost of services declined 5.4% to
Ps.1,533.0&nbsp;million in 2002 as compared to Ps.1,619.7&nbsp;million in 2001. This
decrease resulted from stringent financial controls we implemented in 2002,
despite higher lease costs associated with an increased number of non-strategic
towers sold to and leased back from MATC Celular during the year. See &#147;&#151; Tower
Monetization.&#148;
</FONT>



<P align="center"><FONT size="2">49</FONT>



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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Telephone Equipment and Other</I>. Cost of telephone equipment and other
includes that portion of
handset and accessory costs that are not capitalized, handset and accessory
inventory obsolescence charges and the cost of dark fiber optic cable sold.
Cost of telephone equipment and other increased 22.1% in 2002 from Ps.399.6
million in 2001 to Ps.488.1&nbsp;million primarily due to partial subsidizing of
telephones sold to prepaid customers and higher cost of dark fiber optic sales.
As a percentage of revenues, other costs increased from 6.1% in 2001 to 8.8%
in 2002. As a percentage of the telephone equipment and other revenues, the
cost of telephone equipment and other increased to 82.3% in 2002 from 62.3% in
2001. The cost of a cellular handset given to a postpaid customer is amortized
over 12&nbsp;months, the average length of our cellular contract, instead of being
immediately expensed in the period in which the customer receives the
telephone.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expenses decreased 17.2% from Ps.2,195.1&nbsp;million in 2001 to
Ps.1,817.1&nbsp;million in 2002. As a percentage of total revenues, operating
expenses decreased from 33.3% in 2001 to 32.9% in 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a percentage of total revenues, sales and advertising expenses
increased to 24.7% in 2002 from 24.0% in 2001. In peso terms, sales and
advertising expenses decreased 13.7% from Ps.1,582.5&nbsp;million in 2001, to
Ps.1,365.0&nbsp;million in 2002, primarily because of higher television advertising
rates as well as expenses incurred in association with the consolidation of
Region 8 cellular service into our business.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses decreased 26.2% from Ps.612.5&nbsp;million
in 2001 to Ps.452.1&nbsp;million in 2002, due to stringent cost controls, lower
headcount and restructured compensation plans. As a percentage of total
revenues, general and administrative expenses declined to 8.2% in 2002 from
9.3% in 2001.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had other income of Ps.101.0&nbsp;million in 2002 mainly as a result of the
sale of 76 towers to MATC Celular. The same towers were leased back from MATC
Celular by our subsidiary <I>Iusacell Arrendadora, S.A. de C.V. </I>See &#147;Tower
Monetization.&#148; In 2001, we had other income of Ps.325.4&nbsp;million from the sale
of 244 towers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Depreciation and Amortization</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expenses decreased 18.8% from Ps.2,768.5
million in 2001 to Ps.2,247.1&nbsp;million in 2002, primarily due to a reduced level
of capital expenditures during the period, lower handset amortization expenses
attributable to lower postpaid gross additions, more cost-effective handset
purchases and better targeted handset subsidies for high-value customers.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We reported an operating loss of Ps.457.3&nbsp;million in 2002, as compared to
a loss of Ps.60.3&nbsp;million in 2001. Excluding the benefit of tower sales and
the impact of fiber optic inventory sales in both years, we would have reported
operating losses of Ps.611.5&nbsp;million and Ps.536.6&nbsp;million in 2002 and 2001,
respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Integral Financing Results</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recorded an integral financing cost of Ps.1,513.1&nbsp;million in 2002,
compared to a cost of Ps.335.3&nbsp;million in 2001. This difference was primarily
driven by a Ps.1,028.7&nbsp;million foreign exchange loss resulting from the 13.8%
depreciation of the peso against the US dollar during the year, compared to a
4.8% appreciation recorded in 2001 resulting in an exchange gain that year.
Because our interest obligations are entirely denominated in US dollars, the
depreciation of the peso also increased interest expense by Ps.45.3&nbsp;million for
the year. As a result of a higher inflation rate in 2002 of 5.7% compared to a
4.4% inflation rate in 2001, gains from monetary position increased 47.5%.
</FONT>

<P align="center"><FONT size="2">50</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net
Loss</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generated a net loss of Ps.2,084.0&nbsp;million in 2002 compared to a loss
of Ps.528.5&nbsp;million in 2001. This result was due primarily to the larger
operating loss and increased integral financing cost. Excluding the tower and
fiber optic-related benefits, we would have reported a net loss of Ps.2,238.2
million in 2002 and Ps.1,004.7&nbsp;million in 2001.
</FONT>


<P align="left"><FONT size="2"><B>Year Ended December&nbsp;31, 2001 Compared to Year Ended December&nbsp;31, 2000</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents the sources of our revenues for the years
ended December&nbsp;31, 2000 and 2001:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Change</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>(In millions of constant pesos as of December 31, 2002,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>except percentages)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Service revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,497.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,955.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telephone equipment
and other revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">558.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">641.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,056.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,597.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The table below presents service revenues by source for the years ended
December&nbsp;31, 2001 and 2000:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="7"><FONT size="1"><B>2000<sup>(1)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="7"><FONT size="1"><B>2001<sup>(1)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Change</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ps.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>(In millions of constant pesos as of December 31, 2002,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>except percentages)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Airtime<sup>(2)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,677.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,002.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Monthly fees</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,808.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,842.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long Distance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">562.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">686.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value-added services and
in-roaming<sup>(3)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">448.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">423.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5.6</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total service revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,497.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,955.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(1)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Figures include intercompany eliminations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(2)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Airtime includes amounts billed to other carriers for incoming
minutes under CPP, additional outgoing postpaid minutes to those
included in the package contracted for and prepaid outgoing minutes net
of unbilled minutes. Incoming and outgoing airtime is charged on a
per-minute basis.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(3)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes fees for value-added services, such as call waiting, call
transfer, emergency service, secretarial service and three-way calling,
and revenues from premiums for surety bonds, insurance-related charges
payable by subscribers, rural and public telephony and Iusacell&#146;s
cellular magazines, as well as in-roaming service revenue. Does not
include charges for related airtime. Customers using value-added
services such as news, weather, sports and entertainment reports are
charged only for airtime. These revenues are therefore included in
airtime.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had 1,855,166 and 1,681,219 mobile wireless subscribers at December&nbsp;31,
2001 and 2000, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid subscribers increased 17.2% from 1,238,625 subscribers or 73.7% of
total subscribers, at December&nbsp;31, 2000 to 1,451,091 or 78.2% of total
subscribers, at December&nbsp;31, 2001. This figure includes 98,470 prepaid
subscribers in Region 8 in southern Mexico as a result of our acquisition of
Portatel which represented 6.8% of the total prepaid subscriber base at
December&nbsp;31, 2001. &#147;Incoming calls only&#148; prepaid customers, the substantial
majority of whom generate little traffic, grew by 179.3% from 275,001 customers
at December&nbsp;31, 2000 to 768,076 at December&nbsp;31, 2001. Revenues from these
customers do not have certain costs associated with them which we incur in
connection with postpaid customers, such as sales commissions, advertising and
bad debt expenses. A prepaid customer is included as a customer if the
customer&#146;s telephone number remains activated at the end of the reporting period. During the third quarter 2001, we reduced the initial
period for using an activated prepaid card from 185&nbsp;days to 60&nbsp;days effective
July&nbsp;1, 2001.
</FONT>
<P align="center"><FONT size="2">51</FONT>


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<P align="left"><FONT size="2">If a customer has not activated a new card or recharged the
airtime in its account at the end of 60&nbsp;days, the balance of the customer&#146;s
account becomes zero, and the customer loses the ability to make outgoing calls
for an additional period of 305&nbsp;days. During the third quarter 2001, we began
to turn over &#147;incoming calls only&#148; prepaid customers who had reached the end of
the additional 305-day period without activating a new card or otherwise
recharging the airtime in their accounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Postpaid subscribers decreased 8.7% from 442,594 subscribers or 26.3% of
total subscribers at December&nbsp;31, 2000 to 404,075 subscribers or 21.8% of total
subscribers at December&nbsp;31, 2001. This figure includes 15,112 postpaid
subscribers in Region 8 in southern Mexico. Without including the Region 8
postpaid subscribers as of December&nbsp;31, 2001, the decrease would have been
12.1% from period to period. The December&nbsp;31, 2001 postpaid subscriber data
includes approximately 37,972 public telephony numbers that have been
considered postpaid customers since January&nbsp;1, 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total service revenues increased by 8.3% from Ps.5,497.5&nbsp;million in 2000
to Ps.5,955.5&nbsp;million in 2001 and represented 90.8% and 90.3% of total revenues
in 2000 and 2001 respectively. Revenues increased primarily as a result of
total subscriber growth, greater usage as a result of the digitalization of the
postpaid subscriber base and traffic growth.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Monthly fees from postpaid subscribers grew by 1.9% from Ps.1,808.2
million in 2000 to Ps.1,842.4&nbsp;million in 2001. Monthly fees increased
notwithstanding an increase in the number of lower-end subscribers in 2001.
Airtime revenues increased 12.1% from Ps.2,677.8&nbsp;million in 2000 to Ps.3,002.8
million in 2001, primarily as a result of traffic growth related to calling
party pays and greater usage by postpaid subscribers. Long distance cellular
revenue increased by 22.0% from Ps.562.5&nbsp;million in 2000 to Ps.686.4&nbsp;million in
2001. This growth is the result of higher usage by the subscriber base.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Average monthly MOUs for all subscribers for 2001 (excluding &#147;incoming
calls only&#148; prepaid customers) were 117, an increase of 24.5% as compared to
the average monthly MOUs of 94 in 2000. MOUs among postpaid customers increased
by 1.6% from 246 in 2000 to 250 in 2001. MOUs among prepaid customers also
increased by 40.6% from 32 in 2000 to 45 in 2001. This increase in MOUs was
driven by traffic growth and greater usage by the total prepaid subscriber base
and the reduction of the period within which to use the prepaid card from 180
days to 60&nbsp;days.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nominal average monthly cellular revenue per subscriber for all
subscribers (excluding &#147;incoming calls only&#148; prepaid customers) increased 14.9%
from Ps.322.0 in 2000 to Ps.370.0 in 2001. The increase was driven mainly by
higher usage by the subscriber base, increased traffic growth and the reduction
of the period within which to use the prepaid card from 180&nbsp;days to 60&nbsp;days.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Postpaid subscriber churn increased to an average monthly level of 3.8% in
2001 from 3.5% in 2000. We have adopted strict collection procedures to reduce
the bad debt expense and have implemented new activation policies and retention
programs.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Telephone Equipment and Other Revenues. </I>Telephone equipment and other
revenues increased 14.8% from Ps.558.8&nbsp;million in 2000 to Ps.641.7&nbsp;million in
2001. The 14.8% increase in these revenues resulted mainly from increased out
roaming fees.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of sales increased 5.0% from Ps.1,923.9&nbsp;million in 2000 to
Ps.2,019.4&nbsp;million in 2001. As a percentage of total revenues, cost of sales
decreased to 30.6% in 2001 from 31.8% in 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Services. </I>As a percentage of total revenues, cost of services
decreased to 24.6% in 2001 from 25.6% in 2000. Cost of services increased 4.7%
from Ps.1,547.6&nbsp;million in 2000 to Ps.1,619.7&nbsp;million in 2001. The increase was
primarily driven by the higher access costs paid to other carriers due to
increased mobile-to-mobile CPP traffic as well as lease costs following the
sale of certain transmission towers in 2001. See Item&nbsp;5 &#151; &#147;Tower Monetization.&#148; Partially offsetting those items were the reduction of
interconnection rates in January 2001, the more efficient use of our fiber
network and the one-time adjustment in provisions of gross cellular airtime
revenues payable to the Mexican government.
</FONT>
<P align="center"><FONT size="2">52</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Telephone Equipment and Other. </I>Cost and telephone equipment and
other increased 6.2% from Ps.376.3&nbsp;million in 2000 to Ps.399.6&nbsp;million in 2001
primarily due to the three-month consolidation of Portatel, partial subsidizing
of telephones sold to prepaid customers and an increase in accessory
obsolescence charges. As a percentage of the telephone equipment and other
revenues, the cost of telephone equipment and other decreased to 62.3% in 2001
from 67.3% in 2000. The cost of a cellular handset given to a postpaid
customer is amortized over 12&nbsp;months, the average length of our cellular
contract, instead of being immediately expensed in the period in which the
customer receives the telephone.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expenses increased 7.9% from Ps.2,033.6&nbsp;million in 2000 to
Ps.2,195.1&nbsp;million in 2001. As a percentage of total revenues, operating
expenses slightly decreased from 33.6% in 2000 to 33.3% in 2001. As a
percentage of total revenues, sales and advertising expenses decreased to 24.0%
in 2001 from 24.6% in 2000. In peso terms, sales and advertising expenses
increased 6.2% from Ps.1,490.4&nbsp;million in 2000, to Ps.1,582.5&nbsp;million in 2001,
primarily because of higher television advertising rates as well as expenses
incurred in connection with the consolidation of Region 8 cellular service into
our business. General and administrative expenses increased 12.8% from Ps.543.3
million in 2000 to Ps.612.5&nbsp;million in 2000, due to lower capitalization of
engineering expenses, higher consulting and vendor fees as well as charges
associated with the consolidation of Portatel, the provider of cellular service
in Region 8 which we acquired. As a percentage of total revenues, general and
administrative expenses increased slightly to 9.3% in 2001 from 9.0% in 2000.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had other income of Ps.325.4&nbsp;million in 2001 mainly as a result of the
sale of 244 towers to MATC Celular. The same towers were leased back from MATC
Celular by our subsidiary <I>Iusacell Arrendadora, S.A de C.V. </I>See &#147;&#151; Tower
Monetization.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Depreciation and Amortization</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2001, management completed a review of its depreciation and
amortization policies related to certain analog and digital network equipment
and postpaid handsets. The aim of the study was to align the estimated
remaining useful lives of those assets with current international benchmarks.
As a result of the review, a change in the weighted estimated useful life of
the network assets was made. The weighted average useful life for the network
equipment was extended to 10&nbsp;years, compared to the 8.7&nbsp;years previously used.
With regard to the amortization of postpaid handset costs, we shortened the
average amortization period from 18&nbsp;months to 12&nbsp;months. Depreciation and
amortization expenses increased 8.7% from Ps.2,546.3&nbsp;million in 2000 to
Ps.2,768.5&nbsp;million in 2001, primarily due to the higher postpaid handset
amortization expense in 2001.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We reported an operating loss of Ps.60.3&nbsp;million in our Consolidated
Financial Statements in 2001, compared to an operating loss of Ps.447.4&nbsp;million
in 2000. The decreased operating loss was attributable to the benefit
resulting from the sale of our towers. Without considering this benefit, our
operating loss for 2001 would have been Ps.385.7&nbsp;million.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><I>Integral Financing Results</I></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recorded an integral financing cost of Ps.335.3&nbsp;million in 2001
compared to an integral financing cost of Ps.579.8&nbsp;million in 2000. The lower
cost was attributable to several factors. Net interest expense decreased by
17.7% from Ps.1,038.5&nbsp;million in 2000 to Ps.854.8&nbsp;million in 2001 as a result
of lower interest rates and a stronger peso which appreciated by 4.8% against
the U.S. dollar from December&nbsp;31, 2000 to December&nbsp;31,
2001. Due to the appreciation of the peso, we recorded a foreign exchange gain of Ps.237.6
million in 2001 compared to a foreign exchange loss of Ps.17.7&nbsp;million in 2000.
We posted a lower gain in monetary position of Ps.281.8&nbsp;million in 2001
compared to a gain of Ps.476.4&nbsp;million in 2000 due to the effect on our net
peso liability position of the lower period-over-period inflation rate of 4.4%
in 2001 compared to 8.9% in 2000.</FONT>
<P align="center"><FONT size="2">53</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the factors described above, our net loss was Ps.528.5
million in 2001 compared to a net loss of Ps.1,186.5&nbsp;million in 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income Tax, Asset Tax and Employees&#146; Profit Sharing</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning January&nbsp;1, 1999, as a result of Mexican Income Tax Law
amendments, we must limit our tax consolidation to 60% of all our subsidiaries,
except for six entities (<I>Iusatel, S.A. de C.V.</I>, <I>Iusatelecomunicaciones, S.A. de
C.V.</I>, <I>Infotelecom, S.A. de C.V.</I>, <I>Iusacell PCS, S.A. de C.V., Iusacell PCS de
M&#233;xico, S.A. de C.V. </I>and <I>Punto-a-Punto Iusacell, S.A. de C.V.</I>) which are not
included in our annual consolidated income tax return (although they are
consolidated for financial reporting purposes), because we do not hold at least
51% of the voting shares of such subsidiaries.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2000, the Mexican Finance Ministry (<I>Secretar&#237;a de Hacienda y
Cr&#233;dito P&#250;blico</I>) ruled that we could prepare consolidated tax returns for
ourselves and the subsidiaries in which we hold a majority of voting shares and
thereby apply our net operating loss carryforwards against our and such
subsidiaries&#146; profits. In April 2001, the Mexican Finance Ministry ruled that
Iusacell Celular&#146;s net operating loss carryforwards could be transferred to
Iusacell, so that Iusacell could apply such net operating loss carryforwards
against its and its majority-owned subsidiaries&#146; tax result.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell and its subsidiaries pay an alternative net asset tax, which is
levied on the average value of substantially all assets less certain
liabilities. This tax, which is 1.8% of the taxable base, is required to be
paid if the amount of the asset tax exceeds the computed income tax liability.
We provided for Ps.165.2&nbsp;million, Ps.154.7&nbsp;million and Ps.111.2&nbsp;million as
asset tax for 2000, 2001 and 2002 respectively. These taxes may be applied in
subsequent years against income tax payments, to the extent income tax
liabilities for such years exceed the net asset tax calculation. Due to net
losses, we paid no income taxes in 2001 and 2002 and paid the asset taxes
specified above. In 2000, as a result of the new tax consolidation rules, we
paid Ps.47.4&nbsp;million in income taxes as well as the asset tax specified above,
even though Iusacell recorded a net loss on a fully consolidated basis. In
2002, due to the change in the statutory income tax rate which became effective
annually in 2003, Iusacell and its subsidiaries reduced the deferred tax asset
in 2002, resulting in a provision of deferred income tax of Ps.9.3&nbsp;million.
See Note 12 to the Consolidated Financial Statements for a discussion of our
tax loss carryforwards.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While we have no employees at the holding company level, our subsidiaries
are required under Mexican law to pay their employees, in addition to their
required compensation and benefits, profit sharing in an aggregate amount equal
to 10% of the taxable income of the relevant subsidiary (calculated without
reference to inflation adjustments or amortization of tax loss carryforwards).
There was no statutory profit sharing in any periods presented.
</FONT>


<P align="left"><FONT size="2"><B>New Mexican Accounting Pronouncements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 2001, the MIPA issued the revised Bulletin C-9, &#147;Liabilities,
Provisions, Contingent Assets and Liabilities and Commitments&#148; (Bulletin C-9),
which establishes a methodology for valuation, presentation and disclosure of
liabilities and provisions, as well as for valuation and disclosure of
contingent assets and liabilities, and for disclosure for commitments. The
revised Bulletin C-9 states that (i)&nbsp;all contingent assets that have a
practical true realization must be accounted for and disclosed in the financial
statements; (ii)&nbsp;contingent assets that have a probable realization cannot be
accounted for in the financial statements, but must be disclosed; and (iii)
contingent assets that do not have a probable realization and cannot be
accounted for in the financial statements are not required to be disclosed.
Bulletin C-9 requires disclosure of committed amounts when it represents
significant fixed assets additions. The provisions of Bulletin C-9 were
required to be applied beginning on January&nbsp;1, 2003, although early adoption
was recommended.
</FONT>

<P align="center"><FONT size="2">54</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, in December 2001, the MIPA issued revised Bulletin C-8,
&#147;Intangible Assets&#148; (Bulletin C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a future economic
benefit. Revised Bulletin C-8 states that pre-operating costs should be
expensed as a period cost, unless they can be classified as development costs.
Bulletin C-8 requires that intangible assets with finite useful lives should be
amortized over their useful lives and those with an indefinite life should no
longer be amortized. The provisions of Bulletin C-8 are required to be applied
beginning on January&nbsp;1, 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management is currently evaluating the impact that the adoption of these
bulletins will have on our financial statements.
</FONT>


<P align="left"><FONT size="2"><B>U.S. GAAP Reconciliation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal differences between Mexican GAAP and U.S. GAAP as they
relate to Iusacell are the adjustment for the effects of inflation, minority
interest, purchase accounting, deferred income taxes, capitalization of
pre-operating costs, derivative financial instruments, provisions for
consolidation of facilities and accounting for non-monetary exchanges,
capitalized interest, goodwill and indefinite-lived intangible assets
amortization and sale-leaseback transactions. See Note 23 to the Consolidated
Financial Statements for a reconciliation to U.S. GAAP of stockholders&#146; equity
and net profit (loss)&nbsp;for the respective periods presented.
</FONT>


<P align="left"><FONT size="2"><B>New U.S. Accounting Pronouncements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2001, the Financial Accounting Standards Board (&#147;FASB&#148;) issued
SFAS No.&nbsp;143 &#147;Accounting for Obligations Associated with the Retirement of
Long-Lived Assets.&#148; The objectives of SFAS 143 are to establish accounting
standards for the recognition and measurement of tangible long-lived asset
retirement obligations and their associated asset retirement costs. SFAS 143
is effective for fiscal years beginning after June&nbsp;30, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2002, the FASB issued SFAS No.&nbsp;145 &#147;Rescission of SFAS No.&nbsp;4, 44,
and 64, Amendment of SFAS 13, and Technical Corrections.&#148; As a result,
companies will no longer be allowed to classify gains and losses from
extinguishments of debt as extraordinary items unless they meet the criteria of
APB No.&nbsp;30. Gain and losses from extinguishments of debt that have been
classified as extraordinary in prior years that do not meet the criteria of APB
30 shall be reclassified on a go forward basis. In addition, SFAS 145 requires
that capital leases that are modified so that the resulting lease agreement is
classified as an operating lease be accounted for under the sale-leaseback
provisions of SFAS 28 or 98, as applicable, instead of SFAS 13. The provisions
of this statement with regard to SFAS 4 will be effective for fiscal years
beginning after May&nbsp;15, 2002, and those for SFAS 13 will be effective for
transactions occurring after May&nbsp;15, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2002, the FASB issued SFAS No.&nbsp;146, &#147;Accounting for Costs
Associated with Exit or Disposal Activities.&#148; This statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF)&nbsp;Issue No.&nbsp;94-3,
&#147;Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit on Activity (Including Certain Costs incurred in Restructuring)&#148;.
EITF Issue No.&nbsp;94-3 required accrual of liabilities related to exit and
disposal activities at a plan (commitment)&nbsp;date. SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. The provisions of this statement are effective
for exit or disposal activities that are initiated after December&nbsp;31, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FASB Interpretation No.&nbsp;45, &#147;Guarantor&#146;s Accounting and Disclosure
Requirements for Guarantees&#148;, (FIN 45) was issued on November 2002. FIN 45
requires that a liability be recognized at the inception of certain guarantees
for the fair value of the obligation, including the ongoing obligation to stand
ready to perform over the term of the guarantee. Guarantees, as defined in FIN
45, include contracts that contingently require us to make payments to a
guaranteed party based on changes in an underlying that is related to an asset,
liability or equity security of the guaranteed party, performance guarantees,
indemnification agreements or indirect guarantees of indebtedness of others.
This new accounting is effective for certain guarantees issued or modifies
after December&nbsp;31,2002. In addition, FIN 45 requires certain additional
disclosures.
</FONT>

<P align="center"><FONT size="2">55</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS 148, &#147;Accounting for Stock-Based Compensation &#151; Transition and
Disclosure &#151; an amendment of SFAS No.&nbsp;123&#148;, was issued on December&nbsp;31, 2002.
SFAS 148 provides alternative methods of transition for a voluntary change to
the fair value-based method of accounting for stock-based employee
compensation. SFAS 148 also amends the disclosure requirements of SFAS 123,
&#147;Accounting for Stock-Based Compensation&#148;, to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2003, the FASB issued Interpretation 46 &#147;Consolidation of
Variable Interest Entities, an interpretation of ARB No.&nbsp;51&#148; (FIN 46). FIN 46
provides a new framework for identifying variable interest entities (VIEs) and
determining when a company should include the assets, liabilities,
non-controlling interests and results of activities of a VIEs created after
January&nbsp;31, 2003 and is effective beginning in the third quarter of 2003 for
VIEs created prior to issuance of the interpretation. We are presently
evaluating the impact, if any, that this new standard will have on its
financial position or results of operations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2003, the FASB issued SFAS No.&nbsp;149, &#147;Amendment of Statement 133
on Derivative Instruments and Hedging Activities.&#148; This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
133, &#147;Accounting for Derivative Instruments and Hedging Activities.&#148; This
statement is effective prospectively for contracts entered into or modified
after June&nbsp;30, 2003 and prospectively for hedging relationships designated
after June&nbsp;30, 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May 2003, the FASB issued SFAS No.&nbsp;150, &#147;Accounting For Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.&#148;
This statement improves the accounting for certain financial instruments that,
under previous guidance, issuers could account for as equity, and requires that
these instruments be classified as liabilities in statements of financial
position. This statement is effective prospectively for financial instruments
entered into or modified after May&nbsp;31, 2003 and otherwise is effective at the
beginning of the first interim period beginning after June&nbsp;15, 2003. This
statement shall be implemented by reporting the cumulative effect of a change
in an accounting principle for financial instruments created before the
issuance date of the statement and still existing at the beginning of the
interim period of adoption.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are presently evaluating the impact, if any, that these new standards
will have on our consolidated financial statements.
</FONT>


<P align="left"><FONT size="2"><B>Critical Accounting Policies and Estimates</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have identified certain key accounting policies on which our
consolidated financial condition and results of operations are dependent.
These key accounting policies most often involve complex matters or are based
on subjective judgments or decisions that require management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. We base our estimates on historical
experience, where applicable, and other assumptions that we believe are
reasonable under the circumstances. Actual results may differ from our
estimates under different assumptions or conditions. In the opinion of our
management, our most critical accounting policies under both Mexican GAAP and
U.S. GAAP are those that require management to make estimates and assumptions
that affect the reported amounts related to the accounting for revenue
recognition, allowance for doubtful accounts, the evaluation of long-lived
assets, property plant and equipment, goodwill, and deferred taxes. For a full
description of all of our accounting policies, see Notes 4 and 23 to the
Consolidated Financial Statements included in this Annual Report.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are certain critical estimates that we believe require significant
judgment in the preparation of our consolidated financial statements. We
consider an accounting estimate to be critical if:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">It requires us to make assumptions because information was not
available at the time or it included matters that were highly uncertain
at the time we were making the estimate, and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Changes in the estimate or different estimates that we could have
selected would have had a material impact on our financial condition or
results of operations.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">56</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cellular airtime is recorded as revenue as service is provided. Until
December&nbsp;31, 2001, revenue from the sale of prepaid cards was recognized at the
date of sale. We had recognized the revenue on the sale of prepaid cards at
the date of sale rather than on a deferred basis because the length of the
average consumption period for such prepaid cards was not significant, i.e.,
approximately one to one-and-a-half months, and it was not material to results
of operations for 2001 and 2000. Starting January&nbsp;1, 2002, we started to
recognize revenue from the sale of the prepaid cards as service is provided
because the increasing length of the average consumption period for such
prepaid cards. Revenues from the sale of prepaid cards associated with
services that have not been provided are deferred until the services are
provided and are included in the line item &#147;taxes and other payables&#148; in the
accompanying consolidated balance sheets. Sales and cost of sales of equipment
and related services are recorded when goods are delivered and services are
provided. Cellular access charges are billed in advance and recognized when
the services are provided. Other revenues, mainly from paging and long
distance services, are recognized when the related services are provided.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Allowance for Doubtful Accounts</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The allowance for doubtful accounts represents our estimate of losses
resulting from the failure or inability of our customers to make required
payments. We consider a number of factors in determining the proper level of
the allowance including historical collection experience, current economic
trends, the aging of the accounts receivable portfolio and changes in the
credit-worthiness of our customers. Systems to detect fraudulent call activity
are in place within our network, but if these systems fail to identify such
activity, we may realize a higher degree of uncollectible accounts. While we
believe that our estimates are reasonable, changes in our customers&#146; trends or
any of the above mentioned factors could materially affect our bad debt
expense.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Evaluation of Long-Lived Assets</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have recognized on our balance sheets certain long-lived assets and
capitalized costs including goodwill, property, plant and equipment,
pre-operating expenses and Telmex special projects. These assets are assigned
useful lives which impact annual depreciation and amortization expense, the
assignment of which involves significant judgments and estimates. These
long-lived assets are evaluated for impairment on a periodic basis and we
recognize an impairment to the extent we believe that the carrying value is no
longer recoverable from future cash flows. Factors we take into consideration
include the future undiscounted cash flows to be generated by the assets and
the possible impact that inflation may have on our ability to generate cash
flow since, with inflation accounting, the carrying value is restated for
inflation prior to performing an impairment analysis. Key assumptions we
evaluate in preparing an undiscounted cash flow analysis include inflation,
currency fluctuations and future revenue growth. The use of different
estimates or assumptions within our undiscounted cash flow model could result
in undiscounted cash flows lower than the current carrying value of our assets,
therefore requiring the need to compare the carrying values to their fair
values. Our estimates and assumptions take into consideration all relevant
business and market factors which are known to us at the time, some of which
may change in future periods due to factors outside of our control (including
shareholder strategic decisions) . Should these factors adversely change in
future periods, we would be required to reevaluate the carrying value of our
long-lived assets and cash flow impairment calculations could possibly change.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Property, Plant and Equipment</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depreciate property, plant and equipment and other intangible assets
with a definite life using straight-line methods over the period of time we
estimate we will benefit from each asset.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon adoption of Statement of Financial Accounting Standards (SFAS)&nbsp;No.
142, &#147;Goodwill and Other Intangible Assets&#148;, we were required to reassess the
useful lives of our other intangible assets, which consist primarily of Mexican
government telecommunications concessions (&#147;Concessions&#148;). Although Concessions
are issued with a stated term, the renewal of specific Concessions is a routine
matter involving a nominal fee and we have determined that regulatory,
competitive, and economic, factors currently exist that limit the useful life
of our Concessions. Prospectively, we will continue to periodically re-evaluate
our determination of an indefinite useful life with regard to Concessions.
</FONT>

<P align="center"><FONT size="2">57</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of mobile wireless telephones given to customers under exclusive
service contracts is amortized on a straight-line basis. During 2001, we
reduced the amortization period of mobile wireless telephones from an average
of 18&nbsp;months to 12&nbsp;months. The term of service contracts varies on a customer
by customer basis. Due to the cost-ineffectiveness of tracking phones on an
individual contract basis for amortization purposes, we estimate the average
term of our contracts based on current trends.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the second quarter of 2001, we completed a technical review of the
remaining useful lives of certain analog and digital network equipment. As a
result, the weighted-average useful life for certain communications equipment
is now ten years compared with the previous 8.7&nbsp;years. This change represented
a reduction of approximately Ps.477,764.0 in depreciation expense for 2001.
The average annual rates of depreciation used by us are as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="84%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and facilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Communications equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Furniture and fixtures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Transportation equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Computer equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular rental telephones</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not capitalize integral financing cost for assets under
construction, unless the integral financing cost generated by loans are
directly attributable to those assets. For the years ended December&nbsp;31, 2002,
2001 and 2000, we did not capitalize integral financing cost.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in associated companies are accounted for using the equity
method based on the associated company&#146;s equity and are adjusted for the
effects of inflation in accordance with Bulletin B-10.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, we amortize goodwill on a straight-line basis over a
period of 20&nbsp;years. For a discussion of goodwill under U.S. GAAP, see Note
23g. to the Consolidated Financial Statements.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have recorded a net deferred tax asset mainly reflecting the benefit of
tax loss carry forwards, which expire in varying amounts in the future.
Realization is dependent on generating sufficient taxable income prior to
expiration of the loss carry forwards. Although realization is not assured,
management believes it is more likely than not that a portion of the net
deferred tax asset will be realized based on our business plan estimate of
future taxable income over the next five years in an amount sufficient to
utilize the net deferred tax losses recorded. Although we feel we will use our
tax loss carry forwards, given the fact that we&#146;ve experienced significant
losses, a valuation allowance for a majority of the asset has been recognized.
Our estimates and assumptions take into consideration all relevant business and
market factors which are known to us at the time, some of which may change in
future periods due to factors outside of our control (including shareholder
strategic decisions). Should these factors adversely change in future periods,
we would be required to reevaluate the recoverability of the net deferred tax
assets.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our estimate of future taxable income is based primarily on and supported
by (i)&nbsp;additional increases in revenues generated by the CPP feature with an
important taxable operating margin, (ii)&nbsp;the change in Mexican income tax law
to increase the useful lives for network equipment from 3.3&nbsp;years to 12.5
years, representing an important decrease in depreciation expense for income
tax purposes and (iii)&nbsp;an increase in 2002 of the potential effects of
additional cost cutting. We will continue to evaluate our deferred tax asset
every year.
</FONT>

<P align="center"><FONT size="2">58</FONT>

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<P align="left"><FONT size="2"><B>B. LIQUIDITY AND CAPITAL RESOURCES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the equity recapitalization and restructuring of Iusacell
completed in August 1999, Iusacell acquired 99.5% of the capital stock of
Iusacell Celular. Prior to that time, Iusacell had nominal assets and no
operations, indebtedness or liabilities. As a result of a second exchange
offer launched in the United States by Iusacell for the remaining Iusacell
Celular ADSs, which was completed on February&nbsp;29, 2000, Iusacell held 99.9% of
the capital stock of Iusacell Celular. On March&nbsp;30, 2001, Iusacell Celular&#146;s
shareholders approved a 30,000 to 1 reverse stock split, which became effective
in May 2001. As a result of such transactions, Iusacell now holds 100% of the
capital stock of Iusacell Celular.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our liquidity requirements arise from cash used in operating activities,
purchases of network equipment, interest and principal payments on outstanding
indebtedness and acquisitions of and strategic investments in businesses. We
have financed our growth to date through equity contributions from our
principal shareholders, public offerings and private placements of debt and
equity securities, bank debt and vendor financing.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds from operating activities and sales of non-strategic assets have not
been sufficient to enable us to make the interest payment on the Iusacell
senior notes which was due on June&nbsp;1, 2003. In addition, funds will not be
sufficient to meet our debt service and principal amortization requirements,
working capital requirements and capital expenditure needs for our existing
businesses through 2003. We have engaged Morgan Stanley as our financial
advisor to assist us in developing a comprehensive debt restructuring plan. We
are still in the process of developing such a plan and have not yet presented a
restructuring plan to our creditors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future operating performance and ability to service and repay our
indebtedness will be subject to many factors, including a successful debt
restructuring, future economic and competitive conditions and to financial,
business and other factors, many of which are beyond our control.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Changes in Financial Position</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, our cash generated from operating activities has not been
sufficient to meet our debt service, working capital and capital expenditure
requirements. We have relied on the capital markets for new equity and debt
financing, vendor financing and borrowings and equity contributions for our
principal shareholders to meet such funding needs. For the years ended
December&nbsp;31, 2001 and 2002, our earnings were insufficient to cover our fixed
charges by Ps.279.6&nbsp;million (U.S.$26.8&nbsp;million) and Ps.2,945.9&nbsp;million
(U.S.$282.6&nbsp;million), respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Iusacell debt, including notes payable to suppliers, was Ps.8,586.3
million (U.S.$823.6&nbsp;million) at December&nbsp;31, 2002. At December&nbsp;31, 2001,
Iusacell&#146;s average cost of outstanding bank debt was approximately 9.95%, with
a remaining average maturity of approximately 2.9&nbsp;years. At December&nbsp;31, 2002,
Iusacell&#146;s ratio of debt to total capitalization was 61.6% compared to 51.5% at
December&nbsp;31, 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell Celular&#146;s liquidity has been provided by cash from operations,
short and long-term borrowings, vendor financing and capital contributions.
Total Iusacell Celular debt, including trade notes payable, was Ps.4,464.1
million (U.S.$428.2&nbsp;million) outstanding at December&nbsp;31, 2002, 4.4% higher in
pesos than the total debt of Ps.4,275.1&nbsp;million (U.S.$410.1&nbsp;million)
outstanding at December&nbsp;31, 2001. At December&nbsp;31, 2002, Iusacell Celular&#146;s
average cost of outstanding bank debt was approximately 6.3%, with a remaining
average maturity of approximately 2.0&nbsp;years. At December&nbsp;31, 2002, Iusacell
Celular&#146;s ratio of debt to total capitalization was 36.4% compared to 32.2% at
December&nbsp;31, 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cash Flows From Operating Activities</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generated positive cash flows from operating activities in the year
ended December&nbsp;31, 2001, but used cash in operating activities in the year
ended December&nbsp;31, 2002. Net cash used by operating activities was Ps.489.0
million (U.S.$46.9&nbsp;million) for 2002 compared to Ps.2,176.7&nbsp;million (U.S.$208.8
million) generated in 2001. The decrease in 2002 resulted primarily from a
Ps.1,562.4&nbsp;million (U.S.$149.9&nbsp;million) larger loss from
continuing operations than in 2001, caused primarily by a Ps.1,177.8&nbsp;million
(U.S.$113.0&nbsp;million) increased integral financing cost and by a Ps.397.0
million (U.S.$38.1&nbsp;million) increased operating loss, net of a decrease in
depreciation and amortization expense of Ps.521.5&nbsp;million (U.S.$50.0&nbsp;million),
and a decrease in resources used in working capital of Ps.654.4&nbsp;million
(U.S.$62.8&nbsp;million).</FONT>
<P align="center"><FONT size="2">59</FONT>

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<P align="left"><FONT size="2">We generated positive cash flows from operating
activities in the year ended December&nbsp;31, 2000, of Ps.1,573.6&nbsp;million
(U.S.$150.9&nbsp;million).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cash Flows from Financing Activities</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2002, net cash provided by financing
activities amounted to Ps.628.9&nbsp;million (U.S.$60.3&nbsp;million) compared to
Ps.396.9&nbsp;million (U.S.$38.1&nbsp;million) for the year ended December&nbsp;31, 2001. The
increase was mainly attributable to a decrease in the principal payments on
long-term debt of Ps.3,260.6&nbsp;million (U.S.$312.8&nbsp;million), partially offset by
a decrease in the proceeds received from long-term debt of Ps.1,981.7&nbsp;million
(U.S.$190.1&nbsp;million) and a decrease of Ps.985.5&nbsp;million (U.S.$94.5&nbsp;million)
from contributions from our shareholders. Both figures, payments and proceeds,
were materially affected by a significant foreign exchange loss in 2002. Net
cash provided by financing activities in 2000 was Ps.822.2&nbsp;million (U.S.$78.9
million). The decrease in 2001 from 2000 was mainly due to a decrease in the
principal payments on long term debt of Ps.2,040.7&nbsp;million (U.S.$195.8&nbsp;million)
and a decrease in the proceeds received from the 2000 rights and primary
offering of Ps.1,695.6&nbsp;million (U.S.$162.6&nbsp;million), partially offset by an
increase in the proceeds received from long term debt of Ps.2,476.3&nbsp;million
(U.S.$237.5&nbsp;million) and proceeds from the sale of capital stock in 2001 of
Ps.985.5&nbsp;million (U.S.$94.5&nbsp;million)
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cash Flows Used for Investing Activities</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities was Ps.419.1&nbsp;million (U.S.$40.2
million) in 2002. We purchased Ps.808.2&nbsp;million (U.S.$77.5&nbsp;million) of
property and equipment in 2002. These purchases were partially offset by a
release of a portion of the escrow account (described below) amounting to
Ps.464.9&nbsp;million (U.S.$44.6&nbsp;million). Net cash used in investing activities
was Ps.2,860.7&nbsp;million (U.S.$274.4&nbsp;million) in 2001 and was primarily
attributable to purchases of Ps.3,384.3&nbsp;million (U.S.$324.6&nbsp;million) of
property, equipment, the acquisition of Portatel and other assets including
additional capital contributions to associated companies, which were partially
offset by a release of a portion of the escrow account of Ps.523.5&nbsp;million
(U.S.$50.2&nbsp;million).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities in 2000 was Ps.3,054.6&nbsp;million
(U.S.$293.0&nbsp;million). In 2000, we made investments in an aggregate amount of
Ps.3,590.9&nbsp;million (U.S.$344.5&nbsp;million). Substantially all of these
expenditures were for the purchase of property, equipment and other assets. In
connection with the issuance and sale of the Iusacell senior notes, we provided
security for those notes in the form of a cash escrow account in the amount of
Ps.536.3&nbsp;million (U.S.$51.4&nbsp;million) for fiscal year 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax Loss Carryforwards</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, we had recorded a net deferred tax asset of
Ps.163.9&nbsp;million (U.S.$15.7&nbsp;million) mainly reflecting the benefit of tax loss
carryforwards, which expire in varying amounts between 2005 and 2012.
Realization is dependent on generating sufficient taxable income prior to the
expiration of the tax loss carryforwards. Although realization is not assured,
management believes it is more likely than not that a portion of the net
deferred tax asset at December&nbsp;31, 2002 will be realized based on our business
plan estimate of future taxable income over the next five years in an amount
sufficient to utilize such net deferred tax losses.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our estimate of future taxable income is based primarily on and supported
by (i)&nbsp;additional increase in revenues generated by the CPP feature with an
important taxable operating margin, (ii)&nbsp;the change in the income tax law to
increase the useful lives for network equipment from 3.3&nbsp;years to 12.5&nbsp;years,
representing an important decrease in depreciation expense for income tax
purposes and (iii)&nbsp;an increase in 2003 of the potential effects of additional
cost cutting.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of the deferred tax asset considered realizable could be
reduced in the near term if estimates of future taxable income during the carry
forward periods are reduced.
</FONT>

<P align="center"><FONT size="2">60</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, we had a valuation allowance of Ps.903.6&nbsp;million
(U.S.$86.7&nbsp;million), to reduce our deferred tax assets to estimated realizable
value. The valuation allowance primarily relates to the deferred tax assets
arising from tax loss carryforwards and tax credits. To the extent that the
Mexican tax loss carryforwards cannot be used by our subsidiaries, 60% of such
tax loss carryforwards can be used to offset our future consolidated income.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, we had net operating losses for income tax purposes
that may be carried forward and applied against future taxable earnings of
Ps.5,431.1&nbsp;million (U.S.$521.0&nbsp;million) expiring in various amounts from 2005
through 2012. See Note 12 to the Consolidated Financial Statements.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003 and 2004, we expect to make capital expenditures to expand our
network infrastructure, expand our cellular and long distance networks,
continue the expansion of our PCS networks in Regions 1 and 4 in northern
Mexico, enhance our billing and customer care systems, and support existing
operations and new business opportunities. The degree and timing of capital
expenditures will remain strongly dependent on the nature, timing and success
of our debt restructuring efforts, the competitive environment and economic
developments in Mexico, including inflation and exchange rates, the timing of
regulatory actions and on the availability of new funding from suitable debt
and/or equity financing.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we acquire additional mobile wireless concessions in Mexico, we may be
required to increase our capital expenditure budget. We would expect to
finance these capital expenditures through a combination of debt and vendor
financing, equity capital and operating cash flow.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect capital expenditures for 2003 and 2004 to total approximately
U.S.$270.0&nbsp;million, not including amounts in respect of capitalized interest.
We expect to make capital expenditures of approximately U.S.$85.0&nbsp;million in
2003, including up to U.S.$62.0&nbsp;million to expand and develop our cellular
network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first quarter of 2003, we invested approximately U.S.$1.0
million in our cellular regions to expand our coverage. The remaining
U.S.$22.0&nbsp;million will be used in system and quality upgrades.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total capital expenditures in 2002 were U.S.$87.6&nbsp;million. Of this
amount, approximately U.S.$58.2&nbsp;million was used primarily for the development
of the wireless network in central regions and to construct new and remodel
existing customer sales and service centers. The balance of U.S.$29.4&nbsp;million
was primarily:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">invested in developing and launching PCS services in the cities of
Tijuana and Monterrey in Regions 1 and 4; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">used to develop and increase the quality of the wireless network in
the recently acquired Region 8 in southern Mexico.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total capital expenditures in 2001 were U.S.$213.8&nbsp;million of which
approximately U.S.$189.8&nbsp;million was used primarily for the development of our
wireless network and to construct new and remodel existing customer sales and
service centers. Approximately U.S.$175.0&nbsp;million of this amount was used for
the development of the Iusacell Celular wireless network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditure amounts were derived using historical pesos translated
at the exchange rate in effect at the end of the corresponding year.
</FONT>


<P align="left"><FONT size="2"><B>Iusacell Contractual Obligations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table outlines our obligations for payments under our
indebtedness, including notes payable to suppliers, and operating leases for
the periods indicated using balances as of December&nbsp;31, 2002. The BNP Paribas
facilities and the Harris facility are also obligations of our subsidiaries
other than Iusacell Celular.
</FONT>

<P align="center"><FONT size="2">61</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not generate sufficient cash flows from our operations to make the
June&nbsp;1, 2003 U.S.$25.0&nbsp;million interest payment on the Iusacell senior notes.
As a result, we are currently in default under the Iusacell senior notes. For
a more detailed discussion of the consequences of such default, please see Item
3, &#147;Key Information &#151; Risk Factors &#151; <I>We are in default of our obligations under
the Iusacell senior notes which will enable the holders of such debt to
accelerate our repayment obligations after the expiration of a grace period</I>.&#148;
We have a 30-day grace period to make the payment before an event of default
will occur. If we do not make such payment within that grace period, the
holders of such notes will have the right to accelerate our obligations
thereunder, which will cause an event of default under the terms of Iusacell
Celular&#146;s senior refinancing secured loan. As a result, the lenders under that
loan will have the right to accelerate the loan, and if such lenders
accelerate, an event of default under the Iusacell Celular senior notes will
occur, permitting the holders of such notes to accelerate Iusacell Celular&#146;s
repayment obligations under the Iusacell Celular senior notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table does not reflect as current the effects of our default
under certain of our obligations, as such obligations have not yet been
declared immediately due and payable. Depending on subsequent events and the
progress of our restructuring efforts, we expect our payment obligations to
change. See Note 24 to the Consolidated Financial Statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please
see &#147;&#151; Iusacell Celular Contractual Obligations&#148; for a separate
discussion of Iusacell Celular&#146;s debt obligations, operating leases and other
financing arrangements:
</FONT>


<P align="center"><FONT size="2"><B>Payments due by Period</B><BR>
<HR size="1" width="20%" noshade>
</FONT>


<DIV align="center"><FONT size="2"><B>(</B><B><I>Figures in thousands of U.S. Dollars as of December&nbsp;31, 2002</I></B><B>)</B>
</FONT></DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" colspan="2"><FONT size="1"><B>Iusacell
Indebtedness<sup>(1)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior notes due 2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>BNP Paribas facilities:</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">GIEK-Guaranteed Loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BNP Paribas (Oslo)
Non-GIEK-
Guaranteed Loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">GTE Venholdings B.V. Loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Harris facility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,429</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total indebtedness</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,426</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">358,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">394,877</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" colspan="2"><FONT size="1"><B>Operating
Leases<sup>(2)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MATC Celular</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,808</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,067</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">231,380</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,984</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total operating
leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">293,705</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(1)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">These amounts are principal payments.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(2)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">These amounts include minimum lease payments.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The degree to which we are leveraged and the covenants with which we must
comply under our various financing agreements may adversely affect our ability
to finance future operations, to finance necessary capital expenditures, to
service our indebtedness, to compete effectively against better capitalized
competitors and to withstand downturns in our business or the Mexican economy
in general. Our high level of indebtedness could limit our ability to pursue
business opportunities that may be in our interest and that of holders of our
securities. In addition, in the event that the Iusacell Celular senior notes
have not been refinanced by March&nbsp;31, 2004, the outstanding amount of the
senior refinancing secured loan will become due on that date.
</FONT>

<P align="center"><FONT size="2">62</FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of our and our subsidiaries&#146; debt impose significant operating
and financial restrictions. These restrictions will affect, and, in many
respects, significantly limit or prohibit, our ability and the ability of our
subsidiaries to, among other things:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">borrow money;</FONT></TD>
</TR>
</TABLE>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pay dividends on stock;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">make capital expenditures and other investments;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">use assets as security in other transactions; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sell certain assets or merge with or into other companies.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>Iusacell Long-Term Indebtedness</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Iusacell Senior Notes</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 1999, Iusacell issued U.S.$350.0&nbsp;million of 14&nbsp;1/4% senior
notes due 2006 (the &#147;Iusacell senior notes&#148;) under an indenture dated as of
December&nbsp;16, 1999 among Iusacell, Bell Atlantic (which is now Verizon), and The
Bank of New York, as trustee, (the &#147;Iusacell indenture&#148;). An amount of
U.S.$133.6&nbsp;million in proceeds from the issuance of the Iusacell senior notes
was deposited in a security account for purposes of payment of the first six
semiannual installments of interest thereon. The security account was closed
upon the payment of the sixth semiannual installment in December 2002. In June
2000, substantially all of the Iusacell senior notes were exchanged for
identical 14&nbsp;1/4% senior notes due 2006, which we also refer to as the
Iusacell senior notes and which are also governed by the Iusacell indenture,
pursuant to an exchange offer registered with the SEC. The Iusacell indenture
restricts the ability of Iusacell and its subsidiaries to incur indebtedness.
Under circumstances involving a change of control of Iusacell or Iusacell
Celular, we will be required to make an offer to repurchase the Iusacell senior
notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cash flow was not sufficient to meet a U.S.$25.0&nbsp;million interest
payment on the Iusacell senior notes that was due on June&nbsp;1, 2003. If we do
not make the payment within the 30-day payment grace period, the holders of the
Iusacell senior notes will have the right to accelerate the outstanding
principal and accrued and unpaid interest on such notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>BNP Paribas Facilities</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2000, our subsidiary <I>Iusacell Infraestructura, S.A. de C.V.</I>
entered into financing agreements for the purpose of purchasing NERA microwave
transmission equipment consisting of:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a seven-year senior amortizing term facility in the principal
amount up to U.S.$30.5&nbsp;million, guaranteed by the Export Import Bank of
Norway, which we refer to as the GIEK-Guaranteed Facility; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a four-year senior loan in the principal amount up to U.S.$5.4
million, which we refer to as the Non-GIEK-Guaranteed Loan.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The GIEK-Guaranteed Facility bears interest at six-month LIBOR plus 0.6%.
The Non-GIEK Guaranteed Loan bears interest at six-month LIBOR plus 2.0%. We
guarantee the obligations of our subsidiary under both of these facilities. As
of December&nbsp;31, 2002, our subsidiary had drawn down U.S.$25.8&nbsp;million in
principal under the GIEK-Guaranteed Facility and U.S.$4.6&nbsp;million in principal
under the Non-GIEK-Guaranteed Loan. On December&nbsp;16, 2002 a payment of U.S.$3.7
million was made under these facilities, leaving an outstanding debt of
U.S.$26.6&nbsp;million at that date. Our subsidiary obtains the funds to pay the
interest and principal on this purchase money debt through rental payments made
to it by Iusacell Celular and its subsidiaries for such microwave transmission
equipment.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>GTE Venholdings B.V. Loan</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;8, 2001, we signed a U.S.$7.8&nbsp;million promissory note in favor of
GTE Venholdings B.V. that accrues interest at an annual rate equal to 11.5%,
and was scheduled to mature on May&nbsp;8, 2003. On May&nbsp;8, 2003, we
extended the maturity date to November&nbsp;8, 2003. No other provisions were
amended under such promissory note. The proceeds from the issuance of this
note were used to complete the funding of the acquisition of Portatel.
</FONT>

<P align="center"><FONT size="2">63</FONT>


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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Harris Facility</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 2000, our subsidiary <I>Iusacell Infraestructura de M&#233;xico, S.A. de
C.V. </I>entered into a purchase framework agreement for the purpose of purchasing
Harris microwave equipment. This vendor financing consisted of a five-year
senior amortizing term loan facility in the principal amount of up to U.S.$6.9
million, with interest accruing at a rate of the average term LIBOR plus 1.25%.
This agreement was amended in both June and July 2001 to increase the amount
to U.S.$10.3&nbsp;million and modify the interest rate to the average term LIBOR
plus 3.50%, and was amended again in December 2001 to increase the amount to
U.S.$10.9&nbsp;million. We guarantee the obligations of our subsidiary under this
facility. As of December&nbsp;31, 2002, our subsidiary had drawn down U.S.$10.4
million in principal under this facility, all of which was outstanding on that
date. Our subsidiary obtains the funds to pay the interest and principal on
this purchase money debt through rental payments made to it by Iusacell Celular
and its subsidiaries for such microwave transmission equipment.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Building and Others</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Building and others consisted of operating leases for our administrative
offices, sales branches and service facilities. Building leases are
peso-denominated and contain escalation clauses for inflation. The amounts in
the table represent the future annual minimum rental payments on leases current
at December&nbsp;31, 2002.
</FONT>


<P align="left"><FONT size="2"><B>Iusacell Celular Contractual Obligations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table outlines Iusacell Celular&#146;s obligations for payments
under its indebtedness, including notes payable to suppliers and operating
leases for the periods indicated using balances as of December&nbsp;31, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell did not generate sufficient cash flows from its operations to
make the June&nbsp;1, 2003 U.S.$25.0&nbsp;million interest payment on the Iusacell senior
notes. Iusacell has a 30-day grace period to make the payment before an event
of default will occur. If Iusacell does not make such payment within that
grace period, the holders of such notes will have the right to accelerate
Iusacell&#146;s obligations thereunder, which will cause an event of default under
the terms of Iusacell Celular&#146;s senior refinancing secured loan. As a result,
the lenders under that loan will have the right to accelerate the loan, and if
such lenders accelerate, an event of default under the Iusacell Celular senior
notes will occur, permitting the holders of such notes to accelerate Iusacell
Celular&#146;s repayment obligations under the Iusacell Celular senior notes.
</FONT>

<P align="center"><FONT size="2">64</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table does not reflect as current the effects of Iusacell&#146;s
default under certain of its obligations, as such obligations have not yet been
declared immediately due and payable. Depending on subsequent events and the
progress of our restructuring efforts, we expect Iusacell Celular&#146;s payment
obligations to change. See Note 24 to the Consolidated Financial Statements.
</FONT>


<P align="center"><FONT size="2"><B>Payments due by Period</B><BR>
<HR size="1" width="20%" noshade>
</FONT>


<DIV align="center"><FONT size="2"><B>(</B><B><I>Figures in thousands of U.S. Dollars as of December&nbsp;31, 2002</I></B><B>)</B>
</FONT></DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="2"><FONT size="1"></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" colspan="2"><FONT size="1"><B>Iusacell
Celular Indebtedness<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior notes due 2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior refinancing
secured loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">265,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Short-term credit lines:</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Banco Santander Mexicano</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total indebtedness</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">249,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">427,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="left" colspan="2"><FONT size="1"><B>Iusacell
Celular Indebtedness<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MATC Celular</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,054</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,054</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and others</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,229</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">58,444</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total operating
leases</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,078</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">45,764</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">138,452</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">These amounts include principal payments.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">These amounts include the minimum lease payments.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>Iusacell Celular Long-Term Indebtedness</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Iusacell Celular Senior Notes</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 1997, Iusacell Celular issued U.S.$150.0&nbsp;million of its 10% Senior
Notes due 2004 (the &#147;Iusacell Celular senior notes&#148;), under an indenture dated
as of July&nbsp;25, 1997 among Iusacell Celular, the subsidiaries of Iusacell
Celular guaranteeing the Iusacell Celular senior notes and First Union National
Bank (now Wachovia Bank National Association), as trustee, which we refer to as
the Iusacell Celular indenture. Substantially all of the Iusacell Celular
senior notes were exchanged in January 1998 for identical 10% Senior Notes due
2004, which we also refer to as the Iusacell Celular senior notes and which are
also governed by the Iusacell Celular indenture, pursuant to an exchange offer
registered with the SEC.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Iusacell Celular indenture limits the ability of Iusacell Celular to
make dividend payments to Iusacell. In addition, it restricts the ability of
Iusacell Celular and its principal subsidiaries to incur indebtedness.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the senior refinancing secured loan described below,
Iusacell Celular was required, under the terms of the Iusacell Celular
indenture, to equally and ratably secure all amounts due under the Iusacell
Celular senior notes by a second priority lien on its cellular concessions and
certain equipment.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Senior Refinancing Secured Loan</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;29, 2001, Iusacell Celular completed the refinancing of its
senior secured credit facility by entering into an Amended and Restated Senior
Secured Credit Loan Agreement, which we refer to as the senior refinancing
secured loan, which consists of:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a Tranche A Loan in an aggregate principal amount of U.S.$189.8
million for the purpose of refinancing existing indebtedness under the
senior secured credit facility and under a certain bridge loan, the
proceeds of which were used to make a principal amortization payment
under the senior secured credit facility in January 2001; and</FONT></TD>
</TR>
</TABLE>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a Tranche B Loan in an aggregate principal amount of U.S.$75.8
million for the purpose of paying existing indebtedness under certain
Eximbank facilities and under a certain bridge loan, the proceeds of
which were used to make a principal amortization payment under the
Eximbank facilities in January 2001.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The senior refinancing secured loan bears interest at a rate per annum
equal to one-, two-, three- or six-month LIBOR (at Iusacell Celular&#146;s option)
plus a spread ranging from 1.75% to 2.25%, depending on Iusacell Celular&#146;s
leverage ratio. Iusacell Celular&#146;s obligations under the senior refinancing
secured loan are unconditionally guaranteed, jointly and severally, by the
principal operating subsidiaries of Iusacell Celular and its subsidiaries
holding cellular concessions and are secured by a pledge of substantially all
the capital stock and equity interests held by Iusacell Celular and
substantially all assets used in connection with or related to such cellular
concessions. Upon the acquisition of Portatel, the cellular concession
covering Region 8 was mortgaged under this loan, and all capital stock and
equity interests of Portatel were pledged under this loan.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The senior refinancing secured loan begins amortizing on May&nbsp;31, 2004 in
equal quarterly amounts and matures on February&nbsp;28, 2006. However, in the
event that the Iusacell Celular senior notes have not been refinanced by March
31, 2004, the outstanding amount of the senior refinancing secured loan will
become due on that date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan Covenant Waivers and Modifications</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;7, 2001, Iusacell Celular and the lenders entered into an
amendment and waiver to the senior refinancing secured loan, which we refer to
as the first amendment and waiver, to permit Iusacell Celular to (i)&nbsp;create
liens encumbering initial deposits and margin deposits securing indebtedness
under any interest rate protection agreement or other interest hedging
agreement up to the principal amount of indebtedness of Iusacell Celular and
its subsidiaries with floating rates of interest; (ii)&nbsp;make loans or advances
to Iusacell (in lieu of paying dividends) at such times and in such amounts as
necessary to permit Iusacell to pay scheduled interest (including any related
tax gross-up amount) and principal payments when due in respect of the Iusacell
senior notes; and (iii)&nbsp;make loans or advances to Iusacell (in lieu of paying
dividends) in an amount not exceeding U.S.$5.0&nbsp;million to discharge other
liabilities of Iusacell incurred in the ordinary course of business, so long as
an event of default has not occurred under the senior refinancing secured loan.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first half of 2003, Iusacell Celular exceeded the permitted
leverage ratio (as defined in the senior refinancing secured loan) of 2.50.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2003, Iusacell Celular received notice from the lenders of the
occurrence of two defaults under the senior refinancing secured loan. One
default occurred as a result of Iusacell Celular&#146;s failure to notify the
lenders that Iusacell Celular had opened and closed several bank accounts
related to its telecommunications business. The other default occurred as a
result of Iusacell Celular&#146;s failure to notify the lenders that Iusacell
Celular had failed to register a mortgage on certain assets of Portatel with
the Telecommunications Registry, which is maintained by the SCT. Iusacell
Celular has since registered the mortgage and requested, but has not yet
received, the consent of the lenders with respect to the opening and closing of
those bank accounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;28, 2003, Iusacell Celular and the lenders entered into a
temporary amendment and waiver to the senior refinancing secured loan, which we
refer to as the second amendment and waiver, to increase the permitted leverage
ratio under the senior refinancing secured loan from 2.50 to 2.70. Under the
second amendment and waiver, Iusacell Celular temporarily agreed not to make
any restricted payment, loan or advance to, or repay any loan or advance from
any affiliate, provided that if Iusacell Celular or any of its subsidiaries
makes any payment on the principal of any indebtedness (as defined in the
senior refinancing secured loan), Iusacell Celular or the relevant subsidiary
will simultaneously prepay a pro rata amount outstanding under the senior
refinancing secured loan. On May&nbsp;22, 2003, the second amendment and waiver was
extended until June&nbsp;13, 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;12, 2003, the second amendment and waiver was further extended
until June&nbsp;26, 2003. On June&nbsp;26, 2003, if the second amendment and waiver is
not further extended, Iusacell Celular will be in default of a financial ratio
covenant under the senior refinancing secured loan, which will constitute an
event of default under that loan as if the second amendment and waiver had
never been executed.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our credit ratings were lowered several times during 2002 by major credit
rating agencies. On July&nbsp;29, 2002, Standard &#038; Poor&#146;s Ratings Services
(Standard and Poor&#146;s), a division of The McGraw-Hill Companies, Inc., lowered
Iusacell&#146;s foreign and local currency corporate credit ratings from BB to B&#043;,
with a negative outlook. On August&nbsp;26, 2002, Moody&#146;s Investors Service Inc.
(Moody&#146;s) downgraded Iusacell&#146;s senior unsecured and issuer ratings from B1 to
Caa2, Iusacell&#146;s senior implied rating from Ba2 to B3 and Iusacell Celular&#146;s
senior unsecured rating from Ba2 to B3, all with a negative outlook. On
November&nbsp;5, 2002, Standard &#038; Poor&#146;s again lowered Iusacell&#146;s foreign and local
currency corporate credit rating from B&#043; to CCC&#043; and placed us on CreditWatch
with negative implications. On November&nbsp;15, 2002, Moody&#146;s downgraded
Iusacell&#146;s senior unsecured and issuer ratings from Caa2 from C and Iusacell
Celular&#146;s senior unsecured rating from B3 to Ca.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most recently, on May&nbsp;27, 2003, Standard &#038; Poor&#146;s announced that it had
lowered Iusacell&#146;s foreign and local currency corporate credit rating from CCC&#043;
to CC, Iusacell Celular&#146;s senior secured rating from CCC&#043; to CC and Iusacell
Celular&#146;s unsecured debt rating from CCC- to C. On June&nbsp;3, 2003, Standard &#038;
Poor&#146;s again lowered Iusacell&#146;s foreign and local currency corporate credit
rating from CC to D and Iusacell&#146;s senior unsecured debt rating from C to D.
At the same time, Standard &#038; Poor&#146;s affirmed Iusacell Celular&#146;s senior secured
rating at CC and Iusacell Celular&#146;s senior unsecured debt rating at C.
Subsequently, Standard &#038; Poor&#146;s withdrew all the ratings assigned to Iusacell
and Iusacell Celular and their debt instruments.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of these actions, our ability to obtain short-term and
long-term financing and the cost of such financing have been adversely
affected.
</FONT>


<P align="left"><FONT size="2"><B>Certain Hedging Activities</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;30, 1999, Iusacell Celular entered into a foreign exchange
hedge using forward rate contracts to hedge its exchange rate exposure for
U.S.$77.0&nbsp;million, representing approximately 50% of the principal and interest
payments on its indebtedness coming due over the period from April 2000 to
April 2001. This transaction resulted in a U.S.$9.8&nbsp;million loss. On November
22, 2000, Iusacell Celular entered into a second foreign exchange hedge using
forward rate contracts for U.S.$15.0&nbsp;million to hedge the interest payments on
the Iusacell Celular senior notes coming due over the period from July 2001 to
January 2002. This transaction resulted in a U.S.$1.7&nbsp;million loss. On August
9, 2001, Iusacell Celular entered into a third foreign exchange hedge using
forward rate contracts for U.S.$11.0&nbsp;million of its indebtedness coming due
over the period from November 2001 to November 2002. This transaction resulted
in a U.S.$0.1&nbsp;million loss.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August and October 2001, Iusacell Celular entered into a foreign
exchange hedge using forward rate contracts to hedge 100% of the principal
amount of U.S.$150.0&nbsp;million and interest of U.S.$34.5&nbsp;million on the Iusacell
Celular senior notes. This hedge was intended to benefit from the strength of
the U.S. dollar relative to the peso to mitigate foreign exchange exposure.
This hedge would become due between July 2002 and July 2004. In October 2002,
Iusacell Celular in order to improve liquidity by eliminating cash collateral
requirements took advantage of a temporary weakness in the Mexican peso and
opted to terminate the hedge transaction resulting in a U.S.$1.7&nbsp;million loss.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, we did not have any forward rate contracts in
place.
</FONT>


<P align="left"><FONT size="2"><B>Interest Rate Collars</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 1998, Iusacell Celular entered into an interest rate collar
agreement for a notional amount of U.S.$35.0&nbsp;million until July&nbsp;30, 2002. The
collar agreement limited the maximum effective LIBOR cost to 6.12% if six-month
LIBOR was lower than 7.12%, and 7.12% if LIBOR equaled or exceeded 7.12%.
Iusacell Celular could participate in a decline in LIBOR to 5.30%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;26, 1999, Iusacell Celular entered into an additional interest
rate collar agreement to limit the maximum interest rate, which must be paid on
U.S.$15.0&nbsp;million of its floating rate debt until July&nbsp;30, 2002. This collar
agreement limited the maximum effective LIBOR cost to 5.82% if six-month LIBOR
was lower than 6.82%,
<P align="center"><FONT size="2">67</FONT>

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</FONT>

<P align="left"><FONT size="2">and 6.82% if LIBOR equaled or exceeded 6.82%. Iusacell Celular could
participate in a decline in LIBOR to 4.75%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2002, due to the significant decrease in
the LIBOR interest rates, Iusacell Celular recognized additional interest
expense of U.S.$1.0&nbsp;million for the interest rate collars, which was offset by
the lower interest expense on its floating rate debt.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The U.S.$50.0&nbsp;million aggregate notional amount of the above interest rate
collar agreements did not quantify risk or represent assets or liabilities of
Iusacell, but were used in the determination of cash settlements under the
agreements.
</FONT>


<P align="left"><FONT size="2"><B>Debt Restructuring</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2002, we engaged Morgan Stanley as our financial advisor to
assist us in developing a comprehensive debt restructuring plan. We are still
in the process of developing such a plan and nothing has yet been presented to
our creditors.
</FONT>


<P align="left"><FONT size="2"><B>Recent Equity Offerings</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;10, 1999, we completed a comprehensive equity recapitalization
and restructuring. As part of this transaction, we issued 23,596,780 new
series V shares at a price of U.S.$1.05 per share in a primary offering and
18,405,490 new series V shares at a price of U.S.$0.70 per share in a rights
offering. After commissions and expenses, we received net proceeds of
approximately U.S.$33.7&nbsp;million, which were used primarily for the acquisition
of cellular network infrastructure equipment. In April and May 2000, we sold
10,529,700 American depositary shares representing series V shares at
U.S.$15.125 per American depositary share. After commissions and expenses, we
received net proceeds of approximately U.S.$153.0&nbsp;million from these offerings,
which we used primarily to fund investments in our cellular network as well as
the first phase of our PCS network deployment in Regions 1 and 4 in northern
Mexico. See Item&nbsp;4, &#147;Information on the Company &#151; History and Development of
the Company.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 2001, we completed a rights offering to holders of our
outstanding series A and series V shares and series V American depositary
shares raising an aggregate of U.S.$100.0&nbsp;million. Iusacell&#146;s principal
shareholders, Verizon and Vodafone, subscribed for approximately U.S.$81.0
million of the offering. Verizon&#146;s subscription included all of the series V
shares offered to, but not subscribed for by, public shareholders. In the
United States and Mexico, public shareholders subscribed to approximately
U.S.$15.0&nbsp;million and U.S.$4.0&nbsp;million of the offering, respectively.
</FONT>


<P align="left"><FONT size="2"><B>Tower Monetization</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1999, Iusacell Celular entered into a series of agreements
with MATC Celular. These agreements, which were amended in May 2002, among
other things, gave MATC Celular the right to acquire approximately 350 existing
Iusacell Celular non-strategic towers. We sold and leased back a total of 76
non-strategic towers to MATC Celular for approximately Ps.101.0&nbsp;million in net
gains in 2002. During 2001 and 2002, we sold and leased back a total of 320
non-strategic cellular towers to MATC Celular and fulfilled our contractual
obligation under the existing agreements. Iusacell Celular has no further
commitment with MATC Celular to sell additional towers. Iusacell Celular is
leasing back the sold towers from MATC Celular and subleasing them to its
operating subsidiaries.
</FONT>


<P align="left"><FONT size="2"><B>Dividend Policy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have never paid dividends, and we currently have no plans to initiate
dividend payments. In addition, the Iusacell indenture, the Iusacell Celular
indenture and the senior refinancing secured loan limit both Iusacell&#146;s and
Iusacell Celular&#146;s ability to pay dividends.
</FONT>

<P align="center"><FONT size="2">68</FONT>

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<P align="left"><FONT size="2"><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell does not undertake research and development activities.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the events and developments identified elsewhere in this
Item&nbsp;5, &#147;Operating and Financial Review and Prospects,&#148; our financial condition
and results of operations could also be materially affected by the following
events and developments:
</FONT>


<P align="left"><FONT size="2"><B>Price Increases and Rollbacks</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have attempted, and continue to attempt, to exercise price leadership
in the Mexican cellular market, with a strategy of increasing our prices to
keep pace with inflation if economic and competitive conditions permit.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In late March 1999, we raised airtime prices on our postpaid plans by
approximately 12% on a weighted average basis and approximately 6% for prepaid
customers. Our competitors also increased their prices.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In mid-April 2001, after not having raised our fees for more than two
years, we increased the regular monthly fees of our postpaid plans by
approximately 4.5% on a weighted-average basis and the monthly fees for
one-single rate service of our postpaid plans by approximately 15% on a
weighted average basis. We also increased the airtime charges of one of our
postpaid plans by 4.8%. These price increases have remained effective despite
the fact that our competitors have not increased their prices. Our revenues
will be adversely affected to the extent that our price increases cannot keep
pace with inflation.
</FONT>


<P align="left"><FONT size="2"><B>Regulatory Developments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican authorities resolved several critical regulatory issues over
the last several years and will likely continue to resolve additional important
regulatory issues during 2003 which may have a material effect on Iusacell&#146;s
financial condition and results of operations.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;27, 1998, COFETEL issued a resolution which established the
per-minute interconnection rate for telephone calls made from wireless
customers to wireline customers at Ps.0.2573 per full minute payable on a
per-second basis, which will be indexed on a monthly basis for inflation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COFETEL declined to provide for any amount of reciprocity in the
interconnection fee payable by Telmex to wireless operators for interconnection
services that Iusacell and other wireless operators provide Telmex for calls
made by wireline customers to mobile wireless customers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2001, we negotiated a rate reduction with Telmex, retroactive to
January&nbsp;1, 2001, that decreases the interconnection rate per minute for
telephone calls made from wireless customers to wireline customers from Ps.0.31
per full minute, payable on a per-second basis, to the peso equivalent of
U.S.$0.0125 per full minute, payable on a per-second basis.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2001, Telmex, Alestra and Avantel reached an agreement to
further reduce the long distance interconnection rate from U.S.$0.0125 per
minute to U.S.$0.00975 per minute. We negotiated with Telmex to obtain similar
terms for both our long distance business and local cellular interconnection
rates and these terms have been maintained until 2003.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;27, 1998, COFETEL ruled that the calling party pays modality
would be implemented by May&nbsp;1, 1999 as an option for the wireless customer.
CPP is a cellular telephony payment scheme similar to the existing wireline payment scheme, which provides that the wireline or fixed
wireless party that makes a local call to a cellular telephone, not the
cellular subscriber receiving the call, will be billed for interconnection
access, and the recipient will not be billed for the airtime charges
corresponding to that call.
</FONT>


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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The interconnection rate is frozen at Ps.1.90 per minute or fraction of a
minute. The price which Telmex may charge its customers is frozen at Ps.2.50
per minute or fraction of a minute, plus Telmex&#146;s applicable per-call local
charge. Iusacell cannot predict whether COFETEL intends to extend the same
tariff and surcharge at the same rates and for how long.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are currently discussing with COFETEL and Telmex the possibility of
extending the CPP modality to incoming national long distance calls. If this
proposal is accepted, the mobile party pays modality would continue to apply
only to incoming international long distance calls.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1997, COFETEL authorized a modification of our concession to
provide long distance services, modifying coverage requirements and permitting
the use of microwave and other non-fiber technologies for transmission
purposes. Together with fiber-swapping agreements reached by Iusacell with two
of our competitors, the modified concession permits a more efficient, more
technologically flexible long distance network and eliminated more than
U.S.$200.0&nbsp;million in Iusacell capital expenditure requirements from 1998 to
2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 2001, Telmex, Avantel and Alestra announced a preliminary
agreement under which Avantel and Alestra will pay for the special projects
implemented by Telmex prior to January 1997 in order to permit competition in
long distance telephony, including the numbering and signaling plans and
expenditures to facilitate interconnection. Avantel, Alestra and Telmex agreed
that the total amount reimbursable to Telmex for such special projects by all
long distance carriers was U.S.$777.0&nbsp;million, including interest payable from
December 1997 until October 1999. In March 2001, Iusatel negotiated a similar
agreement with Telmex, in which Iusatel agreed to pay for its portion of such
special projects in two parts: (i)&nbsp;a fixed payment of approximately U.S.$13.6
million, payable in twelve equal monthly installments beginning in April 2001,
and (ii)&nbsp;a U.S.$0.0053 per full minute, usage-based surcharge to the local
wireline interconnection rate from January&nbsp;1, 2001 through December&nbsp;31, 2004
for long distance calls terminated in Telmex&#146;s local wireline network. Since
these special projects payments relate to capital investments made by Telmex,
we are recording them as a deferred asset and consequently we are amortizing
them.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 1999, we entered into an agreement with COFETEL to maintain
certain cellular quality standards measured in terms of connection time,
dropped calls and ineffective attempts. We currently meet these quality
standards. Failure to maintain these quality standards may result in refund
obligations to subscribers and governmental sanctions.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we met COFETEL&#146;s quality standards in 2000, we nevertheless
voluntarily determined to compensate our subscribers in Region 9 in light of
perceived quality problems during 1999 due to network digitalization and rapid
traffic growth. As of December&nbsp;31, 1999, our postpaid subscribers each
received 20% more included minutes in each of their postpaid packages in April
and May 2000 and our prepaid customers, each received five free minutes. The
financial impact of this voluntary compensation program was not material.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell met COFETEL&#146;s quality standards, that in 2001 were as follows:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Drop calls 6%</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Ineffective attempts 5%</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Portatel significantly increased its quality standards in the fourth
quarter of 2001, the rate of ineffective attempts improved to 0.7% after
initial audits in the city of M&#233;rida indicated a 14.9% rate in July 2001.
</FONT>



<P align="center"><FONT size="2">70</FONT>



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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms and conditions for the 2002 quality standards agreed by concessionaires and COFETEL are:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Drop calls 4%</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Ineffective attempts 5%</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Connection time 12 seconds</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 2002 quality tests began June&nbsp;3, 2002 and ended December&nbsp;13, 2002, and
covered 19 of our largest cities in terms of number of wireless mobile users.
The verification covered 70% of the total wireless mobile users in Mexico. The
results of the test indicated that Iusacell met COFETEL quality standards.
</FONT>


<P align="left"><FONT size="2"><B>Other Developments</B>
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2001, <I>SAGO Interamericana, S.A. de C.V. </I>(SAGO), a distributor that
represented at that time slightly less than 10% of our monthly gross postpaid
additions and approximately 2% of our monthly gross prepaid additions, notified
us that it was immediately terminating its distribution agreement with us. We
believe that this action violated the termination provisions of the
distribution agreement and we are seeking compensatory damages. In addition,
we are seeking to recover approximately Ps.44.0&nbsp;million (U.S.$4.2&nbsp;million) in
net receivables owed to us by SAGO.
</FONT>


<P align="left"><FONT size="2"><B>E. </B>&nbsp;&nbsp;<B>OFF-BALANCE SHEET ARRANGEMENTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.
</FONT>


<P align="left"><FONT size="2"><B>F.</B>&nbsp;&nbsp; <B>TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For tabular disclosure of our contractual obligations, please see &#147;&#151;
Liquidity and Capital Resources &#151; Iusacell Contractual Obligations&#148; and &#147;&#151;
Liquidity and Capital Resources &#151; Iusacell Celular Contractual Obligations.&#148;
</FONT>

<!-- link2 "ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 6.&nbsp; DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A twelve-member Board of Directors manages Iusacell. The directors
nominated by Verizon have the power under our by-laws to approve, without the
affirmative vote of any other directors, all resolutions of the Board of
Directors, except those resolutions that the Iusacell Shareholders Agreement
grants Vodafone supermajority voting rights. Pursuant to the Iusacell
Shareholders Agreement, Daniel C. Petri is the Chairman of the Board of
Directors. Under the Iusacell Shareholders Agreement, the Chairman of the
Board possesses the tie-breaking vote on all matters except on any matter that
requires a supermajority vote. See Item&nbsp;7, &#147;Major Shareholders and Related
Party Transactions &#151; Major Shareholders &#151; Governance&#148; for a description of the
Iusacell Shareholders Agreement, which governs the appointment of directors as
between our major shareholders.
</FONT>


<P align="left"><FONT size="2"><B>A.</B>&nbsp;&nbsp; <B>DIRECTORS AND SENIOR MANAGEMENT</B>
</FONT>


<P align="left"><FONT size="2"><B>Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;21, 2003, Iusacell elected new directors who will hold office for
a period of one year and until the election of their successors at a duly
convened general ordinary shareholders meeting.
</FONT>

<P align="center"><FONT size="2">71</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents information with respect to our directors as
of April&nbsp;30, 2003:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position(s)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Daniel C. Petri</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
55</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chairman of the Board of Directors
and Series&nbsp;A Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Carlos Espinal G.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
53</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;A Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Alfred C. Giammarino</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
46</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;A Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Lowell McAdam</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
49</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;A Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Javier Mart&#237;nez del Campo Lanz</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
43</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;A Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jos&#233; Luis Vergara D&#237;ez</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
45</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;A Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Tomas Isaksson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
49</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;A Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Martin Enriquez</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
43</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;V Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Anthony Gilbert</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
51</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;V Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Alan Harper</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
46</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;V Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ignacio Mas</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
38</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;V Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ignacio G&#243;mez Morin</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
42</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Series&nbsp;V Director</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our by-laws authorize alternate directors to serve on the Board of
Directors in place of directors who are unable to attend meetings or otherwise
participate in the activities of the Board of Directors. The series A
alternate directors as of April&nbsp;21, 2003 are any of John Lack, Charles Fallini,
Steven R. Smith, Russell A. Olson and Michael Pawlowski for any of Daniel C.
Petri, Carlos Espinal G., Alfred C. Giammarino, Lowell McAdam, Javier Mart&#237;nez
del Campo Lanz and Jos&#233; Luis Vergara D&#237;ez, and Richard Harman for Tomas
Isaksson. The series V alternate directors as of April&nbsp;21, 2003 are any of
Richard Harman, Mark Hickey, Jeff Bloszies and Jack Lester for any of Martin
Enriquez, Anthony Gilbert, Alan Harper and Ignacio Mas, and Gary Butler for
Ignacio G&#243;mez Morin.
</FONT>


<P align="left"><FONT size="2"><B>Executive Officers</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents information relating to our executive
officers as of May&nbsp;30, 2003:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position(s)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Carlos Espinal G.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
53</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Executive Officer and President*
</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Russell A. Olson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
44</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Executive Vice
President, Finance and Audit, and Chief Financial Officer*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Alejandro Garc&#237;a</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
41</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President, Marketing</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Juan Carlos Merodio</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
40</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Senior Vice President, Legal and Regulatory</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Nestor Bergero</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
45</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President, Technology</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Anthony Llompart</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
40</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President, Sales*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jos&#233; Bellido</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
44</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President, Human Resources</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Roberto Konigs</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
49</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President, Corporate Sales</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jos&#233; Luis Vergara D&#237;ez</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
45</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President, Customer Service</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Indicates an employee of Verizon who is serving as an executive officer
of Iusacell.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>Biographies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Daniel C. Petri </I>has been a member of the Board of Directors of Iusacell
since December 2002. Mr.&nbsp;Petri is Group President, International for Verizon
Communications, Inc. He is responsible for Verizon&#146;s wireless and wire line
operations in Mexico, Venezuela, the Dominican Republic, Puerto Rico and
Canada. Previously, Mr.&nbsp;Petri served as Verizon&#146;s President, International &#151;
Europe and Asia, and in that capacity was responsible for wireless and wire
line operations in those markets and related business development. Before the
merger of Bell Atlantic and GTE to form Verizon, Mr.&nbsp;Petri&#146;s responsibilities included directing the
development of Bell Atlantic&#146;s capabilities for global connectivity, such as
its investment in FLAG (Fiber optic Link Around the World). Mr.&nbsp;Petri has held
a series of positions overseeing various international investments of Bell
Atlantic and NYNEX. During his telecommunications career spanning more than 30
years, Mr.&nbsp;Petri has held a number of key positions in domestic
as well as international operations. Mr.&nbsp;Petri is the chairman of the board of directors
of CODETEL (Dominican Republic) and Telecomunicaciones de Puerto Rico Inc., two
Verizon affiliates, and a board member of Coma&#241;&#237;a An&#243;nima Nacional Tel&#233;fonos de
Venezuela, TelecomAsia (Thailand) and TELUS (Canada), also Verizon affiliates.
He is also a board member of the US ASEAN Business Council and chairman of the
Business Council for International Understanding. Mr.&nbsp;Petri holds a bachelor&#146;s
degree in mechanical engineering from Rugters University and a master&#146;s degree
in management science from Long Island University. He has also completed
management programs in general management, finance and marketing at the
Columbia University Graduate School of Business.
</FONT>


<P align="center"><FONT size="2">72</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Carlos Espinal G. </I>has been a member of the Board of Directors of Iusacell
since April 2002 and has served as Senior Group Vice-President, International &#150;
Americas for Verizon Communications, Inc. since April 2002. Before being
appointed the Senior Group Vice-President, since April 2000 Mr.&nbsp;Espinal served
as Chairman and Chief Executive Officer of CTI Movil, a leading wireless
carrier in Argentina, of which Verizon was a significant shareholder. Before
joining CTI Movil, Mr.&nbsp;Espinal served as General Manager and then as President
and Chief Executive Officer of CODETEL. Prior to joining GTE/Verizon, Mr.
Espinal served as Chairman and/or Chief Executive Officer of various large
multinational firms in the industrial sector in Mexico, Venezuela and Thailand,
and was the Managing Director of Hondutel (the Honduran telephone company). He
has been a member of several professional and industry associations throughout
Latin America. After graduating with honors in electronic engineering from the
Universidad Javeriana in Colombia, Mr.&nbsp;Espinal enrolled in a graduate program
in telecommunications engineering at NTT in Japan. Later, he obtained a
master&#146;s degree in industrial engineering and management from the Asian
Institute of Technology in Thailand and completed the Program for Management
Development at Harvard Business School.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Alfred C. Giammarino </I>has been a member of the Board of Directors of
Iusacell since August&nbsp;10, 2000. Mr.&nbsp;Giammarino was named Senior Vice-President
and Chief Financial Officer of Information Services and International of
Verizon in January 2000. Previously, he served as Senior Vice-President of
International Finance, Planning and Business Development for GTE since July
1998, where he was responsible for business development in countries where GTE
did not have existing operations. At GTE, Mr.&nbsp;Giammarino was also responsible
for financial analysis and administration, budgets, benchmarking and planning
for the international organization, as well as providing financial support for
all business-development activities, international strategic planning,
coordination of business transactions, due-diligence activities and project
integration. Prior to that, Mr.&nbsp;Giammarino served as Vice-President of
International Finance and Planning since 1997 and as Vice-President of Finance
at GTE. Mr.&nbsp;Giammarino began his GTE career in 1985. He served as
Vice-President of Finance and Planning for the GTE Telecommunications Products
&#038; Services group and, prior to that, as Assistant Controller of Corporate
Accounting for GTE Corporation. Mr.&nbsp;Giammarino previously held positions with
Freeport-McMoRan Inc. and Arthur Andersen LLP. Mr.&nbsp;Giammarino is a director of
TELPRI (Puerto Rico), CANTV (Venezuela) and FLAG Telecom (UK). He holds a
bachelor&#146;s degree in accounting from St. John&#146;s University and is a certified
public accountant.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lowell McAdam </I>has been a member of the Board of Directors of Iusacell
since April&nbsp;21, 2003. Mr.&nbsp;McAdam has served as the Executive Vice President
and Chief Operating Officer of Verizon Wireless since April 2000. From
September 1997 to April 2000, Mr.&nbsp;McAdam served as President and Chief
Executive Officer of PrimeCo Personal Communications, L.P. (PrimeCo). Prior to
that, he served as the Executive Vice President and Chief Operating Officer of
PrimeCo since November 1994. Mr.&nbsp;McAdam joined AirTouch in 1993 where he
served in a number of key positions, including Vice President of International
Operations and Lead Technical Partner for cellular ventures in Spain, Portugal,
Sweden, Italy, Korea and Japan. From 1983 to 1993 he held various executive
positions with Pacific Bell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Javier Mart&#237;nez del Campo Lanz </I>has been a member of the Board of Directors
of Iusacell since April&nbsp;4, 2001 and was an alternate member of the Board of
Directors of Iusacell from August 1999 until April 2001. Mr.&nbsp;Mart&#237;nez del
Campo has also been a member of the Board of Directors of Iusacell Celular
since February 1997. Since 1984 he has also been a partner of the Mexico City
based law firm of <I>De Ovando y Mart&#237;nez del Campo, S.C. </I>Mr.&nbsp;Mart&#237;nez del Campo
is a member of the Mexican Bar Association and an international associate of
the American Bar Association. Mr.&nbsp;Mart&#237;nez del Campo serves as the secretary
of the board of directors of various Mexican corporations, including <I>Grupo Gigante, S.A. de C.V.</I>, one of
Mexico&#146;s largest retailers. Mr.&nbsp;Mart&#237;nez del Campo holds a law degree from the
Universidad An&#225;huac and a master&#146;s degree from the University of San Diego.
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jos&#233; Luis Vergara </I>has been a member of the Board of Directors of Iusacell
since April&nbsp;21, 2003. Mr.&nbsp;Vergara was appointed Vice-President of Customer
Service of Iusacell in August 2002. Mr.&nbsp;Vergara has broad experience in
customer relationship management and customer service operations, which he has
acquired through 16&nbsp;years of field specialization. In his field of expertise
he has held senior director positions at Citibank M&#233;xico and Latin America,
DirecTV and Bancomer, where he has led turn-around projects for those
companies, including the creation of a multi-country centralized customer
service operation for Citibank. Mr.&nbsp;Vergara has also acted as a consultant in
the aforementioned fields and in the field of strategic planning for major
Mexican and international companies. Mr.&nbsp;Vergara holds a graduate degree in
architecture and an MBA from the Instituto Panamericano de Alta Direcci&#243;n de
Empresas (IPADE). While in college Mr.&nbsp;Vergara was awarded the Mexico&#146;s Best
Student Award by President Lopez Portillo in 1981.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tomas Isaksson </I>has been a member of the Board of Directors of Iusacell
since April&nbsp;30, 2002. Mr.&nbsp;Isaksson is Chief Executive Officer for the Vodafone
Americas Region, a position he has held since January 2002. He is responsible
for Vodafone&#146;s interests in the Americas and Vodafone Global Platform and
Internet Services (VGP). Previously, he served as President of VGP since its
inception in March 2000. Mr.&nbsp;Isaksson has worked in the telecommunications
industry for 24&nbsp;years, beginning with Ericsson in 1978. During the 16&nbsp;years he
was with Ericsson, he held a variety of key positions and was appointed
President and Chief Executive Officer of Ericsson Radio Systems, Inc. in the
United States in 1991. In 1994, he left Ericsson to serve as President of the
Swedish mobile operator Europolitan, and in November 1995 he was appointed
President and Chief Executive Officer. In 1999, after its merger with
AirTouch, Vodafone became Europolitan&#146;s majority owner. Mr.&nbsp;Isaksson holds a
master&#146;s degree in electrical engineering from the Royal Institute of
Technology in Stockholm, Sweden. He is a member of the board of directors of
Verizon Wireless and Ledstiernan AB, and a member of the Vodafone Group
Executive and Operational Review Committees.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Martin Enriquez </I>has been a member of the Board of Directors of Iusacell
since April&nbsp;30, 2002. Mr.&nbsp;Enriquez is the Vice President of Governance for the
Vodafone Americas Region, which includes Verizon Wireless in the United States
and Iusacell in Mexico. In this capacity, amongst his other responsibilities,
he participates in the Executive Committee of Iusacell and the Operations
Committee of Verizon Wireless. Previously, he served as the Chief Operating
Officer of Vodafone Egypt, and was instrumental in the start-up of the network
operating company. He also worked to start up the network operating companies
of Proximus in Belgium and Vodafone Omnitel in Italy as a Director of Marketing
and Sales. Mr.&nbsp;Enriquez has also served as the Director of International
Marketing for AirTouch International, prior to the company&#146;s merger with
Vodafone. Before joining AirTouch, Mr.&nbsp;Enriquez spent 10&nbsp;years with Pacific
Bell, where he held various positions in sales, sales management, customer
operations, product management and executive staff. Mr.&nbsp;Enriquez holds an MBA
and a master&#146;s degree in education from Stanford University and a bachelor&#146;s
degree from California State University in Hayward.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Anthony Gilbert </I>has been a member of the Board of Directors of Iusacell
since September&nbsp;19, 2002. Mr.&nbsp;Gilbert has also served as the Group Management
Development Director for Vodafone Group Plc. since April 2000. Mr.&nbsp;Gilbert&#146;s
early career was as a consultant with Ernst and Young, initially based in
London and then in Holland, France and Belgium for 8&nbsp;years. Subsequently, he
was the planning director of a listed UK engineering company and IT Planning
Director for UKAEA, then one of the largest users of computers in the UK, where
he was responsible for the operation of substantial voice and data networks.
For the following 12&nbsp;years, Mr.&nbsp;Gilbert was a partner at Tyzack and Partners,
an executive search consultancy. He led their technology practice, which had a
wide range of multinational clients including Vodafone, and established a
venture capital practice. Mr.&nbsp;Gilbert holds a master&#146;s degree with honors from
Trinity College, Cambridge, a master&#146;s degree in computer sciences from London
University and an MBA from INSEAD.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Alan Harper </I>has been a member of the Board of Directors of Iusacell since
September 2002. Mr.&nbsp;Harper has also served as the Group Strategy Director of
Vodafone Group Plc. since July 2000. Mr.&nbsp;Harper is a member of the Executive
Committee of Vodafone Group, which is responsible for the overall business
strategy, public policy activities and the research and development for
Vodafone Group. He is also a member of the Investment Board of Vodafone
Ventures and a Trustee of the Vodafone UK Foundation. Prior to serving in his
current position, Mr.&nbsp;Harper served as Managing Director of Vodafone Ltd., the
UK network operator, and as Chairman of Vodafone
Paging and Vodafone Value Added &#038; Data Services. Prior to joining
Vodafone, Mr.&nbsp;Harper was Strategy Director of Unitel PCN (which became One2One
and subsequently T-Mobile UK) from its inception in 1989 until 1995.
</FONT>

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<P align="left"><FONT size="2">Before this time, Mr.&nbsp;Harper held a variety of marketing and business development
positions with BBC Enterprises, Infotec, Mercury Communications and STC
Telecommunications.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ignacio Mas </I>has been a member of the Board of Directors of Iusacell since
April&nbsp;4, 2001. Mr.&nbsp;Mas has served as Group Business Strategy Director for
Vodafone since January 2000. He joined Vodafone from Intel Capital, Intel
Corporation&#146;s venture investing arm, where he was Senior Strategic Investments
Manager responsible for telecommunications investments in Europe, based in
Munich, Germany. From 1996 until 1999, Mr.&nbsp;Mas was a principal consultant at
Analysys, Ltd., a UK-based telecommunications strategic consulting firm, where
he led consulting activities in the fields of the Internet, broadband and
e-commerce. After that, Mr.&nbsp;Mas became a non-executive director at Analysys,
until his resignation from that position in December 2000. Prior to joining
Analysys, Mr.&nbsp;Mas spent 7&nbsp;years at the World Bank in Washington DC, where he
worked as a financial sector economist and within the bank&#146;s treasury area. He
has taught at the Graduate School of Business at the University of Chicago as
Visiting Professor of International Business. Mr.&nbsp;Mas holds a doctorate in
economics from Harvard University and a bachelor&#146;s degree in mathematics and
economics from Massachusetts Institute of Technology.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ignacio G&#243;mez Morin </I>has been a director of Iusacell since April&nbsp;4, 2001
and served as an alternate director of Iusacell from August 1999 to April 2001.
Mr.&nbsp;G&#243;mez Morin has served as an alternate director of Iusacell Celular since
February 1997. Since 1992 he has been a partner of the law firm <I>De Ovando y
Mart&#237;nez del Campo, S.C. </I>Mr.&nbsp;G&#243;mez Morin holds the offices of secretary or
alternate secretary of several companies within the financial, industrial and
commercial sectors. Mr.&nbsp;G&#243;mez Morin holds a law degree from the Universidad
Nacional Aut&#243;noma de M&#233;xico and was admitted to practice law in 1991.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Russell A. Olson </I>has served as Executive Vice President of Finance and
Audit and Chief Financial Officer for Iusacell since October 2001. He
previously served as Executive Director of Business Analysis for Verizon
International for the Americas since June 2000. Mr.&nbsp;Olson has served in a
variety of financial positions within Verizon and its predecessor company, GTE,
for over 18&nbsp;years, including financial reporting, auditing, treasury,
international, strategic planning and business analysis. Mr.&nbsp;Olson holds a
master&#146;s degree in finance from Fairfield University and a bachelor&#146;s degree in
business administration from the University of Arizona.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Alejandro Garc&#237;a </I>was appointed Marketing Vice-President for Iusacell in
August 2002. Mr.&nbsp;Garc&#237;a has been responsible for the re-launching of the brand
campaign (image and perception), development of new products and services,
customer satisfaction and maintaining a consistent approach focused on the
customer needs. Previously, Mr.&nbsp;Garc&#237;a was General Manager for Samsonite
Mexico and North Latin America and before that for Samsonite Brazil. Mr.
Garc&#237;a also worked in various marketing management positions for companies such
as Procter and Gamble, Kraft Foods and American Express.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Juan Carlos Merodio </I>was appointed Senior Vice-President, Legal and
Regulatory Affairs of Iusacell on April&nbsp;23, 2001. Mr.&nbsp;Merodio has been
involved in the practice of law for 20&nbsp;years, primarily in the transportation
industry. During the 2&nbsp;years prior to joining Iusacell, Mr.&nbsp;Merodio was a
partner and director of the Mexican law firm M&#038;A Bufete Merodio, S.C. Mr.
Merodio was also in private practice as a partner of M&#038;A Bufete Merodio y
Alfaro, S.C. from 1991 until 1995. Mr.&nbsp;Merodio spent 11&nbsp;years working for
<I>Grupo Servia, S.A. de C.V. </I>and its subsidiary <I>Transportaci&#243;n Mar&#237;tima Mexicana,
S.A. de C.V. </I>(TMM). Mr.&nbsp;Merodio served as General Counsel of TMM from 1985
until 1991, as President of <I>Grupo Servia, S.A. de C.V. </I>in 1995 and as President
and Director General of TMM from 1996 until 1999. Mr.&nbsp;Merodio has served as a
director of <I>Cintra, S.A.</I>, <I>Mexicana, S.A. </I>and <I>Aeromexico, S.A. </I>and was
Vice-Chairman of the Mexican Shipowners Association from 1997 until 1999. He
is a graduate of the Universidad Nacional Aut&#243;noma de Mexico, a member of the
Mexican Bar Association and a member of the Association of the Bar of the City
of New York.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nestor Bergero </I>was appointed Vice-President of Technology of Iusacell
effective January 2003. Prior to this appointment, Mr.&nbsp;Bergero served as Chief
Technology Officer and as a member of the Board of Directors of CTI Movil in
Argentina since June 2000. Mr.&nbsp;Bergero served in a variety of engineering
planning and network positions in CTI for over 9&nbsp;years. Previously he served
as Engineering Manager of <I>Telecom, S.A. </I>and in a variety of management
positions in companies such as <I>Telintar, S.A.</I>, the Government of Cordoba,
Spain, and Sancor Cooperativas Unidas Limitadas in Argentina. He holds an
undergraduate degree with honors in electronic and electrical engineering from the
Universidad Nacional de Cordoba, and he completed a management development program at
the Universidad Austral in Argentina. He has also served on the academic faculty
of the Universidad Nacional and of the Universidad Cat&#243;lica, both in Cordoba,
and was awarded the GTE Excellence Award in 1997/1998.
</FONT>


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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Anthony Llompart </I>was named Vice-President of Sales &#038; Distribution for
Iusacell on April&nbsp;29, 2002. Mr.&nbsp;Llompart served 3&nbsp;years as Director Channel
Management for Verizon International and has held a variety of sales and
marketing positions for Verizon and its predecessor company, GTE, for over 8
years. These positions include sales management, product management,
distribution, and customer support. Mr.&nbsp;Llompart has over 12&nbsp;years experience
in the wireless industry. He holds a bachelor&#146;s degree in business management
from the University of Phoenix.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jose Bellido Valerio </I>has served as Vice-President of Human Resources of
Iusacell since February 2000. He served as Director of Human Resources of
Iusacell from August 1999 until January 2000. From May 1994 until April 1996,
Mr.&nbsp;Bellido served as Human Resources Manager of Iusacell Celular, and since
May 1996 he has served as Director of Human Resources of Iusacell Celular.
Prior to joining Iusacell Celular, Mr.&nbsp;Bellido served as Manager of Industrial
Relations for <I>Aeromexico, S.A. de C.V. </I>for more than 4&nbsp;years. Mr.&nbsp;Bellido
holds a degree in labor law from the Universidad Nacional Aut&#243;noma de Mexico, a
specialized degree in law from Universidad Panamericana, a diploma in human
resources strategic planning from the University of California in Berkeley, and
a master&#146;s degree in business from the Instituto Panamericano de Alta Direcci&#243;n
de Empresas (IPADE).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Roberto Konigs </I>was appointed Vice President, Corporate Sales of Iusacell
in May 2003. Previously, Mr.&nbsp;Konigs served as General Director of Tellabs in
Mexico, a position that he held for over 3&nbsp;years. Mr.&nbsp;Konigs has more than 13
years of experience in the telecommunications industry in Latin America, and
has held executive positions for a variety of service providers and equipment
companies. Mr.&nbsp;Konigs holds a master&#146;s degree from the University of Waterloo
and a degree in industrial engineering from the Universidad Iberoamericana.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate compensation (including, without limitation, base salary and
benefits) paid by Iusacell to all directors and executive officers in 2002 was
Ps.62.0&nbsp;million (U.S.$5.9&nbsp;million), compared to Ps.84.8&nbsp;million (U.S.$8.1
million) in 2001. These aggregate amounts exclude any amounts paid by Verizon
and Vodafone to their employees who are directors and executive officers of
Iusacell. See Item&nbsp;7, &#147;Major Shareholders and Related Party Transactions &#151;
Related Party Transactions.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2001 Iusacell granted purchase rights with respect to a total of
659,000 series V shares to its executive officers under the management employee
stock purchase plan described below, which were later exchanged for series V
shares. No purchase rights were granted under the management employee stock
purchase plan during 2002. Individuals who are currently Iusacell executive
officers and those executive officers of Iusacell whose employment was
terminated during 2001 and 2002 did not exercise any purchase rights with
respect to series V shares. For the last 23&nbsp;months the stock purchase plan has
been inactive.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of Iusacell&#146;s general compensation policy, we conduct periodic
reviews of our management and employees to determine bonus compensation.
Iusacell also provides executive officers with use of an automobile. In
addition, we provide our executive officers with food stamps (up to Ps.1,264.0
per month), gas stamps (up to 200 liters per month) and with contributions to a
savings plan (up to Ps.1,665.8 per month).
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell has established Executive, Finance and Strategic Planning, Audit,
and Human Resources and Compensation Committees of the Board of Directors. All
decisions of these committees require a majority vote of their members,
including the favorable vote of at least one member appointed by the series A
shareholders. Mexican law requires that the Audit Committee be comprised of a
majority of independent directors and be chaired by an independent director.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Executive Committee, an administrative and decision-making body of the
Board of Directors, may act for the Board of Directors except where Mexican law
requires action by the Board of Directors. The members of the Executive Committee elected on April&nbsp;21, 2003 are Messrs.&nbsp;Petri, Espinal, Giammarino,
McAdam, Isaksson and Enriquez.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Finance and Strategic Planning Committee reviews, evaluates and makes
recommendations to the Board of Directors regarding investment policies,
financing policies and strategic planning. The members of the Finance and
Strategic Planning Committee elected on April&nbsp;21, 2003, are Messrs.&nbsp;Petri,
Espinal, Smith and Lester.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee recommends Iusacell&#146;s public accountants, reviews our
annual consolidated financial statements, provides oversight of our auditing,
accounting, financial reporting and internal control functions, and reviews
with management and our independent public accountants the plans and results of
the auditing function. The members of the Audit Committee elected on April&nbsp;21,
2003, are Messrs.&nbsp;Martinez del Campo, Petri, Giammarino, Lester and Bloszies.
See Item&nbsp;16A &#147;Audit Committee Financial Expert.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Human Resources and Compensation Committee reviews, evaluates and
makes recommendations to the Board of Directors regarding Iusacell&#146;s executive
compensation standards and practices, including salaries, bonus distributions,
grants under the executive employee stock purchase plan (described below) and
deferred compensation arrangements. The members of the Human Resources and
Compensation Committee elected on April&nbsp;21, 2003 are Messrs.&nbsp;Petri, Giammarino,
McAdam and Hickey.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell does not provide benefits to directors upon termination of their
directorships.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, Iusacell and its subsidiaries had an aggregate of
1,685 full-time and part-time employees, 96 temporary employees and 5 full-time
Verizon seconded employees or consultants, all of whom are based in Mexico. At
December&nbsp;31, 2001, Iusacell and its subsidiaries had an aggregate of 2,643
full-time and part-time employees, 129 temporary employees and 8 full-time
Verizon seconded employees or consultants. At December&nbsp;31, 2000, Iusacell and
its subsidiaries had an aggregate of 2,392 full-time and part-time employees,
139 temporary employees and 4 full-time Verizon seconded employees or
consultants. Approximately 33.6% of the full-time employees were members of a
labor union. We have never experienced a work stoppage and management
considers our relationship with our employees to be good.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors and officers own, in aggregate, less than 1.0% of our
shares. See Item&nbsp;7, &#147;Major Shareholders and Related Party Transactions &#151; Major
Shareholders.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Management Employee Stock Purchase Plan</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell&#146;s management employee stock purchase plan became the successor to
Iusacell Celular&#146;s management employee stock purchase plan upon the completion
of Iusacell&#146;s reorganization in August 1999. The plan helps to retain key
executives and better align their interests with those of our shareholders.
The stock purchase plan is administered by a management trust with the
assistance of the trust division of <I>Bancrecer, S.A.</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the stock purchase plan, the technical committee of the management
trust (the &#147;Technical Committee&#148;), which is comprised of certain executive
officers of Iusacell, acting upon the instructions of the Human Resources and
Compensation Committee, determines the executive employees to whom series V
shares of Iusacell will be offered for purchase under the stock purchase plan.
The Technical Committee, acting upon the instructions of the Human Resources
and Compensation Committee, determines the number of series V shares to be
offered for purchase to such executive employees, the purchase price per share
for such purchase rights, the vesting schedule for such purchase rights, the
payment terms and all other terms and conditions. The purchase price per share
for the purchase rights is one-hundredth the closing price for the series V
shares held in form of American Depositary
Shares (ADSs) on the New York Stock Exchange on the business day selected
by the Technical Committee as the date of sale, converted into pesos at the
prevailing exchange rate published by the <I>Banco de M&#233;xico</I>.
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grantees who leave Iusacell forfeit unvested purchase rights and, after a
period of time, forfeit vested but unexercised purchase rights, all of which
forfeited purchase rights may be reissued by the Technical Committee to other
employees. The number of series V shares that may be granted under the stock
purchase plan cannot exceed 4.9% of the aggregate number of issued and
outstanding Iusacell shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the completion of the Iusacell reorganization in August 1999,
outstanding purchase rights with respect to Iusacell Celular series L shares
were exchanged for rights to purchase Iusacell series V shares. In addition,
39 Iusacell management employees exercised the right to purchase 1,220,690
series V shares at U.S.$0.70 per share (Ps.6.52 on the date immediately prior
to the date of the launch of the offer) in the rights offer in respect of the
shares held in the management trust administering the plan.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000, the Human Resources and Compensation Committee and the Technical
Committee granted purchase rights with respect to a total of 681,000 Iusacell
series V shares to 5 executive employees at a purchase price of Ps.15.35
(U.S.$1.47) per series V share. All such purchase rights vest in three equal
annual installments commencing a year after the date of the grant. In 2001,
the Human Resources and Compensation Committee and the Technical Committee
granted purchase rights with respect to a total of 659,000 Iusacell series V
shares to 4 executive employees at a weighted average purchase price of Ps.8.96
(U.S.$0.86) per series V share. No purchase rights were granted during 2002.
All such purchase rights vest in three equal annual installments commencing a
year after the date of the grant.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the last 23&nbsp;months, the stock purchase plan has been inactive.
</FONT>

<!-- link2 "ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 7.&nbsp; MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have two principal shareholders. The first, Verizon, holds its
interest in us through its subsidiaries. Since February 1997, we have been
under management control of subsidiaries of Bell Atlantic, which is now
Verizon. Our second principal shareholder is a subsidiary of Vodafone Group
Plc.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Verizon is one of the largest telecommunications companies in the world,
with extensive participation in and knowledge of the wireless
telecommunications business. In August 1997, Bell Atlantic and NYNEX
Corporation, two of the original seven regional Bell operating companies formed
as a result of the break-up of AT&#038;T in 1984, completed their merger of equals
to form the new Bell Atlantic. On June&nbsp;30, 2000, the new Bell Atlantic and GTE
Corporation consummated a merger of equals, in which GTE shareholders received
1.22 shares of Bell Atlantic common stock for each GTE share they owned, and
Bell Atlantic renamed itself Verizon. Verizon had operating revenues and net
income of approximately U.S.$67.6&nbsp;billion and U.S.$4.0&nbsp;billion, respectively,
for the fiscal year ended December&nbsp;31, 2002, and total assets of approximately
U.S.$167.5&nbsp;billion at such date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the United States, Verizon Communications is the largest provider of
wireline and wireless telephone service in 29 states and the District of
Columbia, with 135.8&nbsp;million access lines and employing 229,500 people.
Verizon Wireless, a partnership between Verizon (which owns 55%) and Vodafone
(which owns 45%) established in April 2000, is the largest wireless operator in
the United States, with more than 32.5&nbsp;million subscribers. Verizon Wireless
has a presence in 49 of the top 50 U.S. markets and it covers nearly 90% of the
United States population.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Verizon has wireline and/or wireless operations in 32 countries and
territories in the Americas, Europe, Asia and the Pacific, with 3.2&nbsp;million
attributable access lines and 8.7&nbsp;million attributable wireless customers as of
December&nbsp;31, 2002. Verizon is also the world&#146;s largest provider of print and
on-line directory information.
</FONT>

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

<P align="center"><FONT size="2">78</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;4, 2001, Vodafone acquired a 34.5% equity interest in Iusacell
from the Peralta Group for U.S.$973.4&nbsp;million. Vodafone is the largest mobile
operations network company in the world, with more than 112.5&nbsp;million
subscribers, calculated based on Vodafone&#146;s percentage interest in the relevant
wireless companies, and a presence in 28 countries. Vodafone also owns
interests in wireless carriers in Europe, the United States, the Asia/Pacific
region, the Middle East and Africa. Vodafone companies are among leading
mobile phone operators in the United States (with a 45% ownership interest in
Verizon Wireless), Germany (Vodafone D2) and the United Kingdom (Vodafone),
among others. Vodafone has grown substantially with its acquisition of
Mannesmann AG in 2001 and is expanding its wireless data services.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No other shareholder owns more than 5% of any class of our shares. At
April&nbsp;30, 2003, based on the information made available to us, our
shareholders&#146; ownership interests were as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Number of Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Shareholders</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>A Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>V Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>%</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Verizon<sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">657,966,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">76,152,002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">734,118,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">39.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vodafone<sup>(2)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">303,326,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,617,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">642,943,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Public investors<sup>(3)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">484,962,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">53.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">484,962,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">961,292,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,732,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,862,024,794</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(1)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The address of Verizon Communications Inc. is: 1095 Avenue of the
Americas, New York, New York.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(2)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The address of the Vodafone Group Plc is: Max Eunvelaan 61, 3062
MA. Rotterdam, The Netherlands.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(3)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes the series V shares held by the trust administering our
executive employee stock purchase plan.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors and officers as a group own, in the aggregate, less than
1.0% of Iusacell&#146;s shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of Iusacell&#146;s series V shares outstanding at May&nbsp;30, 2003, 116,038,100
series V shares were held in the form of American Depositary Shares (ADS)&nbsp;by 35
holders of record based on information made available to us and provided by our
depositary, The Bank of New York. Assuming that the holders of ADSs are
located in the United States, then 23.9% of the series V shares (which includes
all of the series V shares which are held in the form of ADSs except for the
1,400,000 series V shares held by Verizon which are held in the form of ADSs)
are held in the United States. In May 2003, we completed a reverse split/ADS
ratio change by modifying the ratio of shares of common stock of Iusacell per
ADS, from ten (10)&nbsp;shares per ADS to one hundred (100)&nbsp;shares per ADS. The
ratio change did not affect holders of Iusacell&#146;s ordinary shares and was
effected without charge to investors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 1999, we completed a reorganization of Iusacell. The
reorganization included U.S.$132.5&nbsp;million in borrowings from our principal
shareholders between August 1998 and March 1999 that were immediately converted
into equity, an offer to exchange the shares of Iusacell Celular for shares of
Iusacell, primary equity offerings that raised U.S.$33.7&nbsp;million in net
proceeds for Iusacell and a U.S.$106.5&nbsp;million secondary offering by our
principal shareholders. This reorganization more than doubled the number of
Iusacell&#146;s publicly held shares. Before the August 1999 primary and secondary
offerings, Verizon (then Bell Atlantic) had a 47.2% interest in Iusacell
Celular and the Peralta Group had a 43.8% interest. After the August 1999
reorganization, Verizon and the Peralta Group each had a 40.4% interest in
Iusacell. On January&nbsp;31, 2000, we launched a second exchange offer to acquire
the remaining 0.5% interest in Iusacell Celular held by public shareholders.
This offer was completed on February&nbsp;29, 2000 and, as a result, we then held
99.9% of the outstanding Iusacell Celular shares. See Item&nbsp;4, &#147;Information on
the Company &#151; History and Development of the Company.&#148; This second exchange
offer diluted both Verizon and the Peralta Group&#146;s ownership interests by
placing additional series V shares with public shareholders.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;30, 2000, Iusacell Celular&#146;s shareholders approved a 30,000 for 1
reverse split of its shares which became effective in May 2001. Iusacell now
holds 100% of the outstanding Iusacell Celular shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fourth quarter of 1999 and the first quarter of 2000, relatives
of Mr.&nbsp;Carlos Peralta sold approximately 34,900,000 series V shares on the open
market. In April and May 2000, Iusacell sold 10,529,700 American Depositary
Shares for U.S.$15.125 per ADS in a public offering, receiving approximately
U.S.$153.0&nbsp;million in net proceeds. As a result, as of May&nbsp;31, 2000, Verizon
held a 37.2% interest in Iusacell and the Peralta Group and associated
individuals held a 34.5% interest in Iusacell.
</FONT>

<P align="center"><FONT size="2">79</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;4, 2001, Vodafone purchased the Peralta Group&#146;s 34.5% interest in
Iusacell. In connection with this purchase, the shareholders agreement among
Iusacell, Verizon and the Peralta Group terminated and Iusacell, Verizon and
Vodafone entered into a new shareholders agreement, which we refer to as the
Iusacell Shareholders Agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;27, 2001, our shareholders authorized a rights offering to
holders of our outstanding series V shares and ADSs. The rights offering
involved newly issued series V shares representing ADSs and series A shares for
up to U.S.$100.0&nbsp;million. The subscription period began on October&nbsp;5, 2001 and
ended on November&nbsp;1, 2001. Iusacell&#146;s principal shareholders, Verizon and
Vodafone, purchased their pro rata portion of series A and series V shares.
Sixty-seven percent (67%) of the non-Verizon and Vodafone series V shareholders
exercised their rights to purchase additional shares. In addition, Verizon&#146;s
subscription included all of the series V shares offered to, but not subscribed
for by public shareholders.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of April&nbsp;30, 2003, Verizon held a 39.4% interest in Iusacell and
Vodafone held a 34.5% interest in Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;13, 2003, Movil Access, a Mexican telecommunications service
provider and a subsidiary of <I>Biper, S.A. de C.V.</I>, which is a part of <I>Grupo
Salinas</I>, announced that it would commence a public tender offer in Mexico and
the United States to buy all of Iusacell&#146;s outstanding capital stock. Verizon
and Vodafone have announced that they have agreed to tender all of their
Iusacell shares to Movil Access. See Item&nbsp;4, &#147;Information
on the Company &#151;
History and Development of the Company.&#148;
</FONT>


<P align="left"><FONT size="2"><B>Governance</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Iusacell&#146;s by-laws and the Iusacell Shareholders
Agreement, our Board of Directors consists of twelve members. The series A
shareholders have the right to appoint seven directors and their alternates
(including the Chairman of the Board of Directors) and the series V
shareholders have the right to appoint five directors and their alternates.
Mexican law, Iusacell&#146;s by-laws and the Iusacell Shareholders Agreement give
Verizon, as majority owner of the series A shares, the right to elect six of
the series A directors. Under Iusacell&#146;s by-laws and the Iusacell Shareholders
Agreement, Verizon, as holder of the majority of the series A shares, has the
right to elect the Chairman of the Board of Directors, who casts the deciding
vote in the event of a tie. Vodafone, as holder of greater than 10% but less
than 20% of the capital stock of Iusacell in the form of series A shares, has
the right to appoint the remaining series A director and, as the controlling
owner of the series V shares, all five series V directors, subject to (i)&nbsp;the
right of any holder of a 10% or greater equity interest in Iusacell in the form
of series V shares to elect one director, and (ii)&nbsp;the right, granted to
Verizon under the Iusacell Shareholders Agreement, to nominate one of the
series V directors. If Vodafone is unable to elect Verizon&#146;s series V director
nominee, then Vodafone has agreed, under the Iusacell Shareholders Agreement,
to nominate a Verizon nominee as the seventh series A director.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our by-laws and the Iusacell Shareholders Agreement provide that
resolutions of the Board of Directors will be valid when approved by a majority
vote of the members present, including a majority of the series A directors,
except for certain matters which require a supermajority vote. For actions of
the Board of Directors present and voting at such meeting, a &#147;supermajority
vote&#148; means the affirmative vote of a majority of the members of the Board of
Directors, including a majority of the series A directors and the series A
director or directors elected by holders of a 10% or greater equity interest in
Iusacell in the form of series A shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our by-laws and the Iusacell Shareholders Agreement also provide that
resolutions of our shareholders will be valid when approved by shareholders
representing a majority of our outstanding shares, including a majority of the
outstanding series A shares, except for certain matters which require a
supermajority vote. For actions by the shareholders, &#147;supermajority vote&#148;
means the affirmative vote of the beneficial owners of (i)&nbsp;a majority of the
aggregate of the series A shares and series V shares, and (ii)&nbsp;75% of the
outstanding series A shares.
</FONT>






<P align="center"><FONT size="2">80</FONT>


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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following transactions are subject to a supermajority vote by our Board of Directors or our shareholders:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">acquisitions of non-telecommunications businesses for a purchase price
in excess of U.S.$30.0&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain investments, joint ventures and mergers within the
telecommunications business involving assets in excess of U.S.$100.0
million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain dispositions of assets for consideration in excess of
U.S.$30.0&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">incurrence of indebtedness in an amount exceeding U.S.$100.0
million in the aggregate within any fiscal year;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain issuances of capital stock in an amount exceeding U.S.$50.0
million in the aggregate within any fiscal year;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">entering into, amending or terminating contracts with or for the
benefit of certain affiliates of Iusacell, except for any renewals or
extensions on terms substantially similar to those of certain
consulting and seconded employee arrangements of Iusacell with Verizon
affiliates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">termination or disposition of any telecommunication transmission
business with annual revenues of more than U.S.$10.0&nbsp;million in each of
the two most recent fiscal years;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">termination of concessions relating to telecommunications
operations;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the determination of how Iusacell will vote its shares and grant
proxies to vote its shares on any supermajority transaction within
entities in which Iusacell holds 10% or more of the capital stock; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the granting of powers-of-attorney in connection with any such
supermajority transactions.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As provided by Mexican law, our by-laws require our Board of Directors
itself, without delegation, to approve certain matters:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">related party transactions not in the ordinary course of business,
including Iusacell&#146;s subsidiaries&#146; related party transactions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sales/purchases of 10% or more of assets, including those
sales/purchases of assets by any of Iusacell&#146;s subsidiaries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">guarantees involving 30% or more of consolidated assets by Iusacell
or any of its subsidiaries; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other non-ordinary course of business transactions by Iusacell or
any of its subsidiaries including more than 1% of consolidated assets.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our by-laws and the Iusacell Shareholders Agreement provide that any
shareholder or group of shareholders holding shares that represent at least 25%
of the total capital stock of Iusacell, provided that such holdings include at
least 11% of the series V shares and at least 10% of the series A shares, which
we refer to as a Qualified Minority Shareholder, shall be entitled to elect
either the chief operations officer, the chief financial officer, the chief
marketing officer or the chief technical officer of Iusacell. Our Board of
Directors or our Executive Committee shall determine the officer to be
designated by each Qualified Minority Shareholder.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Iusacell Shareholders Agreement, Verizon and Vodafone have
agreed to some restrictions on the transfer of their Iusacell shares. Verizon
and Vodafone have granted to each other a right of first refusal on the
transfer of any series A shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Iusacell Shareholders Agreement, each of Verizon and
Vodafone has the right to cause us to facilitate two registered secondary
public offerings of their respective shares and on one occasion, a
shelf-registration for sale of their respective shares in a bona-fide public
offering for a period not to exceed 180&nbsp;days. After one party&#146;s exercise of
its registration rights, all other parties having registration rights may elect
to include
</FONT>
<P align="center"><FONT size="2">81</FONT>

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<P align="left"><FONT size="2">their shares in the offering. Any party holding registration rights
may not exercise such rights during the 90-day period commencing on the
effective date of any registration statement filed by Iusacell for a primary
equity offering in which gross proceeds are expected to exceed U.S.$30.0
million.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Iusacell Shareholders Agreement also provides that if we register any
equity securities for a primary or secondary public offering, we must permit
Verizon and Vodafone (and anyone to whom they have transferred shares other
than in a public offering) to include their shares in such offering. We have
agreed to bear all expenses of any of the above-described primary or secondary
public offerings, other than the fees of counsel to the holders of the
registration rights and any underwriting commissions or discounts. In
addition, we have agreed not to effect any public sale or distribution of
securities similar to those being registered during the period commencing 21
days prior to the effective date of a registration statement covering the
registered securities and continuing until 90&nbsp;days following such effective
date.
</FONT>


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


<P align="left"><FONT size="2"><B>General Policy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We adopted a policy on transactions with related parties in November 1993
in connection with the acquisition by Bell Atlantic of its initial holdings in
Iusacell. This policy provides that we will not, and will not permit any of
our subsidiaries to, enter into any contract or transaction with or for the
benefit of any of their affiliates (excluding transactions with, between or
among wholly owned subsidiaries), which is not at a price and on other terms at
least as favorable to us or the subsidiary as those which could be obtained on
an arm&#146;s-length basis from an unaffiliated third party. This policy has been
formalized in the Iusacell Shareholders Agreement.
</FONT>


<P align="left"><FONT size="2"><B>Consulting and Secondment Agreements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell Celular and Verizon have entered into a series of consulting and
secondment agreements pursuant to which Verizon has agreed, for an indefinite
term, to provide Iusacell with management, technical, marketing, legal and
other consulting services and seconded employees. Seconded employees generally
agree to expatriate assignments of two to three years duration, with such
employees&#146; compensation being paid by Verizon and reimbursed by Iusacell.
Verizon charges Iusacell for the provision of seconded employees at cost, and
for the provision of consulting services at or below market rates. Vodafone
has entered into a similar agreement with Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to consulting services and seconded employees provided in
2002, Iusacell Celular has been credited by Verizon for a total of U.S.$7.2
million to adjust for previous overcharges. At December&nbsp;31, 2001, Iusacell
Celular owed Verizon U.S.$6.3&nbsp;million for consulting services and seconded
employees provided in 1999, 2000 and 2001. Vodafone charged Iusacell a total
of U.S.$219,216.0 for consulting fees and secondment agreements in 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2001, Verizon and Iusacell agreed that Verizon would accept a
transfer of all rights in connection with a U.S.$15.0&nbsp;million advance paid by
Iusacell Celular to an affiliate of Nortel Networks Inc. in exchange, on a
dollar-for-dollar basis, for the cancellation of all existing charges invoiced
by Verizon to Iusacell with respect to consulting services and seconded
employees and a credit against any and all future such charges until the sum of
all canceled charges equals U.S.$15.0&nbsp;million.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to consulting services for 2003, Iusacell and Verizon have
reached an agreement in which Iusacell Celular will pay a fixed fee of U.S.$1.8
million plus any applicable tax gross-up amount.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot predict whether these consulting and secondment agreements will
continue to remain in place, as Verizon and Vodafone have announced that they
would tender all of their Iusacell shares to Movil Access. See Item&nbsp;4,
&#147;Information on the Company &#151; History and Development of the Company.&#148;
</FONT>

<P align="center"><FONT size="2">82</FONT>


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<P align="left"><FONT size="2"><B>Roaming Agreements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GTE Telecommunications Services, Inc., which we refer to as TSI, provides
clearinghouse services for roaming arrangements. In 2002, TSI paid Iusacell
U.S.$134,821.0 for such services. In October 2001, we entered into an
inter-carrier roaming agreement with Verizon Wireless in the United States.
</FONT>


<P align="left"><FONT size="2"><B>Interests of Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Peralta Group, which was one of our principal shareholders until April
4, 2001, owns <I>Fraccionadora y Constructora Mexicana, S.A. de C.V.</I>, known as
Fracomex, a company engaged in real estate investment and management that has
entered into 13 lease agreements with some subsidiaries of Iusacell. In 2002,
Iusacell paid Fracomex total rent payments of U.S.$450,329.0.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Two Peralta Group members lease land to Iusacell at the Peralta Group
industrial complex in Pastej&#233;, Mexico, upon which Iusacell has built and
operates warehouses. These land leases expire in December 2015, but can be
terminated before then if either party gives the other one year&#146;s prior written
notice. Currently, Iusacell pays these two Peralta Group entities U.S.$26,301.0
per month for these land leases. In 2002, payments for these leases totaled
U.S.$315,617.0.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, <I>Manufacturas Electr&#243;nicas Pastej&#233;, S.A. de C.V.</I>, a joint venture
between the Peralta Group and Mr.&nbsp;Marco Antonio de la Torre Barranco, an
alternate director of Iusacell until April 2001, provided telephone and
accessory repair services to Iusacell in the amount of Ps.0.9&nbsp;million
(U.S.$92,105.0).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Fernando de Ovando, a director of Iusacell until April 2000, Mr.
Javier Mart&#237;nez del Campo, a director of Iusacell since April 2001 and a
director of Iusacell Celular since February 1997, and Mr.&nbsp;Ignacio G&#243;mez Morin,
a director of Iusacell since April 2001 and an alternate director of Iusacell
Celular since February 1997, are members of the law firm of <I>De Ovando y
Mart&#237;nez del Campo, S.C.</I>, which, in 2002, provided legal services to Iusacell
in the amount of approximately Ps.1.1&nbsp;million (U.S.$105,516.0).
</FONT>


<P align="left"><FONT size="2"><B>C.</B>&nbsp;&nbsp; <B>INTERESTS OF EXPERTS AND COUNSEL</B>
</FONT>

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

<!-- link2 "ITEM 8. FINANCIAL INFORMATION" -->
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<P align="left"><FONT size="2"><B>ITEM 8.&nbsp; FINANCIAL INFORMATION</B>
</FONT>


<P align="left"><FONT size="2"><B>A. </B>&nbsp;&nbsp; <B>CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION</B>
</FONT>


<P align="left"><FONT size="2"><B>Financial Statements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;19(a) for a list of financial statements filed under Item&nbsp;18.
</FONT>


<P align="left"><FONT size="2"><B>Legal Proceedings</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we are a party to legal proceedings in the ordinary course of our
business, management believes that none of these proceedings, individually or
in the aggregate, are likely to have a material adverse effect on Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Suit against SAGO</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2001, <I>SAGO Interamericana, S.A. de C.V. </I>a distributor that at that
time represented slightly less than 10% of our monthly gross post paid
additions and approximately 2% of our monthly gross prepaid additions, notified
us that it was immediately terminating its distribution agreement. We believe
that this action violated the termination provisions of the distribution agreement, and have filed a
lawsuit seeking compensatory damages. We cannot predict whether we will
prevail in this lawsuit.
</FONT>

<P align="center"><FONT size="2">83</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2002, <I>Telemedic S.A de C.V. </I>filed a lawsuit against Iusacell
seeking compensatory damages. We are now in the process of submitting evidence
to the judge. Compensatory damages, if any, shall be determined by the judge
at the end of the process.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May 2003, <I>Comercializadora Ingran, S.A. de C.V. </I>filed a lawsuit against
Iusacell, seeking compensatory and consequential damages. We recently filed
before the court an answer to the lawsuit and the period for submission of
evidence to the judge will begin in the near future. Compensatory damages, if
any, will be determined by the judge at the end of the period.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Injunctive action against additional 10% excise tax</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 2002, the Mexican Congress approved a surcharge that
assesses an additional 10% federal excise tax on certain wireless
telecommunications services. The tax resulted in a 10% increase in the monthly
bills of postpaid mobile wireless customers and in the cost of prepaid cards in
denominations of Ps.200.0 (U.S.$19.18) or more for the year 2002. In February
2002, we filed an injunctive action (amparo)&nbsp;challenging the Mexican
government&#146;s implementation of the tax. In October 2002, we received a
preliminary ruling in favor of Iusacell by a Federal Judge, and the Mexican
government subsequently filed an appeal. In June 2003, Mexico&#146;s Supreme Court
rejected the appeal and affirmed the ruling in favor of Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, the Mexican government implemented a modified version of the
additional 10% excise tax on certain wireless telecommunications services,
which was approved by the Mexican Congress. In March 2003, we filed an
injunctive action (amparo)&nbsp;challenging this implementation. Until this
injunctive action is resolved, we will continue to pay the full modified
additional 10% excise tax to the Finance Ministry.
</FONT>


<P align="left"><FONT size="2"><B>Dividend Policy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since becoming a public company in 1999, we have not paid any dividends.
We do not contemplate paying dividends in the foreseeable future.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No significant change has occurred since the date of the financial statements filed under Item&nbsp;18.
</FONT>

<!-- link2 "ITEM 9. THE OFFER AND LISTING" -->
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<P align="left"><FONT size="2"><B>ITEM 9. &nbsp;THE OFFER AND LISTING</B>
</FONT>


<P align="left"><FONT size="2"><B>A.</B>&nbsp;&nbsp; <B>OFFER AND LISTING DETAILS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell&#146;s series A and series V shares have been listed on the Mexican
Stock Exchange since August&nbsp;4, 1999, with the series V shares trading under the
symbol CEL. ADSs representing 10 Iusacell series V shares were listed on the
New York Stock Exchange since August&nbsp;4, 1999 until May&nbsp;12, 2003, when we
implemented a change in the ADR ratio. From that date, one ADS represents 100
Iusacell series V shares and trades under the symbol CEL. The series V ADSs
are evidenced by American depositary receipts issued under a deposit agreement
with The Bank of New York, as depositary. Each of the Iusacell series A and
series V shares are without par value and are in registered form. With respect
to limitations on the rights of series A and series V shares, see Item&nbsp;5,
&#147;Operating and Financial Review and Prospects &#151; Liquidity and Capital
Resources,&#148; Item&nbsp;7, &#147;Major Shareholders and Related Party Transactions &#151; Major
Shareholders &#151; Governance&#148; and Item&nbsp;10, &#147;Additional Information &#151; Memorandum
and Articles of Association.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell Celular&#146;s series D and L shares were listed on the Mexican Stock
Exchange until February&nbsp;29, 2000. ADSs representing 10 Iusacell Celular series
D shares were listed on the New York Stock Exchange from June&nbsp;21, 1994 until
August&nbsp;10, 1999 and traded under the symbol CEL.d. ADSs representing 10
Iusacell Celular series L shares were listed on the New York Stock Exchange
from June&nbsp;21, 1994 until February&nbsp;29, 2000 and traded under the symbol CEL
until August&nbsp;4, 1999 and thereafter, until February&nbsp;29, 2000 under the symbol
CEL.y.
</FONT>



<P align="center"><FONT size="2">84</FONT>



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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables present, for the periods indicated, the high and low
sales prices of (i)&nbsp;the Iusacell series V shares on the Mexican Stock Exchange,
as reported by the Mexican Stock Exchange, and (ii)&nbsp;the Iusacell series V ADSs
on the New York Stock Exchange, as reported by the New York Stock Exchange.
</FONT>


<P align="center"><FONT size="2"><B>Mexican Stock Exchange (in Ps.) &#151; Series&nbsp;V Shares</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Mexican Stock Exchange</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(pesos)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Previous five years:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Series V Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Mexican Stock Exchange</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(pesos)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Previous two years (by quarter):</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Series V Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Mexican Stock Exchange</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(pesos)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Previous six months:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Series V Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">85</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>New York Stock Exchange</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Previous five years:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Series V American</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Depository Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>New York Stock Exchange</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Previous two years (by quarter):</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Series V American</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Depository Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.660</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>New York Stock Exchange</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Previous six months:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Series V American</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Depository Shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.530</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May 2003<sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><I>Source</I>: Bloomberg L.P., Reuters.
</FONT>


<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><sup>(1)</sup></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The prices presented do not reflect the effect of our reverse split/ADS
ratio change that occurred in May 2003.</FONT></TD>
</TR>
</TABLE>

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

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

<P align="center"><FONT size="2">86</FONT>

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

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


<P align="left"><FONT size="2"><B>Trading on the New York Stock Exchange</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADSs representing Iusacell series V shares have been listed on the New
York Stock Exchange since August&nbsp;4, 1999. In May&nbsp;12, 2003 we implemented a
reverse split/ADS ratio change. Since May, 2003 one ADS represents 100
Iusacell series V shares and trades under the symbol CEL.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADSs representing ten Iusacell Celular series D shares were listed on the
New York Stock Exchange from June&nbsp;21, 1994 until August&nbsp;10, 1999 and traded
under the symbol CEL.d. ADSs representing ten Iusacell Celular series L shares
were listed on the New York Stock Exchange from June&nbsp;21, 1994 until February
29, 2000 and traded under the symbol CEL until August&nbsp;4, 1999 and thereafter,
until February&nbsp;29, 2000, under the symbol CEL.y.
</FONT>


<P align="left"><FONT size="2"><B>Trading on the Mexican Stock Exchange</B>
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican Stock Exchange, which was founded in 1894 and has operated
continuously since 1907, is located in Mexico City and is Mexico&#146;s only stock
exchange. The Mexican Stock Exchange is organized as a corporation, and its
shares are owned by Mexico&#146;s 33 operating brokerage firms. These firms are
exclusively authorized to trade on the floor of the Mexican Stock Exchange.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electronic trading on the Mexican Stock Exchange takes place between the
hours of 8:30 a.m. and 3:00 p.m., Mexico City time, on each weekday other than
public holidays. Lot sizes are of 1,000 shares. Brokerage firms are permitted
to buy odd lots for their own account. The Mexican Stock Exchange publishes an
official daily price list that includes price information for each listed
security.&#096;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since January&nbsp;11, 1999, the trading of equity securities listed on the
Mexican Stock Exchange is made through the Electronic Negotiation System, an
automated, computer-linked system commonly known as <I>BMV-SENTRA Capitales</I>. The
trading of debt securities on the Mexican Stock Exchange commenced in November
1995 through the system known as <I>BMV-SENTRA T&#237;tulos de Deuda</I>.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The BMV-SENTRA system allows participation in the securities markets
through work stations set up for this purpose on the trading floor of the
Mexican Stock Exchange and on the trading desks of each member broker. Member
brokers must maintain the number of work stations authorized by the Mexican
Stock Exchange, which work stations must be located in the territory of Mexico.
To access the BMV-SENTRA system, each member broker is given a password.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transactions may be carried out through ordinary matched transactions
during a trading day or through an auction process. Ordinary transactions may
take the form of firm bids and offers that are matched on a given trading date,
or matched transactions (<I>operaciones de cruce</I>) in which the same broker or
brokers act for the seller and for the purchaser of the relevant securities.
Matched transactions may only occur if existing bids or offers made on better
terms are first matched. Auctions may only be initiated with the approval of
the Mexican Stock Exchange in order to (i)&nbsp;determine the market price of a
security, (ii)&nbsp;commence the trading of a security on a trading day or (iii)
reinitiate trading of a security, the trading of which was suspended.
Securities may only be traded at prevailing market prices (which may be
adjusted for corporate events) or at auction prices.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Settlement is effected two trading days after a share transaction is
completed on the Mexican Stock Exchange. Deferred settlements, even if by
mutual agreement, are not permitted without the approval of the CNBV. Most
securities traded on the Mexican Stock Exchange are on deposit with <I>S.D.
Indeval, S.A. de C.V., Instituci&#243;n para el Dep&#243;sito de Valores</I>, known as
Indeval, a privately owned central securities depositary that acts as a
clearing house, depositary, custodian, settlement, transfer and registration
institution for Mexican Stock Exchange transactions.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican Stock Exchange publishes a daily official price list that
includes information on each listed security. The Mexican Stock Exchange may
suspend trading of a particular security for various reasons.
</FONT>
<P align="center"><FONT size="2">87</FONT>

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


<P align="left"><FONT size="2"> Trading may be suspended in the event of disclosure of material non-public information, if the
Mexican Stock Exchange considers that the suspension is necessary for the
public to be fully informed. The Mexican Stock Exchange may also suspend
trading of a particular security as a result of significant price fluctuations
during a given trading day (fluctuations exceeding a given price level by more
than 15%) or as a result of unusual movements in the price of a security, but
in this last case, during no more than five consecutive trading days. The
Mexican Stock Exchange may also suspend trading generally as a result of
fortuitous events or force majeure, or if unusual market fluctuations arise.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, approximately 169 Mexican companies were listed
on the Mexican Stock Exchange, excluding mutual funds. During 2002, the ten
most actively traded equity issues represented approximately 69% of the total
volume of the shares traded on the Mexican Stock Exchange, not including public
offerings. Although there is substantial participation by the public in the
trading of securities on the Mexican Stock Exchange, a major part of such
activity reflects transactions of institutional investors. There is no formal
over-the-counter market for securities in Mexico.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican Stock Exchange is Latin America&#146;s second largest exchange in
terms of market capitalization, but it remains relatively small and illiquid
compared to major world stock markets and is subject to significant volatility.
For example, there was a sharp decline of 38.8% in the Mexican Stock Exchange
Index (<I>Indice de Precios y Cotizaciones</I>), which is based on the share prices of
30 major Mexican issuers, from July&nbsp;14, 1998 to September&nbsp;10, 1998 following a
decrease in oil prices and concerns about increasing inflation in Mexico.
During 1999, however, the Mexican Stock Exchange Index experienced steady
incremental growth, even though there was only one registered day of 5% growth
or more. During the first six months of 1999, the index gained 52%, and by
year-end 1999, the increase reached 82%, driven mainly by a booming local
economy and U.S. economic performance. During 2000, the deceleration in the
U.S. economy as well as the political uncertainty generated by the Mexican
presidential elections during the first six months of the year, led the Mexican
Stock Exchange Index to experience one-day gains or losses of more than 3% on
several occasions and ended the year 2000 with a 21% loss. During 2001, the
continued deceleration in the U.S. economy and its implications on the Mexican
economy as well as the political and economic uncertainty resulting from the
congress&#146;s consideration and approval of a new tax reform, led the Mexican
Stock Exchange Index to experience 1-day gains or losses of more than 3% on
several occasions and ended the year 2001 with a 12.7% gain. During 2002, the
U.S. economy continued its negative trend and its implications on the Mexican
economy led the Mexican Stock Exchange Index to experience 1-day gains or
losses of more than 3% on several occasions and ended the year 2002 with a
14.8% loss.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Market Regulation and Registration Standards</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;28, 1995, the National Banking and Securities Commission Law (<I>Ley
de la Comisi&#243;n Nacional Bancaria y de Valores</I>) was enacted, which merged the
former Mexican National Securities Commission with the Mexican National Banking
Commission to create the National Banking and Securities Commission (<I>Comisi&#243;n
Nacional Bancaria y de Valores</I>), which we refer to as CNBV, which now has
supervisory jurisdiction over both banking and securities activities. The CNBV
regulates the public offering and trading of securities and imposes sanctions
on illegal use of privileged information. The CNBV regulates the Mexican
securities market, the Mexican Stock Exchange and brokerage houses through a
Board of Governors composed of 13 members, five of which are appointed by the
Mexican Ministry of Finance and Public Credit.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to offer securities to the public in Mexico, an issuer must meet
qualitative and quantitative requirements, and only securities for which a
listing application has been approved by the Mexican National Securities
Commission may be listed on the Mexican Stock Exchange. CNBV approval does not
imply any kind of certification or assurance relating to the merits or the
quality of the securities or the solvency of Iusacell. In June of 2000, the
CNBV adopted new general rules setting forth the requirements to become
registered in the National Securities Registry, which we refer to as RNV, and
to maintain such registration. These new rules also repealed CNBV&#146;s 1993
general rules that established Subsection A and B of the RNV. The new rules
provide that to become registered in the RNV, an issuer is generally required
to have:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">at least three years operating history unless the issuer is a
holding company, in which case the issuer&#146;s principal subsidiaries must
have an operating history of at least three years;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">88</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">stockholders&#146; equity of at least 20,000,000 <I>Unidades de Inversi&#243;n</I>,
which we refer to as UDIs, and which are inflation-indexed currency
units (equivalent to Ps.64.5&nbsp;million or U.S.$6.19&nbsp;million as of
December&nbsp;31, 2002);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">profits for the last three years of operation taken as a whole; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a public float of at least 15% of the capital stock on a fully
diluted basis, or of at least 7% of said capital, also on a fully
diluted basis, if the issuer&#146;s offer represents a value of at least 160
million UDIs, in both cases excluding the shares of certain persons
related to the issuer.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The new rules also provide that to maintain their registration in the RNV,
issuers are required to have:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">stockholders&#146; equity of at least 15,000,000 UDIs (equivalent to
Ps.48.4&nbsp;million or U.S.$4.64&nbsp;million as of December&nbsp;31, 2002);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">at least 36 transactions per six-month period on their publicly traded shares;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an average share price per six-month period higher than one peso;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">no less than 8&nbsp;million shares of the issuer and no less than 12% of
the issuer&#146;s paid-in capital placed with the investment public at
large; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">at least 100 stockholders.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The CNBV has the authority to waive some of these requirements under
certain circumstances. The Mexican Stock Exchange carries out an annual review
of each issuer to determine if it continues to meet the eligibility
requirements for registration in the RNV. The Mexican Stock Exchange may
request issuers to submit a correction program when such issuers have failed to
comply with maintenance requirements. If the program is not submitted or
complied with by the issuer, the registration and listing with the Mexican
Stock Exchange may be canceled by the CNBV. Mexican securities which are
offered outside Mexico are required to be registered in the Special Section of
the RNV.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell shares are registered under the Securities and Special Section of
the RNV.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Mexican Securities Market Law, the CNBV must be notified
before shareholders of a company listed on the Mexican Stock Exchange effect
one or more simultaneous or successive transactions outside the Mexican Stock
Exchange affecting 10% or more of such company&#146;s capital stock. The holders of
the shares being transferred in the transactions are also obligated to inform
the CNBV of the results of the transactions within three days of completion of
the last transaction, or that the transactions have not been completed. The
CNBV will notify the Mexican Stock Exchange of these transactions, without
specifying the names of the parties involved.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuers of listed securities are required to file unaudited quarterly
financial statements and audited annual financial statements as well as various
periodic reports with the CNBV and the Mexican Stock Exchange.
</FONT>


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

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


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

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


<P align="left"><FONT size="2"><B>F.</B>&nbsp;&nbsp; <B>EXPENSES OF THE ISSUE</B>
</FONT>

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

<P align="center"><FONT size="2">89</FONT>

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<!-- link2 "ITEM 10. ADDITIONAL INFORMATION" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 10.&nbsp; ADDITIONAL INFORMATION</B>
</FONT>


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

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


<P align="left"><FONT size="2"><B>B.</B>&nbsp;&nbsp; <B>MEMORANDUM AND ARTICLES OF ASSOCIATION</B>
</FONT>


<P align="left"><FONT size="2"><B>General</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell was incorporated on August&nbsp;6, 1998 as a variable capital
corporation (<I>sociedad an&#243;nima de capital variable</I>) established under the laws
of Mexico. Iusacell was registered in the Public Registry of Commerce of the
Federal District of Mexico under Commercial Number 242349 on November&nbsp;3, 1998.
We were initially formed for the purpose of acquiring and holding the shares of
<I>Grupo Iusacell Celular, S.A. de C.V. </I>On March&nbsp;8, 2001, Iusacell&#146;s shareholders
approved new by-laws, which became effective on April&nbsp;4, 2001, upon the closing
of the sale by the Peralta Group to Vodafone of its series A and series V
shares of Iusacell. On April&nbsp;30, 2002 and on April&nbsp;21, 2003, Iusacell&#146;s
shareholders approved amendments to our by-laws, in order to reflect certain
provisions of the Mexican Securities Market law (<I>Ley del Mercado de Valores</I>)
and its regulation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell&#146;s corporate purpose is found under Article&nbsp;Two of its by-laws.
Iusacell&#146;s primary purpose is to act as a holding company. The duration of our
existence under our by-laws is indefinite.
</FONT>


<P align="left"><FONT size="2"><B>Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law, any member of the Board of Directors who has a conflict
of interest with Iusacell in any transaction must disclose such fact to the
other members of the Board of Directors and abstain from voting on such matter
at the relevant meeting of the Board of Directors. Any member of the Board of
Directors who violates such provision may be liable for damages caused to us.
Additionally, members of the Board of Directors may not represent any
shareholders at any shareholders&#146; meeting.
</FONT>


<P align="left"><FONT size="2"><B>Voting Rights and Shareholders&#146; Meetings</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each series A and series V share entitles the holder thereof to one vote
at any general meeting of the shareholders of Iusacell. Series&nbsp;A shareholders
are entitled to vote at a special meeting of the series A shareholders to elect
seven of the twelve members of our Board of Directors and the corresponding
alternate directors. Series&nbsp;V shareholders are entitled to vote at a special
meeting of the series V shareholders to elect five of the twelve members of our
Board of Directors and the corresponding alternate directors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our by-laws, any shareholder or group of shareholders holding shares
of the same series of Iusacell shares representing at least 10% of the total
capital stock of Iusacell shall be entitled to designate one director
corresponding to such series and the corresponding alternate director for each
10% of the total capital stock of Iusacell represented by the shares of such
series held by such shareholder or group of shareholders. In addition, any
Qualified Minority Shareholder shall be entitled, acting at a special
shareholders meeting, to designate and, as the case may be, remove or
substitute a member of each Committee, which shall be one of the members
designated by series V shareholders.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law, the holders of shares of any series (or category of
holders such as the Qualified Minority Shareholder) are also entitled to vote
at a special meeting of the holders of shares of such series or category of
holders on any action that would prejudice the rights of such holders, and such
a holder would be entitled to judicial relief against any such action taken
without the approval of the required majority of holders of the relevant series
or category of holders at such a meeting. Any determination that an action
does not require a vote at a special meeting would be subject to judicial
challenge by an affected shareholder, and the necessity for a vote at a special
meeting would ultimately be determined by a court. Mexican law does not
provide extensive guidance on the criteria to be applied in making such a
determination.
</FONT>

<P align="center"><FONT size="2">90</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General shareholders&#146; meetings may be ordinary or extraordinary meetings.
Extraordinary general meetings are meetings called to consider the matters
specified in Article&nbsp;182 of the <I>Ley General de Sociedades Mercantiles</I>, which we
refer to as the Mexican Companies Law, including, principally, changes in the
fixed share capital, any amendments to the by-laws, liquidation, issuance of
preferred stock, merger, transformation from one type of company to another,
change in nationality and change of corporate purpose. Under our by-laws, an
extraordinary general shareholders&#146; meeting may also be called to consider
certain items (so long as they have not been approved at a meeting of the Board
of Directors or Executive Committee of the Board of Directors) for which our
by-laws require a supermajority vote, as generally identified in Item&nbsp;7, &#147;Major
Shareholders and Related Party Transactions &#151; Major Shareholders &#151; Governance.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General shareholders&#146; meetings called to consider all other matters are
ordinary meetings. An ordinary general meeting of the shareholders of Iusacell
must be held at least annually during the four months following the end of each
fiscal year to consider matters specified in Article&nbsp;181 of the Mexican
Companies Law, including, principally, the approval of the report of the Board
of Directors regarding the performance of Iusacell, the approval of the
financial statements of Iusacell for the preceding fiscal year, appointment of
directors and statutory auditors and determination of their compensation, and
the declaration of dividends.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special meetings are meetings of the holders of a particular series of
shares or category of holders called to consider matters relevant only to
holders of such series of shares or category of holders or which would
prejudice the rights of such holders. Special meetings of the series A and the
series V shareholders and the Qualified Minority Shareholders, respectively,
are to be held at least once a year if necessary to elect the members of the
Board of Directors (or any committee of the Board of Directors) representing
such shareholders and to address other matters relating to the relevant series
or category of holders.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our by-laws, the quorum on a first call for an ordinary general
shareholders&#146; meeting of the series A and series V shareholders is at least 50%
plus one share of the outstanding series A and series V shares. If a quorum is
not available on the first call, a second meeting may be called and validly
held regardless of the number of shares represented. In order for a resolution
of the ordinary general shareholders meeting to be validly adopted as a result
of a first or subsequent call, attendance by and the favorable vote of the
holders of a majority of the series A shares is required.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The quorum on a first call for an extraordinary general meeting is 75% of
the outstanding series A and series V shares. If a quorum is not available on
the first call, a second meeting may be called and convened, provided that at
least 50% plus one share of the aggregate of the outstanding series A and
series V shares are present. Whether on a first or second call, in order for a
resolution of an extraordinary general meeting to be validly adopted, the
favorable vote of the holders of a majority of the outstanding shares present,
including a majority of the outstanding series A shares present, is required;
provided, however, that the affirmative vote of at least 75% of the outstanding
series A shares present is required to approve the supermajority items referred
to above, as well as to approve amendments to certain provisions of the
by-laws, early dissolution of Iusacell and the designation of the corresponding
liquidators.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The quorum on a first call for a special meeting is 75% of the outstanding
shares of the corresponding series or category of holders. If a quorum is not
available on the first call, a second meeting may be called and convened,
provided that at least 51% of the outstanding shares of the corresponding
series or category of holders, as the case may be, are present. Whether on a
first or second call for a special meeting to take action, the favorable vote
of a majority of the outstanding shares present of the corresponding series or
category of holders is required.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The by-laws provide that the controlling shareholders&#146; obligation
specified in Article&nbsp;30 of the by-laws for the repurchase of shares in the
event of delisting can be waived if 95% of the outstanding shares approved such
delisting in a shareholders meeting and if the amount to be offered per share
to the public investors is less than 300,000 UDIs.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of ADSs are entitled to instruct the depositary as to the exercise
of the voting rights pertaining to the series V shares represented by the ADSs.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law, holders of 20% of our outstanding capital stock may
have any shareholder action set aside by filing a complaint with a Mexican
court of competent jurisdiction within 15&nbsp;days after the close
of the general shareholders&#146; meeting at which such action was taken, by showing that the
challenged action violates Mexican law or our by-laws. Relief under these
provisions is only available to holders:
</FONT>
<P align="center"><FONT size="2">91</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">whose shares were not represented when the action was taken or, if
represented, were voted against it; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">whose complaint makes reference to the clause of the by-laws or the
legal provision that was infringed.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders&#146; meetings may be called by the Board of Directors, any of the
statutory auditors or any Mexican court of competent jurisdiction. In
addition, the Board of Directors or any of the statutory auditors may be
required to call a meeting of shareholders upon the written request of holders
of 10% of the outstanding capital stock. In addition, the Board of Directors
or the statutory auditors must call a shareholders&#146; meeting at the written
request of any shareholder if no ordinary general shareholders&#146; meeting has
been held for two consecutive years or if the shareholders&#146; meetings held
during such period have not considered the items mentioned in Article&nbsp;181 of
the Mexican Companies Law discussed above. Notice of a meeting must be
published in the Official Gazette of the Federation (<I>Diario Oficial de la
Federaci&#243;n</I>) and in a newspaper of general circulation in Mexico City at least
15&nbsp;days prior to the meeting. In order to attend a shareholders&#146; meeting, a
shareholder must request and obtain an admission card by furnishing, at least
48 hours before the time set for holding the shareholders&#146; meeting, appropriate
evidence of its ownership of shares or depositing such shares with our
corporate secretary of the Board of Directors or with an institution authorized
to accept such deposit. If so entitled to attend the meeting, a shareholder
may be represented by proxy signed before two witnesses.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law, an action for civil liabilities against members of the
Board of Directors may be initiated by a shareholders&#146; resolution taken at a
general shareholders&#146; meeting. In the event shareholders decide to bring such
an action, the persons against whom such action is brought will immediately
cease to be members of the Board of Directors. Additionally, shareholders
representing not less than 15% of the outstanding shares of Iusacell may
directly take such action against members of the Board of Directors, provided
that (i)&nbsp;such shareholders have not voted in favor of a resolution approved at
the relevant general shareholders&#146; meeting pursuant to which it was resolved
not to take any action against the directors who are to be sued, and (ii)&nbsp;the
claim in question covers damages alleged to have been caused to Iusacell and
not only to the individual shareholders&#146; interests.
</FONT>


<P align="left"><FONT size="2"><B>Shareholder Conflicts of Interest</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law, any shareholder that has a conflict of interest in
connection with any transaction must abstain from voting at the relevant
shareholders&#146; meeting. A shareholder that votes on a business transaction in
which his interest conflicts with that of Iusacell may be liable for damages if
the transaction would not have been approved without such shareholder&#146;s vote.
</FONT>


<P align="left"><FONT size="2"><B>Dividend Rights</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each series A and series V share has the same dividend rights. The
declaration and payment of such dividends will depend upon Iusacell&#146;s results
of operations, financial conditions, cash requirements, future prospects and
other factors deemed relevant by the shareholders. In addition, Mexican law
provides that Mexican companies may only pay dividends from retained earnings
included in the year-end financial statements that have been approved by their
shareholders. Dividends may be paid only after all losses for previous years
have been paid for, a legal reserve equal to 20% of paid-in capital has been
achieved and shareholders have approved the dividend payment. Some of
Iusacell&#146;s subsidiaries, including Iusacell Celular, have outstanding debt
obligations which limit the amount of dividends that can be paid in any given
year or prohibit dividends entirely. Iusacell and its subsidiaries may agree
to similar restrictions in the future as they incur additional debt.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the Iusacell Shareholders Agreement, each of Verizon
and Vodafone has the right to cause Iusacell to pay dividends during any fiscal
year in an amount of up to 25% of the consolidated net income for the prior
fiscal year, provided that such payment is not in violation of applicable law
or contractual provisions and would not adversely affect the foreseeable cash
flow or capital requirements of Iusacell. Consolidated net income for these
purposes will be determined in accordance with Mexican GAAP. However, the
Iusacell Shareholders Agreement provides that, if consolidated net income as so
determined exceeds consolidated net income determined in accordance with U.S. GAAP by more than 10%, consolidated net income will be determined in accordance
with U.S. GAAP.
</FONT>
<P align="center"><FONT size="2">92</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Iusacell Shareholders Agreements also provides that any declaration
and/or payment of dividends that would (i)&nbsp;in any fiscal year exceed 25% of
Iusacell&#146;s consolidated net income for the prior fiscal year or (ii)&nbsp;be subject
to Mexican withholding tax (except for dividends required by Vodafone or
Verizon, as discussed above) may be made only upon the approval of holders of a
majority of all outstanding shares, including holders of a majority of the
series A shares. Under Mexican law, shareholders approve the declaration and
payment of dividends generally, but not necessarily, upon the recommendation of
the Board of Directors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of series V ADSs on the applicable record date are entitled to
receive dividends declared on the shares underlying series V ADSs. The
depositary will fix a record date for the holders of ADSs in respect of each
dividend distribution.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the annual ordinary general meeting of shareholders of Iusacell, the
Board of Directors will generally submit the financial statements of Iusacell
for the previous fiscal year, together with a report by the Board of Directors,
to the series A and series V shareholders for their approval. The series A and
series V shareholders, having approved the financial statements, will determine
the allocation of Iusacell&#146;s net profits for such fiscal year. At least 5% of
such net profits must be allocated to a legal reserve until the amount of the
legal reserve equals 20% of Iusacell&#146;s capital stock. Such reserve is not
available for distribution except as a stock dividend. Additional amounts may
be allocated to other reserve funds as the shareholders determine including a
reserve to repurchase shares. The remaining balance of net profits, if any, is
available for distribution as dividends but only after losses, if any, of
previous years have been paid for.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All shares of each series outstanding at the time a dividend or other
distribution is declared are entitled to share pro rata in such dividend or
other distribution. Partially-paid shares participate in any distribution to
the extent that such shares have been paid at the time of the distribution.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The covenants contained in the Iusacell indenture limit Iusacell&#146;s ability
to declare and distribute dividends to its shareholders. The covenants
contained in the Iusacell Celular indenture and in the terms of the senior
refinancing secured loan limit Iusacell Celular&#146;s ability to declare and
distribute dividends to Iusacell.
</FONT>


<P align="left"><FONT size="2"><B>Liquidation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that we are liquidated, one or more liquidators must be
appointed at an extraordinary general shareholders&#146; meeting to wind up our
affairs. All outstanding shares would be entitled to participate equally in
any distribution upon liquidation. Partially-paid shares participate in any
distribution to the extent that such shares have been paid at the time of the
distribution.
</FONT>


<P align="left"><FONT size="2"><B>Changes in Share Capital and Rights of Shareholders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An increase of capital stock may be effected through the issuance of new
shares for payment in cash or in kind, by capitalization of indebtedness or by
capitalization of certain items of shareholders&#146; equity. No increase of
capital stock may be effected until all previously issued shares of capital
stock have been fully paid. A reduction of capital stock may be effected to
absorb losses, to make reimbursements to shareholders, or to release
shareholders from payments not made. A reduction of capital stock to absorb
losses may be effected by reducing the value of all outstanding shares. A
reduction of capital stock shall also be effected on a pro rata basis.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders may also approve the redemption of fully-paid shares with
retained earnings. Such a redemption would be effected by a repurchase of
shares listed on the Mexican Stock Exchange or by lot.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The by-laws require that, unless a shareholders&#146; meeting resolves
otherwise, any capital increase effected pursuant to a capital contribution be
represented by new series A and series V shares in proportion to the number of
shares of each such series outstanding. Our by-laws provide that the series V
shares may not exceed 50% less one share of our capital stock.
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fixed portion of our capital stock may only be increased or decreased
by resolution of an extraordinary general meeting of the shareholders and an
amendment to the by-laws, whereas the variable portion of our capital stock may
be increased or decreased by resolution of an ordinary general meeting of
shareholders.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No resolution by the shareholders is required for decreases in capital
stock based on the exercise of the right to withdraw variable shares or the
purchase by Iusacell of its own shares or for increases in capital stock based
on offers by Iusacell of shares it previously purchased.
</FONT>


<P align="left"><FONT size="2"><B>Preemptive Rights</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a capital increase through the issuance of new shares for
payment in cash or in kind, a holder of existing shares has a preferential
right to subscribe for a sufficient number of new shares to maintain the
holder&#146;s existing proportionate holdings of shares. Preemptive rights must be
exercised within the period and under the conditions established for such
purpose by the shareholders, under Mexican law, and our by-laws. In no case
may such period be less than 15&nbsp;days and no greater than 30&nbsp;days following the
publication of notice of the capital increase in the Official Gazette of the
Federation or following the date of the shareholders&#146; meeting at which the
capital increase was approved if all shareholders were represented. Otherwise,
such rights will lapse.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. In addition, holders of ADSs that are
U.S. persons or are located in the United States may be restricted in their
ability to participate in the exercise of preemptive rights.
</FONT>


<P align="left"><FONT size="2"><B>Other Provisions</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fixed and Variable Capital, Withdrawal Rights</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a <I>sociedad an&#243;nima de capital variable</I>, we may issue shares
constituting fixed capital and shares constituting variable capital. The
issuance of variable capital shares, unlike the issuance of fixed capital
shares, does not require an amendment of our by-laws, although it does require
approval at an ordinary general meeting of shareholders.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the by-laws and CNBV regulations, variable capital may not be
greater than ten times the minimum fixed portion of our capital stock specified
in the by-laws. No shares of Iusacell representing variable capital are
currently outstanding. Outstanding variable capital shares may be fully or
partially withdrawn. In contrast, the minimum fixed capital required by law
cannot be withdrawn. A holder of variable capital shares that wishes to effect
a total or partial withdrawal of such shares would be required to notify us in
an authenticated written notice to that effect. If we received that notice
prior to the last quarter of the fiscal year, the withdrawal would become
effective at the end of the fiscal year in which the notice was given.
Otherwise, the withdrawal would become effective at the end of the following
fiscal year.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redemption of variable capital shares of Iusacell would be made at the
lower of (i)&nbsp;95% of the average share price quoted on the Mexican Stock
Exchange during the 30 business days prior to the date on which the withdrawal
were to become effective or (ii)&nbsp;the book value per variable capital share as
calculated from our financial statements for the fiscal year at the end of
which the withdrawal were to become effective, as approved by our shareholders
at an ordinary general meeting. Any such amount to be paid by Iusacell would
become due on the day following the ordinary general meeting approving the
financial statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The covenants contained in the Iusacell indenture limit Iusacell&#146;s ability
to issue variable capital shares. The covenants contained in the Iusacell
Celular indenture and the senior credit refinancing secured loan limit Iusacell
Celular&#146;s ability to issue variable capital shares.
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Forfeiture of Shares</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by Mexican law, Iusacell&#146;s by-laws provide that &#147;current or
future foreign shareholders of the Company agree with the Ministry of Foreign
Relations to consider themselves as Mexican nationals with respect to the
shares that they may acquire or of which they may be owners, and therefore not
to invoke the protection of their governments with respect to such shares under
penalty, should they violate this agreement, of forfeiting for the benefit of
the Nation the shares that they may have acquired.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of <I>De Ovando y Mart&#237;nez del Campo, S.C.</I>, special Mexican
counsel to Iusacell and Iusacell Celular, under this provision a non-Mexican
shareholder is deemed to have agreed not to invoke the protection of his own
government by requesting such government to interpose a diplomatic claim
against the Mexican government with respect to its rights as a shareholder, but
is not deemed to have waived any other rights it may have with respect to its
investment in Iusacell, including any rights under U.S. securities laws (the
enforceability of which may be challenged in Mexico).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the shareholder should invoke such governmental protection in violation
of this agreement, its shares could be forfeited to the Mexican government.
Mexican law requires that such a provision be included in the by-laws of all
Mexican corporations unless such by-laws prohibit ownership of capital stock by
foreign investors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Purchase of Our Own Shares</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to Mexican law, we may repurchase any series of our shares on
the Mexican Stock Exchange at any time at the then prevailing market price.
Any such repurchase must be done by affecting our shareholders&#146; equity account,
while we hold the repurchased shares, or by reducing our capital stock, if such
shares are to be converted into treasury stock. No resolution from a
shareholders&#146; meeting is required for such reduction, but a shareholders&#146;
meeting must approve, for each year, the maximum amount of funds that may be
used to repurchase shares, which amount may not exceed the amount of our net earnings (including retained
earnings). During the period we own repurchased shares, such shares may not be
represented at any shareholders&#146; meeting. Repurchased shares may be placed
among the investing public, without the need of approval from our Board of
Directors or shareholders, and the corresponding capital increase shall not
require a resolution of a shareholders&#146; meeting.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our by-laws and according to Mexican law, Iusacell&#146;s subsidiaries
are not allowed to own directly or indirectly any of the capital stock of
Iusacell. Also, Iusacell&#146;s subsidiaries are not allowed to own any capital
stock of any controlling shareholder of Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The covenants contained in the Iusacell indenture limit Iusacell&#146;s ability
to repurchase its own shares. The covenants contained in the Iusacell Celular
indenture and in the terms of the senior refinancing secured loan limit
Iusacell Celular&#146;s ability to repurchase its own shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Repurchase in the Event of Delisting</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that the registration of our shares in the Securities Section
of the RNV is canceled, whether upon our request or pursuant to a resolution
adopted by the CNBV, our by-laws and CNBV regulations require that our
controlling shareholders make a public offer to purchase the shares owned by
minority holders prior to such cancellation. The shares must be purchased by
our controlling shareholders at least and at the higher of (i)&nbsp;the quotation
price on the Mexican Stock Exchange or (ii)&nbsp;the book value of the shares, as
reflected in the last quarterly report filed with the CNBV and the Mexican
Stock Exchange prior to the date of the offer except in the case that such
value had been modified in accordance with criteria applicable to determination
of relevant information. In this case the most recent Company&#146;s financial
information must be considered. The quotation price on the Mexican Stock
Exchange will be the average per volume for the last 30 trading days prior to
the date of the offer. In any event, such period cannot exceed six moths. If
the trading period is less than 30&nbsp;days, the days in which the shares were
actually traded will be taken into consideration for purposes of the
calculation. In the event that no trading of shares has occurred, the offer
price will be the book value. In accordance with our by-laws and as provided
by Mexican law, our Board of Directors, within the five days prior to the date
of the offer, shall disclose its opinion on the price, taking into
consideration the minority shareholders&#146; interests. The Board of Directors
opinion shall be rendered in conjunction with the Audit Committee
opinion.</FONT>
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<P align="left"><FONT size="2">In the event of conflict of interests by the Board of
Directors, its opinion shall be rendered in conjunction with the opinion of an Independent Expert (as
defined by Mexican Securities regulation) appointed by the Audit Committee. If
after said offer our controlling shareholders fail to acquire 100% of our
capital stock, the cancellation of the registration of our shares will not
become effective until our controlling shareholders have created a trust with
the funds required to purchase the remaining shares at the same offering price,
with such trust being effective for at least six months.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The controlling shareholders may, so long as the Board of Directors
approve and the Audit Committee renders an opinion, request the CNBV to
authorize a different basis for the calculation of the share offer price. The
Audit Committee opinion must include the reasons for setting forth a different
price and must be accompanied by a report from an independent expert. In
determining whether to authorize a different basis, the CNBV takes into account
Iusacell&#146;s financial condition as well as its business outlook.
</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever the shareholders approve a change of corporate purpose, change of
nationality, spin-off or transformation from one type of corporate form to
another, any shareholder entitled to vote on such change or transformation who
has voted against it has the right to withdraw from Iusacell and receive an
amount generally equivalent to the book value of our shares (in accordance with
our last balance sheet approved by a shareholders&#146; meeting), provided such
shareholder exercises its right to withdraw within 15&nbsp;days following the
adjournment of the meeting at which the change or transformation was approved.
</FONT>


<P align="left"><FONT size="2"><B>Foreign Investment Regulation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign investment in capital stock of Mexican corporations in certain
economic sectors, including telephone and cellular services, is regulated by
the 1993 Foreign Investment Law, as amended, and the regulations issued
under that law in 1998, which we refer to as the 1998 Regulations. Under
the 1993 Foreign Investment Law, foreign investment is defined in general as
the participation of foreign investors in the voting capital stock of Mexican
corporations and in activities which are regulated by the 1993 Foreign
Investment Law. Foreign investors are defined as non-Mexican individuals,
non-Mexican legal entities and foreign entities without legal personality.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican Foreign Investment Commission, the Mexican Foreign Investment
Bureau and the Mexican National Registry of Foreign Investment are responsible
for the administration of the 1993 Foreign Investment Law and the 1998
Regulations. In order to comply with foreign investment restrictions, Mexican
companies that are engaged in specified restricted industries typically limit
particular classes of their stock to ownership by Mexican individuals and by
Mexican corporations in which foreign investment has a minority participation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a general rule, the 1993 Foreign Investment Law allows foreign
investments in up to 100% of the capital stock of Mexican companies, except for
those engaged in specified restricted industries, such as basic telephone
service, where foreign investments are limited to 49% of the voting capital
stock. Foreign investors may, however, participate in excess of 49% of the
voting capital stock of a Mexican corporation engaged in the cellular telephone
business with the prior approval of the Mexican Foreign Investment Commission.
Iusacell has received such approval and, as a result, neither our series A nor
our series V shares are restricted to Mexican ownership. See Item&nbsp;4,
&#147;Information on the Company &#151; Business Overview &#151; Government Regulation &#151;
Foreign Ownership Restrictions.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign states and foreign governments are prohibited under the 1995
Telecommunications Law from holding a concession or permit to provide
telecommunications services, from receiving any such concession or permit as a
guarantee or from being the beneficiary of any such guarantee, or from directly
or indirectly owning shares of Mexican companies, including Iusacell.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;29, 1999, Iusacell Celular entered into a series of agreements
with MATC Celular, the Mexican subsidiary of American Tower
Corporation, with respect to Iusacell Celular&#146;s existing towers
and future tower needs.</FONT>
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<P align="left"><FONT size="2">Under these agreements, which were amended in May 2002, MATC Celular, among other
things, is required to build towers or find space on existing towers, which
Iusacell Celular&#146;s subsidiaries lease. The term of the lease is 10&nbsp;years with
two five-year renewal periods. As of May&nbsp;30, 2003, Iusacell Celular&#146;s
subsidiaries lease from MATC Celular 715 sites, including 320 transfer sites, a
number of built-to-suit sites and co-locations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
also, Item&nbsp;5, &#147;Operating and Financial Review and Prospects
&#151; Liquidity
and Capital Resources,&#148; for a summary of Iusacell&#146;s material credit agreements
and indentures.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are currently no exchange controls in Mexico, however, Mexico has
imposed foreign exchange controls in the past. Pursuant to the provisions of
the North American Free Trade Agreement and in the event Mexico experiences
serious balance of payment difficulties or the threat thereof in the future,
Mexico remains free to impose foreign exchange controls on investments made in
Mexico, including those made by U.S. and Canadian investors.
</FONT>


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


<P align="left"><FONT size="2"><B>General</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a general summary of material U.S. and Mexican federal
income tax consequences of the acquisition, ownership and disposition of
Iusacell ADSs, the Iusacell Celular senior notes and the Iusacell senior notes
(the &#147;Note&#148; or the &#147;Notes&#148;) by U.S. holders.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this summary, a &#147;U.S. holder&#148; is any holder of any of such
securities that is, for United States federal income tax purposes:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a citizen or resident of the United States;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a corporation, partnership, or other entity created or organized in
or under the laws of the United States, or any political subdivision
thereof;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an estate the income of which is includible in gross income for
United States federal income tax purposes regardless of source; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary does not constitute, and should not be construed as, legal or
tax advice to holders of Iusacell ADSs or Notes. This summary does not purport
to consider all the possible U.S. or Mexican federal income tax consequences of
the purchase, ownership and disposition of the Iusacell ADSs or Notes and is
not intended to reflect the individual tax position of any beneficial owner
thereof. The summary is based upon Mexican federal tax laws, their regulations
and administrative rules issued by the Mexican Ministry of Finance and Public
Credit, the Tax Treaty mentioned below and the Internal Revenue Code of 1986,
as amended (the &#147;Code&#148;), U.S. Treasury regulations promulgated thereunder,
published rulings by the U.S. Internal Revenue Service (&#147;IRS&#148;) and court
decisions, all as in effect as of the date hereof, all of which authorities are
subject to change or differing interpretations, which changes or differing
interpretations could apply retroactively. Readers are cautioned that this is
not a complete analysis or listing of all potential tax effects that may be
relevant to a decision to purchase, hold or dispose of the Iusacell ADSs or
Notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary of U.S. federal income tax consequences is limited to
investors who hold the Iusacell ADSs or Notes as &#147;capital assets&#148; within the
meaning of section 1221 of the Code (i.e., generally, property held for
investment) and does not purport to deal with investors in special tax
situations, such as financial institutions, tax exempt organizations, insurance
companies, regulated investment companies, dealers in securities or currencies,
persons holding notes as a hedge against currency risks or as a position in a
&#147;straddle,&#148; &#147;conversion transaction,&#148; or
</FONT>
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<P align="left"><FONT size="2">&#147;constructive sale&#148; transaction for
tax purposes, persons owning (actually or constructively) 10% or more of the
voting shares of the company, or persons whose functional currency (as defined
in section 985 of the Code) is not the U.S. dollar. In general, for U.S.
federal income tax purposes, holders of Iusacell ADSs will be treated as the
owners of the series V shares represented by those Iusacell ADSs.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders and prospective purchasers of the Iusacell ADSs or Notes should
consult their own tax advisors concerning the application of Mexican and U.S.
federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the Iusacell ADSs or
Notes arising under the laws of any state, locality or foreign government or
other taxing jurisdiction.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mexico and the United States have signed and ratified a Convention for the
Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to
Taxes on Income and related Protocols (collectively, the &#147;Tax Treaty&#148;). The
Tax Treaty is currently in effect and provisions of the Tax Treaty that may
affect holders of Iusacell ADSs or Notes are summarized below. Holders should
consult with their tax advisors as to their entitlement to the benefits
afforded by the Tax Treaty. Mexico has also executed treaties to avoid double
taxation with other countries as well as agreements providing for the exchange
of information with respect to tax matters, some of which presently are in
force. The following summary does not take into account the effect of any such
treaties. Readers should consult their tax advisors as to their entitlement to
the benefits afforded by such other treaties.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The U.S. Treasury has expressed concerns that parties to whom ADSs are
released may be taking actions that are inconsistent with the claiming of
foreign tax credits for U.S. holders of ADSs. Accordingly, the analysis of
creditability of Mexican taxes described below could be affected by future
actions that may be taken by the U.S. Treasury.
</FONT>


<P align="left"><FONT size="2"><B>Taxation of Distributions of Iusacell ADSs</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>U.S. Federal Income Tax Considerations</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions paid out of Iusacell&#146;s current or accumulated earnings and
profits (as determined for U.S. federal income tax purposes) with respect to
the series V shares represented by Iusacell ADSs will be includible in the
gross income of a U.S. corporate holder as ordinary income when the
distributions are received by the depositary or by the U.S. holder of a
certificated ADS, and will not be eligible for the dividends received
deduction. We expected that under recently enacted law, such distributions by
Iusacell to U.S. individual holders generally should be treated as &#147;qualified
dividend income&#148; and thus, such holders would be subject to tax at the capital
gains rates for these distributions made after December&nbsp;31, 2002 but before
January&nbsp;1, 2008. To the extent that a distribution exceeds earnings and
profits, it will be treated first as a return of the U.S. holder&#146;s tax basis to
the extent of such tax basis, and then as gain from the sale or disposition of
a capital asset. The amount of any dividend paid in pesos will equal the U.S.
dollar value of the pesos received, calculated by reference to the exchange
rate in effect on the date the distribution is includible in income, regardless
of whether the pesos are converted into U.S. dollars. For U.S. holders, that
date would be the date the depositary receives the dividend, regardless of
whether the pesos are converted into U.S. dollars. In addition, if dividends
received in pesos are not converted into U.S. dollars on the day they are
received, U.S. holders may recognize foreign currency gain or loss (generally
treated as ordinary gain or loss) upon the disposition of such pesos measured
by the differences between such U.S. dollar value and the amount realized on
such disposition. Distributions generally will constitute foreign source
&#147;passive income&#148; (or, in the case of some holders, &#147;financial services income&#148;)
for U.S. foreign tax credit purposes; however, assuming a U.S. individual
holder has &#147;qualified dividend income&#148;, special rules will apply in determining
such holder&#146;s foreign tax credit limitations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions of additional series V shares, if any, to U.S. holders of
Iusacell ADSs that are made as part of a pro rata distribution to all
shareholders of Iusacell generally will not be subject to U.S. federal income
tax.
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mexican Tax Considerations</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Apart from any liability that may result to Iusacell from our paying of
dividends to our shareholders, dividends, either in cash or in any other form,
paid with respect to the series V shares represented by Iusacell ADSs, will not
be subject to a Mexican withholding tax.
</FONT>


<P align="left"><FONT size="2"><B>Taxation of Capital Gains of Iusacell ADSs</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>U.S. Federal Income Tax Considerations</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, upon the sale or other disposition of Iusacell ADSs, a U.S.
holder generally will recognize gain or loss equal to the difference between
the amount realized on such sale or disposition (if the amount realized is
denominated in a foreign currency then its U.S. dollar equivalent, determined
at the spot rate on the date of disposition) and the U.S. holder&#146;s adjusted tax
basis in the shares (in U.S. dollars). Such gain or loss will be treated as
capital gain or loss if the Iusacell ADSs were held as a capital asset and will
be long-term capital gain or loss if the Iusacell ADSs have been held for more
than one year on the date of such sale or other disposition. For this purpose,
a U.S. holder&#146;s holding period for the Iusacell ADSs will generally include its
holding period for the Iusacell Celular ADSs. The deductibility of capital
losses is subject to limitations. Gain or loss recognized by a U.S. holder on
a sale or other disposition of Iusacell ADSs generally will be treated as from
sources within the United States for U.S. federal income tax purposes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mexican Tax Considerations</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The sale or other disposition of Iusacell ADSs by holders who are
non-residents of Mexico (as described below) will not be subject to Mexican
tax. Deposits of shares in exchange for Iusacell ADSs and withdrawals of
shares in exchange for Iusacell ADSs will not give rise to Mexican tax.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains realized by an individual who is not a resident of Mexico on the
sale or other disposition of shares representing capital stock of a Mexican
corporation (like Iusacell) through a recognized stock exchange, such as the
Mexican Stock Exchange and high liquidity markets of countries with which
Mexico has signed a treaty to avoid double taxation, are exempt from Mexican
income tax if the stock is listed on an authorized in Mexico (each a
&#147;recognized exchange&#148;), currently the Mexican Stock Exchange only, and
otherwise complies with the requirements to be considered a real trade. The
Iusacell series V shares are currently listed on the Mexican Stock Exchange.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under current law, gains realized by a non-resident holder on the sale or
disposition of shares not conducted through a recognized stock exchange
generally are subject to a Mexican tax at a rate of 25% of the gross sales
price. However, if the holder is a resident of a country which is not
considered to be a low tax rate country (by reference to a list of low rate
countries published by the Mexican Ministry of Finance and Public Credit), the
holder may elect to designate a resident of Mexico as its representative, in
which case taxes would be payable at a maximum rate of 34% on the gain on such
disposition which maximum rate will be gradually reduced by one percent per
year until 2005. In 2005 and thereafter, said maximum rate will be 32%. The
United States is not considered to be a low tax rate country.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, even if the sale is not conducted through a recognized stock
exchange, pursuant to the Tax Treaty gains realized by qualifying U.S. holders
from the sale or other disposition of shares will not be subject to Mexican
income tax so long as:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">less than 50% of the assets of Iusacell consist of real property
situated in Mexico;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">such U.S. holder did not own 25% or more of the shares representing
capital stock of Iusacell, directly or indirectly, during the 12-month
period preceding such disposition; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the gain is not attributable to a permanent establishment of the
U.S. holder in Mexico.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">99</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brokerage commissions paid in connection with transactions on the Mexican
Stock Exchange are subject to a value added tax of 15%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of Mexican taxation, an individual is a resident of Mexico if
he or she has established his or her home in Mexico, unless he or she has
resided in another country for more than 183&nbsp;days, whether consecutive or not,
during a calendar year and can demonstrate that he or she has become a resident
of that other country for tax purposes. An individual of Mexican birth is
deemed to be a Mexican resident for tax purposes, unless proof is submitted to
the contrary.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A legal entity is a resident of Mexico if it (i)&nbsp;was established under
Mexican law or (ii)&nbsp;has its main management in Mexico. If a legal entity has a
permanent establishment in Mexico, such permanent establishment shall be
required to pay taxes in Mexico on income attributable to such permanent
establishment in accordance with relevant tax provisions.
</FONT>


<P align="left"><FONT size="2"><B>Other Mexican Taxes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no inheritance or succession taxes applicable to the ownership,
transfer or disposition of Iusacell ADSs or shares. There are no Mexican
stamp, registration or similar taxes or duties payable by holders of Iusacell
ADSs or shares.
</FONT>


<P align="left"><FONT size="2"><B>Information Reporting and Backup Withholding</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each U.S. holder who holds ADSs through a broker participating in the
Depositary Trust Company (&#147;DTC&#148;), or indirect participant holding Iusacell ADSs
through DTC on behalf of a beneficial owner and each paying agent making
payments in respect of Iusacell ADSs will generally be required to provide the
IRS with information, including the name, address and taxpayer identification
number of the beneficial owner of the Iusacell ADSs, and the aggregate amount
of dividends and sale proceeds paid to such beneficial owner during the
calendar year. These reporting requirements, however, do not apply with respect to certain
beneficial owners, including corporations, securities broker-dealers, other
financial institutions, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that a beneficial owner of Iusacell ADSs fails to establish
its exemption from such information reporting requirements or is subject to the
reporting requirements described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law, or underreports
its tax liability, as the case may be, a holder may be subject to backup
withholding at the rate of 30% in 2002 and 2003 (and at a lower rate in
subsequent years) with respect to dividends and proceeds from the sale or
disposition of Iusacell ADSs. This backup withholding tax is not an additional
tax and any amounts withheld from a payment to a holder of Iusacell ADSs will
be refunded (or credited against such holder&#146;s U.S. federal income tax
liability, if any) provided that the required information is furnished to the
IRS.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The U.S. Treasury Department has issued final regulations (the
&#147;Regulations&#148;) that unify current certification procedures and modify reliance
standards. Potential investors and holders of Iusacell ADSs should consult
their own tax advisors concerning the adoption of the Regulations and the
potential effect on their acquisition, ownership and disposition of Iusacell
ADSs.
</FONT>


<P align="left"><FONT size="2"><B>United States Tax Consequences to Holders of Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Payments of Interest and Additional Amounts</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, payments of interest and any additional amounts (i.e.,
&#147;gross-up payment&#148;) paid by Iusacell or Iusacell Celular (the &#147;Additional
Amounts&#148;) will be taxable to a U.S. holder as ordinary income at the time such
payments are accrued or are received, in accordance with the U.S. holder&#146;s
regular method of accounting for Federal income tax purposes.
</FONT>

<P align="center"><FONT size="2">100</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a U.S. holder purchases a Note for less than its principal amount, the
difference will be treated as a &#147;market discount&#148; for U.S. federal income tax
purposes subject to a <I>de minimis </I>exception.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the market discount rules, a U.S. holder will be required to treat
any payment on a Note, or any gain on its sale, exchange, retirement or other
disposition, as ordinary income to the extent of the accrued market discount
which was not previously included in income. If the Note is disposed of in a
non-taxable transaction (other than a non-recognition transaction described in
section 1276(c) of the Code), accrued market discount will be includible as
ordinary income to the U.S. holder as if it had sold the Note at its fair
market value. In addition, a U.S. holder may be required to defer, until the
maturity of a Note or its earlier disposition (including a non-taxable
transaction other than a transaction described in section 1276(c) of the
Internal Revenue Code), the deduction of all or a portion of the interest
expense in respect of any indebtedness incurred or continued to purchase or
carry the Note. Market discount will be considered to accrue on a
straight-line basis during the period from the date of acquisition to the
maturity date of the Note, unless the U.S. holder elects to accrue on a
constant-yield basis.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. holder of a Note may elect to include market discount in income as
it accrues on either a ratable or a constant yield basis. If a U.S. holder
makes this election, the rules regarding the treatment of gain upon the
disposition of the Note and upon the receipt of certain cash payments as
ordinary income and regarding the deferral of interest deductions will not
apply. Currently, if a U.S. holder elects to include market discount in income
as it accrues, the election will apply to all market discount obligations
acquired during or after the first taxable year to which the election applies.
Currently this election may not be revoked without the consent of the Internal
Revenue Service.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amortizable Bond Premium</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a U.S. holder purchases a Note for more than the amount payable at
maturity (or on an earlier call date), that excess will be considered an
&#147;amortizable bond premium.&#148; This holder may elect to amortize the premium to
offset the interest and Additional Amounts from the Note such holder would
otherwise be required to include in income (subject to special rules for early
redemption provisions). In any tax year, the holder can only use as much of
the premium as the constant yield method would allocate to that year. The U.S.
holder&#146;s basis in the Note will be reduced by the amount of bond premium offset
against interest and Additional Amounts. Currently, if a U.S. holder elects to
amortize the premium to offset the interest from a Note, the election will
apply to all debt instruments acquired during or after the first taxable year
to which the election applies. Currently, this election may not be revoked
without the consent of the Internal Revenue Service.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sale, Exchange or Retirement of a Note</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as discussed above, upon the sale, exchange or retirement of a
Note, a U.S. holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement and
such U.S. holder&#146;s adjusted tax basis in the Note. For this purpose, the
amount realized does not include any amount attributable to accrued interest on
the Note (which will be taxable as such). A U.S. holder&#146;s adjusted tax basis
in a new note will generally be the cost of the Note plus the market discount,
if any, the U.S. holder previously included in income <I>minus </I>any amortizable
bond premium and any payments other than payments of stated interest made on
the Note. Such gain or loss generally will be long-term capital gain or loss
if the Note has been held for more than one year at the time of such sale,
exchange or retirement. The deductibility of capital losses is subject to
limitations. Gain or loss recognized by a U.S. holder on a sale or other
disposition of a Note generally will be treated as from sources within the
United States for U.S. federal income tax purposes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Foreign Tax Credit and Effect of Withholding Taxes</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest and Additional Amounts paid on Notes will constitute income from
sources outside the United States for United States federal income tax
purposes, and, with certain exceptions, will be grouped together with other
items of &#147;passive&#148; income (or, in the case of some holders, &#147;financial services
income&#148;), for purposes of computing the foreign tax credit allowable to a U.S.
holder.
</FONT>

<P align="center"><FONT size="2">101</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. holder will be
required to include foreign withholding taxes, if any, imposed on payments on a
Note (including any Additional Amounts payable by Iusacell or Iusacell Celular)
in gross income as interest income. Such treatment will be required regardless
of whether, as will generally be true, Iusacell or Iusacell Celular is required
to pay additional amounts so that the amount of Mexican withholding taxes does
not reduce the net amount actually received by the holder of the Note.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to certain limitations, a U.S. holder may be entitled to a credit
against its United States Federal income tax liability, or a deduction in
computing its United States Federal taxable income, for foreign income taxes
withheld by Iusacell or Iusacell Celular (which, as described above, would
include amounts withheld on Additional Amounts paid by Iusacell or Iusacell
Celular with respect to Mexican taxes). The foreign tax credit provisions are
complex, and U.S. holders are urged to consult their own tax adviser as to the
availability, if any, of a tax credit or deduction to them.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Information Reporting and Backup Withholding</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For each calendar year in which the Notes are outstanding, each DTC
participant or indirect participant holding an interest in a Note on behalf of
a beneficial owner of a Note and each paying agent making payments in respect
of a Note will generally be required to provide the IRS with certain
information, including such beneficial owner&#146;s name, address and taxpayer
identification number (either such beneficial owner&#146;s Social Security number or
its employer identification number, as the case may be), and the aggregate
amount of interest, principal and Additional Amounts paid to such beneficial
owner during the calendar year. These reporting requirements, however, do not
apply with respect to certain beneficial owners, including corporations,
securities broker-dealers, other financial institutions, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that a beneficial owner of a Note fails to establish its
exemption from such information reporting requirement or is subject to the
reporting requirements described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law, or underreports
its tax liability, as the case may be,
a holder may be subject to backup withholding at the rate of 30% in 2002
and 2003 (and at a lower rate in subsequent years) of each payment of interest,
principal and Additional Amounts with respect to Notes. This backup
withholding tax is not an additional tax and will be allowed as a refund or
credit against the beneficial owner&#146;s United States Federal income tax
liability if the required information is furnished to the IRS.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prospective purchasers of Notes are advised to consult their own tax
advisers as to the consequences of acquiring and disposing of the Notes,
including, without limitation, (i)&nbsp;the applicability and effect of any state,
local or non-U.S. tax laws to which they may be subject, and of any legislative
or administrative changes in law, (ii)&nbsp;the United States Federal income tax
consequences of foreign withholding taxes by Iusacell or Iusacell Celular (and
of the payment by Iusacell or Iusacell Celular of Additional Amounts with
respect thereto) and (iii)&nbsp;the availability of a credit or deduction for
foreign withholding taxes.
</FONT>


<P align="left"><FONT size="2"><B>Mexican Tax Consequences to Holders of Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the principal consequences under current
Mexican federal tax law, their regulations and administrative rules issued by
the Mexican Ministry of Finance and Public Credit and the Tax Treaty, in force
as of the date of this report, of the purchase, ownership and disposition of
Notes by a Foreign Holder. A &#147;Foreign Holder&#148; is a holder who (i)&nbsp;is not a
resident of Mexico for tax purposes and (ii)&nbsp;will not hold Notes or a
beneficial interest in Notes in connection with the conduct of a trade or
business through a permanent establishment in Mexico.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxation of Payments of Interest and Principal</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Mexican Income Tax Law, payments of interest made by Iusacell or
Iusacell Celular to a Foreign Holder in respect of their respective Notes will
be subject to Mexican withholding taxes assessed at a rate of 4.9% if, (i)&nbsp;the
Notes have been placed through banks or brokers in a country with which Mexico
has executed a treaty to avoid double taxation and such treaty is in force,
(ii)&nbsp;the Notes have been registered in the Special Section of the
National Registry of Securities (the &#147;Special Section&#148;), and (iii)&nbsp;as has
been the case in the past, the issuer provides the information required under
general rules issued by the Ministry of Finance and Public Credit (the &#147;Reduced
Rate Regulation&#148;), which is described below. Otherwise, payments of interest
made by Iusacell or Iusacell Celular to a Foreign Holder in respect of their
respective Notes will be subject to Mexican withholding taxes assessed at a
rate of 10%.
</FONT>


<P align="center"><FONT size="2">102</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information requirements under the &#147;Reduced Rate Regulation&#148; are
generally described below:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that Iusacell and Iusacell Celular, as is the case, have timely
filed with the Mexican Ministry of Finance and Public Credit
information relating to the registration of their respective Notes in
the Special Section and to the issuance of their respective Notes; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that Iusacell and Iusacell Celular timely file each quarter of the
calendar year with the Mexican Ministry of Finance and Public Credit
information representing that no &#147;party related&#148; to Iusacell or
Iusacell Celular, as the case may be, directly or indirectly, is the
effective beneficiary of 5% or more of the aggregate amount of the
interest payment, and Iusacell and Iusacell Celular maintain records
evidencing compliance with this requirement.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Mexican Income Tax Law and the Reduced Rate Regulation any of
the following would be a &#147;party related&#148; to Iusacell or Iusacell Celular, as
the case may be: (1)&nbsp;shareholders of Iusacell or Iusacell Celular, as the case
may be, that own, directly or indirectly, individually or collectively with
related persons (within the meaning of the Mexican Income Tax Law and the
Reduced Rate Regulation) more than 10% of the voting stock of Iusacell or
Iusacell Celular, as the case may be, or (2)&nbsp;corporations if more than 20% of
their stock is owned directly or indirectly, individually or collectively by
related persons of Iusacell or Iusacell Celular, as the case may be.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Apart from the Reduced Rate Regulation, other special rates of Mexican
withholding income tax may apply. In particular, under the Tax Treaty, the
Mexican withholding tax is reduced to 4.9% (the &#147;Treaty Rate&#148;) for some holders
that are residents of the United States within the meaning of the Tax Treaty
provided they satisfy the
circumstances contemplated in the Tax Treaty and provided that the Notes
are considered to be regularly and substantially traded on a recognized
securities market, which is not expected to be the case. During 2003, the Tax
Treaty is not expected, generally, to have any material effect on the Mexican
tax consequences to holders of Notes because, as described above, with respect
to a Foreign Holder, Iusacell and Iusacell Celular will be entitled to withhold
taxes in connection with interest payments under their respective Notes at the
Reduced Rate so long as the Reduced Rate Regulation requirements described
above are met. Otherwise, holders of the Notes should consult their tax
advisors as to the possible application of the Treaty Rate.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid on Notes held by a non-Mexican pension or retirement fund
will be exempt from Mexican withholding tax if the fund (i)&nbsp;has been duly
incorporated as a fund pursuant to the laws of its country of origin, (ii)&nbsp;is
the effective beneficiary of the interest paid, (iii)&nbsp;is registered with the
Mexican Ministry of Finance and Public Credit for that purpose, and (iv)&nbsp;the
relevant interest income is exempt from taxes in that country.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell and Iusacell Celular, have agreed, subject to the exceptions and
limitations contained in the indentures under which the Notes were issued, to
pay additional amounts in respect of the Mexican withholding taxes mentioned
above to the holders of the Notes. Payment of these additional amounts with
respect to the Notes will be subject to Mexican withholding tax at the same
rate generally applicable to interest paid in the Notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Mexican Income Tax Law, a Foreign Holder will not be subject to
any Mexican income taxes in respect of payments of principal made by Iusacell
or by Iusacell Celular in connection with the Notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxation of the Sale and other Disposition of the Notes</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Income Tax Law gains resulting from a Foreign Holder&#146;s sale or
other disposition of Notes are considered interest.
</FONT>

<P align="center"><FONT size="2">103</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Transfer and other Taxes</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no Mexican stamp, registration, or similar taxes payable by a
Foreign Holder in connection with the purchase ownership or disposition of the
Notes. A Foreign Holder of Notes will not be liable for Mexican estate, gift,
inheritance or similar tax with respect to the Notes, although gratuitous
transfers of the Notes may in some circumstances cause a Mexican income tax to
be imposed on the recipient.
</FONT>


<P align="left"><FONT size="2"><B>F. </B>&nbsp;&nbsp;<B>DIVIDENDS AND PAYING AGENTS</B>
</FONT>

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


<P align="left"><FONT size="2"><B>G. </B>&nbsp;&nbsp; <B>STATEMENT BY EXPERTS</B>
</FONT>

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


<P align="left"><FONT size="2"><B>H. </B>&nbsp;&nbsp; <B>DOCUMENTS ON DISPLAY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file Annual Reports with and furnish other information to the SEC as
may be applicable from time to time. You may read and copy any documents filed
or furnished by Iusacell at the SEC&#146;s public reference rooms in Washington,
D.C., New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. In addition, because
Iusacell&#146;s American depositary shares are listed on the New York Stock
Exchange, reports and other information concerning Iusacell can also be
inspected at the office of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
</FONT>


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

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

<!-- link2 "ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</FONT>


<P align="left"><FONT size="2"><B>Interest Rate Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell&#146;s earnings are affected by changes in interest rates as a result
of long-term borrowings. For a description of Iusacell&#146;s long-term borrowings,
see Item&nbsp;5, &#147;Operating and Financial Review and Prospects &#151; Liquidity and
Capital Resources &#151; Iusacell Long-Term Indebtedness.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell has fixed rate debt under the Iusacell senior notes, a U.S.$7.8
million loan made by GTE Vendholdings due 2003 and under the Harris Facility.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell also guarantees variable debt borrowed by its infrastructure
equipment purchase subsidiaries under the BNP Paribas Facilities. Under the
BNP Paribas Facilities, the GIEK-Guaranteed Facility bears interest at
six-month LIBOR plus 0.6%, while the Non-GIEK Guaranteed Loan bears interest at
six-month LIBOR plus 2.0%. The Harris Facility bears interest at a rate of
six-month LIBOR plus 1.25%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell Celular has fixed rate debt under its Iusacell Celular senior
notes and a Banco Santander credit facility. Iusacell Celular also had, as of
December&nbsp;31, 2002, variable debt under the senior refinancing secured loan.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell Celular&#146;s senior refinancing secured loan bears interest at a
variable rate per annum equal to one, two, three or six-month LIBOR (at
Iusacell Celular&#146;s option) plus a spread ranging from, depending on Iusacell
Celular&#146;s leverage ratio, of 1.75% to 2.25%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not enter into derivative financial contracts for trading or
speculative purposes. However, we have managed the exposure to interest rate
risk through the use of interest rate collars and the exposure to foreign
exchange risk through forward rate contracts.
</FONT>



<P align="center"><FONT size="2">104</FONT>



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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 1998, Iusacell Celular entered into an interest rate collar
agreement on a notional amount of U.S.$35.0&nbsp;million until July&nbsp;30, 2002. The
collar agreement limited the maximum effective LIBOR cost to 6.12% if six-month
LIBOR was lower than 7.12% and 7.12% if LIBOR equaled or exceeded that level.
On February&nbsp;26, 1999, Iusacell Celular entered into a second interest rate
collar agreement to limit the maximum interest rate Iusacell Celular must pay
on U.S.$15.0&nbsp;million of its floating rate debt until July 2002. Under the
terms of this second collar agreement, Iusacell Celular&#146;s maximum effective
LIBOR cost was limited to 5.82% if six-month LIBOR was lower than 6.82% and, if
six-month LIBOR equalled or exceeded 6.82%, then Iusacell Celular&#146;s maximum
effective LIBOR cost would be limited to 6.82%. These interest rate collar
agreements expired on July&nbsp;30, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the debt obligations and derivative
instruments that are sensitive to changes in interest rates held by Iusacell as
of December&nbsp;31, 2002. With respect to the debt, the tables present principal
payment obligations that exist by maturity date and the related average
interest rate. Average interest rates for liabilities are calculated based on
weighted averages. Dollar-denominated amounts have been converted to Mexican
pesos based on the exchange rate published by <I>Banco de M&#233;xico </I>at December&nbsp;31,
2002, which was U.S.$1.00 = Ps.10.4393.
</FONT>

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    <TD nowrap align="center" colspan="31"><FONT size="1"><B>As of December 31, 2002 &#151; Expected Maturity Date</B></FONT></TD>
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    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair Value</B></FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="27"><FONT size="1"><B>in millions of Mexican pesos (U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Fixed Rate Debt</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>U. S. Dollar denominated</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">219.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,588.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,653.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,535.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,247.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Mexican Peso denominated</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Variable Rate Debt</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>U. S. Dollar denominated</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,105.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,440.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,051.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,051.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Mexican Peso denominated</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Interest Rate Derivatives</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Interest Rate Collars</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average Cap Rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average Floor Rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><I>&nbsp;</I></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><HR size="1" width="18%" align="left" noshade></FONT></TD>
</TR>
</TABLE>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><I>&nbsp;</I></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><I>Note: To determine the weighted-average interest rate for variable rate
debt, LIBOR interest rate was forecasted by CIEMEX-WEFA assuming 1.33%. for
2003, 1.84% for 2004, 2.24% for 2005, 2.4% for 2006 and 3.15% for 2007.</I></FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>Foreign Currency Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell&#146;s primary foreign currency exposure relates to our foreign
currency denominated debt. Iusacell&#146;s debt obligations are denominated in U.S.
dollars while we generate revenues in Mexican pesos. Therefore, we are exposed
to currency exchange rate risks that could significantly affect our ability to
meet our obligations. The exchange rate of pesos to the U.S. dollar is a
freely floating rate and the peso has experienced significant devaluations in
recent years. Any significant decrease in the value of the peso relative to
the U.S. dollar in the near term may have a material adverse effect on Iusacell
and on our ability to meet our long-term debt obligations.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1999, Iusacell Celular used forward-rate contracts to hedge
its exchange rate exposure for U.S.$77.0&nbsp;million, approximately 50% of the
principal and interest payments coming due over the period April 2000 to April
2001. In November 2000, Iusacell Celular entered into another forward-rate
contract to hedge its exchange rate exposure for U.S.$15.0&nbsp;million of interest
payments coming due between then and January 2002. In August 2001, Iusacell
entered into another forward-rate contract for U.S.$11.0&nbsp;million to hedge its
exchange rate exposure of interest payments coming due between then and
November 2002. In August and October 2001, Iusacell Celular hedged using
forward rate contracts 100% of the principal U.S.$150.0&nbsp;million and U.S.$34.5
million of associated interest of the Iusacell Celular senior notes. In
October 2002, we opted to unwind the full foreign exchange hedge contracted in 2001; however, we will continue to look for opportunities to enter into cost
efficient, foreign exchange hedging positions when appropriate.
</FONT>

<P align="center"><FONT size="2">105</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes Iusacell&#146;s debt that is sensitive to
changes in foreign currency exchange rates as of December&nbsp;31, 2002. With
respect to the debt, the tables present principal payment obligations that
exist by maturity date and the related average interest rate. Average interest
rates for liabilities are calculated based on weighted average.
Dollar-denominated amounts have been converted to Mexican pesos based on the
exchange rate published by <I>Banco de M&#233;xico </I>at December&nbsp;31, 2002, which was
U.S.$1.00 = Ps.10.4393.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="92%">
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>As of December 31, 2002 &#151; Expected Maturity Date</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="31"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2004</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2005</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2006</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2007</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thereafter</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="31"><FONT size="1"><B>In millions of Mexican Pesos (U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Fixed Rate Debt</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>U. S. Dollar denominated</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">219.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,588.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,653.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,535.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,247.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Variable Rate Debt</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>U. S. Dollar denominated</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,105.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,440.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,051.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,051.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Forward Exchange Derivatives</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Receive Mexican Pesos/
Pay U.S. Dollars</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average exchange rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Receive U.S. Dollars/
Pay Mexican Pesos</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Average exchange rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><I>&nbsp;</I></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><HR size="1" width="18%" align="left" noshade></FONT></TD>
</TR>
</TABLE>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><I>&nbsp;</I></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><I>Note: To determine the weighted-average interest rate for variable rate
debt, LIBOR interest rate was forecasted by CIEMEX-WEFA assuming 1.33%. for
2003, 1.84% for 2004, 2.24% for 2005, 2.4% for 2006 and 3.15% for 2007.</I></FONT></TD>
</TR>
</TABLE>
<!-- link2 "ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES" -->
<DIV align="left"><A NAME="012"></A></DIV>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>ITEM 12.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>

<!-- link1 "PART II" -->
<DIV align="left"><A NAME="013"></A></DIV>

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

<!-- link2 "ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES" -->
<DIV align="left"><A NAME="014"></A></DIV>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>ITEM 13.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;1, 2003, we failed to make a U.S.$25.0&nbsp;million interest payment
which was due on the Iusacell senior notes. While we have a 30-day grace
period to make the payment before an event of default will occur, we do not
expect to make the June&nbsp;1, 2003 interest payment within that grace period. As
a result, an event of default under the Iusacell indenture will occur and the
holders of those notes will have the right to declare the Iusacell senior notes
immediately due and payable.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first half of 2003, Iusacell Celular exceeded the permitted
leverage ratio (as defined in the senior refinancing secured loan) of 2.50. On
April&nbsp;28, 2003, Iusacell Celular and the lenders entered into the second
amendment and waiver to increase the permitted leverage ratio under the senior
refinancing secured loan from 2.50 to 2.70. Under the second amendment and
waiver, Iusacell Celular temporarily agreed not to make any restricted payment,
loan or advance to, or repay any loan or advance from any affiliate, provided
that if Iusacell Celular or any of its subsidiaries makes any payment on the
principal of any indebtedness (as defined in the senior refinancing secured
loan), Iusacell Celular or the relevant subsidiary will simultaneously prepay a
pro rata amount outstanding under the senior refinancing secured loan. On May
22, 2003, the second amendment and waiver was extended until June&nbsp;13, 2003. On
June&nbsp;12, 2003, the second amendment and waiver was further extended until June
26, 2003. On June&nbsp;26, 2003, if the second amendment and waiver is not further
extended, Iusacell Celular will be in default of a financial ratio covenant
under the senior refinancing secured loan, which will constitute an event of
default under that loan as if the second amendment and waiver had never been
executed. See Item&nbsp;5, &#147;Operating and Financial Review and Prospects &#151;
Liquidity and Capital Resources &#151; Iusacell Celular Long-Term Indebtedness &#150;
Loan Covenant Waivers and Modifications.&#148;
</FONT>

<P align="center"><FONT size="2">106</FONT>

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

<!-- link2 "ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS" -->
<DIV align="left"><A NAME="015"></A></DIV>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>ITEM 14.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</FONT>

<!-- link2 "ITEM 15. CONTROLS AND PROCEDURES" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="left"><FONT size="2"><B>ITEM
15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONTROLS AND PROCEDURES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Evaluation of Disclosure Controls and Procedures. </I>The Chief Executive
Officer and Chief Financial Officer of Iusacell have evaluated the
effectiveness of Iusacell&#146;s disclosure controls and procedures (as such term is
defined in Rules&nbsp;13a-14(c) and 15d-14(c) under the Exchange Act) as of a date
within 90&nbsp;days prior to the filing date of this Annual Report (the &#147;Evaluation
Date&#148;). Based on such evaluation, such officers have concluded that, as of the
Evaluation Date, Iusacell&#146;s disclosure controls and procedures are effective in
alerting them on a timely basis to material information relating to Iusacell
(including its consolidated subsidiaries) required to be included in Iusacell&#146;s
reports filed or submitted under the Exchange Act.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Changes in Internal Controls. </I>Since the Evaluation Date, there have not
been any significant changes in Iusacell&#146;s internal controls or in other
factors that could significantly affect such controls. No significant
deficiencies and material weaknesses were identified that required corrective
actions.
</FONT>

<!-- link2 "ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT" -->
<DIV align="left"><A NAME="017"></A></DIV>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" nowrap><FONT size="2"><B>ITEM 16A.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>AUDIT COMMITTEE FINANCIAL EXPERT</B></FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors has determined that Iusacell has two audit
committee financial experts serving on our Audit Committee. Such financial
experts are Mr.&nbsp;Alfred C. Giammarino, a Series&nbsp;A Director, and Mr.&nbsp;Jack Lester,
a Series&nbsp;V alternate Director.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a description of Mr.&nbsp;Giammarino&#146;s relevant experience, see Item&nbsp;6,
&#147;Directors, Senior Management and Employees &#151; Directors and Senior Management &#151;
Biographies.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jack Lester has been an alternate member of the Board of Directors of
Iusacell since March 2001. Mr.&nbsp;Lester has been the Chief Financial Officer of
Vodafone Americas Inc. (VAI)&nbsp;since 2000. At VAI, Mr.&nbsp;Lester is responsible
for, among other things, financial planning and analysis, accounting, financial
reporting, cash management, investment management and risk management.
Previously, he had served as Director of Finance of Satellite Services for
Vodafone AirTouch from 1999 to 2000 and for AirTouch International from 1996 to
1999. Prior to that, Mr.&nbsp;Lester had served as Director of Corporate
Development for AirTouch Communications from 1991 to 1996. Mr.&nbsp;Lester also
previously held the position of Financial Analyst at AT&#038;E Corporation and of
Venture Analyst at Equitec Leasing Company. Mr.&nbsp;Lester holds an M.B.A. from
the University of Southern California and a bachelor&#146;s degree in Business
Administration &#151; Accounting from the University of California, Berkeley.
</FONT>

<!-- link2 "ITEM 16B. CODE OF ETHICS" -->
<DIV align="left"><A NAME="018"></A></DIV>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><FONT size="2"><B>ITEM 16B.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>CODE OF ETHICS</B></FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May, 2002 we adopted a code of ethics. Our code of ethics applies to
all of our employees, including the principal executive officer, principal
financial officer, principal accounting officer and controller and persons
performing similar functions. During 2002, we implemented training courses in
the code of ethics to all our employees. Every new employee is provided also
with training and a copy of our code of ethics. Our code of ethics, together
with an English translation, is also posted on our internet website:
www.iusacell.com.
</FONT>

<!-- link2 "ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES" -->
<DIV align="left"><A NAME="019"></A></DIV>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><FONT size="2"><B>ITEM 16C.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>PRINCIPAL ACCOUNTANT FEES AND SERVICES</B></FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PricewaterhouseCoopers, which has been appointed by Iusacell&#146;s Board of
Directors, has served as Iusacell&#146;s independent public accountants for each of
the fiscal years in the three-year period ended December&nbsp;31, 2002. Each year, the Audit Committee submits a recommendation to Iusacell&#146;s Board of Directors
to ratify the re-appointment of Iusacell&#146;s independent public accountants.
</FONT>

<P align="center"><FONT size="2">107</FONT>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents the aggregate fees for professional audit
services and other services rendered by PricewaterhouseCoopers to Iusacell in
2002.
</FONT>


<P align="center"><FONT size="2"><B>Fees Paid to PricewaterhouseCoopers</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Thousands of pesos</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Audit Fees<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Audit-related Fees<SUP>(2)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Tax Fees<SUP>(3)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">All Other Fees<SUP>(4)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Audit fees include services performed by the independent accountant
to comply with generally accepted accounting standards in Mexico and the
United States. Audit fees also include fees for services provided by
the independent accountants in connection with statutory and regulatory
filings or engagements, comfort letters, statutory audits, attest
services, consents and assistance with and review of documents filed
with the SEC.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Audit-related fees include employee benefit plan audits, accounting
consultations and audits in connection with internal control reviews,
attest services that are not required by statute or regulation and
consultation concerning financial accounting and reporting standards.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Tax fees include fees for tax compliance, tax planning and tax
advice. Tax compliance generally involves preparation of original and
amended tax returns, claims for refund and tax payment-planning
services. Tax planning and tax advice encompass assistance with tax
audits and appeals, employee benefit plans and requests for rulings or
technical advice from taxing authorities.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(4)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">All other fees include mainly services related to the purchasing
information system implementation and design.</FONT></TD>
</TR>
</TABLE>
<!-- link1 "PART III" -->
<DIV align="left"><A NAME="020"></A></DIV>

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

<!-- link2 "ITEM 17. FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="021"></A></DIV>


<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>ITEM 17.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>FINANCIAL STATEMENTS</B></FONT></TD>
</TR>
</TABLE>






<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have responded to Item&nbsp;18 in lieu of responding to this Item&nbsp;17.
</FONT>

<!-- link1 "ITEM 18. FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="022"></A></DIV>

<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>ITEM 18.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>FINANCIAL STATEMENTS</B></FONT></TD>
</TR>
</TABLE>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See pages F-1 to S-II.
</FONT>

<P align="center"><FONT size="2">108</FONT>

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


<!-- link2 "ITEM 19. EXHIBITS" -->
<DIV align="left"><A NAME="023"></A></DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>ITEM 19.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<B>EXHIBITS</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Documents filed as exhibits to this Annual Report.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>No.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">1.1*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">By-laws (<I>estatutos</I>) of <I>Grupo Iusacell, S.A. de C.V.</I>, as amended on
April&nbsp;21, 2003, (English translation).<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">2.1
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Shareholders Agreement dated as of March&nbsp;30, 2001 by and among
Iusacell, Bell Atlantic Latin America Holdings, Inc., Bell
Atlantic International, Inc., Bell Atlantic New Zealand Holdings,
Inc. and Vodafone Americas B.V. (incorporated herein by reference
to Exhibit&nbsp;2(a) of Iusacell&#146;s Annual Report on Form&nbsp;20-F for
fiscal year 2000 &#151; File No.&nbsp;001-14938).<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">2.2
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Indenture dated as of December&nbsp;16, 1999 among <I>Grupo Iusacell, S.A.
de C.V.</I>, Verizon Communications Inc. and The Bank of New York, as
trustee (incorporated herein by reference to Exhibit&nbsp;4.1 of the
Registration Statement F-4 &#151; Registration Number 333-95547).<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">2.3
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Indenture dated as of July&nbsp;25, 1997 among <I>Grupo Iusacell Celular,
S.A. de C.V.</I>, certain subsidiaries of <I>Iusacell Celular, S.A. de
C.V. </I>and First Union National Bank, as trustee (incorporated
herein by reference to Exhibit&nbsp;4.1 of the Registration Statement
F-4 &#151; Registration Number 333-37431).<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.1
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Agreement for Equipment, Furnish and Installation for Iusacell&#146;s
Cellular Network, dated as of December&nbsp;10, 1997, among <I>Grupo
Iusacell Celular, S.A. de C.V.</I>, Lucent Technologies World
Services, Inc. and <I>Lucent Technologies de M&#233;xico, S.A. de C.V.</I>
(incorporated herein by reference to Exhibit&nbsp;A of Iusacell
Celular&#146;s Annual Report on Form&nbsp;20-F for fiscal year 1997).<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.2
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Amended and Restated Credit Agreement, dated as of July&nbsp;25, 1997,
as amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V. </I>and JP Morgan, as sole Bookrunner and Lead
Arranger, and The Chase Manhattan Bank, as Administrative Agent
and Collateral Agent, BNP Paribas, Citibank N.A., The
Toronto-Dominion Bank and <I>BBVA Bancomer S.A.</I>, as Arrangers
(incorporated herein by reference to Exhibit&nbsp;4(b) of Iusacell&#146;s
Annual Report on Form&nbsp;20-F for fiscal year 2000 &#151; File No.
001-14938).<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.3*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Amended and Restated Master Lease Agreement (English version),
dated as of May&nbsp;16, 2002, among <I>MATC Celular, S. de R.L. de C.V.</I>,
<I>Grupo Iusacell Celular, S.A. de C.V. </I>and <I>Iusacell Arrendadora,
S.A. de C.V.</I><BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.4*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Amended and Restated Master Lease Agreement (English version),
dated as of May&nbsp;16, 2002, between <I>MATC Celular, S. de R.L. de C.V.</I>
and <I>Grupo Iusacell Celular, S.A. de C.V.</I>, for and on behalf of
itself and its affiliates.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.5*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Amended and Restated Build-to-Suit and Site Development Agreement,
dated as of May&nbsp;16, 2002, between <I>MATC Celular, S. de R.L. de C.V.</I>
and <I>Grupo Iusacell Celular, S.A. de C.V.</I>, for and on behalf of
itself and its affiliates.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.6
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">First Amendment and Waiver, dated as of December&nbsp;7, 2001, to the
Amended and Restated Credit Agreement, dated as of July&nbsp;25, 1997,
as amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V.</I>, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent
(incorporated herein by reference to Exhibit&nbsp;4.3 of Grupo
Iusacell&#146;s Annual Report on Form&nbsp;20-F for fiscal year 2001 &#151; File No.&nbsp;001-14938)</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P align="center"><FONT size="2">109</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>No.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.7*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Second Amendment and Waiver, dated as of April&nbsp;28, 2003, to the
Amended and Restated Credit Agreement, dated as of July&nbsp;25, 1997,
as amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V.</I>, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.8*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">First Amendment to the Second Amendment and Waiver, dated as of
April&nbsp;28, 2003, to the Amended and Restated Credit Agreement,
dated as of July&nbsp;25, 1997, as amended and restated as of March&nbsp;29,
2001 among <I>Grupo Iusacell Celular, S.A. de C.V.</I>, the lenders party
thereto, and JP Morgan Chase Bank as Administrative Agent and
Collateral Agent.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.9*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Second Amendment, dated as of June&nbsp;10, 2003, to the Second
Amendment and Waiver dated as of April&nbsp;28, 2003, to the Amended
and Restated Credit Agreement, dated as of July&nbsp;25, 1997, as
amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V.</I>, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">7.1*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Computation of ratio of earnings to fixed charges.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">8.1*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">List of subsidiaries.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">12.1*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">12.2*
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Filed herewith.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">110</FONT>

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




<P align="center"><FONT size="2"><B>GLOSSARY OF TELECOMMUNICATIONS TERMS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">1XRTT:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A member of CDMA 2000 which is a family of standards that defines the radio
interface allowing a smooth transition from CDMA (1S-95) systems. This
family of standards involve some variants and the services, offerings, such
as voice and packet data on a single carrier (1XRTT), data only (1X-DO).<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Analog:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A transmission method employing a continuous electrical signal that varies in
amplitude or frequency in response to changes in sound, light, position,
etc., impressed on a transducer in the sending device.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Band:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A range of frequencies between two defined limits.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">CDMA:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Code Division Multiple Access, the highest-capacity commercial digital
standard available. CDMA increases capacity by transmitting a large number
of simultaneous conversations over a single channel, assigning unique codes
that can be re-assembled at the receiving end.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Cellular A-band:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The range of frequencies used to provide cellular wireless service between
825-835 MHz and between 870-880 MHz of the radio spectrum.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Cellular B-band:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The range of frequencies used to provide cellular wireless service between
835-845 MHz and between 880-890 MHz of the radio spectrum.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Channel:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A pathway for the transmission of information between a sending point and a
receiving point.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Covered POPS:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The number of POPs in a defined area for whom a cellular signal is accessible.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">CPP:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Calling Party Pays is a cellular telephony payment structure in which the
party that places a call to a cellular telephone is billed for
interconnection access, and the recipient is not billed for the airtime
charges corresponding to the call.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Digital:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A method of storing, processing and transmitting information through the use
of distinct electronic or optical pulses that represent the binary digits 0
and 1. Digital transmission and switching technologies employ a sequence of
discrete, distinct pulses to represent information, as opposed to the
continuous analog signal.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Hertz:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The unit measuring the frequency with which an alternating electromagnetic
signal cycles through the zero-value state between lowest and highest states.
One hertz (abbreviated Hz) equals one cycle per second; KHz (kilohertz)
stands for thousands of hertz; MHz (megahertz)&nbsp;stands for millions of hertz;
and GHz (gigahertz)&nbsp;stands for billions of hertz.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">IMTS:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Improved mobile telephone service; IMTS systems are analog mobile telephone
systems that employ a single powerful radio base station to communicate with
IMTS mobile telephones that are within approximately a 25-mile radius.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">LATA:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Local access and transport area; an area in which a local exchange carrier is
permitted to provide service as designated by the 1982 United States federal
court decree resulting from antitrust litigation brought by the United States
Department of Justice against AT&#038;T corporation<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">PCS:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Personal communications services. PCS represents a digital wireless
communica-tions service with the ability to provide features such as voice,
video and data applications, short messaging, voicemail, caller
identification, call conferencing and call forwarding.<BR><BR></FONT></TD>
</TR>

</TABLE>
</CENTER>
<P align="center"><FONT size="2">111</FONT>

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

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">PCS A-band:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The range of frequencies used to provide PCS wireless services between
1.850-1.865 GHz and between 1.930-1.945 GHz of the radio spectrum.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">PCS B-band:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The range of frequencies used to provide PCS wireless services between
1.870-1.885 GHz and between 1.950-1.965 GHz of the radio spectrum.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">PCS D-band:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The range of frequencies used to provide PCS wireless services between
1.865-1.870 GHz and between 1.945-1.950 GHz of the radio spectrum.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">PCS E-band:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The range of frequencies used to provide PCS wireless services between
1.885-1.890 GHz and between 1.965-1.970 GHz of the radio spectrum.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Penetration Rate:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A cellular operator&#146;s subscribers within a defined area derived by total POPs
within that area.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">POPs:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">The population for a particular area based on the 2000 Mexican census.
Population figures for 1996, 1997, 1998 and 1999 have been calculated by
applying the forecast annual population growth rate for 1995, as published by
the <I>Instituto Nacional de Estad&#237;stica, Geograf&#237;a e Inform&#225;tica </I>(the National
Institute of Statistics, Geography and Information Processing, &#147;INEGI&#148;) to
the official 1990 census figures. Population figures for 2002 have been
calculated by applying the forecast annual population growth rate for 2002 to
the data derived from the 2000 Mexico census. Where the population
information is set forth without reference to a year, the information given
is as of December&nbsp;31, 2002. The SCT divides Mexico into nine geographic
Regions for the provision of cellular service (individually a &#147;Region&#148; and
collectively the &#147;Regions&#148;). Information regarding the numbers of POPs
within a given Region has been calculated using the national population
growth rate, as published by INEGI. Information regarding the number of POPs
within a given city has been calculated using the growth rate for that city,
as published by INEGI, which may not be the same as the national growth rate
published by INEGI. The number of POPs in any Region or other geographic
area should not be confused with the current number of users of wireless
services in that Region or other geographic area and is not indicative of the
number of users of wireless services in the future.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Roaming:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A service offered by mobile communications providers which allows a
subscriber to use his or her telephone while in the service area of another
carrier.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Switch:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">A device that opens or closes circuits or selects the paths or circuits to be
used for transmission of information. Switching is the process of
interconnecting circuits to form a transmission path between users.<BR><BR></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">TDMA:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">Time division multiple access, a standard of digital cellular technology,
which provides more call carrying capacity than analog, but less than CDMA,
by interlacing conversations on a single channel through time-sharing
methods</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">112</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "SIGNATURES" -->
<DIV align="left"><A NAME="024"></A></DIV>

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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of Section&nbsp;12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all requirements for filing on
Form&nbsp;20-F and has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
</FONT>

<P align="left"><FONT size="2">GRUPO IUSACELL, S.A. DE C.V.
</FONT>

<P align="left"><FONT size="2">By: /s/ CARLOS ESPINAL G.
<HR align="left" size="1" width="30%" noshade>
Carlos Espinal G.<br>
President and Chief Executive Officer<br><br>
</FONT>

<P align="left"><FONT size="2">By: /s/ RUSSELL A. OLSON
<HR align="left" size="1" width="30%" noshade>
Russell A. Olson<br>
Executive Vice President and<br>
Chief Financial Officer<br><br>
</FONT>

<P align="left"><FONT size="2">Date: June&nbsp;25, 2003
</FONT>

<P align="center"><FONT size="2">113</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "CERTIFICATIONS" -->
<DIV align="left"><A NAME="025"></A></DIV>

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

<P align="left"><FONT size="2">I, Carlos Espinal G., certify that:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">I have reviewed this annual report on Form&nbsp;20-F of <I>Grupo Iusacell, S.A.
de C.V.</I>;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and
have:</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">evaluated the effectiveness of the registrant&#146;s disclosure
controls and procedures as of a date within 90&nbsp;days prior to the
filing date of this annual report (the &#147;Evaluation Date&#148;);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">c.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant&#146;s
ability to record, process, summarize and report financial data and
have identified for the registrant&#146;s auditors any material
weaknesses in internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant&#146;s
internal controls; and</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">6.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">Date: June&nbsp;25, 2003
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Carlos Espinal G.</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Carlos Espinal G.<br>
President and Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">114</FONT>

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

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

<P align="left"><FONT size="2">I, Russell A. Olson, certify that:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">I have reviewed this annual report on Form&nbsp;20-F of <I>Grupo Iusacell, S.A.
de C.V.</I>;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and
have:</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">evaluated the effectiveness of the registrant&#146;s disclosure
controls and procedures as of a date within 90&nbsp;days prior to the
filing date of this annual report (the &#147;Evaluation Date&#148;);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">c.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant&#146;s
ability to record, process, summarize and report financial data and
have identified for the registrant&#146;s auditors any material
weaknesses in internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant&#146;s
internal controls; and</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">6.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">Date: June&nbsp;25, 2003
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Russell A. Olson</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Russell A. Olson<br>
Executive Vice President and Chief Financial Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">115</FONT>






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


<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V.</B>
</FONT>


<P align="center"><FONT size="2"><B>AUDITED CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>


<P align="center"><FONT size="2"><B>DECEMBER 31, 2002, 2001 AND 2000</B>
</FONT>


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

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>CONTENTS</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>PAGE</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left"><HR size="1" width="9%" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Report of Independent Accountants</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Balance Sheets &#151; December&nbsp;31, 2002 and
2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Income Statements &#151; Fiscal Years Ended
December&nbsp;31, 2002, 2001 and 2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statements of Changes in Stockholders&#146;
Equity &#151; Fiscal Years Ended December&nbsp;31, 2002, 2001 and
2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statements of Changes in Financial
Position &#151; Fiscal Years Ended December&nbsp;31, 2002, 2001
and 2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes to the Consolidated Financial Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Schedule&nbsp;II &#151; Valuation and Qualifying Accounts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">S-II</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-1</FONT>

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

<P align="center"><FONT size="2"><B>REPORT OF INDEPENDENT ACCOUNTANTS</B>
</FONT>

<P align="left"><FONT size="2">Mexico City, February&nbsp;28, 2003, except for Note 24 for which the date is June&nbsp;13, 2003
</FONT>

<P align="left"><FONT size="2">The Board of Directors and Stockholders of<BR>
Grupo Iusacell, S. A. de C. V.:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have audited the accompanying consolidated balance sheets of Grupo
Iusacell, S. A. de C. V. and subsidiaries (the Company) as of December&nbsp;31, 2002
and 2001, and the related consolidated statements of income, of changes in
stockholders&#146; equity and of changes in financial position for each of the three
years in the period ended December&nbsp;31, 2002 and the financial statement
schedule included in this Form&nbsp;20-F. These financial statements and financial
statement schedule are the responsibility of the Company&#146;s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We conducted our audits in accordance with generally accepted auditing
standards in Mexico and the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement and are prepared in
accordance with generally accepted accounting principles. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our opinion, the consolidated financial statements and financial
statement schedule referred to above present fairly, in all material respects,
the consolidated financial position of Grupo Iusacell, S. A. de C. V. and
subsidiaries as of December&nbsp;31, 2002 and 2001, and the consolidated results of
its operations, changes in stockholders&#146; equity and changes in its consolidated
financial position for each of the three years in the period ended December&nbsp;31,
2002, in conformity with accounting principles generally accepted in Mexico.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounting principles generally accepted in Mexico vary in certain
significant respects from accounting principles generally accepted in the
United States and as allowed by Item&nbsp;18 to Form&nbsp;20-F. The application of the
latter would have affected the determination of consolidated net income for
each of the three years in the period ended December&nbsp;31, 2002 expressed in
constant Mexican pesos and the determination of consolidated stockholders&#146;
equity at December&nbsp;31, 2002 and 2001 also expressed in constant Mexican pesos
to the extent summarized in Note 23 to the consolidated financial statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As mentioned in
Note 24 to the consolidated financial statements, on June&nbsp;1, 2003, the Company
failed to make its scheduled interest payment on its Senior Notes due 2006.
This will constitute an event of default if the Company does not make such
interest payment within a thirty-day cure period. If an event of default
occurs, it would permit the holders of the notes to accelerate their maturity.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, the Company&#146;s main subsidiary, Grupo Iusacell Celular, S.A.
de C.V. has incurred a technical default and violated a financial leverage
covenant under its Amended and Restated Syndicated Loan. The subsidiary has
obtained an amendment that will expire on June&nbsp;26, 2003 or earlier under
certain circumstances. If such amendment is not extended, upon its expiration
Grupo Iusacell Celular, S.A. de C.V. will be in default and such event will
permit the lenders to demand the outstanding principal and interest on the
debt.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lastly, as discussed in Note 24 to the consolidated financial statements,
the Company&#146;s two largest shareholders have recently agreed to tender all of
their shares, representing 73.90% of the Company&#146;s outstanding shares to an
unrelated party. This event, if consummated, will transfer control of the
Company to a new unrelated party. Under the indentures governing the Senior
Notes due 2006 and the Senior Notes due 2004, this constitutes a change of
control under which the holders of the notes have the right to require the
Company and Grupo Iusacell Celular, S.A. de C.V., respectively, to repurchase
such holders&#146; notes. This also constitutes a change of control and would
constitute an event of default under the Amended and Restated Syndicated Loan
so the lenders under the Amended
<P align="center"><FONT size="2">F-2</FONT>

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

<P align="left"><FONT size="2">and Restated Syndicated Loan would have the right to declare all amounts
outstanding under the Amended and Restated Syndicated Loan immediately due and
payable.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These conditions raise substantial doubt about the Company&#146;s ability to
continue as a going concern. These matters and management&#146;s plans are more
fully discussed in Note 24 to the consolidated financial statements. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
PRICEWATERHOUSECOOPERS</FONT></TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/ Jos&#233; S. Oropeza de la Cruz<BR>
<HR align="right" size="1" noshade>
Jos&#233; S. Oropeza de la Cruz<BR>
Audit Partner</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-3</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>CONSOLIDATED BALANCE SHEETS</B>
</FONT>


<P align="center"><FONT size="2"><B>(Notes 1, 2, 3 and 4)</B>
</FONT>


<P align="center"><FONT size="2"><B>Expressed in thousands of<BR>
constant Mexican pesos as of December&nbsp;31, 2002</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2"><B>ASSETS</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>CURRENT ASSETS:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents (Note 4c.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 160,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 439,185</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current portion of escrow account (Note 10b.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">464,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade, net of Ps.93,603 and Ps.222,912 of
allowance for doubtful accounts in 2002 and 2001,
respectively (Note 4e.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">640,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">629,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Due from related parties (Note 5)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Recoverable taxes and other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">537,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">687,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,177,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,317,966</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories &#150; Net (Note 6)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">268,149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,373,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,490,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investments (Note 7)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property and equipment &#151; Net (Note 8)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,367,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,008,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other assets &#151; Net (Note 9)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,278,230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,787,346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Excess of cost of investments in subsidiaries over
book value &#150; Net of accumulated amortization of
Ps.990,498 in 2002 and Ps.860,716 in 2001 (Note 4j.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,069,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,193,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 15,122,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 17,516,280</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>CURRENT LIABILITIES:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable (Note 10g.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 125,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 116,306</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current portion of long-term debt (Note 10)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">351,479</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">807,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable to suppliers, short-term (Note 11)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130,541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Due to related parties (Note 5)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">181,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes and other payables</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">643,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">914,719</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax (Note 12)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">73,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,604</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee profit sharing (Note 12)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,821</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total current liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,464,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,121,464</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt (Note 10)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,193,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,622,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable to suppliers, long-term (Note 11)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Due to related parties (Note 5)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other accounts payable, long-term (Notes 4d. and 4m.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,757,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,945,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Commitments and contingencies (Note 13)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>STOCKHOLDERS&#146; EQUITY:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Contributed capital (Notes 14, 15 and 16):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,139,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,139,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital contributed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,404,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,404,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,544,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,544,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earned capital (Note 16):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated (losses)&nbsp;profits:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Legal reserve</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">For prior years</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,333,740</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(805,252</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">For the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(528,488</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,397,712</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,313,675</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated other comprehensive income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total majority stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,354,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,438,979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,365,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,571,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities and stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 15,122,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 17,516,280</FONT></TD>
</TR>
<TR>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><I>The accompanying twenty-four notes are an integral part of these consolidated financial statements.</I>
</FONT>

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

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



<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>CONSOLIDATED INCOME STATEMENTS<BR>
(Notes 1, 2, 3 and 4)</B>
</FONT>


<P align="center"><FONT size="2"><B>Expressed in thousands of<BR>
constant Mexican pesos as of December&nbsp;31, 2002</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Services</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 4,933,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 5,955,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 5,497,454</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telephone equipment sales and other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">593,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">641,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">558,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,526,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,597,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,056,304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of sales:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of services</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,533,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,619,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,547,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of telephone equipment sales and other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">488,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">399,644</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">376,288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,021,119</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,019,355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,923,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,505,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,577,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,132,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,817,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,195,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,033,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,247,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,768,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,546,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other operating income (Note 8)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">325,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(457,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(60,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(447,447</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Integral financing cost (gain):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense &#150; Net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">854,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,038,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Foreign exchange (gain)&nbsp;loss  &#151; Net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,028,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(237,606</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain from monetary position</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(415,625</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(281,823</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(476,396</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,513,148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">335,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">579,806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity participation in net loss (profit)&nbsp;of associated
companies and net loss (gain)&nbsp;on sale of equity
investments (Notes 2 and 7)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,890</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from continuing operations before assets tax,
income tax and minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,980,201</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(388,766</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,048,020</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provisions for:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">111,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from continuing operations before minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,100,671</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(543,515</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,213,266</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from continuing operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(521,641</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,195,867</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit from discontinued operations (net of income tax)
(Note 19)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,370</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss after discontinued operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(521,641</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,186,497</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of the adoption of the new accounting
pronouncement (Note 4d.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 2,084,037)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 528,488)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 1,186,497)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average number of shares of common stock
outstanding (thousands)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,862,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,495,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,396,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic net loss per share of common stock (pesos):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from continuing operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 1.12)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 0.35)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 0.86)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit from discontinued operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of the adoption of the new accounting
pronouncement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.00</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic net loss per share of common stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 1.12)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 0.35)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 0.85)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><I>The accompanying twenty-four notes are an integral part of these consolidated financial statements.</I>
</FONT>

<P align="center"><FONT size="2">F-5</FONT>

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



<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146; EQUITY<BR>
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000<BR>
(Notes 1, 2, 3 and 4)</B>
</FONT>


<P align="center"><FONT size="2"><B>Expressed in thousands of constant Mexican pesos<BR>
as of December&nbsp;31, 2002</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accumulated</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Accumulated profits (losses)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capital stock</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capital</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>comprehensive</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>Minority</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>stockholders1</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>subscribed</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>contributions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Legal reserve</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Prior years</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>For the year</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>income</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>equity</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Balance at
December&nbsp;31, 1999</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Ps. 5,684,848</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Ps. 178,606</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Ps. 401,310</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Ps. 39,761</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Ps. 6,304,525</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Application of
1999 net profit</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Ps. 20,065</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Ps. 381,245</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(401,310</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Increase in capital
stock from the
primary offering</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">469,211</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,226,355</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,695,566</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Decrease in minority
interest</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(12,866</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(12,866</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Comprehensive loss
for the year</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(1,186,497</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="1">Ps. 208,135</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(978,362</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Balance at
December&nbsp;31, 2000</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6,154,059</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,404,961</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,065</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">381,245</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(1,186,497</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">208,135</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">26,895</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,008,863</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Application of 2000
net loss</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(1,186,497</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,186,497</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Increase in capital
stock</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">985,499</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">985,499</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Increase in minority
interest</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">105,322</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">105,322</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Comprehensive loss
for the year</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(528,488</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(528,488</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Balance at
December&nbsp;31, 2001</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,139,558</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,404,961</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,065</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(805,252</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(528,488</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">208,135</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">132,217</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,571,196</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Application of
2001 net loss</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(528,488</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">528,488</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Decrease in minority
interest</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(122,057</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(122,057</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Comprehensive loss
for the year</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Balance at December
31, 2002</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">Ps. 7,139,558</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">Ps. 1,404,961</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">Ps. 20,065</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">(Ps. 1,333,740)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">(Ps. 2,084,037)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">Ps. 208,135</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">Ps. 10,160</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="3" align="center"><FONT size="1">Ps. 5,365,102</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><I>The accompanying twenty-four notes are an integral part of these consolidated financial statements.</I>
</FONT>

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

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



<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION<BR>
(Notes 1, 2, 3 and 4)</B>
</FONT>


<P align="center"><FONT size="2"><B>Expressed in thousands of constant<BR>
Mexican pesos as of December&nbsp;31, 2002</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Operating Activities:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from continuing operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 2,084,037)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 521,641)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps. 1,195,867)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Items not requiring the use of resources:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,247,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,768,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,546,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity participation in net loss (gain)&nbsp;of associated
companies and net loss (gain)&nbsp;on sale of equity
investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,890</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16,634</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(21,874</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17,399</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,218,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,353,790</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Resources (used for) provided by operating activities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,426</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">72,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">177,792</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related parties, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(95,761</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Recoverable taxes and other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(59,800</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55,038</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">116,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">232,451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,069</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(41,969</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(539,743</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">270,705</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(166,229</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes and other payables</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(271,107</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(321,716</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,533</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee profit sharing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,821</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,816</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(449</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(54,844</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">764</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Resources (used for) provided by operating
activities before discontinued operations, extraordinary
item and cumulative effect of the adoption of the new
accounting pronouncement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(488,970</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,183,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,564,187</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of the adoption of the new accounting
pronouncement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,847</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of tax loss carryforwards</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit from discontinued operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Resources (used for) provided by operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(488,970</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,176,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,573,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financing activities:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">658,756</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,640,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">164,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Principal payments on long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,836</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,299,457</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,258,761</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from related parties financing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase (decrease)&nbsp;in notes payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,966</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,947</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase in capital stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">985,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of rights and primary offerings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,695,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated effect of deferred taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Resources provided by financing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">628,886</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">396,940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">822,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Investing activities:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchase of property and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(808,224</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,044,030</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,262,344</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">(Purchase) sale of common stock of associated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(167,019</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,719</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Acquisition of Portatel, net of cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(523,553</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase in telephones to be amortized</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(551,524</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,150,163</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Decrease in escrow account</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">464,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">523,527</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">536,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Disposal (purchase)&nbsp;of other assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(269,357</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(157,682</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Resources used for investing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(419,066</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,860,735</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,054,597</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net decrease in cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(279,150</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(287,104</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(658,809</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at the beginning of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">439,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">726,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,385,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at the end of the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 160,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 439,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 726,289</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><I>The accompanying twenty-four notes are an integral part of these consolidated financial statements.</I>
</FONT>

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

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



<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
AS OF DECEMBER 31, 2002, 2001 AND 2000</B>
</FONT>


<P align="center"><FONT size="2"><B>Except as otherwise noted, expressed<BR>
in thousands of constant Mexican pesos as of December&nbsp;31, 2002.<BR>
Amounts expressed in U.S. Dollars are in thousands.</B>
</FONT>


<P align="left"><FONT size="2"><B>Note 1 &#151; Entity, Nature of Business and Principal Stockholders</B>
</FONT>


<P align="left"><FONT size="2"><B>Entity and nature of business</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a part of the recapitalization and restructuring plan of <I>Grupo
Iusacell, S.A. de C.V.</I>, a new holding company, <I>Nuevo Grupo Iusacell, S.A. de
C.V. </I>was incorporated on August&nbsp;6, 1998 to acquire and hold all of the
outstanding shares of <I>Grupo Iusacell, S.A. de C.V</I>. On March&nbsp;1, 2000, both
companies changed their names: <I>Nuevo Grupo Iusacell, S.A. de C.V. </I>changed its
name to <I>Grupo Iusacell, S.A. de C.V. </I>(New Iusacell), and <I>Grupo Iusacell, S.A.
de C.V. </I>changed its name to <I>Grupo Iusacell Celular, S.A. de C.V. </I>(Old
Iusacell). In July 1999, New Iusacell initiated an offer to exchange its two
series of common stock for the four series of common stock of Old Iusacell then
outstanding on a one for one basis. As a result of the exchange, New Iusacell
acquired 99.50% of Old Iusacell shares when the offer expired on August&nbsp;10,
1999.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New Iusacell and its subsidiaries (Old Iusacell and its subsidiaries prior
to the recapitalization) are referred to collectively herein as the Company.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;1, 2000, New Iusacell launched a second exchange offer and at
its conclusion, Old Iusacell&#146;s ADS depositary, The Bank of New York, converted
the remaining, non-exchanged Old Iusacell ADSs into New Iusacell shares. As a
result of these transactions, New Iusacell increased its ownership in Old
Iusacell to 99.99%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2000, New Iusacell launched a primary public offering under which
New Iusacell sold 10,529,700 series V ADSs at a price of U.S.$.015125 per ADS
raising Ps.1,695,566 (U.S.$159,370) in net proceeds.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;15, 2000, New Iusacell launched a private purchase offer under
which the Company expected to purchase the remaining Old Iusacell shares not
tendered during the two exchange offers. Pursuant to this private offer, New
Iusacell purchased a total of 9,717 series L shares of Old Iusacell and 392
series D shares of Old Iusacell. When this offer expired on September&nbsp;29,
2000, there were 38,684 shares of Old Iusacell not owned by New Iusacell.
These 38,684 shares represented 0.002% of the total outstanding shares of Old
Iusacell at December&nbsp;31, 2000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;30, 2001, Old Iusacell&#146;s stockholders approved a 30,000 to 1
reverse stock split. Upon implementation of the reverse split in the second
quarter of 2001, the Company increased its ownership in Old Iusacell to
100.00%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;27, 2001, at ordinary and extraordinary stockholders&#146;
meetings, the Company&#146;s stockholders approved a capital stock increase for
Ps.985,499 (U.S.$100,000) through the issuance of 224,461,739 series A shares
and 210,320,870 series V shares. The Company&#146;s major stockholders&#146; subscribed
to their proportional part of the increase and the Company launched a rights
offering for the unsubscribed series V shares. When the offer expired, a total
of 82,046,734 series V shares were subscribed to, leaving 40,694,059 series V
shares unsubscribed to, which were then subscribed to by Verizon
Communications, Inc. (Verizon) through some of its subsidiaries.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Old Iusacell is a holding company incorporated on October&nbsp;6, 1992. Its
subsidiaries are primarily engaged in the wireless telecommunications business
and hold concessions to operate cellular telephone systems in five market areas
(each a Region) in Mexico. New Iusacell, through Old Iusacell, holds the
non-wire line cellular concessions for Region 5 (Guadalajara), Region 6 (Leon),
Region 7 (Puebla), a cellular authorization for Region 9 (Mexico City), and in
2001, acquired the company that holds the concession for Region 8 (M&#233;rida)
(Note 2).
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New Iusacell subsidiaries also hold concessions to provide long distance
services, nationwide and international paging services and, starting on
December 2001, to provide commercial wireless personal communication services
(PCS)&nbsp;in Regions 1 and 4 in northern Mexico.
</FONT>


<P align="left"><FONT size="2"><B>Principal stockholders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 1997, after execution of a definitive agreement between Old
Iusacell&#146;s principal stockholders and approval by the Mexican government, Bell
Atlantic Corporation (Bell Atlantic) assumed management control of Old Iusacell
from Carlos Peralta and companies and individuals controlled by or related to
him (together, the Peralta Group). After the incorporation of New Iusacell,
Bell Atlantic also has management control of New Iusacell.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;30, 2000, Bell Atlantic and GTE Corporation, completed their
merger, creating Verizon. References made to Verizon with respect to dates
prior to June&nbsp;30, 2000 are references to Bell Atlantic prior to its acquisition
of GTE Corporation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;4, 2001, after obtaining the authorization of the Mexican
regulatory agencies and the finalization of a stockholders&#146; agreement between
the Peralta Group and Vodafone Group Plc (Vodafone), the Peralta Group and
Vodafone closed the transaction under which the Peralta Group sold its 34.50%
ownership in New Iusacell to Vodafone. Verizon and Vodafone hold substantial
ownership interests (direct or indirect) in New Iusacell.
</FONT>


<P align="left"><FONT size="2"><B>Note 2 &#151; Acquisitions, Dispositions and Company Structure</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2001, the Company incorporated two new subsidiaries: <I>Iusacell PCS
de M&#233;xico, S.A. de C.V. </I>for the financing of the development of the PCS
services in Regions 1 and 4, and Iusatel USA, Inc. to be engaged in the long
distance business in the United States of America. Iusatel USA, Inc. started
operations in December 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;22, 2001, the Company sold its 65.00% equity interest in
<I>Satelitr&#243;n, S.A. de C.V</I>. As a result of the sale, the Company recorded a gain
of Ps.4,203 (U.S.$429) before taxes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2002, <I>Inflight Phone de M&#233;xico, S.A. de C.V. </I>and <I>Promotora Celuar,
S.A. de C.V.</I>, were merged into <I>Iusacell, S.A. de C.V</I>. The merger was recorded
as of July&nbsp;31, 2002.
</FONT>


<P align="left"><FONT size="2"><B>Acquisition of Grupo Portatel, S.A. de C.V.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;19, 2001, Old Iusacell completed the acquisition of a 78.34%
ownership in <I>Grupo Portatel, S.A. de C.V. </I>and its subsidiaries (Portatel) for
Ps.552,317 (U.S.$56,588). The Company also reached an agreement to acquire the
remaining 21.66% ownership in Portatel for Ps.157,630 (U.S.$16,150). The
Company closed the acquisition of this remaining ownership on February&nbsp;8, 2002.
Portatel is engaged in the wireless communications business and holds the
concession to operate cellular telephone systems in the Region 8, which covers
the Mexican states of Yucatan, Campeche, Quintana Roo, Chiapas and Tabasco in
the southeast of Mexico.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated income statements of the Company include the consolidated
results of Portatel beginning October&nbsp;19, 2001. The assets acquired and
liabilities assumed were recorded at estimated fair values as determined by the
Company&#146;s management based on information currently available, on current
assumptions as to future operations and independent appraisals. A summary of
the assets acquired and liabilities assumed in the acquisition is as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="83%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Estimated fair values:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets acquired</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 696,534</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liabilities assumed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(206,210</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill (amortized by the straight-line method over the
remaining life of the concession)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">219,623</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchase price</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 709,947</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-9</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>Company Structure</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the laws established by the Mexican government, due to Verizon&#146;s
control of New Iusacell, New Iusacell may not own the majority of the voting
stock of Mexican companies that hold concessions to provide telecommunications
services other than cellular service. As of November 1998, Old Iusacell and
Jose Ramon Elizondo, a then director of New Iusacell (the Mexican National),
entered into a joint venture formation agreement (the Agreement) pursuant to
which they agreed to participate together in the microwave frequencies leasing,
long distance, local telephony, PCS and paging businesses.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Old Iusacell and the Mexican National agreed that Old Iusacell would own
94.90% of the economic interest and 49.00% of the voting shares of <I>Iusatel,
S.A. de C.V. </I>(Iusatel), the Company&#146;s long distance concessionaire,
<I>Iusatelecomunicaciones, S.A. de C.V. </I>(Iusatelecomunicaciones), the Company&#146;s
fixed wireless local telephony operation, <I>Punto-a-Punto Iusacell, S.A. de C.V.</I>
(Punto-a-Punto Iusacell), a microwave frequencies concessionaire and <I>Iusacell
PCS, S.A. de C.V. </I>(Iusacell PCS), which holds concessions for 1.9GHz
frequencies in Regions 1 and 4. The Mexican National would own 5.10% of the
economic interest and 51.00% of the voting shares of these companies.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;29, 2002, the Mexican Government granted the Company the right to
own up to 99.99% of the voting shares of Iusacell PCS. After this resolution
was obtained, at an extraordinary stockholders&#146; meeting held on September&nbsp;12,
2002, Iusacell PCS&#146;s stockholders approved the conversion of neutral shares of
Iusacell PCS held by New Iusacell into voting shares of Iusacell PCS. After
this conversion, New Iusacell holds 94.90% of the voting shares and economic
interest of Iusacell PCS.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusatel, Iusatelecomunicaciones and Punto-a-Punto Iusacell (and until
September&nbsp;12, 2002 Iusacell PCS) are each referred herein as a Non-Cellular
Subsidiary and together, the Non-Cellular Subsidiaries.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican National does not have the unilateral right to approve actions
at the shareholder or board level of the Non-Cellular Subsidiaries. Under each
company&#146;s by-laws, all shareholder or board action must also be approved by the
majority of the shares held by Old Iusacell (or New Iusacell) or a majority of
the board members designated by Old Iusacell (or New Iusacell), respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Agreement, together with each joint venture company&#146;s by-laws, enable
Old Iusacell or New Iusacell, as the case may be, to have management control
over the day-to-day operations and financial administration of the Non-Cellular
Subsidiaries. The Mexican National cannot alone, among other things, select,
terminate or determine the compensation of management or establish operating
and capital decisions in the ordinary course of business.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Old Iusacell signed a joint venture agreement with a Mexican company which
holds a fifteen-year concession to provide nationwide and international paging
services through July 2009. As of December&nbsp;31, 2002, Infotelecom is owned
49.00%, 49.00% and 2.00%, by Old Iusacell, Banorte, S.A. (which acquired
<I>Infomin, S.A. de C.V.</I>&#146;s interest in Infotelecom in exchange for the retirement
of debt) and the Mexican National, respectively. Old Iusacell committed to
contribute up to U.S.$10,500. As of December&nbsp;31, 2000, Old Iusacell had
invested all U.S.$10,500. If a partner does not fulfill its responsibilities
under the joint venture agreement, sanctions could cause such partner to lose
its investment and incur a penalty of up to U.S.$1,000.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The subsidiaries of New Iusacell, which are included in the consolidated
financial statements, are the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Economic interest</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>(direct or indirect,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>as of December 31)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Subsidiary</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusacell PCS, S.A. de C.V</I>. (Regions 1 and 4)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusacell PCS de M&#233;xico, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusacell Infraestructura, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusacell Arrendadora, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusacell Infraestructura de M&#233;xico, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Grupo Iusacell Celular, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>S.O.S. Telecomunicaciones, S.A. de C.V. </I>(Region 9)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusacell, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Sistecel, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Comunicaciones Celulares de Occidente, S.A. de C.V. </I>(Region 5)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Sistemas Telef&#243;nicos Port&#225;tiles Celulares, S.A. de C.V. </I>(Region 6)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Telecomunicaciones del Golfo, S.A. de C.V. </I>(Region 7)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Inflight Phone de M&#233;xico, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Inmobiliaria Montes Urales 460, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mexican Cellular Investments, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusanet, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Promotora Celular, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusatelecomunicaciones, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Grupo Iusacell Nicaragua, S.A.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Infotelecom, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Punto a Punto Iusacell, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Grupo Portatel, S.A. de C.V. </I>and subsidiary (Region 8)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Iusatel, S.A. de C.V.</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Iusatel USA, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Note 3 &#151; Basis of Presentation</B>
</FONT>


<P align="left"><FONT size="2"><B>a. Basis of presentation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s consolidated financial statements have been prepared in
conformity with Mexican GAAP. The consolidated financial statements have been
presented in thousands of constant Mexican pesos as of December&nbsp;31, 2002 as
required by Bulletin B-10, &#147;Recognition of the Effects of Inflation on
Financial Information,&#148; as amended, issued by the Mexican Institute of Public
Accountants (MIPA) (Bulletin B-10).
</FONT>


<P align="left"><FONT size="2"><B>b. Consolidated financial statements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Those companies in which the Company holds 50% or more of the capital
stock and/or exercises control over operating and financing activities are
included in the consolidated financial statements. In addition, while the
Company owns less than 50% of the voting common stock of the Non-Cellular
Subsidiaries, it consolidates them because it exercises management control over
their day-to-day operations and financial administration by appointment of the
stockholders and other arrangements (Note 2). All significant inter-company
balances and transactions have been eliminated in consolidation.
</FONT>


<P align="left"><FONT size="2"><B>c. Use of estimates</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial statements in conformity with Mexican GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
</FONT>
<P align="center"><FONT size="2">F-11</FONT>

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


<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;assets and
liabilities at the dates of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ from those estimates.
</FONT>


<P align="left"><FONT size="2"><B>Note 4 &#151; Accounting Policies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of the Company&#146;s significant accounting policies is as follows:
</FONT>


<P align="left"><FONT size="2"><B>a. Monetary unit</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements are presented in Mexican pesos (Ps.), the
currency that, based on Mexican laws, must be used to prepare the accounting
records of the Company and its Mexican subsidiaries.
</FONT>


<P align="left"><FONT size="2"><B>b. Effects of inflation on the financial statements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of the Company have been prepared in
accordance with Bulletin B-10. The Third Amendment to Bulletin B-10 requires
the restatement of all comparative financial statements to constant Mexican
pesos as of the date of the most recent balance sheet presented. Accordingly,
the consolidated financial statements have been restated as follows:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The balance sheet amounts as of December&nbsp;31, 2001 presented
in the consolidated financial statements have been restated to
constant Mexican pesos as of December&nbsp;31, 2002 based on the National
Consumer Price Index (NCPI)&nbsp;published by <I>Banco de M&#233;xico </I>(the
Mexican Central Bank).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated income statements for the current and prior
years have been restated to constant Mexican pesos as of December
31, 2002 using the NCPI from the periods in which the transactions
occurred.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Bulletin B-12, &#147;Statement of Changes in Financial
Information,&#148; issued by the MIPA (Bulletin B-12), addresses the
presentation of the statement of changes in financial position when
financial statements have been restated to constant Mexican pesos as
of the latest balance sheet date. Bulletin B-12 identifies the
origin and application of resources representing differences between
beginning and ending balance sheet amounts in constant Mexican
pesos, excluding the effect of holding non-monetary assets.
Bulletin B-12 also provides that monetary and foreign exchange gains
and losses should not be eliminated from resources provided by
operating or financing activities.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The items that originate from the recognition of effects of inflation on
financial information are as follows:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restatement of non-monetary assets</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories are valued at the average price of the purchases made during
the period and are restated using the NCPI, without exceeding net realizable
value.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the Fifth Amendment to Bulletin B-10, property and equipment,
net, and depreciation for the year are restated using the NCPI, without
exceeding net realizable value.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment are depreciated using the straight-line method,
based on the restated values. During the second quarter of 2001, the Company
completed a technical review of the remaining useful lives of certain analog
and digital network equipment. As a result, the weighted-average useful life
for certain communications equipment is now ten years compared with the
previous 8.7&nbsp;years. This change represented a reduction of approximately
Ps.477,764 in depreciation expense for 2001. The average annual rates of
depreciation used by the Company are as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="84%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(%)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and facilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Communications equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Furniture and fixtures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Transportation equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Computer equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular rental telephones</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not capitalize integral financing cost for assets under
construction, unless the integral financing cost generated by loans are
directly attributable to those assets. For the years ended December&nbsp;31, 2002,
2001 and 2000, the Company did not capitalize integral financing cost.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in associated companies are accounted for using the equity
method based on the associated company&#146;s equity and are adjusted for the
effects of inflation in accordance with Bulletin B-10.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restatement of stockholders&#146; equity</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The contributed and earned capital accounts include the effect of
restatement determined by applying the NCPI factor from the date capital was
contributed or earned. The restatement represents the amount required to
maintain the contributions and accumulated results in constant Mexican pesos as
of December&nbsp;31, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The excess or deficit from restatement of capital account is an element of
stockholders&#146; equity that includes surplus or deficit from holding non-monetary
assets, which represents the excess or deficit in specific values of net
non-monetary assets in comparison with the increase attributable to general
inflation as measured by the NCPI.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Integral financing (gain)&nbsp;cost</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Integral financing (gain)&nbsp;cost is comprised of net interest expense,
foreign exchange gains and losses, gains and losses from net monetary position
and fluctuations in the market value of hedge derivative contracts on
foreign-denominated debt.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange gains and losses on transactions denominated in
currencies other than Mexican pesos result from fluctuations in exchange rates
between the date transactions are recorded and the date of settlement or period
end.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains and losses from net monetary position represent the effects of
inflation, as measured by the NCPI, on the Company&#146;s monetary assets and
liabilities at the beginning of each month. If monetary liabilities exceed
monetary assets, there is a gain from monetary position. If monetary
liabilities are less than monetary assets, there is a resulting loss from
monetary position.
</FONT>


<P align="left"><FONT size="2"><B>c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents consist primarily of bank deposits. The Company
invests its excess cash in deposits with major banks.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 2001, Bulletin C-2, &#147;Financial Instruments,&#148; issued
by the MIPA (Bulletin C-2), requires that all financial instruments be recorded
in the balance sheet at their fair value and changes in the fair value be
recorded in each period in the income statement. Bulletin C-2 also requires
that derivative financial instruments used for hedging purposes be recorded in
the balance sheet and valued using the same valuation criteria used to value
the hedged asset or liability.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s financial instruments consist principally of cash and cash
equivalents, accounts receivable and payable, notes payable, long-term debt,
and foreign currency and interest hedge contracts.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until October, 2002, the Company used derivative financial instruments to
manage the risk of variable interest rates and foreign currency exchange
fluctuations, which under Bulletin C-2, are classified as hedge transactions.
On October 7 and 10, 2002, the Company early terminated the derivative
financial instruments used for hedging purposes (Note 21).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The carrying amounts of the Company&#146;s financial instruments, as reflected
in the balance sheet, approximate their fair value as of December&nbsp;31, 2002 and
2001, except for long-term debt which has a quoted market value and for the
foreign currency and interest rate hedge contracts, which as of January&nbsp;1,
2001, were valued using the same valuation criteria used to value the hedged
asset or liability (Note 21).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the adoption of this new accounting pronouncement, the
Company recognized a cumulative loss on derivative financial instruments of
Ps.6,847 as of January&nbsp;1, 2001. Prior to January&nbsp;1, 2001, the Company recorded
interest rate and foreign currency hedge contracts on a cash basis.
</FONT>


<P align="left"><FONT size="2"><B>e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for doubtful accounts</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company cancels service to customers with invoices that are 60&nbsp;days
past due. The allowance for doubtful accounts represents the Company&#146;s
estimate of the probable loss inherent in all accounts receivable due to
general historical trends of customer performance and factors surrounding the
specific customer&#146;s credit risk. The Company wrote off accounts receivable for
Ps.190,645 and Ps.126,021 in 2002 and 2001, respectively. The charge to income
for the year for the allowance for doubtful accounts amounted to Ps.61,336,
Ps.114,613 and Ps.99,919 in 2002, 2001 and 2000, respectively.
</FONT>


<P align="left"><FONT size="2"><B>f.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in associated companies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company carries under the equity method long-term investments in
associated companies in which it owns between 20.00% and 50.00% of the
company&#146;s voting common stock and over which the Company can exercise
significant influence. Under the equity method, such investments are carried
at cost adjusted for the Company&#146;s share of the net income or losses of these
companies and the effects of restatement of non-monetary assets in the
associated companies. The effects of transactions with such associated
companies are eliminated before applying the equity method.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of cellular telephones given to customers under exclusive service
contracts is amortized based on the nature and terms of the service contracts
to match costs with the timing of earned revenues. During the second quarter
of 2001, the Company decided to reduce the amortization period of cellular
telephones from an average of eighteen months to twelve months. This change
represented an increase of approximately Ps.194,855 in amortization expense for
2001. Until December&nbsp;31, 2001, the cost of such telephones was included in
other assets, net of accumulated amortization. Starting January&nbsp;1, 2002, it is
included in Recoverable taxes and other. Such cost does not exceed market
value.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the end of the contract term, the customer keeps the cellular
telephone. In the event of an early termination of an exclusive service
contract, the customer either (i)&nbsp;is required to return the phone to the
Company or (ii)&nbsp;acquires the telephone at its book value on the date of
termination.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of cellular telephones sold to customers is recorded as cost of
sales based on the average cost of such telephones. Telephones leased to
customers are included in fixed assets and are depreciated over the initial
lease period, generally two years.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Costs related to the acquisition of concessions granted by the Mexican
government to provide cellular telephone services have been capitalized and are
included in other assets. Such costs are amortized on a straight-line basis
over the initial term of the respective concession. The Mexican government
requires the Company&#146;s compliance with the specific terms of each concession.
Through December&nbsp;31, 2002, the Company had complied substantially with such
requirements, except for certain informational requirements of the Mexican
authorities.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that such noncompliance does not expose it to any
risk of concession forfeiture, or any other material liability.
</FONT>


<P align="left"><FONT size="2"><B>i. Advertising</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertising costs are expensed as incurred. The cost of prepaid media
advertising (including television air time, magazine, directory and other print
media) is deferred and recorded in other assets until the advertising airtime
or space is used, at which time, such cost is recognized as an operating
expense. Advertising expense amounted to Ps.280,151, Ps.455,560 and Ps.369,792
for 2002, 2001 and 2000, respectively.
</FONT>


<P align="left"><FONT size="2"><B>j.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Excess of cost of investments in subsidiaries over book value</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The excess of cost over the book value of net assets of acquired
subsidiaries is amortized on a straight-line basis over twenty years.
Amortization expense was Ps.178,153, Ps.179,513 and Ps.174,403 in 2002, 2001
and 2000, respectively.
</FONT>


<P align="left"><FONT size="2"><B>k. Evaluation of long-lived assets</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 cash flows
estimated to be generated by these assets to their respective carrying amounts.
In the event impairment exists, a loss is recognized based on the amount by
which the carrying value exceeds the fair value of the asset. If quoted market
prices for an asset are not available, fair market value is determined
primarily using the anticipated cash flows discounted at a rate commensurate
with the risk involved. Losses on property and equipment to be disposed of are
determined in a similar manner, except that fair market values are reduced for
the cost to dispose.
</FONT>


<P align="left"><FONT size="2"><B>l. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes and employee profit sharing</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;1, 2000, the Company adopted the provisions of revised
Bulletin D-4, &#147;Accounting Treatment of Income Tax, Assets Tax and Employee
Profit Sharing,&#148; issued by the MIPA (Bulletin D-4). This revised Bulletin
significantly modifies the previous accounting treatment for the calculation of
deferred taxes by the partial liability method to a method based on
comprehensive assets and liabilities. The new method requires the recognition
of future tax consequences based on the difference between the financial
statements and tax basis of assets and liabilities -temporary differences- as
of the date of the financial statements.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accumulated effect at the beginning of the year, because of the
adoption of Bulletin D-4, increased the deferred tax asset by Ps.173,102 and
increased stockholders&#146; equity by the same amount (Note 12).
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee profit sharing is a statutory labor obligation payable to
employees and determined, for each subsidiary with employees, on its pretax
income, as adjusted, in accordance with the provisions of Mexican labor and tax
laws.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Mexican labor law, the Company&#146;s employees are entitled
to seniority premiums upon retirement after 15&nbsp;years of service or upon
dismissal, disability or death. The Company follows Bulletin D-3, &#147;Labor
Obligations,&#148; issued by the MIPA (Bulletin D-3). Under Bulletin D-3, the
actuarially determined projected benefit obligation is computed using estimates
of salaries that will be in effect at the time of payment.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel not yet eligible for seniority premiums are also included in the
determination of the obligation with necessary adjustments made in accordance
with the probability that these employees will reach the required seniority.
At December&nbsp;31, 2002, the average seniority of the eligible employees was less
than 4&nbsp;years. The Company&#146;s liability and related costs for seniority premiums
are immaterial for all periods presented.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Mexican labor law, the Company is liable for severance
payments to employees who are dismissed under certain circumstances. Such
compensation is expensed when paid.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has no employee pension plans and does not provide for
post-retirement benefits.
</FONT>


<P align="left"><FONT size="2"><B>n.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit (loss)&nbsp;per share</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic profit (loss)&nbsp;per share is computed by dividing profit (loss)
available to common stockholders by the weighted-average number of common
shares outstanding for the year. The computation of diluted profit (loss)&nbsp;per
share is similar to basic profit (loss)&nbsp;per share, except that the denominator
is increased to include the number of additional common shares that would have
been outstanding if the potentially dilutive common shares had been
issued. For the years ended December, 31, 2002, 2001 and 2000, the
Company did not compute nor disclose diluted profit (loss)&nbsp;per share because,
for those years, the Company incurred losses from continuing operations.
</FONT>


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

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cellular air time is recorded as revenue as service is provided. Until
December&nbsp;31, 2001, revenue from the sale of prepaid cards was recognized at the
date of sale. The Company had recognized the revenue on the sale of prepaid
cards at the date of sale rather than on a deferred basis because the length of
the average consumption period for such prepaid cards was not significant,
i.e., approximately one to one-and-a-half months, and it was not material to
results of operations for 2001 and 2000. Starting January&nbsp;1, 2002, the Company
started to recognize revenue from the sale of the prepaid cards as service is
provided because the increasing length of the average consumption period for
such prepaid cards. Revenues from the sale of prepaid cards associated with
services that have not been provided are deferred until the services are
provided and are included in taxes and other payable in the accompanying
consolidated balance sheet. Sales and cost of sales of equipment and related
services are recorded when goods are delivered and services are provided.
Cellular access charges are billed in advance and recognized when the services
are provided. Other revenues, mainly from paging and long distance services,
are recognized when the related services are provided.
</FONT>


<P align="left"><FONT size="2"><B>p.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency transactions</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency transactions are recorded at the exchange rates in effect
at the transaction date. Assets and liabilities denominated in foreign
currencies are translated to Mexican pesos using the exchange rates in effect
at the time of settlement or valuation at each balance sheet date, with the
resulting exchange differences being recognized as exchange gains or losses.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>q.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive income (loss)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive income (loss)&nbsp;includes the Company&#146;s consolidated net loss
and any other item that, because of specific accounting guidance, is recorded
directly as a part of stockholders&#146; equity, and which are not capital stock
increases, decreases and/or distributions.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The comprehensive income (loss)&nbsp;line included in the consolidated
statement of stockholders&#146; equity represents the result of the performance of
the Company during the year (Note 20).
</FONT>


<P align="left"><FONT size="2"><B>r.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; New accounting pronouncements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 2001, the MIPA issued the revised Bulletin C-9, &#147;Liabilities,
Provisions, Contingent Assets and Liabilities and Commitments&#148; (Bulletin C-9),
which establishes a methodology for valuation, presentation and disclosure of
liabilities and provisions, as well as for valuation and disclosure of
contingent assets and liabilities, and for disclosure for commitments. The
revised Bulletin C-9 states that (i)&nbsp;all contingent assets that have a
practical true realization must be accounted and disclosed in the financial
statements; (ii)&nbsp;contingent assets that have a probable realization cannot be
accounted for in the financial statements, but must be disclosed; and (iii)
contingent assets that do not have a probable realization and cannot be
accounted for in the financial statements are not required to be disclosed.
Bulletin C-9 requires disclosure of committed amounts when it represents
significant fixed assets additions. The provisions of Bulletin C-9 are
required to be applied beginning on January&nbsp;1, 2003, although early adoption is
recommended.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, in December 2001, the MIPA issued revised Bulletin C-8,
&#147;Intangible Assets&#148; (Bulletin C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a future economic
benefit. Revised Bulletin C-8 states that pre-operating costs should be
expensed as a period cost, unless they could be classified as development
costs. Bulletin C-8 requires that intangible assets with finite useful lives
should be amortized over its useful life and that indefinite life intangibles
no longer be amortized. The provisions of Bulletin C-8 are required to be
applied beginning on January&nbsp;1, 2003, although early adoption is recommended.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management is currently evaluating the impact that the adoption of
Bulletin C-8 and Bulletin C-9 will have on its consolidated financial
statements.
</FONT>


<P align="left"><FONT size="2"><B>Note 5 &#151; Related parties</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts and notes payable to related parties, including interest, as of
December&nbsp;31, are as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-term
Verizon</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 178,904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 61,384</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vodafone</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,488</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total short-term</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 181,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 63,507</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term due to Verizon</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. &#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 81,347</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable result from services rendered by the seconded employees
assigned by Verizon and a note payable to Verizon as explained in the following
paragraph.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;8, 2001, in connection with the negotiations for the purchase of
Portatel, Verizon, through one of its affiliates, provided the Company with
financing for U.S.$7,800 which consisted of a two-year note payable due May&nbsp;8,
2003, bearing interest at a fixed annual interest rate of 11.50%. Interest and
principal are payable at the maturity of the note.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is an analysis of the related party transactions described
above:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Service revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 35,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 5,556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 12,777</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular telephones repair expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 16,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 18,332</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Technical expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 21,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94,030</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Lease expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,505</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,744</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 29,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 91,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 120,547</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Acquisition of handsets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 28,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. &#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. &#151;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Note 6 &#151; Inventories, Net</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, inventories, net, consisted of the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="62%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular telephones and accessories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 138,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 377,612</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Less: Allowance for obsolete and
slow-moving inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(103,238</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(117,069</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">260,543</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goods in transit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 35,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 268,149</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Note 7 &#151; Investments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, the Company&#146;s investments were as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Entity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ownership</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Investment</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ownership</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Investment</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Editorial Celular, S.A. de C.V</I>.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40.00</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">Ps. 13,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40.00</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">Ps. 17,026</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">AMCEL</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,021</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 34,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 36,005</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Editorial Celular, S.A. de C.V. </I>is accounted for by the equity method.
For each of the three years in the period ended December&nbsp;31, 2002, the
Company&#146;s share of net (losses)&nbsp;earnings of <I>Editorial Celular, S.A. de C.V. </I>was
of (Ps.9,741) Ps.2,687 and (Ps.20,767), respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2001, the gain on sale of equity
investments was Ps.4,203.
</FONT>

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

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


<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS&#151;(Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Note 8 &#151; Property and Equipment, Net</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, property and equipment, net, consisted of:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Buildings and facilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 1,721,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 1,715,913</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Communications equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,571,302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,774,064</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Furniture and fixtures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">206,103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Transportation equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84,233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Computer equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,770,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,528,919</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular rental telephones</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,928</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,658</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,532,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,318,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated depreciation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,021,487</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,946,248</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,511,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,372,642</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Land</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">72,110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Construction in progress</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">783,055</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,565,384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advances to suppliers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 9,367,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps. 10,008,780</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation expense was Ps.1,449,679, Ps.1,318,236 and Ps.1,365,798
for 2002, 2001 and 2000, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1999, the Company entered into a series of agreements with
<I>MATC Celular, S. de R.L. de C.V. </I>(an affiliated company of American Tower
Corporation) (&#147;MATC Celular&#148;). These agreements, among other things, gave MATC
Celular the right to acquire approximately 350 existing Old Iusacell
non-strategic towers. During 2002 and 2001, Old Iusacell and some of its
subsidiaries sold 76 and 244 non-strategic towers to MATC Celular,
respectively, for Ps.114,126 (U.S.$11,400) and Ps.368,633 (U.S.$36,600),
respectively, generating a gain on the sale, before taxes, of Ps.100,979 and
Ps.325,436, respectively. As a part of this agreement, a subsidiary of New
Iusacell signed a lease contract for the same towers with MATC Celular for a
minimum mandatory term of ten years, a term that could be automatically
extended for two additional periods of five years each (Note 13a.).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, Bulletin D-5, &#147;Leases&#148; (Bulletin D-5), establishes the
general criteria for capital and operating lease transactions. Sale-leaseback
transactions are recognized with the use of the general criteria of
Bulletin D-5. The timing of the recognition of a gain derived from
sale-leaseback transactions should be based on the subsequent lease
classification criteria of the leaseback portion of the transaction. If the
subsequent leaseback is accounted for as an operating lease, full immediate
gain recognition is allowed, whereas, if the subsequent leaseback is accounted
for as a capital lease, the gain is deferred and amortized in proportion with
the estimated useful life of the asset leased. Based upon this criteria, the
sale-leaseback agreement with MATC Celular was recorded by the Company as an
operating lease and consequently, the Ps.100,979 and Ps.325,436 gains were
recognized at the date of the sale and have been recorded as other operating
income in the consolidated income statements for the years ended December&nbsp;31,
2002 and 2001.
</FONT>
 <P align="center"><FONT size="2">F-19</FONT>





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


<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>Note 9 &#151; Other Assets, Net</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, other assets consisted of the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Concessions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,556,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,556,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular telephones (Note 4g.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,512,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Prepaid expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">362,165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">378,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Advance payments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">615,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">530,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pre-operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">139,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">143,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">106,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">104,808</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred income taxes, net (Note 12)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">163,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" nowrap colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" nowrap colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,943,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,409,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(665,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="left"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,622,088</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" nowrap colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" nowrap colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">2,278,230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">2,787,346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" nowrap colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" nowrap colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Concessions and cellular telephone amortization expense was Ps.619,233,
Ps.1,270,772 and Ps.1,006,088 in 2002, 2001 and 2000, respectively. In January
2002, cellular telephones were reclassified to current assets (Note 4g.)
</FONT>


<P align="left"><FONT size="2"><B>Note 10 &#151; Notes Payable and Long-Term Debt</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002 and 2001, the long-term debt of the Company
consisted of the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. Dollars 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Secured senior notes due 2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,565,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,453,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unsecured senior notes due 2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,653,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,392,257</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BNP credit agreement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">242,530</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,754</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BNP refaccionario loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34,545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amended and restated syndicated loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">265,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,772,902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,574,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current portion of long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">792,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,270,747</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,650,827</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$784,830</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">8,193,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7,622,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>a. Secured senior notes due 2004</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;25, 1997, Old Iusacell completed an offering of long-term, secured
senior notes due July&nbsp;15, 2004 for U.S.$150,000, accruing interest at a fixed
rate of 10.00%, payable semi-annually starting January&nbsp;15, 1998 (the Notes Due
2004). The Notes Due 2004 are redeemable at the option of Old Iusacell, in
whole or in part, at any time on or after July&nbsp;15, 2001 starting at a
redemption price of 105.00% of principal amount plus accrued interest, if any,
declining to 102.50% after July&nbsp;15, 2002, and finally to 100.00% after July&nbsp;15,
2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Notes Due 2004 may also be redeemed at a price equal to 100.00% of
principal amount plus accrued interest, if any, in the case of legal changes
adversely affecting the treatment of the withholding taxes on payments to
holders of the Notes Due 2004.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>b. Unsecured senior notes due 2006</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;16, 1999, New Iusacell completed an offering of long-term,
unsecured senior notes due December&nbsp;1, 2006 for U.S.$350,000, accruing interest
at a fixed rate of 14.25%, payable semi-annually starting June&nbsp;1, 2000 (the
Notes Due 2006). New Iusacell invested approximately U.S.$133,600 of the net
proceeds of the offering in securities in escrow to secure the first six
semi-annual interest payments on the Notes Due 2006. This investment was
restricted as to withdrawal and was utilized to meet the Company&#146;s interest
commitment on the Notes Due 2006. The last interest payment made with the
proceeds invested in the escrow account was in December 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any time prior to December&nbsp;1, 2002, New Iusacell may redeem in the
aggregate up to 35.00% of the original principal amount of the Notes Due 2006
with the proceeds of one or more public equity offerings by New Iusacell at a
redemption price of 114.25% of principal amount plus accrued interest, if any.
The Notes Due 2006 may also be redeemed at a price equal to 100.00% of
principal amount plus accrued interest, if any, in the case of legal changes
adversely affecting the treatment of the withholding taxes on payments to
holders of the Notes Due 2006.
</FONT>


<P align="left"><FONT size="2"><B>c. BNP credit agreement, as amended</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;12, 2000, a subsidiary of New Iusacell obtained financing to
acquire microwave transmission equipment. The financing consists of a
seven-year secured term facility provided by BNP Paribas (guaranteed by the
Eximbank of Norway) in the principal amount of up to U.S.$30,479. At December
31, 2002, U.S.$25,814 of this facility had been drawn down.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans outstanding under the BNP credit agreement provide for interest at a
rate per annum equal to 0.60% above six-month LIBOR. The BNP credit agreement
also included a commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest under the
credit agreement is paid semi-annually starting on December 2000. Fees under
the credit agreement were paid quarterly starting on September 2000. Principal
payments are due in ten equal semi-annual installments which began in December
2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the years ended December&nbsp;31, 2002 and 2001, the weighted-average
interest rates were 2.45% and 2.52%, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The BNP Credit agreement is guaranteed by New Iusacell.
</FONT>


<P align="left"><FONT size="2"><B>d. BNP refaccionario loan, as amended</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;12, 2000, a subsidiary of New Iusacell obtained financing to
acquire microwave transmission equipment. The financing consists of a four
year secured term facility provided by BNP Paribas in the principal amount of
U.S.$5,379. At December&nbsp;31, 2002, U.S.$4,555 of this facility had been drawn
down.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans outstanding under the BNP refaccionario loan provide for interest at
a rate per annum equal to 2.00% above six-month LIBOR. The BNP refaccionario
loan also included a commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest under the
refaccionario loan is paid semi-annually starting on December 2000. Fees under
the credit agreement were paid quarterly starting on September 2000. Principal
payments are due in four equal semi-annual installments which began in December
2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the years ended December&nbsp;31, 2002 and 2001, the weighted-average
interest rates were 3.87% and 3.92%, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The BNP refaccionario loan is guaranteed by New Iusacell.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>e. Amended and restated syndicated loan, as amended</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;29, 2001, Old Iusacell completed the restructuring of its
long-term bank loan, its revolving credit facility, and the payment of the
Eximbank financing and the Commerzbank financing by entering into an amended
and restated senior secured loan agreement (the amended and restated syndicated
loan), which consists of:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp; The Tranche A Loan for an aggregate principal amount of U.S.$189,805
for the purpose of refinancing existing indebtedness under the long-term bank
loan and the revolving credit facility and under a certain bridge loan used to
pay the January 2001 principal amortization payments under the long-term bank
loan and the revolving credit facility.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp; The Tranche B Loan for an aggregate principal amount of U.S.$75,817
for the purpose of paying existing indebtedness under the Eximbank financing
and the Commerzbank financing and under a certain bridge loan used to pay also
in January 2001 a principal amortization payment under the Commerzbank
financing.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amended and restated syndicated loan provides for interest at a rate
per annum equal to one, two, three or six-month LIBOR at Old Iusacell&#146;s option
plus a spread ranging, depending on Old Iusacell&#146;s leverage ratio, from 1.75%
to 2.25% with quarterly interest payments which began on May&nbsp;29, 2001.
Principal installments will be due beginning 2004 through 2006.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There was no gain or loss recognized from this loan restructuring.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;7, 2001 the amended and restated syndicated loan was amended,
and a waiver and consent were granted by the lenders allowing Old Iusacell to
(i)&nbsp;create liens encumbering initial deposits and margin deposits securing
indebtedness under any interest rate protection agreement or other interest
hedging agreement up to the principal amount of indebtedness of Old Iusacell
and its subsidiaries with floating rates of interest; (ii)&nbsp;make loans or
advances to New Iusacell in lieu of paying dividends at such times and in such
amounts as necessary to permit New Iusacell to pay scheduled interest
(including any tax gross-up with respect thereto) and principal payments as and
when due in respect to the Notes Due 2006 and (iii)&nbsp;make loans or advances to
New Iusacell in lieu of paying dividends in an amount not to exceed U.S.$5,000,
so long as an event of default has not occurred, to discharge other liabilities
of New Iusacell incurred in the ordinary course of business.
</FONT>


<P align="left"><FONT size="2"><B>f. Covenants and collateral</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amended and restated syndicated loan, the BNP credit agreement, the
BNP refaccionario loan, the Notes Due 2004 and the Notes Due 2006 contain
certain restrictive covenants, including the maintenance of certain financial
ratios, restrictions on incurring additional debt, limitations on capital
expenditures and restrictions on the sale or lease of Old Iusacell&#146;s assets.
As of December&nbsp;31, 2002 and 2001, New Iusacell and Old Iusacell had complied
with such covenants.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Old Iusacell&#146;s obligations under the amended and restated syndicated loan
are unconditionally guaranteed, jointly and severally, by the principal
operating and cellular concession-holding subsidiaries of Old Iusacell and are
secured by the pledge of substantially all capital stock and equity interests
held by Old Iusacell and by all cellular concessions, and by a first lien on
substantially all assets used in connection with or related to such
concessions.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, the Company&#146;s debt matures as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. Dollars</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Mexican pesos</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$7,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">77,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">255,910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,671,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2005</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">137,973</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,440,342</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">388,365</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,054,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2007</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$792,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">8,270,747</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>g. Notes payable</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, notes payable consisted of the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. Dollars</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Handset facility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">125,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Handset facility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">116,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">125,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">116,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;25, 2002, Old Iusacell obtained a handset acquisition
financing facility from <I>Banco Santander Mexicano, S.A. </I>(Santander), which
consisted of a one-year unsecured credit facility in a principal amount of
U.S.$12,000. Loans outstanding under this facility provided for interest at an
annual variable rate of LIBOR plus a spread of 1.00%. Interest was paid
quarterly. At the maturity date of this facility, February&nbsp;25, 2003, Old
Iusacell reached an agreement with Santander to refinance a portion of this
facility under which Old Iusacell paid Santander U.S.$7,000 plus accrued
interest, and refinance the remaining U.S.$5,000. The refinanced facility
consists of an unsecured five-months credit facility in a principal amount of
U.S.$5,000. This loan provides for interest at an annual fixed rate of 3.84%.
Interest and principal will be paid in five equal monthly installments starting
March&nbsp;25, 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This facility contains certain restrictive covenants. As of December&nbsp;31,
2002, Old Iusacell had complied with such covenants.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2001, Old Iusacell obtained a handset acquisition financing
facility from Santander, which consisted of a one-year unsecured credit
facility in a principal amount of U.S.$12,000. Loans outstanding under this
facility provided for interest at an annual rate of 6.9938%. Interest was paid
quarterly and the principal was paid on February&nbsp;19, 2002.
</FONT>


<P align="left"><FONT size="2"><B>Note 11 &#151; Notes Payable to Suppliers</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, notes payable to suppliers consisted of the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. Dollars</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Short-term:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">The Harris Facility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$1,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">12,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">The Motorola Facility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">88,261</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">The TV Azteca Facility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">42,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total short-term</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$1,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">12,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">130,541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Long-term:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">The Harris Facility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$9,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">96,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">61,795</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-23</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>The Motorola Facility</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;31, 2000, Portatel, through one of its subsidiaries, obtained a
five-year credit facility from Motorola Credit Corporation (Motorola) to be
used solely to acquire communications equipment, in the principal amount of
U.S.$9,106 (the Motorola Facility). Drawdowns under the Motorola Facility were
available for one year. Loans outstanding under the Motorola Facility accrue
interest at a variable annual rate of six-month LIBOR plus 6.00%. Principal
and interest are payable in April 2002. Portatel drew down the entire
U.S.$9,106 during 2000 and 2001. As a part of the agreement, Portatel was
required to keep an escrow account to deposit monthly the accrued interest on
the loans outstanding. This facility was repaid on April, 2002.
</FONT>


<P align="left"><FONT size="2"><B>The TV Azteca Facility</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;5, 2001, the Company, through one of its subsidiaries,
obtained a credit facility from <I>TV Azteca, S.A. de C.V. </I>to be used solely to
acquire television air time, in the principal amount of Ps.40,000 (the TV
Azteca Facility). The facility provides for interest at a variable annual rate
of TIIE times 1.50. Principal and interest are payable in six monthly
installments starting January&nbsp;31, 2002. This facility was repaid during 2002.
</FONT>


<P align="left"><FONT size="2"><B>The Harris Facility</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;18, 2000, the Company through one of its subsidiaries entered
into a framework agreement, as amended, with its supplier <I>Harris, S.A. de C.V.</I>
for the purchase, construction, installation and financing of microwave
equipment in a principal amount of up to U.S.$10,873.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the Company had drawn down five Tranches in a
principal amount of U.S.$10,429 which consists of:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp; Tranches 1, 2A, 2B and 2C in a principal amount of U.S.$6,376 bearing
interest at a rate of average term LIBOR plus 1.25%; interest is paid
semiannually starting six months after each draw dawn date. Principal payments
are due in six equal semiannual installments starting two years after each draw
dawn date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp; Tranche 2D in a principal amount of U.S.$4,053 bearing interest at a
rate of average term LIBOR plus 3.50%; interest is paid semiannually starting
six months after the draw dawn date. Principal payments are due in four equal
semiannual installments starting two years after the draw dawn date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The five tranches are guaranteed by the Company.
</FONT>


<P align="left"><FONT size="2"><B>NOTE 12 &#150; Income Tax, Net Assets Tax and Employee Profit Sharing</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2002, the provision for income taxes
consisted of current income tax and assets tax of Ps.111,220 and deferred
income tax of Ps.9,250.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the years ended December&nbsp;31, 2001 and 2000, the provision for income
taxes consisted of current income tax and assets tax of Ps.154,749 and
Ps.165,246, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Old Iusacell has filed annual consolidated income tax returns since the
tax year beginning January&nbsp;1, 1994. Starting the year ended December&nbsp;31, 2000,
New Iusacell is the holding company for tax consolidation purposes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The statutory income tax rate in Mexico is 35%. As a result of the
amendment to the income tax law enacted on January&nbsp;1, 2002, the 35% statutory
income tax rate will be reduced annually starting in 2003, and continue to
decrease until the statutory rate is 32% in 2005. Consequently, the effect of
the gradual decrease in the statutory
<P align="center"><FONT size="2">F-24</FONT>

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


<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">Income Tax rate reduced the deferred tax
asset in 2002. For the years ended December&nbsp;31, 2002 and 2001, the Company
generated tax losses of Ps.1,981,005 and Ps.613,904, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002 and 2001, the main temporary differences the Company
recognizes for the calculation of deferred income taxes were as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Allowance for doubtful accounts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">93,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">222,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liability accruals</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax losses carry forwards and tax credits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,117,358</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,099,899</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(35,698</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(268,149</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,682,327</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,160,999</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telephones to be amortized</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(141,345</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(184,941</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Concessions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(308,268</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(325,840</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Temporary differences</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,076,210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,458,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,076,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">510,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Valuation allowance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(903,572</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(327,385</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred income tax asset</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">182,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax rate change</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,250</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net deferred income tax asset</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">163,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">182,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has recorded a net deferred tax asset of Ps.163,852
reflecting, mainly, the benefit of tax loss carry forwards, which expire in
varying amounts between 2005 and 2012. Realization is dependent on generating
sufficient taxable income prior to expiration of the loss carry forwards.
Although realization is not assured, management believes it is more likely than
not that most of the net deferred tax asset at December&nbsp;31, 2002 will be
realized based on the Company&#146;s business plan estimate of future taxable income
over the next five years in an amount sufficient to utilize the net deferred
tax losses recorded as of December&nbsp;31, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s estimate of future taxable income is based primarily on and
supported by (i)&nbsp;additional increase in revenues generated by the Calling Party
Pays feature with an important taxable operating margin, (ii)&nbsp;the change in the
income tax law to increase the useful lives for network equipment from 3.3
years to 12.5&nbsp;years, representing an important decrease in depreciation expense
for income tax purposes and (iii)&nbsp;an increase in 2003 of the potential effects
of additional cost cutting.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of the deferred tax asset considered realizable could be
reduced in the near term if estimates of future taxable income during the carry
forward periods are reduced. As of December&nbsp;31, 2002 and 2001, the Company had
a valuation allowance of Ps.903,572 and $ 327,385, respectively, to reduce
its deferred tax assets to estimated realizable value. The valuation allowance
primarily relates to the deferred tax assets arising from tax loss carry
forwards and tax credits.At December&nbsp;31, 2002, the Company had the following
net operating losses for income tax purposes that may be carried forward and
applied against future taxable earnings:
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Year of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Expiration</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>loss</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of loss</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>year</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1993</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">24,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1994</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1995</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">243,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1996</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1997</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">190,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">289,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">197,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">657,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2010</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">613,904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,981,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These losses are indexed for inflation from the year incurred to the sixth
month of the year utilized. Accordingly, these amounts include inflation up to
June 2002. Due to the restructuring of the Company related to Verizon&#146;s
assumption of management control (Note 2), the Company did not include
additional tax losses for Ps.1,018,114, relating to one of its subsidiaries,
Iusatelecomunicaciones, and may not be able to apply these losses against other
subsidiaries&#146; profits in 2003 and beyond.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 1.8% net assets tax is calculated on the average value of
substantially all assets less certain liabilities. This tax is required to be
paid if this computation exceeds the amount of income tax. The 1.8% net assets
tax paid may be utilized as a credit against future income tax in the years in
which the Company generates an income tax in
excess of the assets tax. The assets tax is available as a carry forward
for up to ten years and is subject to restatement based on the NCPI when used.
As of December&nbsp;31, 2002, net assets tax available as a carry forward was
Ps.497,718 which expires in 2007.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee profit sharing, generally 10%, is computed on taxable income,
with adjustments to exclude inflationary effects and the restatement of
depreciation expense. In the years ended December&nbsp;31, 2002 and 2001, the
Company did not generate any taxable income for profit sharing purposes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effective rate reconciliation as of December&nbsp;31, was as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001(*)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000(*)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss on continuing operations before taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(Ps.1,980,201</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(Ps.388,766</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(Ps.1,048,020</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statutory Income Tax rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income Tax (benefit)&nbsp;expense at statutory rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(693,070</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(136,068</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(366,807</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Add (deduct):</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventory purchases less cost of sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(210,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,591</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,689</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(285,605</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(247,961</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(195,197</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Differences between interest and inflationary
gains or losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215,418</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">84,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for doubtful accounts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,662</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,993</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telephones to be amortized</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">205,940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(43,857</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Goodwill amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,830</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax rate change</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">174,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income Tax (benefit)&nbsp;expense for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(Ps.693,352</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(Ps.214,866</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(Ps.230,256</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effective rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">55</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net assets tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">111,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">154,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(*) Certain reclassifications were made in prior years to conform to
classifications used in the most recent year.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>Note 13 &#151; Commitments and Contingencies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the Company had the following commitments and
contingent liabilities:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has entered into operating lease agreements for
administrative offices, sales branches and service facilities and since 2001,
operating lease agreements with MATC Celular for the lease of towers (Note
8c.). These lease agreements expire at various dates through 2011, and some
agreements contain options for renewal. Lease expense was Ps.382,842,
Ps.166,117 and Ps.173,426 for the years ended December&nbsp;31, 2002, 2001 and 2000,
respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future annual minimum rental payments under existing leases as of December
31, 2002 are as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">419,157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">393,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2005</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">376,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">367,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2007</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">349,494</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Thereafter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,155,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">3,061,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may have contingent liabilities for taxes and penalties
that the tax authorities may assess based on audits of prior years&#146; tax
returns.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 1998, Old Iusacell learned that the Montes Urales property was
subject to two liens. Such liens were not identified when <I>Inmobiliaria Montes
Urales 460, S.A. de C.V. </I>was acquired in 1994, nor was Old Iusacell notified of
such liens subsequent to the acquisition. During 2002, the liens have been
removed.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Old Iusacell has certain commitments derived from its joint venture
agreement with <I>Infomin, S.A. de C.V. </I>(Note 2).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During April 2001, Iusatel, a subsidiary of the Company, reached an
agreement to settle the outstanding amounts due related to the special projects
implemented by <I>Tel&#233;fonos de M&#233;xico, S.A. de C.V. </I>(Telmex) to permit competition
in long distance telephony. Iusatel agreed to pay for its portion of such
special projects in two parts: (i)&nbsp;a fixed payment of approximately
U.S.$13,600, payable in twelve equal monthly installments beginning in April
2001, and (ii)&nbsp;a U.S.$0.0053 per full minute, usage-based surcharge to the
local wire line interconnection rate from January&nbsp;1, 2001 through December&nbsp;31,
2004 for long distance calls terminated in Telmex&#146;s local wire line network.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Iusacell, S.A. de C.V.</I>, a subsidiary of the Company, decided to sue and
seek compensatory damages from one of the Company &#180;s distributors as a result of
the latter&#146;s decision to breach their distribution agreement. In the same act,
such distributor also sued Iusacell, S.A. de C.V. The decision of the Court in
the first instance has been not to set a favorable opinion to any of the parts.
Both parties have appealed the Court&#146;s decision.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 2002 the Mexican Congress approved a tax law reform that
assesses an additional 10% excise tax on certain wireless telecommunications
services. In February 2002, the Company filed an injunction action to
challenge the Mexican government&#146;s implementation of the tax. The Company has
obtained a favorable resolution against this 10% excise tax and the Mexican
government has filed an appeal.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2003, the Company has filed an injunction action to challenge
the Mexican government regarding the same excise tax for the year 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A supplier of the Company has sued <I>Iusacell, S.A. de C.V. </I>for the
improper termination of their agreement. The Company has obtained a favorable
resolution in the first instance. The supplier has filed an appeal.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A client of the Company has sued <I>SOS Telecomunicaciones, S.A. de C.V.</I>,
a subsidiary of the Company. The process is in a preliminary stage.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As discussed in Note 10, the Company has important borrowings, which
require, among other things, compliance with certain financial ratios,
specifically a debt/EBITDA ratio at the <I>Grupo Iusacell Celular, S.A. de C.V.</I>
level, on a quarterly basis. If the Company incurs operating losses during the
first quarter of 2003 and/or the debt has a substantial increase due to the
Mexican peso devaluation relative to the U.S. dollar, the Company might not be
in compliance with the financial covenant ratio under the Amended and Restated
Syndicated loan agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Company breaches the financial covenant ratio and does not obtain a
waiver, this could result in the acceleration of the Amended and Restated
Syndicated loan, and because of cross-defaults, the Notes due 2004, the Notes
due 2006, the BNP Credit Agreement and the BNP Refaccionario loan could become
due and payable. Based upon current projections, the Company believes it is
probable that it does not comply with the existing financial covenant ratio
unless it is modified or waived. The Company plans to request an amendment to
the debt/EBTIDA covenant ratio, increasing it to 3.5x from 2.5x.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has started to explore, together with external financial and
legal advisors, the possibility of entering into a debt restructuring process.
Although no assurances can be given, the Company expects to successfully
conclude such restructuring during 2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s ability to fulfill its long-term financial commitments
depends on the results of theses negotiations.
</FONT>


<P align="left"><FONT size="2"><B>Note 14 &#151; Contributed Capital</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the years ended December&nbsp;31, 2002, 2001 and 2000, the following
transactions took place:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;1, 2000, New Iusacell launched a second exchange offer of its
series V ADS and shares, for Old Iusacell&#146;s series D and L ADSs and shares on a
one-for-one basis. At the end of the second exchange offer, New Iusacell
exchanged 5,670,360 series V shares for 33,070 Old Iusacell series D shares and
5,637,290 Old Iusacell series L shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2000, Old Iusacell&#146;s ADS depositary, The Bank of New York,
converted 1,171,464 series L shares that had previously been held in the form
of series L ADSs into New Iusacell&#146;s series V shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2000, New Iusacell launched a primary public offering under which
New Iusacell sold 10,529,700 series V ADSs at a price of U.S.$.015125 per ADS.
Pre-emptive stockholder rights were exercised for 71,752 series V shares.
Proceeds from the offering amounted to Ps.1,695,566 (U.S.$159,370) net of
expenses.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the September&nbsp;29, 2001 stockholders&#146; meeting, the Company&#146;s
stockholders approved a capital increase of up to Ps.985,499 (U.S.$100,000)
through the issuance of 224,461,739 series A shares and 210,320,870 series V
shares. The increase was subscribed by the principal stockholders&#146; of the
Company and through a public rights offering.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The changes in the number of shares of common stock for the period January
1, 2000 through December&nbsp;31, 2002 are as follows:
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Old Iusacell's shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>New Iusacell's shares</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Series A</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Series B</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Series D</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Series L</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Series A</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Series V</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance as of 1/01/00</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,830,705</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">736,830,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">578,200,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of second exchange offer</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(33,070</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,808,754</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,841,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of primary offering</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">105,297,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuance of common stock upon exercise
of preemptive rights</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">71,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of private offering</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(392</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,717</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance as of 12/31/00</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">736,830,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">690,411,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of the reverse stock split</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(26,450</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,234</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuance of common stock for the
capital stock increase</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">224,461,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">210,320,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance as of 12/31/01</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">961,292,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,732,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">No changes for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance as of 12/31/02</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">961,292,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,732,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each series A and series V share entitles the holder to one vote at any
general meeting of the stockholders of New Iusacell. Series&nbsp;A stockholders are
entitled to vote at a special meeting of the series A stockholders to elect
seven of the twelve members of the Board of Directors and the
corresponding alternate directors. Series&nbsp;V stockholders are entitled to vote
at a special meeting of the series V stockholders to elect five of the twelve
members of the Board of Directors and the corresponding alternate directors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New Iusacell&#146;s bylaws require that, unless a stockholders&#146; meeting
resolves otherwise, any capital increase effected pursuant to a capital
contribution be represented by new series A and V shares in proportion to the
number of shares of each such series outstanding. The bylaws provide that the
series V shares may not exceed 50% less one share of New Iusacell&#146;s capital
stock.
</FONT>


<P align="left"><FONT size="2"><B>Note 15 &#151; Executive Employee Stock Purchase Plan</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Stock Purchase Plan is administered by a management trust with the
assistance of the trust division of a Mexican bank. Under the Stock Purchase
Plan, a committee, which is composed of certain executive officers of the
Company (the Technical Committee), determines to which executive employees
series V shares of New Iusacell will be offered for purchase. The Technical
Committee also determines the number of series V shares to be offered for
purchase to such executive employees, the purchase price per share, the vesting
schedule, the payment terms and all other terms and conditions thereof.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of series V shares that may be subject to purchase rights
granted under the Stock Purchase Plan cannot exceed 4.9% of the aggregate
number of issued and outstanding New Iusacell shares.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of the changes of the stock options for employees for the year
ended December&nbsp;31, is presented below.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Weighted- average</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Weighted- average</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Weighted- average</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>exercise price</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>exercise price</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>exercise price</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Outstanding at beginning
of year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">11.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">10.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,695,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Granted</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">659,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">681,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Exercised</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,210,110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cancelled / Forfeited</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">659,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">681,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Outstanding at the end of
the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Shares exercisable at year end</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,826,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,826,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,804,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes Stock Purchase Plan options outstanding as
of December&nbsp;31, 2002, 2001 and 2000:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Outstanding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Exercisable</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Weighted-average</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Weighted-average</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Range of prices</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Remaining life</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exercise price</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exercise price</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December&nbsp;31, 2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD nowrap align="right"><FONT size="2">4.31 - 9.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,695,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,695,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">11.46 - 15.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,789,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,108,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December&nbsp;31, 2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD nowrap align="right"><FONT size="2">4.31 - 9.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,036,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,036,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">11.46 - 15.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,448,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,789,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December&nbsp;31, 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps 4.31 -   9.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,036,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,036,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">11.46 - 15.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,448,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,789,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Note 16 &#151; Earned Capital</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law, a legal reserve must be created and increased annually
by 5% of the annual net earnings until it reaches 20% of the nominal amount of
a corporation&#146;s capital stock. This reserve is not available for dividends,
but may be used to reduce a deficit or be transferred to capital.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid will be free of income tax if paid out of the Net Taxable
Income Account (CUFIN). A 35% rate will be paid on the amount exceeding the
balance of the CUFIN by multiplying the dividend paid by a factor of 1.5385.
The applicable tax will be payable by the Company, and it may be credited
against the income tax the Company is subject to in the following three fiscal
years. Dividends paid will not be subject to any tax withholding.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, the balance on the CUFIN is approximately
Ps.147,157. New Iusacell currently cannot pay dividends under the covenants of
the Notes Due 2006.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accumulated</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Historical</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>adjustments for</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>inflation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital stock subscribed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,923,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,216,360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7,139,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital contributions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,209,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,404,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Legal reserve</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated profits from prior years</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,721,429</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">387,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,333,740</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,897,484</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(186,553</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated other comprehensive income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,033</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">3,704,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,650,915</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,354,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accumulated</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Historical</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>adjustments for</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>inflation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital stock subscribed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,923,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,216,360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7,139,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital contributions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,209,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,404,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Legal reserve</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated profits from prior years</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,421,153</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">615,901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(805,252</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(300,276</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(228,212</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(528,488</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated other comprehensive income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,033</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,601,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,837,468</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7,438,979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Note 17 &#151; Foreign Currency Position</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The balance sheet as of December&nbsp;31 includes assets and liabilities
denominated in U.S. Dollars, as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Monetary assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$14,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$242,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Monetary liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">875,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">896,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net monetary liability position in U.S. Dollars</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$861,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$653,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equivalent in nominal Mexican pesos</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">8,994,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,991,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002 and 2001, most of the communications equipment and
inventories of cellular telephones and accessories are of foreign origin (Notes
6 and 8).
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES<BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2002, 2001 and 2000, interest income and interest expense on assets
and liabilities denominated in U.S. Dollars were as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$1,356</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$9,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$7,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">82,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">74,017</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$80,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$80,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">U.S.$66,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equivalent in nominal Mexican pesos</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">845,176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">739,814</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">639,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating results for the years ended December&nbsp;31, 2002, 2001 and 2000
include depreciation and amortization expenses, related to fixed assets and
inventories of foreign origin.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exchange rates as of December&nbsp;31, 2001 and 2000 were Ps.10.4393 and
Ps.9.1695, per U.S. Dollar, respectively. At the issuance date of these
financial statements, February&nbsp;28, 2003, the exchange rate in effect was
Ps.11.03 per U.S. Dollar.
</FONT>


<P align="left"><FONT size="2"><B>Note 18 &#151; Project 450</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A subsidiary was established to provide fixed wireless local telephony
services using the 450 MHz frequency band (Project 450). At December&nbsp;31, 2002
and 2001, Old Iusacell&#146;s investment in Project 450 amounted to Ps.29,014 and
Ps.32,852, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Given the capabilities of digital technology and the success the Company
has had thus far with its deployment, the Company is exploring alternatives for
providing local telephony service, including fixed or limited zone wireless
service in the 800 MHz and 1.9 GHz bands.
</FONT>


<P align="left"><FONT size="2"><B>Note 19 &#151; Discontinued Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1998, Old Iusacell decided to discontinue the operations of
Cellular Solutions, a subsidiary entity dedicated to the sale of accessories
for cellular handsets. Cellular Solutions transferred all its existing
inventories as of December&nbsp;31, 1998 to another subsidiary of Old Iusacell and
terminated all of Cellular Solutions&#146; employees during January and February
1999.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial information regarding Cellular Solutions as of and for the year
ended December&nbsp;31, 2000, was as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="81%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">2,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gross profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss from operations before income taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for income taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit on disposal</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,370</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(Ps.9,370</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


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



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


<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>Note &nbsp;20 &#151; Comprehensive Income</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the years ended December&nbsp;31, 2002, 2001 and 2000, comprehensive income
consisted of the following:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net (loss)&nbsp;profit for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">528,488</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,186,497</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other comprehensive income:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated effect of deferred taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total other comprehensive income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total comprehensive income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">528,488</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">978,362</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Note&nbsp; 21 &#151; Financial Instruments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company determines the fair value of outstanding financial instruments
as follows:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Cash and cash equivalents: the carrying value approximates fair value
due to its short-term nature.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Restricted cash: the Company estimated fair value of restricted cash,
which was held in U.S.A. treasury bonds, based on public rates available
for U.S. treasury bonds of the same duration.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">c.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Accounts receivable and payable: the carrying value approximates fair
value due to its short-term nature.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">d.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notes payable: Carrying value approximates fair value due to its
short-term nature.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">e.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Long-term debt: the Company estimates the fair value of its long-term
debt based on public and current rates available for debt of the same
remaining duration.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">f.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Derivatives: the Company determined the fair value of derivative
financial instruments as follows:</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>Foreign-currency exchange forward contracts</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company purchased foreign-currency exchange forward contracts with
contract terms of up to three years to protect itself against the adverse
effect that exchange rate fluctuations may have on foreign currency-denominated
liabilities, principally U.S. dollars.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2001, 2000 and 1999, the Company used derivative instruments to
hedge its foreign-currency exposure of approximately 50% of the principal and
interest payments coming due over the next year. In August and October 2001,
the Company also used foreign-currency exchange forward contracts to hedge its
exchange rate exposure on the Notes due 2004 for U.S.$150,000 and its interest
payments of U.S.$34,500. Until its early termination, these derivatives were
highly effective since a foreign currency rate change on the forward contract
is offset by a corresponding change in the value of the hedged loan.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 2002, the Company early terminated its foreign-currency
exchange forward contracts hedging its exchange rate exposure on the Notes due
2004, paying a termination fee of U.S.$1,687.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, the Company does not have any foreign-currency
exchange contracts.
</FONT>

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

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>


<P align="left"><FONT size="2"><B>Interest rate collars</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 1998, Old Iusacell entered into an interest rate collar agreement
for a notional amount of U.S.$35,000 until July&nbsp;30, 2002. The collar agreement
limits the maximum effective LIBOR cost to 6.12% if six-month LIBOR is lower
than 7.12% and 7.12% if LIBOR equals or exceeds 7.12%. Old Iusacell can
participate in a decline in LIBOR to 5.30%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;26, 1999, Old Iusacell entered into an additional interest
rate collar agreement to limit the maximum interest rate, which must be paid on
U.S.$15,000 of its floating rate debt until July&nbsp;30, 2002. This collar
agreement limits the maximum effective LIBOR cost to 5.82% if six-month LIBOR
is lower than 6.82% and 6.82% if LIBOR equals or exceeds 6.82%. Old Iusacell
can participate in a decline in LIBOR to 4.75%.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These interest rate collars expired during 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, the fair values of financial instruments were as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">160,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">160,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">439,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">439,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Restricted cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">464,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">464,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,036,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,036,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,317,966</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,317,966</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,361,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,361,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,177,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,177,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Foreign currency hedge
contracts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(179,073</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest rate collar</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(15,284</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">116,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">116,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unsecured senior notes due
2004</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,565,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">782,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,453,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,497,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unsecured senior notes due
2006</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,653,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,096,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,392,257</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,646,676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BNP credit agreement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">242,530</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">242,530</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,754</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">195,754</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BNP refaccionario loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34,545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34,545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amended and restated
syndicated loan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,772,902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,772,902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,574,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,574,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Note&nbsp; 22 &#151; Segment Information</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s segment data is prepared in accordance with International
Accounting Standard No.14 (revised). Reportable segments are those that are
based on the Company&#146;s method of internal reporting.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has three reportable segments that it operates and manages as
strategic business units that offer different products and services. The
Company measures its reportable segments based on operating profit (loss),
including inter-segment revenues and corporate expenses that are allocated to
the operating segments and excluding any non-recurring items. Inter-segment
transactions are accounted for at current market prices. The Company evaluates
the performance of its segments and allocates resources to them based on
earnings before interest, taxes, depreciation and amortization (EBITDA)&nbsp;and
operating income (loss). The accounting policies underlying the reported
segment data are the same as those described in the summary of significant
accounting policies (Note 4).
</FONT>

<P align="center"><FONT size="2">F-34</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s three reportable segments and their principal activities
are:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cellular </I>- The Company operates and provides wireless cellular telephone
services in five of the nine Regions in the Mexican market. The Company serves
customers in large metropolitan areas such as Mexico City, Guadalajara, Le&#243;n,
Puebla and M&#233;rida. The Company&#146;s services include &#147;value added services&#148; such
as voice mail and caller identification of incoming calling numbers.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Long distance </I>- The Company provides long distance services for which its
first natural market is its cellular subscriber base. The Company is also
providing these services to residential and commercial entities. The Company
uses its own switches and transmission equipment and a combination of fiber
optic lines, microwave links, satellite transmission and lines leased from
Telmex to provide these services.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other businesses </I>- The Company provides paging, local telephony, microwave
links and data transmission services. It has concessions for PCS services,
which started to be provided at the end of 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tables below present information about reportable segments for the
years ended December&nbsp;31, 2002, 2001 and 2000 under Mexican GAAP measurement:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Year ended December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Reconciling</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Cellular</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>distance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Businesses</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>segments</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>items <sup>(2)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>consolidated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues &#151; third party</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,221,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">269,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">35,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,526,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,526,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues &#151; affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,166,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">324,935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,482,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,973,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,973,810</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and
amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,967,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,857</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">157,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,248,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,824</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,247,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(59,763</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(138,351</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(203,973</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(402,087</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55,225</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(457,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EBITDA <sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,908,154</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,494</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(46,858</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,846,802</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(57,049</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,789,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,632,206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,381,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,043,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,057,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17,934,505</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,122,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital expenditures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">494,759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">342,877</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">850,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">850,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Year ended December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Reconciling</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Cellular</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>distance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Businesses</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>segments</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>items <sup>(2)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>consolidated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues &#151; third party</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,216,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">310,206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">70,604</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,597,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,597,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues &#151; affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,184,173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">668,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,456,965</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,310,058</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,310,058</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and
amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,616,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">107,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52,717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,777,054</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(8,533</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,768,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(443,297</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(124,534</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(79,334</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(647,165</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">586,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(60,312</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EBITDA <sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,173,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16,809</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(26,617</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,129,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">578,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,708,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29,261,228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">988,266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,237,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,487,236</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,970,956</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,516,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital expenditures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,629,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">171,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,895,704</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,895,704</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-35</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Year ended December 31, 2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Reconciling</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Cellular</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>distance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Businesses</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>segments</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>items <sup>(2)</sup></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>consolidated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues &#151; third party</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,866,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">73,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">119,214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,059,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">3,355</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,056,304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues &#151; affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,31,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">559,371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">706,605</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,197,655</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,197,655</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and
amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,434,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,554,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(8,181</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,546,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(139,139</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(130,013</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(169,634</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(438,786</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(8,661</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(447,447</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EBITDA <sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,295,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(34,255</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(145,538</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,115,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16,842</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,098,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,350,475</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,184,201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,182,042</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31,716,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,302,881</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,413,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital expenditures</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,862,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86,419</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">323,779</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,273,021</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,273,021</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">EBITDA as used by the Company is operating profit (loss)&nbsp;plus the sum of
depreciation and amortization. The Company&#146;s reconciliation of EBITDA to
consolidated net profit (loss)&nbsp;under Mexican GAAP as of December&nbsp;31, 2002,
2001 and 2000, is as follows:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Reconciling items primarily reflect inter-segment eliminations and
certain non-recurring items.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EBITDA</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="center"><FONT size="2">Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,789,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="center"><FONT size="2">Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,708,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="center"><FONT size="2">Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,098,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation and amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,247,065</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,768,521</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,546,289</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Integral financing cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,513,148</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(335,344</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(579,806</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity participation in net (loss)
gain of associated companies and
net (loss)&nbsp;gain
on sale of equity investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,741</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,767</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets tax and income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(120,470</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(154,749</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(165,246</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit from discontinued operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of the adoption of
the new accounting pronouncements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6,847</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="center"><FONT size="2">(Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">528,488</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,186,497</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>NOTE &nbsp;23 &#151; Significant Differences Between Mexican GAAP and United States Generally Accepted Accounting Principles</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s consolidated financial statements are prepared on a Mexican
GAAP basis, which differs in certain significant respects from United States
generally accepted accounting principles (U.S. GAAP).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The reconciliation to U.S. GAAP does not include the reversal of the
adjustments to the financial statements for the effects of inflation required
under Mexican Bulletin B-10. The application of Bulletin B-10 represents a
comprehensive measure of the effects of price-level changes in the financial
statements based on historical cost for Mexican and U.S. accounting purposes.
The principal differences, other than inflation accounting, between Mexican and
U.S. GAAP are listed below together with an explanation, where appropriate, of
the adjustments that affect consolidated net income for each of the three years
in the period ended December&nbsp;31, 2002, and stockholders&#146; equity as of December
31, 2002 and 2001.
</FONT>

<P align="center"><FONT size="2">F-36</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, the Company applies revised Bulletin D-4. Under the
methodology of Bulletin D-4, the Company recognized future tax consequences
based on the difference between the financial statements and tax basis of
assets and liabilities &#151; temporary differences &#151; as of the date of the
financial statements. For purposes of the reconciliation to U.S. GAAP, the
Company has applied Statement of Financial Accounting Standards (SFAS)&nbsp;No.&nbsp;109,
&#147;Accounting for Income Taxes&#148;, for all periods presented. The U.S. GAAP
adjustment to deferred income taxes exists as a result of the other U.S. GAAP
adjustments changing the book basis of the Company and as a result impacting
various deferred tax balances and the related valuation allowance.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS 109 requires an asset and liability method of accounting whereby
deferred taxes are recognized for the tax consequences of all temporary
differences between the financial statement carrying amounts and the related
tax basis of assets and liabilities. Under U.S. GAAP, the effect on deferred
taxes of a change in tax rate is recognized in income in the period that
includes the enactment date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-operating costs
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, the Company capitalized certain pre-operating costs,
primarily related to the development of the PCS network in regions 1 and 4
until 2001. Under U.S. GAAP, pre-operating costs are expensed as incurred.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative financial instruments
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As mentioned in Note 21, the Company entered into interest rate collar
agreements to hedge an aggregate notional amount of U.S.$50,000 of its floating
rate debt. Additionally, during 2001 the Company purchased foreign-currency
forward exchange contracts, which at December&nbsp;31, 2001, hedged a notional
amount of U.S.$201,000 in debt. The Company employs risk management strategies
using foreign currency forwards and interest rate collar agreements. The
Company does not hold derivatives for trading purposes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As mentioned in Note 4e., effective January&nbsp;1, 2001, the Company adopted
Bulletin C-2, which requires that all financial instruments, including those
used for hedging purposes, be recorded in the balance sheet at their fair value
and changes in the fair value to be recorded in the income statement for each
period. Bulletin C-2 also requires that derivative financial instruments used
for hedging purposes, be recorded in the balance sheet and valued using the
same valuation criteria used to value the hedged asset or liability. Based on
this valuation criteria, under Mexican GAAP since the hedged liabilities are
not carried at fair value, the Company did not record the derivative financial
instruments related to those hedged liabilities at fair value but rather, the
Company keeps the derivative financial instruments valued at the exchange rate
at the end of the year. Prior to January&nbsp;1, 2001, derivative financial
instruments were recorded on a cash basis under Mexican GAAP.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;30, 1999 Old Iusacell entered into a foreign currency hedge
utilizing forward-rate contracts, hedging its exchange rate exposure for up to
U.S.$77,000 or approximately 50% of the principal and interest payments coming
due over the period April 2000 to April 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under U.S. GAAP, effective January&nbsp;1, 2001, the Company adopted SFAS 133,
&#147;Accounting for Derivative Instruments and Hedging Activities&#148;, as amended by
SFAS 137 and 138. Under SFAS 133, all derivatives are also recognized on the
balance sheet at their fair value.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s derivative financial instruments are classified as cash flow
hedges based on certain criteria established by SFAS 133. Accordingly, the
effective portion of the gain or loss of the hedged instrument is reported in
accumulated other comprehensive income, and its ineffective portion is reported
in earnings. All of the Company&#146;s derivatives were considered highly effective.
The Company has no derivative financial instruments at December&nbsp;31, 2002.
</FONT>

<P align="center"><FONT size="2">F-37</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to January&nbsp;1, 2001, the differential to be paid or received as
interest rates changed was accrued and recognized as an adjustment of interest
expense at the balance sheet date. Additionally, the related amount payable or
receivable from counter-parties was included in accrued other expenses at the
balance sheet date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cumulative effect on the adoption of this new accounting pronouncement
amounted to Ps.6,847 as of January&nbsp;1, 2001.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain from the exchange of non-monetary assets
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2002 and 2001, the Company entered into certain fiber optic cable
swap agreements to exchange certain long-distance fiber optic cables fair
valued at Ps.121,215 and Ps.150,812, respectively. Under Mexican GAAP, the
Company recorded the transactions as both acquisitions (at the carrying value
of the asset sold) and sales of fixed assets based on the contract amount,
resulting in a gain on the sale of Ps.53,172 and Ps.145,229, for the years
ended December&nbsp;31, 2002 and 2001, respectively. Under U.S. GAAP, because the
assets exchanged are similar productive assets and, on a net basis, no cash was
exchanged, the transactions did not result in the recognition of earnings.
Consequently, under U.S. GAAP, the acquisitions and sales would not have been
recorded.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1998, the Company entered into another similar fiber optic
cable swap agreement with Bestel for Ps.258,609, resulting in a gain on the
sale of Ps.225,208 that was not recorded under U.S. GAAP.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cumulative gains recorded under Mexican GAAP for exchange of
non-monetary assets taking place in 1999, 2001 and 2002 is Ps.423,609 at
December&nbsp;31, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sale-leaseback transaction with MATC Celular
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As mentioned in Note 8c., during 2002 and 2001 the Company sold and
leased-back 76 and 244, respectively, non strategic towers to MATC Celular.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, sale-leaseback transactions are recognized with the
use of the general criteria for capital and operating lease transactions
pursuant to Bulletin D-5, &#147;Leases&#148;. The timing of the recognition of a gain
derived from sale-leaseback transactions should be based on the subsequent
lease classification criteria of the leaseback portion of the transaction. If
the subsequent leaseback is accounted for as an operating lease, full immediate
gain recognition is allowed whereas if the subsequent leaseback is accounted
for as a capital lease, the gain is deferred and amortized in proportion with
the estimated useful life of the asset leased. Based upon these criteria, the
sale-leaseback agreement with MATC was recorded by the Company as an operating
lease and consequently, the Ps.100,979 and Ps.325,436 gains were recognized at
the date of the sale.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under U.S. GAAP, SFAS 28, &#147;Accounting for Sales with Lease Backs&#148;, this
sale-leaseback transactions should be recognized as a single financing
transaction in which any profit or loss on the sale is deferred and amortized
by the seller, who becomes the lessee. As the Company retained &#147;more than a
minor part but less than substantially all&#148; of the use of the assets leased and
the profit on the sale does not exceed the present value of the minimum lease
payments, the Company deferred Ps.86,643 and Ps.286,319 of the gains at the
transaction dates. In addition, as the leaseback qualified as an operating
lease, the Company is amortizing the deferred gain against the gross rental
charged to expense over the lease term. Consequently, the U.S. GAAP net income
for the years ended December&nbsp;31, 2002 and 2001 was decreased Ps.70,503 and
Ps.276,008, respectively.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized interest
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mexican GAAP allows, but does not require, capitalization of financing
costs as part of the cost of assets under construction. Financing costs
capitalized include interest costs, gains from monetary position and foreign
exchange losses. Under Mexican GAAP, the Company did not capitalize any
financing costs for each of the years ended December&nbsp;31, 2002, 2001 and 2000.
</FONT>

<P align="center"><FONT size="2">F-38</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. GAAP requires the capitalization of interest during the construction
of qualifying assets. In an inflationary economy, such as Mexico, acceptable
practice is to capitalize interest net of the monetary gain on the related
Mexican Peso debt, but not on U.S. dollar or other stable currency debt.
U.S.GAAP does not allow the capitalization of foreign exchange losses.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill and indefinite-lived intangible assets
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, the Company amortizes goodwill on a straight-line
basis over a period of 20&nbsp;years.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2001, the FASB issued SFAS 141, &#147;Business Combinations,&#148; and No.
142, &#147;Goodwill and Other Intangible Assets.&#148; SFAS 141 supercedes Accounting
Principles Board Opinion (APB)&nbsp;No.&nbsp;16, &#147;Business Combinations&#148; and amends or
supercedes a number of related interpretations of APB 16. SFAS 141 eliminates
the pooling-of-interests method of accounting for business combinations and
changes the criteria to recognize intangible assets apart from goodwill. SFAS
142 supercedes APB 17, &#147;Intangible Assets.&#148; Under SFAS 142, goodwill and
indefinite-lived intangible assets are no longer amortized but are reviewed
annually, or more frequently if impairment indicators arise, for impairment.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS 141 is effective for any business combination accounted for by the
purchase method that is completed after June&nbsp;30, 2001. Accordingly, the
Company applied SFAS 141 to the Portatel acquisition and SFAS 142 to the
intangible assets acquired therein.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 2002, the Company adopted the provisions of SFAS 142.
Goodwill is no longer amortized but is reviewed for impairment on an annual
basis at the reporting unit level. The impairment test is performed in two
phases. The first step of the goodwill impairment test compares the fair value
of the reporting unit with its carrying value, including goodwill. If the fair
value of the reporting unit exceeds its carrying value, goodwill of the
reporting unit is considered not impaired; however if the carrying value of the
reporting unit exceeds its fair value, an additional procedure must be
performed. The additional procedure compares the implied fair value of the
reporting unit (as defined by SFAS 142) with the carrying amount of that
goodwill. An impairment loss is recorded to the extent that the carrying amount
of goodwill exceeds its implied fair value. Upon adoption of SFAS 142,
goodwill was tested for impairment and no impairment charges were recorded.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP goodwill continues to be amortized. For U.S. GAAP
purposes, the reversal of goodwill amortization under Mexican GAAP increased
the net income for the year ended December&nbsp;31, 2002 in Ps.178,153.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, the Company defined concessions as intangible assets with
definite life, consequently, under both Mexican GAAP and U.S. GAAP, the
amortization of this intangible asset continues.
</FONT>

<P align="center"><FONT size="2">F-39</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The impact of adopting SFAS 142 on net loss and loss per share adjusted to
exclude amortization expense related to goodwill is as follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="23"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="23"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss for the year under U.S. GAAP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,913,649</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">855,206</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,200,451</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of goodwill</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">177,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">174,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pro-forma net loss for the year
under U.S. GAAP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,913,649</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">677,795</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,026,048</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and diluted net loss per share:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Reported loss per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.57</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.86</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pro-forma basic and diluted loss per
share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Ps</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.45</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="center"><FONT size="2">(Ps.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.73</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect of inflation accounting on U.S. GAAP adjustments
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to determine the net effect on the financial statements of
recognizing certain of the adjustments described above, it is necessary to
recognize the effects of applying the Mexican GAAP inflation accounting
principles (see Note 4b.) to such adjustments.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minority interest
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, the minority interest in consolidated subsidiaries is
presented as a separate component within the stockholders&#146; equity section of
the consolidated balance sheet. For U.S. GAAP purposes, minority interest is
not included in stockholders&#146; equity and accordingly, is excluded to arrive at
U.S. GAAP stockholders&#146; equity.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for consolidation of facilities
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended December&nbsp;31, 1996, the Company recorded a charge and
related provision for consolidation of facilities related to the pending sale
and anticipated loss on the sale of its then corporate headquarters. Since the
Company has not had the ability to remove such headquarters from operations,
under U.S. GAAP, pursuant to the provisions of SFAS 121, &#147;Accounting for the
Impairment of Long-Lived assets and for Long-Lived Assets to Be Disposed Of,&#148;
an impairment charge would not have been recorded at December&nbsp;31, 1996,
therefore, under U.S. GAAP the charge and related provision recorded by the
Company in 1996 has been reversed.
</FONT>

<P align="center"><FONT size="2">F-40</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss)&nbsp;and stockholders&#146; equity under U.S. GAAP
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of net (loss)&nbsp;profit and stockholders&#146; equity
adjusted to take into account certain material differences between Mexican GAAP
and U.S. GAAP:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss under Mexican GAAP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">2,084,037</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">528,488</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,186,497</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pre-operating costs (Note 23b.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,877</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(40,571</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,183</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Derivative financial instruments (Note 23c.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain from the exchange of non-monetary assets
(Note 23d.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(53,172</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(145,229</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation of the gain from the exchange of
non-monetary assets (Note 23d.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on the sale lease-back
transaction (Note 23e.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(70,503</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(276,008</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capitalized interest (Note 23f.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,495</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">101,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation of capitalized interest (Note 23f.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,184</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of goodwill (Note 23g.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">178,153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest (Note 23i.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,327</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Effect of inflation accounting on U.S. GAAP
adjustments (Note 23h.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">563</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(267</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss under U.S.GAAP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,913,649</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">855,206</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1,200,451</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted-average number of shares outstanding
basic (thousands)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,862,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,495,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,396,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and diluted net loss per share (pesos)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">1.03</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">(Ps.</FONT></TD>
    <TD align="right"><FONT size="2">0.86</FONT></TD>
    <TD><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2001, there was no effect on the loss per
share calculation for the cumulative effect of the adoption of the new
accounting pronouncement.
</FONT>

<P align="center"><FONT size="2">F-41</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>


<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The weighted-average number of shares outstanding under the Stock Purchase
Plan at December&nbsp;31, 2002 and 2001 was 6,485,124. Because of the anti-dilutive
effect, outstanding options during 2002 and 2001 are not included in the
computation of diluted (loss)&nbsp;per share for 2002 and 2001.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>As of December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stockholders&#146; equity under Mexican GAAP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">5,365,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">7,571,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pre-operating costs (Note 23b.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(139,875</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(143,752</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Derivative financial instruments (Note 23c.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(194,357</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain from the exchange of non-monetary
assets (Note 23d.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(423,609</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(370,437</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated amortization on the gain from the
exchange of non-monetary assets (Note 23d.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">47,258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on the sale lease-back transaction (Note 23e.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(346,511</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(276,008</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capitalized interest (Note 23f.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">197,331</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">101,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accumulated depreciation on capitalized
interest (Note 23f.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(10,184</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization of goodwill (Note 23g.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">180,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest (Note 23i.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(581</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(123,888</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for consolidation of facilities (Note 23j.)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stockholders&#146; equity under U.S. GAAP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">4,890,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,610,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provided below is an analysis of changes in stockholders&#146; equity under U.S.
GAAP:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="56%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>As of December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Opening balance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,610,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,674,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase in capital stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">985,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,913,649</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(855,206</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other comprehensive income:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inflation effects</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(563</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(304</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Derivative financial instruments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">194,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(194,185</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Closing balance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">4,890,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">6,610,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l) Discontinued operations
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As described in Note 19, in December 1998, Old Iusacell decided to
discontinue the operations of its subsidiary, Cellular Solutions, which was in
the business of selling accessories for cellular handsets, and consequently,
recognized a gain from discontinued operations amounting to Ps.9,370, for the
year ended December&nbsp;31, 2000. Under U.S. GAAP, the closing of this subsidiary
does not constitute a discontinued operation under APB No.30. Accordingly, the
gain (loss)&nbsp;from discontinued operations is recorded as operating income
(expense).
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m) Depreciation
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican GAAP, depreciation is not included in the measure of gross
profit. Under U.S. GAAP, Ps.1,435,126, Ps.1,295,716 and Ps.1,365,798 for the
years ended December&nbsp;31, 2002, 2001 and 2000, respectively, are reclassified to
cost of sales.
</FONT>



<P align="center"><FONT size="2">F-42</FONT>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n) Impairment of long-lived assets
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended December&nbsp;31, 2002, the Company adopted SFAS 144,
&#147;Accounting for the Impairment of Long-Lived Assets.&#148; SFAS 144 provides
guidance on the accounting for the impairment or disposal of long-lived assets.
SFAS 144 supercedes SFAS 121 and applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board
Opinion No.&nbsp;30 (APB 30), &#147;Reporting Results of Operations Reporting the Effects
of Disposal of a Segment of a Business&#148;. SFAS 144 develops one accounting model
(based on the model in SFAS 121) for long-lived assets that are to be disposed
of by sale, as well as addresses the principal implementation issues. The
adoption of SFAS 144 had no effect on the consolidated financial position or
results of operations of the Company.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o) Supplementary U.S. GAAP disclosures
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="90%"><FONT size="2">Cash flow information</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under U.S. GAAP, SFAS 95, &#147;Statement of Cash Flows&#148;, a statement of cash
flows is required, which presents only movements in cash and excludes non-cash
items. SFAS 95 does not provide any specific guidance with respect to
inflation-adjusted financial statements. However, it is accepted practice to
adjust cash flows from operating activities for the monetary gains and losses
and unrealized foreign exchange gains and losses.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000<SUP>(*)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Operating activities:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss under U.S. GAAP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 1,913,649</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 855,206</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 1,200,451</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjustments to reconcile net loss to cash
provided by (used in) operating activities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Depreciation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,435,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,295,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,365,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amortization</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">619,233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,448,182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,180,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on the sale of towers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(30,476</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(49,427</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in (profit)&nbsp;loss of associated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,687</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on sale of equity investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,203</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase in allowance for doubtful accounts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99,919</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase in allowance for obsolete and
slow-moving inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69,777</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,825</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17,886</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(30,201</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(17,399</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred income taxes and employee
profit sharing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on net monetary position and foreign
exchange losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">612,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(519,733</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(458,389</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Changes in operating assets and liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">(Increase) decrease in:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts receivable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(214,434</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(153,519</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">122,302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">221,238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(60,161</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(86,796</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase (decrease)&nbsp;in:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Trade accounts payable and related parties</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(460,636</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">163,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes and other payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(224,163</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(277,254</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">162,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55,014</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,980</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,148,985</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,280,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-43</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000<SUP>(*)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Financing activities:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from notes payable and
long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">854,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">742,033</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payments of notes payable and long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,836</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(795,503</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,437,776</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Decrease in escrow account</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">464,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">462,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">536,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from related parties financing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from equity offerings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">985,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,695,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by financing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">495,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,587,495</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,536,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000<SUP>(*)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Investing activities:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchase of property and equipment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(863,694</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,054,136</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,262,344</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from sales of investments in
associated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(167,019</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(20,719</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from the sale of towers</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">378,933</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Acquisition of Portatel, net of cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(523,553</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchase of other assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">87,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(780,311</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,079,528</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash used in investing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(829,146</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,974,864</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,362,591</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Translation and inflation effects in cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(25,034</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(48,719</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(113,199</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net decrease in cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(279,150</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(287,103</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(658,810</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash at beginning of year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">439,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">726,288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,385,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash at the end of year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">160,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">439,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">726,288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest paid</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">782,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">494,579</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">927,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax paid</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">154,999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">120,781</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">148,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(*)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Certain reclassifications were made in prior years to conform to classifications used in the most recent year.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="90%"><FONT size="2">The assets tax charged to the provision for assets tax
for the years ended December&nbsp;31, 2002, 2001 and 2000 was as
follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Asset tax not offset by current taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">111,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">154,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">165,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">120,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">154,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">165,246</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-44</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="90%"><FONT size="2">Deferred income taxes</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant components of deferred income taxes under U.S. GAAP are as
follows:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SFAS 109</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SFAS 109</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>applied to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>applied to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Mexican GAAP</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. GAAP</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balances</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Adjustments</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred assets:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Allowance for doubtful accounts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">30,898</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">30,898</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net operating loss carryforwards and
tax credits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,957,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,957,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Reorganization reserve</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain from the exchange of non-monetary assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">120,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pre-operating costs</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on the sale lease-back transaction</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,884</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,884</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Valuation allowance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(811,447</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(216,189</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,027,636</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred tax assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,180,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,240,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">858,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">858,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular telephones to be amortized</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Concessions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">98,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">98,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capitalized interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred tax liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,017,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,076,955</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net deferred tax assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">163,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">163,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-45</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SFAS 109</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SFAS 109</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>applied to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>applied to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Mexican GAAP</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. GAAP</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balances</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Adjustments</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred assets:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Allowance for doubtful accounts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">78,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">78,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net operating loss carryforwards and tax credits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,434,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,434,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Reorganization reserve</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain from the exchange of non-monetary assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">121,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">121,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pre-operating costs</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Derivative financial instruments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on the sale lease-back transaction</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Valuation allowance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(327,396</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(301,069</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(628,465</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred tax assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,211,933</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,642</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,247,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">756,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">756,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cellular telephones to be amortized</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">64,730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">64,730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Concessions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capitalized interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,642</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,642</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred tax liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,028,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,642</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,064,606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net deferred tax assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">182,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">182,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-46</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="90%"><FONT size="2">Stock Purchase Plan</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As mentioned in Note 15, the Company has a fixed stock option plan, the
Stock Purchase Plan. This plan grants options to purchase New Iusacell common
stock at a price equal to the market price of the stock at the date of the
grant. The Company applies APB 25, &#147;Accounting for Stock Issued to Employees,&#148;
and related interpretations in accounting for its plan. The Company has adopted
the disclosure-only provisions of SFAS 123, &#147;Accounting for Stock Based
Compensation&#148;. The Company recognizes no compensation expense for its Stock
Purchase Plan as the exercise price of the options equals the market price of
the stock on the grant date. If the Company had elected to recognize
compensation expense based on the fair value at the grant dates for 2001, 2000
and 1999, in accordance with the provisions of SFAS 123, net (loss)&nbsp;profit and
earnings per share would have been changed to the following pro forma amounts:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Years ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Under Mexican GAAP:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 2,084,037</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 528,488</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 1,186,497</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="left"><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,088,224</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(535,866</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,196,319</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and fully diluted</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="left"><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.12</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.35</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.85</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">loss per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="left"><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.12</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.36</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.86</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Under U.S. GAAP:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net loss</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left"><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 1,913,649</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 855,206</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">(Ps. 1,200,451</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="left"><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,917,836</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(862,584</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,210,273</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic and fully diluted</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="left"><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.57</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.86</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">loss per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" nowrap align="left"><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.58</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.87</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">These results may not be representative of the effects on pro forma net income
for future years.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company determined the pro forma amounts using the Black-Scholes
option-pricing model based on the following weighted-average assumptions:
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividend yield</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expected volatility</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">74</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Risk-free interest rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expected lives (in years)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="90%"><FONT size="2">New Accounting Pronouncements</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2001 the Financial Accounting Standards Board (FASB)&nbsp;issued SFAS
143, &#147;Accounting for Obligations Associated with the Retirement of Long-Lived
Assets&#148;, which is effective for fiscal years beginning after June&nbsp;15, 2002.
The objectives of SFAS 143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation and its
associated asset retirement cost.
</FONT>

<P align="center"><FONT size="2">F-47</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2002, the FASB issued SFAS 145, &#147;Rescission of FASB Statements
No.&nbsp;4, 44, and 64, Amendment of FASB Statement No.&nbsp;13, and Technical
Corrections.&#148; As a result, companies will no longer be allowed to classify
gains and losses from extinguishments of debt as extraordinary items
unless they meet the criteria of APB 30. Gain and losses from extinguishments
of debt that have been classified as extraordinary in prior years that do not
meet the criteria of APB 30 shall be reclassified on a going forward basis.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, SFAS 145 requires that capital leases that are modified so
that the resulting lease agreement is classified as an operating lease be
accounted for under the sale-leaseback provisions of SFAS 28 or 98, as
applicable, instead of SFAS 13. The provisions of this statement with regard
to SFAS 4 will be effective for fiscal years beginning after May&nbsp;15, 2002, and
those for SFAS 13 will be effective for transactions occurring after May&nbsp;15,
2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2002, the FASB issued SFAS 146, &#147;Accounting for Costs Associated
with Exit or Disposal Activities.&#148; The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance was provided by Emerging Issue Task Force (EITF)&nbsp;Issue No.
94-3, &#147;Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).&#148; SFAS 146 replaces Issue No.&nbsp;94-3. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December&nbsp;31, 2002.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FASB Interpretation No.&nbsp;45, &#147;Guarantor&#146;s Accounting and Disclosure
Requirements for Guarantees,&#148; (FIN 45) was issued in November 2002. FIN 45
requires that a liability be recognized at the inception of certain guarantees
for the fair value of the obligation, including the ongoing obligation to stand
ready to perform over the term of the guarantee. Guarantees, as defined in FIN
45, include contracts that contingently require the Company to make payments to
a guaranteed party based on changes in an underlying that is related to an
asset, liability or equity security of the guaranteed party, performance
guarantees, indemnification agreements or indirect guarantees of indebtedness
of others. This new accounting is effective for certain guarantees issued or
modified after December&nbsp;31, 2002. In addition, FIN 45 requires certain
additional disclosures.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS 148, &#147;Accounting for Stock-Based Compensation &#150; Transition and
Disclosure &#150; an amendment of FASB Statement No.&nbsp;123,&#148; was issued on December
31, 2002. SFAS 148 provides alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. SFAS 148 also amends the disclosure requirements of SFAS 123,
&#147;Accounting for Stock-Based Compensation,&#148; to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2003, the FASB issued FASB Interpretation 46 &#147;Consolidation of
Variable Interest Entities, an interpretation of ARB No.&nbsp;51&#148; (FIN 46). FIN 46
provides a new framework for identifying variable interest entities (VIEs) and
determining when a company should include the assets, liabilities,
non-controlling interests and results of activities of a VIE in its
consolidated financial statements. FIN 46 is effective immediately for VIEs
created after January&nbsp;31, 2003 and is effective beginning in the third quarter
of 2003 for VIEs created prior to issuance of the interpretation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2003, the FASB issued SFAS No.&nbsp;149, &#147;Amendment of Statement 133
on Derivative Instruments and Hedging Activities&#148;. SFAS 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
133, &#147;Accounting for Derivative Instruments and Hedging Activities&#148;. SFAS 149
is effective prospectively for contracts entered into or modified after June
30, 2003 and prospectively for hedging relationships designated after June&nbsp;30,
2003.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May 2003, the FASB issued SFAS No.&nbsp;150, &#147;Accounting For Certain
Financial Instruments with Characteristics of Both Liabilities and Equity&#148;.
SFAS 150 improves the accounting for certain financial instruments
</FONT>
<P align="center"><FONT size="2">F-48</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">that, under previous guidance, issuers could account for as equity, and requires that these
instruments be classified as liabilities in statements of financial position.
SFAS 150 is effective prospectively for financial instruments entered into or
modified after May&nbsp;31, 2003 and otherwise is effective at the beginning of the
first interim period beginning after June&nbsp;15, 2003. SFAS 150 shall be
implemented by reporting the cumulative effect of a change in an
accounting principle for financial instruments created before the issuance
date of the Statement and still existing at the beginning of the interim period
of adoption.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is presently evaluating the impact, if any, that these new
standards will have on its consolidated financial statements.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">6)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="90%"><FONT size="2">U.S. GAAP requires the desegregation of the account
balances as disclosed below. There is no similar requirement
under Mexican GAAP. As of December&nbsp;31, the account balances were
as follows:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="68%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Recoverable taxes and other:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interconnection fees</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">69,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">93,505</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Recoverable VAT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">179,644</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">340,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other taxes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Telephones to be amortized</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">141,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">88,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">230,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">537,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">687,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes and other payables:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Taxes and rights payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">246,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">217,314</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest payable</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">129,180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">274,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">568,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">643,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">914,719</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">7)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="90%"><FONT size="2">A significant portion of our trade receivables is
represented by a small number of distributors. The Company&#146;s
three largest distributors accounted for 52% and 44% of our net
trade accounts receivables as of December&nbsp;31, 2002 and 2001,
respectively. Management has established certain measures to
reduce the risk associated with this concentration such as
certain guarantees and property liens. Management believes that
this distributor concentration will be reduced over time as the
size of our operations grows. However, results of operations
could be negatively affected, at least in the short term, if any
defaults on payment occur with respect to these distributors.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>NOTE 24 &#150; Subsequent Events</B>
</FONT>


<P align="left"><FONT size="2"><B>Debt restructuring efforts</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of subsequent events relating to the Company&#146;s debt
restructuring efforts are as follows:
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>a.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Technical defaults on amended restated syndicated loan</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;27, 2003, the Company announced that Old Iusacell received
notification from lenders of the occurrence of two technical defaults under the
U.S.$265,622 Amended and Restated Syndicated Loan Agreement dated as of March
29, 2001 (the Credit Agreement). The underlying defaults are due to the failure
to obtain the consent of the lenders prior to the closing and opening of
certain bank accounts and the failure to effect the registration of a mortgage
on certain newly acquired assets within the time period specified in the Credit
Agreement.
</FONT>

<P align="center"><FONT size="2">F-49</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company effected the registration of the mortgage and requested,
but has not yet received, the consent of the lenders with respect to the bank
accounts.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>b.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Amendment and waiver under the Credit Agreement</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;28, 2003, as part of its debt restructuring effort, Old Iusacell
received a temporary Amendment and Waiver (the Amendment) of the Debt/EBITDA
leverage ratio and certain other provisions and technical defaults
under the Credit Agreement. The Amendment was scheduled to expire on May
22, 2003 and at its expiration date the Amendment was extended to June&nbsp;13, 2003
and further extended to June&nbsp;26, 2003. If the Amendment is not extended, upon
its expiration Old Iusacell will be in default of its Debt/EBITDA leverage
ratio, which will constitute an event of default under the Credit Agreement,
and the lenders under the Credit Agreement will have the remedies they would
otherwise have had if the Amendment had not been executed.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Amendment contains covenants which expire on June&nbsp;30, 2003 which
restrict Old Iusacell from making any loans, advances, dividends or other
payments to New Iusacell and require a proportionate prepayment of the loan
under the Credit Agreement if the Company makes any principal payments of any
of its indebtedness for borrowed money, excluding capital and operating leases.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no assurance that the Company will obtain an extension of the
Amendment at its expiration date and if the extension is not obtained, the
lenders under the Credit Agreement can request the acceleration of its
indebtedness in which case, the Credit Agreement, and due to cross-defaults,
the Senior Notes due 2006 and the Senior Notes due 2004, would become
immediately due and payable.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>c.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Extinguishment of Santander refinanced credit facility</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;29, 2003, Old Iusacell reached an agreement with Santander to repay
the remaining balance of U.S.$3,000 under a refinanced credit facility. Under
this agreement, Old Iusacell and Santander agreed to settle the remaining
amount for U.S.$1,500. Old Iusacell recognized the difference as an early
extinguishment of debt under Mexican GAAP and therefore, recognize this amount
as an extraordinary gain in 2003.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>d.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Suspension of interest payment on Senior Notes</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;2, 2003, the Company announced that it determined that pending an
agreement with its lenders on a restructuring plan, it would suspended the
payment of U.S.$24,938 interest payment due June&nbsp;1, 2003 on its Senior Notes
due 2006. The Company has a thirty-day cure period to make the interest
payment, before an event of default would occur. If the interest payment is not
made within the thirty-day period an event of default would occur under the
indenture governing the bonds, and the bondholders would have the right to
accelerate the due date of the principal of the bonds or take other legal
actions as they deem appropriate.
</FONT>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>e.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Principal shareholders acceptance of tender offer to sell controlling interest</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;13, 2003, the Company announced that its two largest shareholders,
Verizon and Vodafone, agreed to tender all of their shares, representing
approximately 73.90% of the Company&#146;s outstanding shares, in a public tender
offer to be commenced in Mexico and the United States of America by Movil
Access, S.A. de C.V., a Mexican telecommunications service provider. Once the
National Banking and Securities Commission (Comisi&#243;n Nacional Bancaria y de
Valores) approves the tender offer and Verizon and Vodafone tender all of their
shares, Verizon and Vodafone will lose the ability to manage the Company.
Verizon and Vodafone will no longer be in a position to determine the Company&#146;s
policies and strategies, provide personnel to the Company on a secondment or
consulting basis, manage the Company&#146;s operations or provide the technical
support, as well as operating synergies that the Company has historically
relied on.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the indentures governing the Senior Notes due 2006 and the Senior
Notes due 2004, this constitutes a change of control under which the
bondholders have the right to require New Iusacell and Old Iusacell,
respectively, to repurchase such bondholders&#146; notes. This also constitutes a
change of control and would constitute an event of
</FONT>
<P align="center"><FONT size="2">F-50</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">default under the Credit
Agreement so the lenders under the Credit Agreement would have the right to
declare all amounts outstanding under the Credit Agreement immediately due and
payable.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company continues to evaluate with the assistance of an external
financial advisor the alternatives for restructuring its debt. The Company&#146;s
ability to operate as a going concern is dependent upon its ability to
successfully negotiate with its bank syndicate and note holders to preclude
acceleration. However, although no assurances can be given, the Company remains
confident that it will be able to continue operating as a going concern.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business, and as such do
not include any adjustments that might result from the outcome of these
uncertainties.
</FONT>


<P align="left"><FONT size="2"><B>10% excise tax on telecommunications services</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;6, 2003, the Company was officially notified that by disposition
of the appeal filed by the Mexican government, Mexico&#146;s Supreme Court affirmed
the ruling by a federal district court in favor of the Company in their
injunction filed against the special telecommunications tax enacted by the
Mexican Congress on January&nbsp;1, 2002 (Note 13g.).
</FONT>

<P align="center"><FONT size="2">F-51</FONT>

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

<P align="center"><FONT size="2"><B>GRUPO IUSACELL</B>
</FONT>

<P align="center"><FONT size="2"><B>SCHEDULE II &#151; VALUATION AND QUALIFYING ACCOUNTS<BR>
Years Ended 2000, 2001 and 2002<BR>
(Amounts expressed in Thousands of Mexican Pesos (Ps.)<BR>
with Purchasing Power as of December&nbsp;31, 2002)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance at</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Charged to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Charged to</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance at</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>beginning</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>costs and</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>other</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>end of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of period</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>expenses</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>accounts</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Deductions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>period</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Allowance for obsolete and
slow-moving inventories</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">9,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">45,290</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">54,254</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54,254</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69,777</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">117,069</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">117,069</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103,238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Allowance for doubtful
accounts</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">179,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">99,919</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">45,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps.</FONT></TD>
    <TD align="right"><FONT size="2">234,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">234,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">114,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">126,021</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">222,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">222,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">61,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">190,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">S-II</FONT>

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

<!-- link1 "EXHIBIT INDEX" -->
<DIV align="left"><A NAME="026"></A></DIV>

<P align="center"><FONT size="2"><B>EXHIBIT INDEX</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>No.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">1.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By-laws (<I>estatutos</I>) of <I>Grupo Iusacell, S.A. de C.V.</I>, as amended on
April&nbsp;21, 2003, (English translation).</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Shareholders Agreement dated as of March&nbsp;30, 2001 by and among
Iusacell, Bell Atlantic Latin America Holdings, Inc., Bell
Atlantic International, Inc., Bell Atlantic New Zealand Holdings,
Inc. and Vodafone Americas B.V. (incorporated herein by reference
to Exhibit&nbsp;2(a) of Iusacell&#146;s Annual Report on Form&nbsp;20-F for
fiscal year 2000 &#151; File No.&nbsp;001-14938).</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indenture dated as of December&nbsp;16, 1999 among <I>Grupo Iusacell, S.A.
de C.V.</I>, Verizon Communications Inc. and The Bank of New York, as
trustee (incorporated herein by reference to Exhibit&nbsp;4.1 of the
Registration Statement F-4 &#151; Registration Number 333-95547).</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indenture dated as of July&nbsp;25, 1997 among <I>Grupo Iusacell Celular,
S.A. de C.V.</I>, certain subsidiaries of <I>Iusacell Celular, S.A. de
C.V. </I>and First Union National Bank, as trustee (incorporated
herein by reference to Exhibit&nbsp;4.1 of the Registration Statement
F-4 &#151; Registration Number 333-37431).</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Agreement for Equipment, Furnish and Installation for Iusacell&#146;s
Cellular Network, dated as of December&nbsp;10, 1997, among <I>Grupo
Iusacell Celular, S.A. de C.V.</I>, Lucent Technologies World
Services, Inc. and <I>Lucent Technologies de M&#233;xico, S.A. de C.V.</I>
(incorporated herein by reference to Exhibit&nbsp;A of Iusacell
Celular&#146;s Annual Report on Form&nbsp;20-F for fiscal year 1997).</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Credit Agreement, dated as of July&nbsp;25, 1997,
as amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V. </I>and JP Morgan, as sole Bookrunner and Lead
Arranger, and The Chase Manhattan Bank, as Administrative Agent
and Collateral Agent, BNP Paribas, Citibank N.A., The
Toronto-Dominion Bank and <I>BBVA Bancomer S.A.</I>, as Arrangers
(incorporated herein by reference to Exhibit&nbsp;4(b) of Iusacell&#146;s
Annual Report on Form&nbsp;20-F for fiscal year 2000 &#151; File No.
001-14938).</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.3*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Master Lease Agreement (English version),
dated as of May&nbsp;16, 2002, among <I>MATC Celular, S. de R.L. de C.V.</I>,
<I>Grupo Iusacell Celular, S.A. de C.V. </I>and <I>Iusacell Arrendadora,
S.A. de C.V.</I></FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.4*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Master Lease Agreement (English version),
dated as of May&nbsp;16, 2002, between <I>MATC Celular, S. de R.L. de C.V.</I>
and <I>Grupo Iusacell Celular, S.A. de C.V.</I>, for and on behalf of
itself and its affiliates.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.5*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Build-to-Suit and Site Development Agreement,
dated as of May&nbsp;16, 2002, between <I>MATC Celular, S. de R.L. de C.V.</I>
and <I>Grupo Iusacell Celular, S.A. de C.V.</I>, for and on behalf of
itself and its affiliates.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
First Amendment and Waiver, dated as of December&nbsp;7, 2001, to the
Amended and Restated Credit Agreement, dated as of July&nbsp;25, 1997,
as amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V.</I>, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent
(incorporated herein by reference to Exhibit&nbsp;4.3 of Grupo
Iusacell&#146;s Annual Report on Form&nbsp;20-F for fiscal year 2001 &#151; File
No.&nbsp;001-14938).</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"></FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>No.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.7*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Second Amendment and Waiver, dated as of April&nbsp;28, 2003, to the
Amended and Restated Credit Agreement, dated as of July&nbsp;25, 1997,
as amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V.</I>, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.8*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
First Amendment to the Second Amendment and Waiver, dated as of
April&nbsp;28, 2003, to the Amended and Restated Credit Agreement,
dated as of July&nbsp;25, 1997, as amended and restated as of March&nbsp;29,
2001 among <I>Grupo Iusacell Celular, S.A. de C.V.</I>, the lenders party
thereto, and JP Morgan Chase Bank as Administrative Agent and
Collateral Agent.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.9*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Second Amendment, dated as of June&nbsp;10, 2003, to the Second
Amendment and Waiver dated as of April&nbsp;28, 2003, to the Amended
and Restated Credit Agreement, dated as of July&nbsp;25, 1997, as
amended and restated as of March&nbsp;29, 2001 among <I>Grupo Iusacell
Celular, S.A. de C.V.</I>, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">7.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Computation of ratio of earnings to fixed charges.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">8.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
List of subsidiaries.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">12.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">12.2*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Filed herewith.</FONT></TD>
</TR>
</TABLE>
</BODY>
</HTML>
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{"company-data": {"conformed-name": "GRUPO IUSACELL SA DE CV", "cik": "0001089695", "assigned-sic": "4813", "irs-number": "000000000", "state-of-incorporation": "O5", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-14938", "film-number": "03757196"}, "business-address": {"street1": "PROLONGACION PASEO DE LA REFORMA 1236", "street2": "COLONIA SANTA FE DELEGACION CUAJIMALPA", "city": "MEXICO", "state": "O5", "zip": "05348 DF", "phone": "5251094400"}, "mail-address": {"street1": "PROLONGACION PASEO DE LA REFORMA 1236", "street2": "COLONIA SANTA FE DELEGACION CUAJIMALPA", "city": "MEXICO", "state": "O5", "zip": "05348"}, "former-company": {"former-conformed-name": "NUEVO GRUPO IUSACELL SA DE CV", "date-changed": "19990629"}}
GRUPO IUSACELL, S.A.DE C.V.
Table of Contents
UNITED STATES
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, 2002
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 1-14938
Grupo Iusacell, S.A. de C.V.
(Exact name of Registrant as specified in its charter)
Iusacell Group
(Translation of Registrant's name into English)
United Mexican States
(Jurisdiction of incorporation or organization)
Prolongación Paseo de la Reforma 1236
Colonia Santa Fe
Delegación Cuajimalpa
05348 Mexico, D.F.
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
Name of each exchange on which registered
American depositary shares,
each representing 100 series V shares
New York Stock Exchange
Series V shares
New York Stock Exchange*
*
Not for trading, but only in connection with the registration of American
depositary shares, pursuant to the requirements of the United States
Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Table of Contents
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the Annual
Report:
Series A Capital Stock
Series V Capital Stock
961,292,484 shares
900,732,310 shares
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [   ]
Indicate by check mark which financial statement item the registrant has
elected to follow:
Item 17 [   ] Item 18 [X]
TABLE OF CONTENTS
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3. KEY INFORMATION
ITEM 4. INFORMATION ON THE COMPANY
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
ITEM 8. FINANCIAL INFORMATION
ITEM 9. THE OFFER AND LISTING
ITEM 10. ADDITIONAL INFORMATION
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15. CONTROLS AND PROCEDURES
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B. CODE OF ETHICS
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART III
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
ITEM 19. EXHIBITS
SIGNATURES
CERTIFICATIONS
EXHIBIT INDEX
BY-LAWS OF GRUPO IUSACELL
AMENDED AND RESTATED MASTER LEASE AGREEMENT
AMENDED AND RESTATED MASTER LEASE AGREEMENT
AMENDED AND RESTATED DEVELOPMENT AGREEMENT
SECOND AMENDMENT AND WAIVER
FIRST AMENDMENT TO SECOND AMENDMENT AND WAIVER
SECOND AMENDMENT TO SECOND AMENDMENT AND WAIVER
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
LIST OF SUBSIDIARIES
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
Table of Contents
TABLE OF CONTENTS
Page
PART I
1
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
1
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
1
ITEM 3. KEY INFORMATION
1
ITEM 4. INFORMATION ON THE COMPANY
15
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
44
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
71
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
78
ITEM 8. FINANCIAL INFORMATION
83
ITEM 9. THE OFFER AND LISTING
84
ITEM 10. ADDITIONAL INFORMATION
90
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
104
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
106
PART II
106
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
106
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS
107
ITEM 15. CONTROLS AND PROCEDURES
107
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
107
ITEM 16B. CODE OF ETHICS
107
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
107
PART III
108
ITEM 17. FINANCIAL STATEMENTS
108
ITEM 18. FINANCIAL STATEMENTS
108
ITEM 19. EXHIBITS
109
i
Table of Contents
FORWARD-LOOKING INFORMATION
This Annual Report contains various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the "Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including statements regarding, among other things, the
financial performance and operating plans for
Grupo Iusacell, S.A. de C.V.
These statements are based upon the current beliefs of our management, as well
as on assumptions made by management based upon information currently available
to it. The words "believe," "expect," "likely" and "anticipate" and similar
expressions identify some of these forward-looking statements. These
statements are subject to various risks and uncertainties and other factors
which may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Should management's
assumptions prove incorrect, actual results may vary materially and adversely
from those anticipated or projected. Readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only as of their
respective dates. We undertake no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Factors described in this Annual Report under Item 3, "Key Information —
Risk Factors," could cause actual results to differ materially from such
forward-looking statements.
"Iusacell" means
Grupo Iusacell, S.A. de C.V.
This company was formerly
known as
Nuevo Grupo Iusacell, S.A. de C.V.
Unless the context otherwise
requires, "we", "our" or "us" refers to Iusacell.
"Iusacell Celular" means
Grupo Iusacell Celular, S.A. de C.V.
This
company was formerly known as
Grupo Iusacell, S.A. de C.V.
Iusacell owns 100%
of the capital stock of Iusacell Celular.
Under Item 4, "Information on the Company", "we", "our" or "us" refers to
Iusacell and its subsidiaries, unless the context otherwise requires.
Certain terms are defined the first time they are used in this Annual
Report. The "Glossary of Telecommunications Terms" that begins immediately
following Item 19, "Exhibits" provides definitions of certain technical terms
used herein.
On June 30, 2000, Bell Atlantic Corporation, Iusacell's principal
shareholder, which holds its interest in Iusacell through various subsidiaries,
acquired GTE Corporation in a merger of equals, renaming itself as "Verizon
Communications Inc." The names of the subsidiaries which hold Iusacell capital
stock directly remained unchanged. The term "Verizon" in this Annual Report
refers to Verizon Communications Inc. or its subsidiaries, as the context
requires. We continue to use the term "Bell Atlantic" in this Annual Report to
refer to Bell Atlantic Corporation and its subsidiaries in connection with
events prior to June 30, 2000.
The term "Vodafone" in this Annual Report refers to Vodafone Group Plc or
its subsidiaries, as the context requires.
Iusacell's equity securities trade on the New York and Mexican stock
exchanges. Both Iusacell and Iusacell Celular have publicly-traded debt
securities.
Unless otherwise specified, all references to "U.S. dollars", "U.S.
Dollars", "dollars", "U.S.$" or "$" are to United States dollars, and
references to "Ps." and "pesos" are to Mexican pesos. We publish our financial
statements in pesos that are adjusted to reflect changes in purchasing power
due to inflation. Thus, unless otherwise specified, our financial data is
presented in constant pesos with purchasing power as of December 31, 2002.
Actual amounts may vary from amounts presented in this Annual Report due to
rounding.
We will provide without charge to each person to whom this Annual Report
is delivered, upon written or oral request, a copy of any or all of the
documents incorporated by reference into this Annual Report (not including the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Written requests for such copies should be
directed to
Grupo Iusacell, S.A. de C.V.
, Prolongación Paseo de la Reforma
1236, Colonia Santa Fe, Delegación Cuajimalpa, 05348 Mexico, D.F., Attention:
Carlos Moctezuma, Investor Relations Manager. E-mail requests may be directed
to investor.relations@iusacell.com.mx. Telephone requests may be directed to
011-52-55-5109-5759.
ii
Table of Contents
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A.
DIRECTORS AND SENIOR MANAGEMENT
Not applicable.
B.
ADVISERS
Not applicable.
C.
AUDITORS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A.
SELECTED FINANCIAL DATA
The following tables present selected consolidated financial data of
Iusacell and its consolidated subsidiaries. We have derived this data from the
audited consolidated financial statements of Iusacell as of December 31, 2002,
2001, 2000, 1999 and 1998. The financial information presented for fiscal
years ended December 31, 2002, 2001 and 2000 was derived from our audited
consolidated financial statements, which we refer to as the Consolidated
Financial Statements, appearing elsewhere in this Annual Report, and you should
read this information in conjunction with the Consolidated Financial
Statements.
Prior to August 10, 1999, when Iusacell completed a corporate
restructuring, Iusacell had minimal assets and liabilities and no operations or
contingent liabilities. For accounting purposes, Iusacell is the successor
business to
Grupo Iusacell, S.A. de C.V.
, the holding and operating company
prior to the restructuring. Iusacell owns 100% of the capital stock of
Iusacell Celular.
The Consolidated Financial Statements have been prepared in accordance
with Mexican generally accepted accounting principles, which we refer to as
Mexican GAAP, which differs in certain significant respects from United States
generally accepted accounting principles, which we refer to as U.S. GAAP.
Pursuant to Mexican GAAP, we have prepared the Consolidated Financial
Statements and the selected financial data presented below in accordance with
Bulletin B-10 of the Mexican Institute of Public Accountants ("MIPA"), which
provides for the recognition of certain effects of inflation.
Throughout the periods presented in this Annual Report, Bulletin B-10 has
required Iusacell to restate non-monetary assets (other than inventory) using
the National Consumer Price Index (
Indice Nacional de Precios al Consumidor
),
also referred to as the INPC. Throughout the periods presented in this Annual
Report, Bulletin B-10 has also required Iusacell to restate the components of
shareholders' equity using the INPC and to record gains or losses in purchasing
power from holding monetary liabilities or assets.
In addition, Bulletin B-10 requires restatement of all financial
statements to constant pesos as of the date of the most recent balance sheet
presented. Accordingly, we have restated all data in the Consolidated
Financial Statements and in the selected financial data set forth below in
constant pesos with purchasing power as of December 31, 2002. We have not
reversed the effect of these inflation accounting principles in the
reconciliation of Iusacell's net profit (loss) and stockholders' equity to U.S.
GAAP.
1
Table of Contents
Note 23 to the Consolidated Financial Statements presents the principal
differences, other than inflation accounting, between Mexican GAAP and U.S.
GAAP applicable to us and contains a reconciliation of Iusacell's net profit
(loss) and stockholders' equity to U.S. GAAP.
As of and for the Year Ended December 31,
1998
1999
2000
2001
2002
2002
(Thousands of constant pesos as of December 31, 2002,
(Thousands of U.S.
except
per share and operating data)
(1)
dollars, except per
share and
operating data)
(2)
Income Statement Data:
Mexican GAAP:
Revenues:
Services
3,307,589
4,530,207
5,497,454
5,955,461
4,933,603
473,247
Telephone equipment sales and other
506,844
525,393
558,850
641,737
593,353
56,916
Total revenues
3,814,433
5,055,600
6,056,304
6,597,198
5,526,956
530,163
Cost of sales:
Cost of services
1,035,036
1,291,588
1,547,575
1,619,711
1,533,026
147,053
Cost of telephone equipment sales
and other
271,194
324,031
376,288
399,644
488,093
46,819
Total cost of sales
1,306,230
1,615,619
1,923,863
2,019,355
2,021,119
193,872
Gross profit
2,508,203
3,439,981
4,132,441
4,577,843
3,505,837
336,291
Operating expenses
1,455,532
1,737,201
2,033,599
2,195,070
1,817,063
174,299
Depreciation and amortization
1,073,547
1,713,421
2,546,289
2,768,521
2,247,065
215,546
450 project write-down
1,325,508
0
0
0
0
0
Other operating income
0
0
0
325,436
100,979
9,686
Operating loss
(1,346,384
)
(10,641
)
(447,447
)
(60,312
)
(457,312
)
(43,868
)
Other income (expense), net
179,211
(27,720
)
0
0
0
0
Integral financing cost (gain):
Interest expense, net
301,645
350,394
1,038,462
854,773
900,075
86,338
Foreign exchange loss (gain), net
1,129,607
(191,267
)
17,740
(237,606
)
1,028,698
98,676
Gain from monetary position
(916,914
)
(795,818
)
(476,396
)
(281,823
)
(415,625
)
(39,868
)
Total
514,338
(636,691
)
579,806
335,344
1,513,148
145,146
Equity participation in net profit
(loss) of associated companies
33,573
(57,247
)
(20,767
)
6,890
(9,741
)
(934
)
(Loss) income before assets tax,
income tax, minority interest and
extraordinary item
(1,647,938
)
541,083
(1,048,020
)
(388,766
)
(1,980,201
)
(189,948
)
Provisions for:
Asset tax
86,725
159,490
165,246
154,749
111,220
10,669
Income tax
0
486,737
0
0
9,250
887
Total
86,725
646,227
165,246
154,749
120,470
11,556
Loss from continuing operations
before minority interest and
extraordinary item
(1,734,663
)
(105,144
)
(1,213,266
)
(543,515
)
(2,100,671
)
(201,504
)
Minority interest
7,625
21,563
17,399
21,874
16,634
1,596
Loss from continuing operations
before extraordinary item
(1,727,038
)
(83,581
)
(1,195,867
)
(521,641
)
(2,084,037
)
(199,908
)
Extraordinary item
(3)
0
486,737
0
0
0
0
Cumulative effect of the adoption of
the new accounting pronouncement
0
0
0
6,847
0
0
(Loss) gain from discontinued
operations
(4)
(24,908
)
(1,846
)
9,370
0
0
0
Net (loss) profit
(1,751,946
)
401,310
(1,186,497
)
(528,488
)
(2,084,037
)
(199,908
)
(Loss) per share from continuing
operations
(1.54
)
(0.06
)
(0.86
)
(0.35
)
(1.12
)
(0.11
)
Net (loss) profit per share
(1.56
)
0.31
(0.85
)
(0.35
)
(1.12
)
(0.11
)
Weighted-average number of shares
outstanding
1,121,396
1,286,844
1,396,672
1,495,140
1,862,025
1,862,025
U.S. GAAP:
(5)
Total revenues
3,838,776
5,055,600
6,056,304
6,451,970
5,352,569
513,436
Operating (loss) profit
(1,139,268
)
(93,639
)
(458,259
)
(497,496
)
(384,404
)
(36,873
)
Net (loss) profit
(1,740,479
)
288,189
(1,200,451
)
(855,206
)
(1,913,649
)
(183,563
)
Basic
and diluted (loss) profit
per
share
(6)
(1.55
)
0.22
(0.86
)
(0.57
)
(1.03
)
(0.10
)
2
Table of Contents
As of and for the Year Ended December 31,
1998
1999
2000
2001
2002
2002
(Thousands of constant pesos as of December 31, 2002,
(Thousands of U.S.
except
per share and operating data)
(1)
dollars, except per
share and operating
data)
(2)
Balance Sheet Data:
Mexican GAAP:
Working capital
(1,622,976
)
973,333
(719,683
)
368,695
(91,594
)
(8,786
)
Property and equipment, net
7,168,516
8,141,460
9,038,005
10,008,780
9,367,325
898,544
Total assets
13,408,186
17,836,583
17,413,837
17,516,280
15,122,628
1,450,612
Total debt
6,014,462
9,518,509
8,437,040
7,767,133
8,396,019
805,374
Total stockholders' equity
4,951,734
6,304,525
7,008,863
7,571,196
5,365,102
514,638
Capital stock
11,660,034
5,684,848
6,154,059
7,139,558
7,139,558
684,850
U.S. GAAP:
(5)
Working capital
(1,824,083
)
728,262
(1,013,877
)
156,350
(249,638
)
(23,920
)
Property and equipment, net
6,943,307
8,141,872
8,812,798
9,762,699
9,178,121
880,395
Total assets
13,946,144
18,362,913
17,969,622
18,050,527
16,082,478
1,542,684
Total debt
6,028,962
9,524,775
8,437,040
7,767,133
8,396,019
805,374
Minority interest
1,096
39,759
26,893
123,888
581
56
Total stockholders' equity
4,954,609
6,172,640
6,674,618
6,610,079
4,890,052
469,070
Other Financial Data:
Mexican GAAP:
EBITDA
(7)
1,052,671
1,702,780
2,098,842
2,708,209
1,789,753
171,678
EBITDA margin
(8)
28
%
34
%
35
%
41
%
32
%
Capital expenditures
(9)
4,371,247
2,060,787
2,273,021
2,094,888
850,942
81,625
Interest expense, net
301,645
350,394
1,038,462
854,773
900,075
86,338
Ratio of earnings to fixed
charges
(10)
—
2.59
—
—
—
—
Cash Flow Data:
(11)
Mexican GAAP:
Net resources (used) provided by
operating activities
920,314
1,379,664
1,573,557
2,176,691
(488,970
)
(46,904
)
Net resources used in investing
activities
(4,655,078
)
(4,756,110
)
(3,054,597
)
(2,860,735
)
(419,066
)
(40,198
)
Net resources provided by financing
activities
3,891,235
4,416,863
822,231
396,940
628,886
60,325
U.S. GAAP:
(5)
Net cash provided by operating
activities
2,302,994
913,583
1,280,846
1,148,985
80,026
7,676
Net used in investing activities
(4,429,872
)
(3,148,416
)
(3,362,591
)
(2,974,864
)
(829,146
)
(79,534
)
Net cash provided by financing
activities
2,283,348
3,316,755
1,536,134
1,587,495
495,004
47,482
Operating Data:
Covered POPs
(12)
66,712,645
67,591,791
68,376,034
89,917,967
91,356,654
91,356,654
Subscribers
(13)
Postpaid
277,014
352,289
442,594
404,075
356,014
356,014
Prepaid
478,361
970,509
1,238,625
1,451,091
1,725,186
1,725,186
Total subscribers
755,375
1,322,798
1,681,219
1,855,166
2,081,200
2,081,200
Gross subscriber additions
747,720
788,438
1,092,895
1,051,089
1,122,024
1,122,024
Average subscribers
(14)
742,601
1,290,558
1,637,481
1,721,072
2,091,765
2,091,765
Average monthly postpaid churn
(15)
2.58
%
2.96
%
3.51
%
3.76
%
3.55
%
3.55
%
Penetration
(16)
1.13
%
1.96
%
2.46
%
2.10
%
2.28
%
2.28
%
Average
monthly MOUs per
subscriber
(17)
87
85
78
84
63
63
Nominal average monthly mobile
wireless revenue per subscriber
(18)
361
311
267
267
191
18.32
Nominal cost to acquire a new
subscriber
(19)
3,477
3,277
3,270
2,677
2,419
232.04
(1)
In accordance with Mexican GAAP, financial data for all periods
covered by the Consolidated Financial Statements, as well as the other
financial data presented in this Annual Report, unless otherwise
indicated, has been restated in constant pesos with purchasing power as
of December 31, 2002. Restatement of peso amounts is made by
multiplying the relevant nominal peso amount for the relevant period by
the inflation index for the period from the end of the period to which
such nominal peso amount relates through December 31, 2002. The
inflation indices used in this Annual Report are 1.3505 for 1998, 1.2024
for 1999, 1.1036 for 2000 and 1.0570 for 2001.
3
Table of Contents
(2)
Peso amounts were converted to U.S. dollars at the noon buying rate
reported by the Federal Reserve Bank of New York for December 31, 2002,
which was Ps.10.425 per U.S.$1.00. Such conversions should not be
construed as representations that the peso amounts actually represent
such U.S. dollar amounts or could be converted into U.S. dollars at the
rate indicated, or at all.
In determining the peso amounts of our U.S. dollar-denominated obligations
at December 31, 2002 in the Consolidated Financial Statements under
Mexican GAAP, however, we applied the exchange rate published by
Banco de
México
(the Mexican Central Bank) on December 31, 2002, which was
Ps.10.439 per U.S.$1.00. The difference between the noon buying rate
reported by the Federal Reserve Bank of New York and the
Banco de México
exchange rate causes certain inconsistencies between references to U.S.
dollar amounts in this Annual Report and the actual outstanding U.S.
dollar amounts of our U.S. dollar-denominated obligations. For example,
our actual total debt outstanding, excluding trade notes payable, at
December 31, 2002 was U.S.$804.3 million. In preparing the Consolidated
Financial Statements, we multiplied this dollar amount by Ps.10.439 (the
Banco de México
exchange rate at December 31, 2002) to arrive at
Ps.8,396.0 million of total debt, excluding trade notes payable. For
purposes of this Annual Report, we have converted this peso amount to U.S.
dollars for the convenience of the reader by dividing it by Ps.10.425 (the
noon buying rate reported by the Federal Reserve Bank of New York at
December 31, 2002) to arrive at U.S.$805.4 million of total debt,
excluding trade notes payable.
As a result of the combined effect of the restatement of the financial
data in constant pesos with purchasing power as of December 31, 2002 and
the translation of peso amounts into U.S. dollars, the amounts shown for
certain balance sheet items are not equal to the actual amounts
outstanding.
(3)
For 1999, the extraordinary item represents the utilization of tax
loss carryforwards available to us which, under Mexican GAAP in effect
at the time, was required to be classified as an extraordinary item.
Under U.S. GAAP, the utilization of tax loss carryforwards is recorded
as a component of tax expense.
(4)
In December 1998, we discontinued the operations of our subsidiary
Cellular Solutions de México, S.A. de C.V.
, which sold cellular handset
accessories. This subsidiary transferred all of its existing
inventories as of December 31, 1998 to another one of our subsidiaries
and terminated all of its employees during January and February 1999.
See Note 19 to the Consolidated Financial Statements. Under U.S. GAAP,
the closing of this subsidiary does not constitute a discontinued
operation under Accounting Principles Board Opinion ("APB Opinion") No.
30. Accordingly, the gain (loss) from discontinued operations is
recorded as operating income (expense).
(5)
See Note 23 to the Consolidated Financial Statements.
(6)
Diluted (loss) profit per share for the years ended December 31,
1998, 2000, 2001 and 2002 is equal to basic (loss) profit per share as
the potential drawdowns and conversions under the subordinated
convertible facility with Bell Atlantic and the shares outstanding under
the executive employee stock purchase plan are excluded from the
computation of diluted (loss) profit per share because to include them
would have been antidilutive for the periods presented. For the year
ended December 31, 1998, the number of potentially antidilutive shares
that were excluded from the computation of diluted (loss) profit per
share to account for the drawdowns and conversions under the facility
with Bell Atlantic were 69,285,714 shares, and for the year ended
December 31, 1999, the shares outstanding under the executive employee
stock purchase plan were 7,695,235, and 6,485,124, for each of the years
ended December 31, 2000, 2001 and 2002.
Diluted (loss) profit per share for the year ended December 31, 1999 is
equal to basic (loss) profit per share.
We have never paid dividends, nor do we contemplate paying dividends in
the foreseeable future. Accordingly, we have not included in these
tables a line item for dividends declared per share.
(7)
EBITDA as used in this Annual Report is operating profit (loss) plus
the sum of depreciation and amortization and is presented because we
believe that EBITDA provides useful information regarding our debt
service ability. EBITDA should not be considered in isolation or as a
substitute for our consolidated income statements or the consolidated
statements of changes in financial position prepared in accordance with
Mexican GAAP or as a measure of profitability or liquidity. EBITDA as
presented in this Annual Report (under both Mexican GAAP and U.S. GAAP)
differs from EBITDA as defined in the instruments governing Iusacell's
14 1/4% senior notes due 2006 and Iusacell Celular's 10% senior notes
due 2004 and Iusacell Celular's senior refinancing secured loan (as
defined herein). In particular, EBITDA in this Annual Report has not
been reduced to reflect the additional expenses that Iusacell Celular
would have incurred had it expensed the cost of cellular telephones it
gives to its postpaid customers rather than amortized such cost over 12
months, in accordance with its current practice under Mexican GAAP.
EBITDA is not (i) a measure determined under U.S. GAAP, (ii) an
alternative to U.S. GAAP operating income (loss) or net income (loss),
or (iii) a measure of liquidity
or cash flows as determined under U.S. GAAP. EBITDA does not represent
discretionary funds. EBITDA, as calculated by us, may not be comparable
to similarly titled measures reported by other companies.
4
Table of Contents
Our reconciliation of EBITDA to consolidated net profit (loss) under
Mexican GAAP as of December 31, 2002, 2001 and 2000, is as follows:
Years ended December 31,
2002
2001
2000
EBITDA
Ps. 1,789,753
Ps. 2,708,209
Ps. 2,098,842
Depreciation and amortization
(2,247,065
)
(2,768,521
)
(2,546,289
)
Integral financing cost
(1,513,148
)
(335,344
)
(579,806
)
Equity participation in net (loss)
gain of associated companies and
net (loss) gain on sale of equity
investments
(9,741
)
6,890
(20,767
)
Assets tax and income tax
(120,470
)
(154,749
)
(165,246
)
Minority interest
16,634
21,874
17,399
Profit from discontinued operations
—
—
9,370
Cumulative effect of the adoption of
the new accounting pronouncements
—
(6,847
)
—
Net loss for the year
(Ps. 2,084,037
)
(Ps. 528,488
)
(Ps. 1,186,497
)
(8)
EBITDA margin is calculated by dividing EBITDA by the total revenues
for the respective period.
(9)
Capital expenditures include fixed asset purchases, capitalized labor
costs, the capitalization of interest costs related to long-term debt
incurred in connection with the acquisition of property, plant and
equipment, trade-in credits received from Lucent Technologies for
exchanging our previous analog network for a digital and analog network
supplied by Lucent Technologies and, in some cases, the net value of
long distance fiber acquired in swaps for Iusacell long distance fiber.
In 1999 and 2000, pursuant to a waiver from its bank lenders, and
beginning in 2001, pursuant to the terms of its senior refinancing
secured loan, Iusacell Celular excluded capitalized interest cost from
capital expenditures in determining its compliance with capital
expenditure limitations set forth in its debt covenants. Pursuant to
waivers from its lenders, Iusacell Celular excluded Lucent trade-in
credits from capital expenditures in determining its compliance with the
capital expenditures limitations set forth in its debt covenants. See
Item 5, "Operating and Financial Review and Prospects — Liquidity and
Capital Resources — Capital Expenditures."
(10)
The ratio of earnings to fixed charges covers continuing operations.
For this purpose, earnings are calculated as income or loss before taxes
plus (i) integral financing cost, including amortization of capitalized
interest, (ii) the interest portion of annual rent expense and (iii)
losses from less than 50%-owned affiliates. Fixed charges include the
expensed and capitalized portions of integral financing cost. Earnings
were insufficient to cover fixed charges in 1998, 2000, 2001 and 2002.
The fixed charge coverage deficiency for the years ended December 31,
1998, 2000, 2001 and 2002 amounted to Ps.2,736.0 million (U.S.$262.5
million), Ps.966.1 million (U.S.$92.7 million), Ps.295.5 million
(U.S.$28.3 million), and Ps.2,945.9 million (U.S.$282.6 million)
respectively.
(11)
Under Mexican GAAP, the cash flow data represents changes in
financial position and has been adjusted for inflation and includes
certain non-cash items, such as monetary gains and losses and foreign
exchange gains and losses and, as a result, is not comparable to U.S.
GAAP cash flow data. Under U.S. GAAP, the effect of inflation
adjustments has been included in the separate line item "Gain on net
monetary position and foreign exchange losses" in Note 23 to the
Consolidated Financial Statements.
(12)
Covered POPs is the aggregate number of POPs in the geographic
regions in which we have concessions for wireless services and whom we
therefore have the potential to serve. POPs means points of presence,
or population, for a given area based on census data published by
Mexico's National Institute of Statistics, Geography and Information
Processing (
Instituto Nacional de Estadística, Geografía e Informática
).
(13)
Unless otherwise indicated, subscribers refers to the total number of
mobile wireless customers included in our subscriber base in the
geographic regions we cover at the end of the respective periods.
Mobile wireless subscribers for the periods presented includes cellular
subscribers and PCS subscribers. In December 2001, we began providing
limited commercial PCS services in Monterey and Tijuana and in 2002 in
other cities of regions 1 and 4. A prepaid customer is included as a
subscriber if, at the end of the period, such customer's telephone
number has not yet been deactivated. See Item 4, "Information on the Company — Business Overview
— Mobile Wireless Services — Prepaid Customers."
5
Table of Contents
(14)
Average subscribers represents the rolling monthly average number of
subscribers for the respective periods.
(15)
Average monthly postpaid churn for a given period is calculated by
dividing the sum of all postpaid subscribers disconnected during such
period by the sum of the beginning-of-month postpaid subscribers for
each of the months in such period, expressed as a percentage. See Item
4, "Information on the Company — Business Overview — Mobile Wireless
Services — Postpaid Customers" and Item 5, "Operating and Financial
Review and Prospects — Results of Operations."
(16)
Penetration represents the end-of-period subscribers divided by the
end-of-period population in the geographic regions we cover, expressed
as a percentage.
(17)
Effective January 1, 2000, we changed the methodology by which we
determine average monthly minutes of use (MOUs). Under the current
methodology, average monthly MOUs per subscriber for a given period are
calculated by dividing total MOUs (which includes minutes of use from
incoming calls to postpaid customers, which had previously been
excluded) for the period by the sum of the monthly average number of
subscribers for each of the months in such period. Average monthly MOUs
for 1999, which were 77 under the methodology used in 1998 and 1999,
have been restated under the current methodology. See Item 5,
"Operating and Financial Review and Prospects — Results of Operations."
When reporting average monthly MOUs per subscriber, we include "incoming
calls only" prepaid subscribers and the MOUs they generate.
(18)
Effective January 1, 2000, we changed the methodology by which we
determine nominal average monthly mobile wireless revenue per subscriber
(ARPU). Under the current methodology, ARPU for a given period is
calculated by dividing the sum of the nominal monthly revenues and other
cellular revenues (excluding revenues generated from the sale of
handsets and accessories to postpaid customers) for each of the months
in the period by the sum of the monthly average mobile wireless
subscribers for each of the months in such period. ARPU for 1999, which
was Ps.346.0 under the methodology effective in 1998, has been restated
under the current methodology. See Item 5, "Operating and Financial
Review and Prospects — Results of Operations." When reporting ARPU, we
include "incoming calls only" prepaid subscribers and the revenue they
generate.
(19)
Through December 31, 1999, nominal cost to acquire a new subscriber
represented sales, marketing and advertising costs associated with
postpaid plans, plus the costs of cellular phones we gave to postpaid
customers, for the respective period (in nominal pesos) divided by the
gross postpaid customer additions for such period. Effective January 1,
2000, we changed the methodology by which we determine nominal cost to
acquire a new subscriber and more accurately reflect postpaid customer
acquisition costs. The new methodology includes only handset subsidies
and sales commissions and excludes allocations of advertising and
overhead costs. Nominal cost to acquire a new subscriber for 1999,
which was Ps.3,527.0 under the old methodology, has been restated under
the new methodology. Nominal cost to acquire a new subscriber for 1998
has not been restated under the new methodology.
Exchange Rates
Unless otherwise specified, this Annual Report contains translations of
peso amounts into U.S. dollars solely for the convenience of the reader based
on the exchange rate reported by the Federal Reserve Bank of New York as its
noon buying rate for pesos, which we refer to as the Noon Buying Rate. At
December 31, 2002, the Noon Buying Rate was Ps.10.425 per U.S.$1.00. These
currency conversions should not be construed as representations that the peso
amounts actually represent such dollar amounts. Additionally, these
conversions should not be construed as representations that these peso amounts
have been, could have been or could be converted into U.S. dollars at those or
any other rates of exchange.
6
Table of Contents
The following table sets forth the high, low and average Noon Buying Rates
expressed in nominal pesos per U.S. dollar for each of the years ended December
31, 1998, 1999, 2000, 2001 and 2002. The Noon Buying Rate on June 24, 2003 was
Ps.10.532 per U.S.$1.00.
Noon Buying Rate
(1)
Year ended December 31,
High
Low
Average
(2)
1998
10.630
8.040
9.245
1999
10.600
9.240
9.562
2000
10.087
9.183
9.459
2001
9.972
8.946
9.337
2002
10.425
9.000
9.664
(1)
Source:
Federal Reserve Bank of New York
(2)
Average of month-end rates for annual data.
The following table sets forth the high and low Noon Buying Rates
expressed in nominal pesos per U.S. dollar for each of the previous six months.
Noon Buying Rate
(1)
Month end
High
Low
December 31, 2002
10.425
10.103
January 31, 2003
10.978
10.321
February 28, 2003
11.064
10.774
March 31, 2003
11.235
10.661
April 30, 2003
10.770
10.308
May 31, 2003
10.424
10.113
(1)
Source:
Federal Reserve Bank of New York.
B.
CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C.
REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D.
RISK FACTORS
Risk Factors Relating to Iusacell
We are a holding company and can pay our liabilities only through the
cash flow from our subsidiaries or out of the proceeds of our financings.
Our obligations, including under Iusacell's 14 1/4% senior notes due 2006
are structurally subordinated to those of our subsidiaries'
creditors.
Iusacell is a holding company with no significant assets other than the
stock of our subsidiaries.
In order to pay our obligations, we must rely on income from dividends and
other cash flow from our subsidiaries or debt or equity financings. Because we
are a holding company, the claims of our creditors are structurally
subordinated to the claims of our subsidiaries' creditors with respect to the
assets of such subsidiaries. At December 31, 2002, our consolidated
subsidiaries' total indebtedness, including trade notes payable,
was Ps.4,851.2 million (U.S.$465.3 million) and may increase in the future.
For a description of some of our obligations and liabilities, see Item 5,
"Operating and Financial Review and Prospects — Liquidity and Capital
Resources."
7
Table of Contents
Our current debt agreements prevent our subsidiaries from paying
distributions or dividends or making cash available to us until at least
December 2006, except for those payments of dividends or loans or advances at
such times and in such amounts as shall be necessary to permit Iusacell to pay
scheduled interest (including any tax gross-up) and principal payments as and
when due in respect of our 14 1/4% senior notes due 2006, which we refer to as
the Iusacell senior notes, so long as (i) no event of default has occurred and
is continuing, scheduled interest (including any tax gross-up) as and when due
in respect of any notes issued to refinance the Iusacell senior notes and (ii)
no event of default has occurred and is continuing in an aggregate amount of up
to U.S.$5.0 million to discharge our liabilities incurred in the ordinary
course of business. On April 28, 2003, Iusacell Celular's senior refinancing
secured loan was amended, and a temporary waiver and consent was granted by the
lenders. As part of such amendment, Iusacell Celular temporarily agreed not to
make any restricted payment, loan or advance to, or repay any loan or advance
from any affiliate, including Iusacell. Dividends and cash flow from our
subsidiaries are therefore severely restricted by the terms of the outstanding
debt of our subsidiaries and the restrictive covenants that govern the debt.
Furthermore, the ability of our subsidiaries to pay dividends or
distributions is subject to Mexican legal requirements, which in general terms
provide that a Mexican corporation may declare and pay dividends or
distributions only out of the profits reflected in its year-end financial
statements, if such payment is approved by its stockholders and after the
creation of required legal reserves and the absorption or satisfaction of
losses suffered in previous fiscal years.
Unless we are able to successfully restructure our consolidated
indebtedness, our ability to access the debt and equity capital markets or
obtain third party financing will be significantly reduced or eliminated. As
described below, Iusacell Celular is in default under its senior refinancing
secured loan and we did not make the interest payment due on the Iusacell
senior notes which was due on June 1, 2003 and an event of default would exist
upon the expiration of the grace period on July 1, 2003. Consequently, our
foreign and local currency corporate credit rating has been lowered to default
levels
.
Our principal shareholders are under no obligation to provide
financial resources to us, and have not indicated that they are prepared to do
so. Therefore, unless we can successfully restructure our consolidated debt,
we believe that we will be unable to satisfy our liabilities. A material
unsatisfied liability at the holding company level could lead us to bankruptcy
or reorganization.
We are in default of our obligations under the Iusacell senior notes
which will enable the holders of such notes to accelerate our repayment
obligations after the expiration of a grace period.
We did not generate sufficient cash flows from our operations to make the
June 1, 2003 U.S.$25.0 million interest payment on the Iusacell senior notes
and, as a result, we did not make that payment. We have a 30-day grace period
to make the payment before an event of default will occur. Since we do not
anticipate making the June 1, 2003 interest payment within the grace period, an
event of default under the indenture governing the Iusacell senior notes, which
we refer to as the Iusacell indenture, will occur and the holders of the
Iusacell senior notes will have the right to declare our indebtedness under the
Iusacell senior notes immediately due and payable. In addition, the right of
such holders to accelerate our repayment obligations under the Iusacell senior
notes will cause an event of default under the terms of Iusacell Celular's
senior refinancing secured loan and the lenders could declare the indebtedness
due thereunder immediately due and payable. If the lenders under the senior
refinancing secured loan decide to accelerate the indebtedness, this will
result in an event of default under the indenture (the "Iusacell Celular
indenture") governing the 10% senior notes due 2004 issued by Iusacell Celular
(the "Iusacell Celular senior notes"), which will permit the holders of such
notes to accelerate Iusacell Celular's repayment obligations under the Iusacell
Celular senior notes. Also, should the foregoing defaults occur, the
cross-default provisions contained in our various other credit agreements may
also be triggered.
In the event that the holders of the Iusacell senior notes or the lenders
under the senior refinancing secured loan choose to accelerate the maturity of
their debt, neither we nor Iusacell Celular would have the cash resources to
repay such amounts. Due to the depressed state of the value of
telecommunication assets and the structural subordination of the claims of the
holders of the Iusacell senior notes to those of our subsidiaries' creditors,
it is unlikely that the value of the assets held by our subsidiaries will be
sufficient to first satisfy their creditors and then the claims of our creditors, including the holders of the Iusacell senior
notes, which could lead us to bankruptcy or reorganization. For a further
description of our status as a holding company, see the risk factor entitled
"We are a holding company and can pay our liabilities only through the cash
flow from our subsidiaries or out of the proceeds of our financings. Our
obligations, including under the Iusacell senior notes, are structurally
subordinated to those of our subsidiaries' creditors." For a further
description of some of our obligations and liabilities, see Item 5, "Operating
and Financial Review and Prospects — Liquidity and Capital Resources." If an
acceleration of the Iusacell senior notes and the senior refinancing secured
loan occurs, the value and market price of our equity would be significantly
adversely affected and our equity holders could lose their entire investment.
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If Iusacell Celular does not receive an extension of the temporary
amendment and waiver to Iusacell Celular's senior refinancing secured loan,
the lenders under that loan will be able to accelerate Iusacell Celular's
repayment obligations.
During the first half of 2003, Iusacell Celular exceeded the permitted
leverage ratio (as defined in the senior refinancing secured loan) of 2.50. On
April 28, 2003 Iusacell Celular and the lenders entered into a temporary
amendment and waiver to the senior refinancing secured loan , which we refer to
as the second amendment and waiver, to increase the permitted leverage ratio
under the senior refinancing secured loan from 2.50 to 2.70. On May 22, 2003,
the second amendment and waiver was extended until June 13, 2003. Most
recently, on June 12, 2003, the second amendment and waiver was further
extended until June 26, 2003. See Item 5, "Operating Financial Review and
Prospects — Liquidity and Capital Resources — Iusacell Celular Long-Term
Indebtedness — Loan Covenant Waivers and Modifications."
We cannot assure you that Iusacell Celular will be able to obtain another
extension of the second amendment and waiver on the expiration date. On June
26, 2003, if the second amendment and waiver is not further extended, Iusacell
Celular will be in default of a financial ratio covenant under the senior
refinancing secured loan, which will constitute an event of default under that
loan as if the second amendment and waiver had never been executed. As a
result, the lenders under the senior refinancing secured loan could declare the
indebtedness under that loan immediately due and payable. In addition, if the
second amendment and waiver is not further extended and the lenders thereunder
accelerate the loan, defaults would occur under the Iusacell indenture and the
Iusacell Celular indenture, which would permit the holders of the Iusacell
senior notes and the Iusacell Celular senior notes to accelerate Iusacell's
repayment obligations and Iusacell Celular's repayment obligations.
There is substantial doubt as to our ability to continue as a going
concern due to our high level of leverage and recurring
losses.
In its Report of Independent Accountants dated June 13, 2003,
PricewaterhouseCoopers, S.C. stated that we are highly leveraged and have
suffered recurring losses from operations that raise substantial doubt as to
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.
In 2002, our accumulated losses were nearly the equivalent of two-thirds
of our capital stock. According to the Mexican Companies Law (
Ley General de
Sociedades Mercantiles
), an interested party may file a claim for dissolution
and force us into a liquidation process (
Proceso de Concurso Mercantíl
) of our
assets if the accumulated losses exceed two-thirds of our contributed capital
during any fiscal year.
If we are unable to service our indebtedness, we also face a
substantial risk of Mexican reorganization-related proceedings and the
suspension or termination of all or a portion of our business under our
concessions.
If we default on our obligations, including the Iusacell senior notes,
some or all of our creditors will have the option of taking legal action
against us, including instituting a reorganization proceeding in Mexico.
Further, we may choose to institute a voluntary reorganization proceeding under
Mexican law. If any such proceedings were to be instituted, we could not
predict their duration. We are not aware of any regulated company of our size
that has successfully completed a restructuring under the new Mexican
reorganization law since it was passed in May 2000. A reorganization
proceeding is likely to result in significant changes to our existing
obligations which could include the cancellation or rescheduling of all or part
of those obligations. During any such proceeding, our ability to operate or manage our business, to retain employees, to maintain existing
or create new client relationships, to continue to collect payments for our
services or to obtain any type of funding or financing would likely be
materially adversely affected. Moreover, in the event of our bankruptcy, our
operating concessions which are critical to our business, may be subject to
termination. There can be no assurance that the holders of the Iusacell senior
notes would receive any meaningful recovery from a bankruptcy proceeding.
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Mexican reorganization laws may not be as favorable to the holders of
the Iusacell senior notes as U.S. insolvency and bankruptcy laws.
The current Mexican reorganization law is based on the largely untested
Ley de Concursos Mercantiles
enacted in May 2000 (Law of Commercial
Reorganizations), which we refer to as the LCR, which provides for two
different and separate proceedings: conciliation and bankruptcy. The
conciliation phase lasts up to 185 days, absent protracted litigation. This
initial term is subject to extension for two 90-day periods. The objective of
the conciliation phase is to reach an agreement between the debtor and its
creditors to restructure the indebtedness of the debtor. The bankruptcy phase
does not have a specific term within which it must be concluded. It is expected
that both proceedings are likely to require significantly more time and be
significantly more unpredictable than a reorganization or bankruptcy proceeding
under U.S. laws. If we were to be declared subject to reorganization under the
LCR, the holders of the Iusacell senior notes would have to file a claim in
Spanish against the estate of Iusacell in Federal District Court in Mexico
City, Mexico. Upon the court's recognition of a holder of an Iusacell senior
note as a creditor of Iusacell, that holder's claim would be unsecured and
would rank equally with all other unsecured claims filed against our estate.
We may be unable to fund our capital expenditure programs, or pursue
business opportunities because our subsidiaries are highly leveraged, have
insufficient cash flow and have limited or no access to additional capital.
Historically, our cash generated from operating activities has not been
sufficient to meet our debt service, working capital and capital expenditure
requirements. We have relied on the capital markets for new equity and debt
financing, vendor financing, borrowings and equity contributions from our
principal shareholders to meet such funding needs.
As of December 31, 2002, our total consolidated indebtedness, including
trade notes payable, was Ps.8,586.3 million (U.S.$823.6 million), or
approximately 61.6% of our total capitalization.
For the years ended December 31, 2001 and December 31, 2002, our earnings
were insufficient to cover our fixed charges by Ps.295.5 million (U.S.$28.3
million) and Ps.2,945.9 million (U.S.$282.6 million), respectively.
In order to implement our operating strategy through 2004, we will have to
incur significant capital expenditures. We expect our aggregate capital
expenditures for 2003, 2004 and 2005, not including capitalized interest, to
total approximately U.S.$435.0 million. We anticipate that approximately
U.S.$85.0 million of such capital expenditures will be invested during 2003,
including capital expenditures to increase the quality and coverage of our
cellular network.
We will need additional external funding in 2003 in order to acquire,
build out and operate our PCS network in northern Mexico, as well as to make
additional investments in the central regions and expand the advance data
network capabilities into other key cities. As we make additional investments
in our cellular network and pursue long distance and data opportunities, we
will also need additional external funding in 2004 and beyond. Furthermore,
the investments required to keep pace with technological change, such as
extended coverage on third-generation wireless telecommunication equipment,
will require additional capital resources. We cannot assure you that we will
be able to obtain such additional funds.
Our declining revenues throughout 2002, the degree to which we are
leveraged and our inability to obtain additional capital may adversely affect
our ability to finance future operations, to finance necessary capital
expenditures, to compete effectively against better capitalized competitors and
to withstand downturns in our business or the Mexican economy generally. Our high level of indebtedness
could limit our ability to pursue business opportunities that may be in our
interest and in the interest of the holders of our securities.
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Depreciation or devaluation of the peso relative to the U.S. dollar may
adversely affect our financial condition and results of operations.
While our sales are almost entirely denominated in pesos, the vast
majority of our obligations are denominated in U.S. dollars. As a result,
unless we enter into hedging arrangements, we are exposed to the risk of
devaluation of the peso relative to the U.S. dollar. The peso appreciated by
4.8% relative to the U.S. dollar during 2001, but depreciated by 13.9% during
2002. In the past, the peso has depreciated substantially against the U.S.
dollar and may depreciate significantly in the future.
Declines in the value of the peso relative to the U.S. dollar could
adversely affect our financial condition and results of operations and our
ability to meet U.S. dollar-denominated obligations, including those under our
debt securities. In addition, any devaluation of the peso may negatively
affect the value of the securities of a Mexican company with sales in pesos and
debt denominated in U.S. dollars, such as our company.
We face increasing competition which may reduce our operating margins.
We face significant competition in our core mobile wireless services
business in each region in which we operate from
Radiomóvil Dipsa, S.A. de
C.V.
, commonly known as Telcel. As a subsidiary of
América Móvil, S.A. de
C.V.
, a company spun off from
Teléfonos de México, S.A. de C.V.
, the former
state telephone monopoly known as Telmex, Telcel has significantly greater
internal financial and operational resources than those available to us,
nationwide cellular and personal communications services (PCS) concessions, a
nationwide cellular network and the ability to use Telmex's installed
telecommunications systems. Competition in the Mexican wireless industry is
substantial and we, like Telcel, bear significant promotional expenses,
including the cost of providing cellular telephones to postpaid subscribers
free of charge or at substantial discounts. In addition, competition from
Telcel has not always allowed us to implement price increases to keep pace with
inflation and has occasionally caused us to implement price rollbacks and
reductions. We also face competition from
Telefónica Móviles Mexico, S.A. de
C.V.
, which we refer to as Telefónica, a subsidiary of
Telefónica Móviles,
S.A.
, a Spanish telecommunications service provider, that concluded in 2002 the
acquisition of
Pegaso Comunicaciones y Sistemas, S.A. de C.V.
, which we refer
to as Pegaso, and from
Servicios Profesionales de Comunicación, S.A. de C.V.
,
which we refer to as Unefón, an affiliate of
TV Azteca, S.A. de C.V.
and
Elektra, S.A. de C.V.
Both these service providers own concessions in all nine
wireless service regions in Mexico and have begun to provide service in
Mexico's principal cities.
We also face increasing competition in certain cities from
Nextel de
México, S.A. de C.V.
, a provider of enhanced specialized mobile radio services
and satellite telephony.
In addition, we face increasing competition in providing long distance,
wireless local telephony and data transmission services. Competition may lead
to increases in advertising and promotional spending, along with increased
demands on access to distribution channels. These factors may lead to smaller
operating margins, greater choices for customers and increasing movement of
customers between competitors, which may make it difficult for us to retain
customers or add new customers.
The Mexican government may grant additional concessions to other companies
to provide services similar to or the same as those that we provide. In
addition to Telcel and Telefónica, other competitors may also have greater
financial, corporate and other resources, which may limit our ability to
compete effectively.
The technology we use may be made obsolete by advancements in
technology.
All companies in the global telecommunications industry must adapt to
rapid and significant changes in technology. The technology that we have
selected in our wireless business become obsolete by market demand for new or
improved digital technologies supporting wireless service or other services in
the near future. Technological changes may adversely affect our competitive
position, require substantial new capital expenditures and/or require
write-downs of obsolete technology.
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A significant portion of our accounts receivable is represented by a
small number of distributors.
Our three largest distributors accounted for 52% and 44% of our net trade
accounts receivable as of December 31, 2002 and 2001, respectively. We have
established certain measures to reduce the risk associated with this
concentration, such as certain guarantees and liens. As a result, the absolute
number of accounts to which these receivables are attributable has decreased.
Although we believe that this distributor concentration will be reduced over
time, our results of operations could be negatively affected, at least in the
short-term, if any payment defaults occur with respect to these distributors.
Risk Factors Relating to Our Shareholders
Verizon and Vodafone, our principal shareholders, announced that they
have agreed to sell all of their interest in us and, as a result, Verizon
will lose management control over our operations and Vodafone will no longer
provide us with other support services.
Since Verizon (formerly known as Bell Atlantic) assumed management control
of Iusacell's Board of Directors and management, Verizon consultants and
Verizon personnel provided on a secondment basis to Iusacell have been
integrally involved in managing our day-to-day operations and defining and
implementing our long-term strategy. Verizon currently has the right and power
to elect a majority of the members of Iusacell's Board of Directors and, with
certain exceptions, to unilaterally determine Iusacell's policies and strategy.
Vodafone, our other principal shareholder, provides us with management,
marketing, legal and other consulting services.
On June 13, 2003,
Movil Access, S.A. de C.V.
(Movil Access), a Mexican
telecommunications service provider and a subsidiary of
Biper, S.A. de C.V.
,
which is a part of
Grupo Salinas
, announced that it would commence a public
tender offer in Mexico and the United States to buy all of Iusacell's
outstanding capital stock. Verizon and Vodafone have announced that they have
agreed to tender all of their Iusacell shares to Movil Access. See Item 4,
"Information on the Company — History and Development of the Company."
If the National Banking and Securities Commission (
Comisión Nacional
Bancaria y de Valores
) approves the tender offer and Verizon tenders all of its
Iusacell shares, Verizon will lose its ability to manage us. Verizon will then
no longer be in a position to determine our policies and strategies, provide
personnel to us on a secondment or consulting basis, manage our operations or
provide the technical support, as well as operating synergies that we have
historically relied on. We cannot predict the strategy that we will implement
following any such management change. In addition, if Vodafone tenders all of
its Iusacell shares, Vodafone will no longer provide us with management and
other services.
The sale of Verizon's interest and Vodafone's interest in us will
constitute a change of control and, as a result, we may be required to
repurchase all or part of the Iusacell senior notes and Iusacell Celular's
senior notes and we may be in default of our obligations under Iusacell
Celular's senior refinancing secured loan.
The sale of our shares by Verizon and Vodafone will constitute a change of
control under the Iusacell Celular indenture and the Iusacell indenture. As a
result, each holder of the Iusacell Celular senior notes may require Iusacell
Celular to repurchase, in whole or in part, that holder's Iusacell Celular
senior notes and each holder of the Iusacell senior notes may require Iusacell
to repurchase, in whole or in part, that holder's Iusacell senior notes. We
cannot assure you that Iusacell or Iusacell Celular will have sufficient funds
or the ability to obtain sufficient funds on a timely basis to pay for any or
all of the debt that each may have to repurchase as a result of this change of
control.
In addition, under Iusacell Celular's senior refinancing secured loan, the
sale of our shares by Verizon and Vodafone will constitute a change of control,
which would constitute a default and, unless the default is waived, the lenders
under that loan would have the right to declare all amounts outstanding under
that loan immediately due and payable. If the lenders accelerate amounts due
under that loan, we cannot assure you that Iusacell Celular will have sufficient funds or the ability to obtain sufficient funds on a timely
basis to pay for those amounts due under that loan, and the value and market
price of our securities would be significantly adversely affected.
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Risk Factors Relating to Doing Business in Mexico
The Mexican government may impose additional conditions on our
concessions or may take them away.
We provide our services pursuant to concessions granted by the Mexican
government. Our activities are subject to significant government regulation
and supervision. The concessions may be subject to additional conditions or
may not be renewed when they expire. The conditions for renewal, however, are
not fully defined. The Mexican government also reserves the right to revoke,
temporarily seize or expropriate concessions or assets related to a concession
for reasons, among others, of public interest, such as war, national disaster
or significant public disturbances. Moreover, the Mexican government may grant
additional concessions to potential competitors to provide services similar to
those that we provide. Any of these developments or other government action
could reduce the value of Iusacell's concessions and adversely affect our
financial condition and results of operations.
Our financial statements may not give you the same information as
financial statements prepared under U.S. generally accepted accounting
principles.
Mexican companies listed on the Mexican Stock Exchange, including
Iusacell, must prepare their financial statements in accordance with Mexican
GAAP. Mexican GAAP differs in certain significant respects from U.S. GAAP,
including, but not limited to, the treatment of minority interest, purchase
accounting, deferred income taxes, capitalization of pre-operating costs,
accounting for derivative financial instruments, gains from the exchange of
non-monetary assets, the provisioning for the consolidation of facilities and
sale-leaseback transactions. In particular, all such Mexican companies must
incorporate the effects of inflation directly in their accounting records and
in published financial statements. The effects of inflation accounting under
Mexican GAAP are not eliminated in the reconciliation to U.S. GAAP, as these
inflation-adjusted figures are considered a more meaningful presentation than
historical cost-based financial reporting for both Mexican and U.S. accounting
purposes. For this and other reasons, the presentation of Mexican financial
statements and reported earnings may differ from that of companies in other
countries. See Note 23 to our Consolidated Financial Statements.
The general political and economic conditions in Mexico may adversely
affect our business, financial condition and results of operations.
We are a Mexican company, and most of our operations are in Mexico. As a
result, our business, financial condition and results of operations may be
significantly affected by the general condition of the Mexican economy, by
devaluation of the peso, by inflation and high interest rates in Mexico, or by
political or economic developments in Mexico. The Mexican economy contracted
at a rate of 0.3% in 2001 and grew at an annual rate of only 0.9% in 2002.
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 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,
disparity of wealth and high unemployment. These economic conditions
substantially reduced the purchasing power of the Mexican population and, as a
result, the demand for telephony services.
Crises such as these could adversely affect our financial condition and
results of operations and the market value of our securities.
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If the Mexican government imposes exchange controls, we may not be able
to purchase imported goods or make dividend, principal and interest payments
in U.S. dollars.
In the past, the Mexican economy has experienced balance of payment
deficits and shortages in foreign exchange reserves. While the Mexican
government does not currently restrict the ability of Mexican or foreign
persons or entities to convert pesos to foreign currencies generally, and U.S.
dollars in particular, it has done so in the past and could do so again in the
future. We cannot assure you that the Mexican government will not institute a
restrictive exchange control policy in the future. Any such restrictive
exchange control policy could prevent or restrict access to U.S. dollars or
other foreign currencies to purchase imported goods and to meet our U.S. dollar
obligations, such as the payment of dividends or principal and interest under
our debt securities.
Payment of judgments entered against us will be in pesos, which may
expose holders of our debt securities to exchange rate risks.
If a proceeding to enforce our obligations under any debt securities is
brought in Mexico, Mexican law permits us to pay a resulting judgment in pesos.
Under the Mexican Monetary Law, an obligation payable in Mexico in a currency
other than pesos may be satisfied in pesos at the exchange rate in effect on
the date when payment is made.
If a Mexican court declares us to be in
concurso mercantil
, our
obligations under any debt securities:
•
would be converted into pesos at the exchange rate prevailing at
the time of the court's declaration of
concurso mercantil
and then to
Unidades de Inversión
, which are denominated in pesos and adjusted
periodically for inflation by the Bank of Mexico, and payment would
occur at the time claims of the court-recognized creditors are
satisfied subject to the priority established by law; and
•
would not be otherwise adjusted to take into account devaluation of
the peso against the U.S. dollar occurring after the court's
declaration.
The additional 10% tax on telecommunications services approved by the
Mexican Congress may adversely affect the ability of wireless companies,
including Iusacell, to attract new customers.
On January 1, 2002, the Mexican Congress approved a surcharge that
assesses an additional 10% federal excise tax on certain wireless
telecommunications services. The tax resulted in a 10% increase in the monthly
bills of postpaid mobile wireless customers and in the cost of prepaid cards in
denominations of Ps.200.0 (U.S.$19.18) or more for the year 2002. In February
2002, we filed an injunctive action (
amparo
) challenging the Mexican
government's implementation of the tax. In October 2002, we received a
preliminary ruling in our favor by a Federal Judge, and the Mexican government
subsequently filed an appeal. In June 2003, Mexico's Supreme Court rejected
the appeal and affirmed the ruling in favor of Iusacell.
In 2003, the Mexican government implemented a modified version of the
additional 10% excise tax on certain wireless telecommunications services,
which was approved by the Mexican Congress. In March 2003, we filed an
injunctive action challenging this implementation. Until this injunctive
action is resolved, we will continue to pay the full modified additional 10%
excise tax to the Finance Ministry. In the prepaid segment, the modified
version of the additional 10% excise tax is being applied to every prepaid plan
with an airtime per-minute rate of more than Ps.3.50 (U.S.$0.34), which differs
from the 2002 initiative that taxed prepaid cards with a face value equal to or
in excess of Ps.200.0 (U.S.$19.18).
High inflation rates in Mexico may decrease demand for our services
while increasing our costs.
In recent years, Mexico has experienced high levels of inflation. The
annual rate of inflation, as measured by the Mexican National Consumer Price
Index, was 9.0%, 4.4% and 5.7% in 2000, 2001, 2002, respectively, and was 1.3%
for the three-month period ended March 31, 2003. High inflation rates can
adversely affect our business and results of operations in the following ways:
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•
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.
ITEM 4. INFORMATION ON THE COMPANY
A.
HISTORY AND DEVELOPMENT OF THE COMPANY
Grupo Iusacell, S.A. de C.V.
, which was known as
Nuevo Grupo Iusacell,
S.A. de C.V.
until February 29, 2000, is a
sociedad anónima de capital variable
with indefinite life organized under the laws of Mexico on August 6, 1998.
Iusacell was formed for the purpose of acquiring and holding the shares of
Grupo Iusacell Celular, S.A. de C.V.
, which was known as
Grupo Iusacell, S.A.
de C.V.
until February 29, 2000, a
sociedad anónima de capital variable
with
indefinite life organized under the laws of Mexico on October 6, 1992.
Iusacell's commercial name is "Grupo Iusacell," but our operating
subsidiaries market their products under the single
Iusacell
™ brand name.
Iusacell currently operates primarily in Mexico under Mexican legislation,
including, among others, the 1995 Telecommunications Law (
Ley Federal de
Telecomunicaciones
), the 1993 Foreign Investment Law (
Ley de Inversión
Extranjera
), the Mexican Securities Market Law (
Ley del Mercado de Valores
) and
the Mexican Companies Law (
Ley General de Sociedades Mercantiles
). Our
participation in the U.S. capital markets also makes us subject to certain
securities laws of the United States. See "— Business
Overview — Government
Regulation" for a discussion of certain of the regulations to which we are
subject.
Iusacell Celular was formed in 1992 to hold the principal
telecommunications interests of the Peralta Group, which was primarily
comprised of securities and entities controlled by Mr. Carlos Peralta.
Iusacell Celular's subsidiaries are primarily engaged in the wireless
telecommunications business and hold concessions to operate cellular telephone
systems in five contiguous market regions in central and southern Mexico.
Mexico is divided into nine geographic regions for the provision of mobile
wireless service. Iusacell Celular, through one of its subsidiaries, was
granted an authorization to provide cellular service in Region 9 (which
includes Mexico City) in 1989 and, in a series of transactions from 1990 to
2002, purchased the companies holding concessions to provide cellular service
in Region 5 (which includes the city of Guadalajara), Region 6 (which includes
the city of León), Region 7 (which includes the city of Puebla) and Region 8
(which includes the cities of Cancún and Mérida). In October 1995, an Iusacell
Celular subsidiary received a concession to provide long distance service and
began providing such service in August 1996.
In May 1998, a separate subsidiary of Iusacell acquired, in an auction,
concessions for frequencies to provide PCS services in Region 1 (which includes
the city of Tijuana) and Region 4 (which includes the city of Monterrey) in
northern Mexico for approximately Ps.493.2 million (in nominal terms)
(U.S.$49.8 million, using the applicable exchange rate as of the date of the
purchase). Iusacell started to offer commercial services in those two cities
in December 2001. During 2002, Iusacell expanded its PCS network in Regions 1
and 4 to the main cities and connecting roads covering approximately 65% of the
total POPs in these regions.
In November 1993 and August 1994, Bell Atlantic acquired a 42.0% equity
interest in Iusacell Celular for U.S.$1.04 billion. In June 1994, Iusacell
Celular completed an initial public offering of two of its four series of
ordinary shares and of American depositary shares representing two series of
its shares.
In February 1997, Bell Atlantic assumed management control of Iusacell
Celular. This change of control was implemented when Bell Atlantic and the
Peralta Group effected certain conversions of shares from one series into
another that gave Bell Atlantic a majority of the Iusacell Celular series A
shares and control over the Iusacell Celular Board of Directors. All these
conversions were effected on a one-for-one basis. In August 1997, Bell
Atlantic acquired NYNEX Corporation in a merger of equals to form a new Bell
Atlantic.
In September 1997, in order to focus exclusively on its core Mexican
market, Iusacell Celular sold its direct and indirect interests in Ecuadorian
cellular and paging companies for approximately U.S.$31.4 million, net of
taxes.
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In December 1997, Iusacell Celular entered into an agreement with
subsidiaries of Lucent Technologies, Inc. pursuant to which Iusacell Celular
agreed (i) to replace its existing analog wireless cellular network with a new
Lucent Technologies digital and analog network for a minimum consideration of
U.S.$188.0 million which was completed in August 1999 and (ii) to continue
acquiring network equipment and services under the agreement in order to
improve its digital and analog network. Through December 31, 2002, Iusacell
Celular has purchased approximately U.S.$433.1 million of network equipment and
services under this agreement.
On July 6, 1999, Iusacell launched an offer to exchange two classes of
Iusacell voting ordinary shares for the four classes of Iusacell Celular
ordinary shares then outstanding on a one-for-one basis. Iusacell completed
this offer on August 10, 1999 and, as a result, Iusacell acquired 99.5% of the
outstanding Iusacell Celular shares. On January 31, 2000, Iusacell launched a
second exchange offer for the purpose of exchanging American depositary shares
representing Iusacell's series V shares for the balance of American depositary
shares representing Iusacell Celular's series D and series L shares on a
one-for-one basis. Iusacell completed this offer on February 29, 2000 and, as
a result, Iusacell held 99.9% of the outstanding Iusacell Celular shares. In
May 2001, Iusacell Celular effected a reverse stock split of 1 new Iusacell
Celular share for every 30,000 old Iusacell Celular shares. As a result of
this reverse split, Iusacell now holds 100% of the capital stock of Iusacell
Celular.
On December 29, 1999, Iusacell Celular entered into a series of agreements
with
MATC Celular, S. de R.L. de C.V.
, the Mexican subsidiary of American Tower
Corporation, which we refer to as MATC Celular, with respect to Iusacell
Celular's existing towers and future tower needs. Under these agreements,
which were amended in May 2002, MATC Celular, among other things, is required
to build towers or find space on existing towers, which Iusacell Celular's
subsidiaries lease. The term of the lease is 10 years with two five-year
renewal periods. As of May 30, 2003, Iusacell Celular's subsidiaries lease
from MATC Celular 715 sites, including 320 transfer sites and a number of
built-to-suit sites and co-locations.
On June 30, 2000, Bell Atlantic acquired GTE Corporation, one of the
world's largest telecommunications companies, in a merger of equals, renaming
itself as Verizon Communications Inc. The names of the subsidiaries which hold
Iusacell capital stock directly remained unchanged. In April 2001, Vodafone
acquired the Peralta Group's 34.5% equity interest in Iusacell for U.S.$973.4
million.
On October 19, 2001, Iusacell Celular completed the acquisition of a 78.3%
ownership interest in Portatel for Ps.595.3 million (U.S.$57.1 million).
Iusacell Celular reached an agreement to acquire the remaining 21.7% ownership
interest in Portatel for Ps.168.9 million (U.S.$16.2 million) and closed the
acquisition of this remaining ownership interest on February 8, 2002. Portatel
is engaged in the wireless communications business and holds the concession to
provide cellular services in Region 8, which covers the states of Yucatan,
Campeche, Quintana Roo, Chiapas and Tabasco in southern Mexico. On November
2001, Iusacell completed a rights offering to holders of its outstanding Series
A and V shares and Series V American Depositary Shares (ADSs) for the aggregate
amount of U.S.$100.0 million. The proceeds were used to finance the
acquisition of Region 8 and the PCS deployment in Regions 1 and 4.
Over the last three full fiscal years, excluding the effects of inflation
accounting, capitalized interest and certain non-cash trade-in credits, we have
invested approximately U.S.$518.7 million in capital expenditures, primarily
for our cellular communications network, long distance network and billing,
customer care and administrative systems. See Item 5, "Operating and Financial
Review and Prospects — Liquidity and Capital Resources — Capital Expenditures."
During the first quarter of 2003, we invested approximately US$1.0 million
in our cellular regions to expand our coverage. In 2003, we plan to invest,
subject to a successful completion of our restructuring efforts, approximately
U.S.$85.0 million in capital expenditures, not including capitalized interest,
to increase the coverage and improve the quality of and enhance the features
available through our cellular and long distance networks, and to improve our
billing and customer care systems. All of this capital equipment will be
deployed in Mexico. We expect to finance our capital expenditures in 2003
through funds from our operations, vendor and project financing and the capital
markets. See Item 5, "Operating and Financial Review and Prospects — Liquidity
and Capital Resources — Capital Expenditures."
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On June 13, 2003, Movil Access, a Mexican telecommunications service
provider and a subsidiary of
Biper, S.A. de C.V.
, which is a part of
Grupo
Salinas
, announced that it would commence a public tender offer in Mexico and
the United States to buy all of Iusacell's outstanding capital stock, which
includes all of Iusacell's outstanding series A and series V shares (including
all of Iusacell's outstanding American depositary shares representing series V
shares), for U.S.$10.0 million. In Mexico, Movil Access would offer a price of
Ps.0.05712180 (or the U.S. dollar equivalent) per series A share and
Ps.0.05712180 (or the U.S. dollar equivalent) per series V share. In the
United States, Movil Access would offer the U.S. dollar equivalent of
Ps.5.712180 per American depositary share representing series V shares.
Iusacell's two principal shareholders, Verizon (which owns a 39.4% interest in
Iusacell) and Vodafone (which owns a 34.5% interest in Iusacell), have
announced that they have agreed to tender all of their Iusacell shares to Movil
Access. The tender offer is subject to approval by the National Banking and
Securities Commission (
Comisión Nacional Bancaria y de Valores
).
There have not been any public takeover offers by us for the shares of
other companies during 2002 and 2003.
Our principal executive offices are located at Prolongación Paseo de la
Reforma 1236, Colonia Santa Fe, Delegación Cuajimalpa, 05348, Mexico, D.F.,
which is also where we are domiciled. Our telephone number is (5255)
5109-4400. Our agent in the United States is Puglisi & Associates, 850 Library
Avenue, Suite 204, P.O. Box 885, Newark, Delaware 19715. Our Internet website
address is www.iusacell.com. The information on our website is not
incorporated into this Annual Report.
B.
BUSINESS OVERVIEW
We are a wireless telecommunications services provider in Mexico with
nearly 2.1 million mobile wireless customers at December 31, 2002,
approximately 83% of which are prepaid customers. We hold and operate
concessions in the 800 megahertz (MHz) band to provide cellular wireless
services in five contiguous geographic regions comprising all of central and
southern Mexico, and in the 1900 MHz band to provide PCS wireless services in
two of the four regions in northern Mexico. Our service regions include Mexico
City, one of the world's most populous cities, and the cities of Monterrey,
Tijuana, Guadalajara, León, Puebla, Cancún and Mérida, which when combined
represent approximately 91 million POPs comprising 90% of Mexico's total
population.
Since February 1997, Iusacell has been under the management control of
subsidiaries of Bell Atlantic (which is now Verizon). From late 1993 through
February 1997, Bell Atlantic participated substantially in the financial and
technological operations of Iusacell. Since Bell Atlantic assumed control of
our Board of Directors and management, Bell Atlantic consultants and Bell
Atlantic personnel provided on a secondment basis to Iusacell have been
integrally involved in managing our day-to-day operations and defining and
implementing our long-term strategy. The management team is supported by an
experienced group of Mexican executives and other personnel from Verizon and
Vodafone. Through December 31, 2002, Verizon has invested approximately
U.S.$1.3 billion for its current 39.4% economic and voting interest in
Iusacell.
Since Bell Atlantic took control of Iusacell's management, our subscriber
base has grown from approximately 245,000 subscribers in February 1997 to
2,081,200 subscribers as of December 31, 2002. Of these subscribers, as of
December 31, 2002, 356,014 were postpaid customers who purchase cellular
services pursuant to fixed-term contracts, and the remaining 1,725,186 were
customers who pay for their cellular services in advance primarily through the
purchase of prepaid calling cards. As of December 31, 2002, approximately 69%
of these prepaid customers were "incoming calls only" customers who are only
able to receive incoming calls and not to make outgoing calls. These customers
generate little or no revenue. Our postpaid and prepaid subscribers who can
make outgoing calls and receive incoming calls had an average monthly cellular
revenue per subscriber (ARPU) during 2002 of Ps.383.0 (approximately
U.S.$36.7), with prepaid subscribers in this group having an ARPU of Ps.206.0
(approximately U.S.$19.8) during 2002.
In May 1998, we launched digital service using Code Division Multiple
Access (CDMA) technology, the highest-capacity commercial digital technology
available in the 800 MHz frequency band in the Mexico City area. Since August
1999, we have offered digital coverage and services in almost all areas where
we provide mobile wireless services. In January 2003, we launched the
country's first CDMA2000 1XRTT voice and high-speed data network in Mexico
City. With this advanced network, we increased voice capacity and offered
subscribers new data services such as high-speed instant messaging, e-mail and
Internet access at speeds of up to 144 kilobits per second (kbps). We offer the corporate sector mobile office capabilities and
applications designed to meet the needs of specific mobile users such as field
sales and service personnel. In addition to the core mobile wireless services,
we also provide a wide range of other telecommunications services, including
long distance, paging, wireless local telephony and data transmission services.
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Table of Contents
Iusacell currently has two principal shareholders, Verizon and Vodafone.
Verizon owns a 39.4% equity interest and Vodafone owns a 34.5% equity interest
in Iusacell. For more information on Iusacell's principal shareholders, see
Item 7, "Major Shareholders and Related Party Transactions — Major
Shareholders."
Movil Access recently announced that it would commence a public tender
offer in Mexico and the United States to buy all of Iusacell's outstanding
capital stock. Verizon and Vodafone announced that they would tender all of
their Iusacell shares to Movil Access. See "— History and Development of the
Company."
Competitive Strengths
Digital Technology Platform
In August 1999, upon completion of the deployment of a CDMA digital
network in nearly all areas where we provide cellular service, we became the
first company in Mexico to make digital voice service broadly available to all
of our customers. Our PCS network is also deploying CDMA technology. In
January 2003, we commercially launched the first CDMA2000 1XRTT network in
Mexico City, providing advanced high-speed data transmission services and
wireless Internet primarily to corporate customers.
For the fourth consecutive year, in 2002, the Mexican telecommunications
regulator, the
Comisión Federal de Telecomunicaciones
(Mexican Federal
Telecommunications Commission or COFETEL), performed technical audits in the
country's largest cities in order to determine whether wireless carriers are
offering acceptable network quality. In these audits, we significantly
surpassed COFETEL minimum standards for dropped calls, ineffective attempts and
set-up time to place a call by 5%, 4% and 12 seconds, respectively, in the 19
audited cities in our core cellular regions, including Mexico City.
Brand Name
All of the services that we offer use the
Iusacell™
brand name to
increase consumer awareness and customer loyalty. We believe that the high
"share of voice" and "top of mind" awareness maintained by the
Iusacell
brand
name has allowed us to make more cost-efficient marketing investments compared
with those of our competitors.
The
Iusacell™
brand name is recognized beyond the regions where we
currently provide service. We believe that this recognition has facilitated
our entry into Regions 1 and 4 in northern Mexico, where we hold PCS
concessions, and Region 8 in southern Mexico, and will facilitate our entry
into other markets if and when we are able to do so.
The Telecommunications Industry in Mexico
Cellular Services
The Mexican government initiated its efforts to liberalize the
telecommunications industry in 1989, dividing Mexico into nine geographic
regions for the provision of cellular service. In order to provide an
alternative for cellular customers, two concessions were granted in each
region, one to Telcel, the cellular subsidiary of Telmex, and the other to an
independent operator. In addition, Telmex was required to interconnect all
cellular operators to its network in an effort to facilitate competition.
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Table of Contents
The nine geographic regions are described in the table below.
Region Number
Geographical Coverage
Major Cities in the Region
1
The states of Baja
California and Baja
California Sur and
the municipality of
San Luis Rio
Colorado in
northwestern Sonora
state
Tijuana, Mexicali, Ensenada, Tecate
and La Paz.
2
The states of Sonora
and Sinaloa (except
for the municipality
of San Luis Rio
Colorado in
northwestern
Sonora)
Hermosillo, Ciudad Obregón, Culiacán
and Mazatlán.
3
The states of
Chihuahua and
Durango and the
municipalities of
Torreón, Francisco
I. Madero,
Matamoros, San Pedro
and Viesca in the
state of Coahuila
Ciudad Juárez, Chihuahua, Durango,
Gómez Palacio and Torreón.
4
The states of
Tamaulipas, Nuevo
León and Coahuila
(except for the
municipalities of
Torreón, Francisco
I. Madero,
Matamoros, San Pedro
and Viesca)
Monterrey, Saltillo, Tampico, Ciudad
Victoria, Nuevo Laredo, Reynosa and
Matamoros.
5
The states of
Colima, Jalisco
(except for 12
municipalities in
northeastern
Jalisco), Michoacan
and Nayarit
Guadalajara (Mexico's second largest
city), Morelia, Tepic, Colima and
Manzanillo.
6
The states of
Aguascalientes,
Guanajuato,
Querétaro, León,
Querétaro, San Luis
Potosí and Zacatecas
and 12
municipalities in
northeastern
Jalisco
Aguascalientes, San Luis Potosí and
Zacatecas.
7
The states of
Guerrero, Oaxaca,
Puebla, Tlaxcala and
Veracruz
Puebla, Acapulco, Veracruz and Oaxaca.
8
The states of
Yucatán, Quintana
Roo, Campeche,
Chiapas and Tabasco
Mérida, Cancún, Villahermosa,
Campeche, Tuxtla Gutiérrez and San
Cristobal de las Casas.
9
The states of
Mexico, Hidalgo and
Morelos and the
Federal District
Mexico City, Toluca, Cuernavaca and
Pachuca.
In December 1990, the Mexican government initiated the privatization of
Telmex, which was then the sole provider of landline local and long distance
service and competing in Cellular B-band cellular services, when it sold 20.4%
of the equity and 50.1% of the voting power in Telmex to a private consortium
for U.S.$1.76 billion. The winning consortium consisted of
Grupo Carso, S.A.
de C.V.
, a Mexican conglomerate which owns or otherwise controls a majority of
the consortium's voting interest, SBC Communications Inc. and
France Telecom
S.A.
Subsequent to the original privatization, the Mexican government further
reduced its holdings in Telmex through additional transactions and completed
the sale process in June 1994. In 2001, Telcel and other wireless
international subsidiaries of Telmex were spun-off from Telmex to form a new
company named
América Móvil, S.A. de C.V.
, which is known as América Móvil.
Telcel holds the Cellular B-band and PCS D-band concessions in each of the
nine cellular regions and is Mexico's largest mobile wireless operator. Our
subsidiaries hold the Cellular A-band concession in Regions 5, 6, 7, 8 and 9
and the PCS E-band concession in Regions 1 and 4. Telefónica is a controlling
shareholder in
Baja Celular Mexicana, S.A. de C.V.
,
Movitel del Noreste, S.A.
de C.V., Telefonia Celular de Norte, S.A. de C.V.
, and
Celular de Telefonia,
S.A. de C.V.
, which cumulatively hold the Cellular A-band concession in Regions
1, 2, 3 and 4 and PCS band concessions nationwide.
Underserved Telecommunications Market
Despite the significant increase in wireline and wireless penetration in
Mexico over the last four years, we believe that there remains a substantial
unmet demand for telephone services in Mexico. According to the
International Telecommunication Union, an agency of the United Nations, as
of December 31, 2002, there were approximately 14.6 wireline telephone lines
per 100 inhabitants in Mexico, which is lower than the teledensity
rates of some other Latin American countries and substantially lower than those of
developed countries such as the United States. Due to the relatively low
wireline penetration in developing countries such as Mexico, increases in the
level of wireless penetration in these countries may be partly attributable to
users who purchase wireless services as a principal means of
telecommunications.
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The following table presents, for selected countries, including Latin
American countries and the United States, the number of subscribers of wireless
telephone services per 100 inhabitants as of December 31, 2001 and December 31,
2002:
Selected Wireless Telephony Penetration
Wireless subscribers
per 100 inhabitants
(1)
Country
2001
2002
Spain
73.4
82.3
Portugal
77.4
81.9
United States
45.1
48.8
Chile
34.2
42.8
Venezuela
26.4
25.6
Mexico
21.7
25.6
Brazil
16.7
20.1
Argentina
19.3
17.8
Uruguay
15.5
15.5
(1)
Source:
International Telecommunication Union 2003 Website.
Calling Party Pays
On May 1, 1999, Mexico implemented the "calling party pays" modality, or
CPP, which had already been implemented in some other Latin American and
European countries. Calling party pays is a wireless telephony payment
structure in which the party that places a call to a wireless telephone is
billed for interconnection access, and the recipient is not billed for the
airtime charges corresponding to that call. The introduction of CPP triggered
growth in wireless penetration, particularly in the prepaid segment and
wireless traffic.
Mobile Wireless Services
History and Overview
We became the first Mexican provider of cellular telecommunications
services in 1989, when we commenced operations of our Cellular A-band network
in Region 9. Through a series of transactions from 1990 to 2002, we acquired
100% beneficial ownership interests in the entities which hold the Cellular
A-band concessions in Regions 5, 6, 7, and 8. In December 2001, we initiated
the commercial launch of our PCS services in the cities of Tijuana and
Monterrey in Regions 1 and 4 in northern Mexico. The regions we serve cover a
contiguous geographic area comprising all of the regions in central and
southern Mexico, and two of the four regions in northern Mexico, which allows
Iusacell to achieve economies of scale.
Iusacell's service regions are home to a variety of industries. Region 9
includes Mexico City, which has the greatest concentration of service and
manufacturing industries in Mexico and is also the center of Mexico's public
and financial services sectors. Region 5 includes Guadalajara, Mexico's second
largest city and the commercial and service center of western Mexico, which has
recently begun to develop as a center for the maquiladora industry.
Region 6 includes León, Querétaro, Aguascalientes and San Luis Potosí and
has historically been dominated by the agricultural sector, although it has
recently begun to develop as an automobile manufacturing and high technology
center. Region 7 includes Puebla, Acapulco, Veracruz and Oaxaca and contains
major operations of the Mexican petrochemical and automotive industries and
significant tourist resorts and attractions. Region 8 includes
Mérida, Villahermosa, Cancún, Campeche and Tuxtla Gutiérrez and contains major
operations of the Mexican petroleum industry and significant tourist resorts
and attractions. Regions 1 and 4, which include Tijuana, Monterrey and Nuevo
Laredo, are centers for the maquiladora industry, manufacturing, as well as
high technology, and international trading.
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Table of Contents
Subscribers and System Usage
Iusacell offers wireless communications services in a variety of plans,
which are divided into two basic groups: either "postpaid" — where the customer
is billed monthly for the previous month based on a contracted length of
service — or "prepaid" — where the customer pays in advance for a specified
volume of use over a specified period.
Postpaid Customers
As of December 31, 2002, postpaid subscribers totaled 356,014, comprising
17% of our customer base. Average revenue per user (ARPU) in this segment was
Ps.693.0 (U.S.$66.5) as of December 31, 2002.
Iusacell also offers a number of value-added services designed
specifically to fulfill the demands of this important group of postpaid
subscribers. We offer value added services such as voicemail, call forwarding,
call waiting, three-way calling, secretarial services and provide
English-speaking operators to serve the English-speaking market in our regions.
Iusacell also provides financial news reporting, emergency services,
entertainment information, reservations services and sports reports. Moreover,
CDMA digital postpaid customers have available caller identification, short
messaging service and data transmission services. We believe that these
value-added services help increase postpaid subscriber usage and also enhance
our market image as a full service cellular provider.
Postpaid churn measures both voluntarily and involuntarily disconnected
subscribers. Average monthly postpaid churn for a given period is calculated
by dividing the sum of all postpaid subscribers disconnected during such period
by the sum of the beginning-of-month postpaid subscribers for each of the
months in such period, expressed as a percentage. For more information, see
Item 3, "Key Information — Selected Financial Data."
Voluntarily disconnected subscribers encompass subscribers who choose not
to continue with Iusacell postpaid services or choose one of our prepaid
options.
Involuntarily disconnected subscribers encompass customers whose service
is terminated after failing to meet Iusacell's payment requirements.
Average monthly postpaid churn for the 12 months ended December 31, 2002
was 3.6%. Measures taken to reduce churn include retention and loyalty
initiatives such as welcome calls, calls at maturity, anniversary calls,
proactive contract renewal campaigns, reactive retention operations and
periodic calls to customers to ensure satisfaction. In addition, we conduct
outreach calls to customers whose contracts are ending or who choose to
terminate service offering them a range of alternative service plans based on
their profile to encourage contract renewal.
Prepaid Customers
In contrast to postpaid subscribers, prepaid customers typically generate
lower levels of cellular usage, have access to a limited number of value-added
services, may already own a handset, or may choose to purchase a handset with
preloaded minutes, and often are unwilling to make a fixed financial commitment
or do not have the credit profile to purchase postpaid plan cellular services.
In addition to helping customers control costs, our prepaid programs have no
monthly bill and allow customers to prepay for cellular services in cash,
credit cards and electronic means. As of December 31, 2002, prepaid ARPU was
Ps.80.0 (US$7.7).
The prepaid program markets four different prepaid cards, each of which
credits a specific peso denomination worth of air-time usage to an account to
be used for outgoing and long distance incoming calls over a specified period
of times.
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A prepaid customer ceases to be considered a customer of Iusacell when a
specified period of time has elapsed since the customer purchased and
activated, or last added credit to, his or her last prepaid card. The
customer's telephone number is then deactivated, and the customer is considered
to have turned over.
Iusacell's current prepaid customers who want to continue to have wireless
service after this time must choose to:
• continue to be prepaid customers of Iusacell by purchasing another
card or otherwise recharge the airtime in their accounts;
• become postpaid customers of Iusacell; or
• become either postpaid or prepaid customers of another wireless service provider.
VIVA prepaid customers normally have 60 days to use an activated prepaid
card (except for prepaid cards in denominations of Ps.450.0, which we refer to
as Ps.450.0 prepaid cards and which provide their holders 90 days to use an
activated card), activate a new card or otherwise recharge the airtime in their
account. If the customer has not activated a new card or recharged the airtime
in its account at the end of 60 days (or in the case of Ps.450.0 prepaid cards,
90 days), the balance of the VIVA customer's account becomes zero, and the
customer loses the ability to make outgoing calls for an additional period of
305 days (or in the case of Ps.450.0 prepaid cards, 275 days). During this
305-day period (or 275-day period, as applicable), a VIVA customer will be able
to receive local incoming calls, but not to make outgoing calls, thereby
becoming an "incoming calls only" customer. If the customer activates a new
card or recharges the airtime in its account within the 305-day period (or
275-day period, as applicable), the customer's account automatically returns to
normal status, and a new 60- or 90-day period, as applicable, begins.
Otherwise, once the 305-day period (or 275-day period, as applicable) lapses,
the customer's telephone number is deactivated.
We evaluate alternative methods of determining prepaid customer turnover
on an ongoing basis, as the current method is dependent upon, among other
things, the number of days of use Iusacell permits before deactivating a
telephone number.
In October 1999, in order to evaluate whether we would be able to generate
additional revenues from "incoming calls only" customers for previously
purchased cards, we extended the period of time to use an activated card and
activate a new card from 185 days to April 30, 2000 for "incoming calls only"
customers who otherwise would have lost service before that date. Beginning
May 1, 2000, we decided to return to our prior policy of maintaining "incoming
calls only" customers for only 185 days and began to turn over "incoming calls
only" prepaid customers who had reached the 185-day limit without activating a
new prepaid card. In July 2001, we reduced the initial period for spending an
activated prepaid card and activating a new card from 185 days to the current
60 days (or 90 days in the case of Ps.450.0 prepaid cards). As a result, at
the time, approximately 345,000 subscribers were transferred to the "incoming
calls only" prepaid customer status.
Given the higher turnover among our prepaid customers, we pursue plans to
migrate our qualified prepaid customers to postpaid plans, where customer
loyalty and retention rates have historically been better.
At December 31, 2002, Iusacell had approximately 1,186,000 "incoming calls
only" customers. The substantial majority of "incoming calls only" customers
generate little or no traffic. Iusacell's prepaid subscribers had an average
monthly revenue per subscriber during 2002 of Ps.79.0 (approximately U.S.$7.6).
In order to better focus on active prepaid customers and reduce the
potential turnover from prepaid sales through retail distribution channels, we
implemented in 2001 a new policy under which a pre-activated prepaid sale would
be reported only when the end-user places the first outgoing call.
Accordingly, commissions related to this type of prepaid sale are now paid only
after the end-user places the first outgoing call.
In March 1999, we substantially completed the installation of the VIVA
prepaid operating system. The VIVA platform tracks customer turnover better
than its predecessor system. This operating system, together with initiatives
to increase the number of distribution points for prepaid cards, adjust
commissions to encourage distributors to sell prepaid cards in higher
denominations, improve customer care and otherwise improve the convenience of
the prepaid program, has enhanced our ability to add and retain prepaid
customers and has increased usage. In 2000, we implemented two important tools
for the sale of prepaid airtime: sales through automated teller machines at
banks and sales over the phone by dialing *AIRE. In early 2002, we introduced
a tool to sell prepaid airtime through our website.
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Roaming
Through our roaming agreements with other operators, we offer nationwide
roaming service to our prepaid and postpaid cellular subscribers, and
international service only to our postpaid subscribers. Through these
agreements, subscribers can make calls from any location in Mexico served by a
Cellular A-band operator, and can receive a call made to the subscriber's
number (automatic call delivery) regardless of the region in Mexico in which
the subscriber is located. We also provide cellular services to all
subscribers of other non-wireline cellular operators in Mexico while such
subscribers are temporarily located in a region served by Iusacell.
An operator (a host operator) providing service to a subscriber of another
operator (the home operator) temporarily located in the host operator's service
region (an in-roamer) earns usage revenue. We bill the home operator of an
in-roamer for the in-roamer's usage in our service region. In the case of
roaming by an Iusacell subscriber in the region of a host operator (an
out-roamer), Iusacell is billed by the host operator for the subscriber's
usage. We remit the billed amount to the host operator and bill our own
customer, the out-roamer, without any mark-up. As a result, we retain the
collection risk for roaming charges incurred by our own subscribers.
Conversely, roaming charges billed by Iusacell for in-roaming usage by
subscribers of other non-wireline operators are the responsibility of those
operators. Roaming charges between wireless operators are settled monthly.
Interconnection charges owed to Telmex and long-distance charges owed to
long distance carriers as a result of roaming are the responsibility of the
host operator. In addition to higher per minute charges for airtime (as
compared to home region rates), the host operator is entitled to receive a fee
for each day roaming service is initiated. In-roaming fees and usage revenue
represented 1.3%, 1.7% and 2.4% of our total revenues during 2000, 2001 and
2002, respectively. Out-roaming charges represented 6.2%, 4.9% and 3.8% of
Iusacell's total revenues during 2000, 2001 and 2002, respectively.
We have more than 60 agreements with U.S., Canadian and other foreign
operators to provide our subscribers with international roaming capabilities.
These operators include Verizon International affiliates such as Verizon
Wireless, Movilnet in Venezuela, Codetel in the Dominican Republic, Telus in
Canada and Puerto Rico Telephone Company as well as AT&T Wireless, Sprint and
Cingular Wireless. In addition, we provide, through the National Automatic
Cellular Network, automatic call delivery throughout most of the United States,
including Puerto Rico, whereby our subscribers may receive telephone calls from
Mexico without the caller having to dial access codes. Currently, our
customers are able to roam in over 2,000 municipalities in the United States
and Canada, as well as in 85 other countries in the Americas, Europe, Asia,
Africa and the Pacific. In the first half of 2003, we launched the
international short message services ("SMS") with the main carriers in the U.S.
and Canada enabling our customers to send messages.
Personal Communications Services
As part of our strategy to develop a nationwide wireless footprint, in
1998 we won auction concessions giving us the right to provide PCS wireless
services in Regions 1 and 4 in northern Mexico. We paid approximately Ps.493.2
million (in nominal terms) (U.S.$49.8 million, using the applicable exchange
rate as of the date of the purchase) for these concessions in June and
September 1998. These two regions include several industrial cities, including
Tijuana in Region 1 and Monterrey in Region 4, and cover approximately 11.0% of
Mexico's total population. In the second quarter of 2000, we initiated PCS
network operations and service was available in Tijuana
and Monterrey. In 2001, we spent approximately Ps.215.8 million
(U.S.$20.7 million) in the commercial deployment of PCS services in Tijuana and
Monterrey, which we launched in December 2001. In 2002, we spent approximately
Ps.252.3 million (U.S.$24.2 million) for the build out and commercial
deployment of PCS services in selected areas of 8 new cities in Regions 1 and
4, including Ensenada, Mexicali, Saltillo, Nuevo Laredo and Reynosa, covering
approximately 65% of the total POPs in those two regions by December 2002. In
2003, subject to obtaining financing, we expect to spend less than U.S.$1.0
million in Regions 1 and 4. See Item 5, "Operating and Financial Review and
Prospects — Liquidity and Capital Resources — Capital Expenditures."
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We market PCS using the same fundamental strategies employed by our
existing cellular operations. The PCS network that we are in the process of
deploying uses digital CDMA technology purchased mostly from Lucent
Technologies.
Long Distance Services
In August 1996, we became one of Telmex's first competitors in long
distance service when we began to provide long distance services to our
cellular subscribers in Mexico pursuant to the 30-year concession which was
awarded to
Iusatel, S.A. de C.V.
(Iusatel) in October 1995 and was modified in
December 1997. Our competitors in long distance include 9 other companies
operating under concessions, including Telmex, the former long distance
monopoly. In the long distance market, we face increasing competition from
alternative providers, as well as from new technologies such as Short Message
Service (SMS) and internet Telephony. As a result of these factors, our long
distance line of business has contributed less to our total revenues than we
expected. We believe that competition in the Mexican long distance market has
stimulated growth in demand for long distance service.
We currently provide long distance service using our own switches and
transmission equipment and a combination of fiber optic lines, microwave links
and lines leased from Telmex and other carriers. At December 31, 2002, we
provided long distance service in 52 cities to 2,096,049 customers, 2,088,241
of which were existing customers of our other services. We chose not to commit
significant marketing resources to the presubscription balloting process in
which telephone customers were asked to elect their long distance carrier,
which was conducted in cities across Mexico in 1997, 1998 and 1999 and, as a
result, we fared poorly in the initial balloting results. Under the COFETEL
rules, we are entitled to obtain exemptions annually from the presubscription
obligation for our cellular customers. We cannot ensure that we will receive
this exemption in the future. Revenues related to long distance services
represented 10.4% and 8.2% of our total revenues for 2001 and 2002,
respectively, not including dark fiber optic cable sales.
We reduced the capital investment for our long distance business by
entering into fiber optic cable swap agreements with two other long distance
companies, Marcatel and Bestel, in March 1998 and December 1998, respectively.
These agreements allowed us to acquire fibers in the long distance fiber optic
networks built by Marcatel and Bestel in central and northern Mexico in
exchange for fibers in the long distance fiber optic network we completed in
central Mexico. As a result, we obtained redundancy in central Mexico and
access to the United States border at minimal cost. We consummated the
agreement with Marcatel in July 2002. The transaction generated an
extraordinary gain of approximately Ps.53.0 million (U.S.$5.1 million) in the
third quarter of 2002.
In December 1999, Iusatel agreed to swap dark fiber optic cable in the
amount of U.S.$17.3 million and sell approximately U.S.$7.4 million of
additional dark fiber optic cable to
Telereunion, S.A. de C.V.
(which we refer
to as Telereunion), an affiliate of Telescape International, Inc. Upon the
execution of this swap agreement, Telereunion issued promissory notes to
Iusatel for the purchase price but defaulted on the payment of each of these
notes. In April 2001, Telereunion's U.S. parent, Telscape International, Inc.,
filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As part
of a settlement arrangement, on September 17, 2001, Telereunion and Iusatel
executed an agreement whereby Telereunion transferred dark fiber optic assets
in the amount of U.S.$7.4 million to Iusatel in exchange for full settlement of
the past notes receivable in the same amount. In 2001, we also entered into a
fiber optic cable swap agreement valued at Ps.142.7 million (U.S.$13.7 million)
to exchange certain long-distance fiber optic cables.
In 1996, Iusatel executed an agreement with Teleglobe USA, Inc. for the
exchange of international long distance traffic. On May 28, 2002, Teleglobe
USA, Inc. filed for reorganization under Chapter 11 of the U.S. Bankruptcy
Code. In 2000, Iusatel entered into a second agreement for the exchange of
international long distance traffic with
AT&T, giving Iusatel two alternative routes to deliver international long
distance traffic, thereby reducing costs and enhancing its proportional return
traffic. In March 2002, the United States Federal Communications Commission
granted to Iusatel USA Inc., a subsidiary of Iusatel, Iusacell's long distance
services provider, a Section 214 authorization that allows Iusacell to provide
global or limited global facilities-based and resale telecommunications
services within the U.S., except those states in which Verizon has not yet
received Section 271 authorization and permissible international points.
Iusatel USA, Inc. has international termination traffic contracts with several
U.S. carriers including Verizon affiliates.
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Other Services
Paging
On December 14, 1995, Iusacell Celular and
Infomin, S.A. de C.V.
, which we
refer to as Infomin, formed
Infotelecom, S.A. de C.V.
(Infotelecom) as a joint
venture to market national and international paging services. Iusacell Celular
owns 49% of Infotelecom. See "— Government Regulation
— Paging."
Infotelecom began marketing paging services in August 1996 and, at
December 31, 2002, provided service in 34 cities including Mexico City,
Guadalajara, Monterrey, Puebla, Cuernavaca, Toluca, Querétaro, León, and Ciudad
Juárez. As of December 31, 2002, Infotelecom had 8,315 paging customers. Our
revenues from paging services represented less than 0.5% of total revenues for
each of 2001 and 2002.
Public and Rural Telephony and Local Fixed Wireless
We operate public and rural telephony programs, using available cellular
capacity. These programs provide telecommunications services through cellular
telephones in phone booths, intercity buses and rural areas. The provision of
services in this way fulfills the terms of our concessions for the provision of
cellular telephone service and uses our cellular network to provide
telecommunications coverage in areas with little or no basic service. As of
December 31, 2002, we had 48,885 cellular telephones in service under our
public and rural telephony programs, representing a 28.7% increase compared to
37,972 cellular phones in service as of December 31, 2001.
As of December 31, 2002, we were providing, on a trial basis pending
approval from Mexico's Ministry of Communications and Transport (
Secretaría de
Comunicaciones y Transportes
), which we refer to as the SCT, local wireless
service in the 450 MHz frequency band to 7,041 customers in selected markets in
Region 9. We do not charge our local wireless customers fees for incoming
calls.
We experienced substantial delays in obtaining the SCT's approval of our
technical and economic plans for local wireless service in the 450 MHz
frequency band. However, on June 10, 1997, Iusacell Celular reached an
agreement with the SCT on a process according to which we could obtain a
concession issued and recognized by the SCT to provide local wireless service
in the 450 MHz frequency band. This agreement allows us to convert and
consolidate our existing concessioned radiotelephony frequencies into 450 MHz
spectrum in all nine geographic regions and grants us a right of first refusal
to acquire concessions to provide local wireless service in these regions over
such frequencies at prices derived from the prices of the winning bids in the
auctions for 450 MHz and 1.9 GHz (PCS) frequency bands concluded in May 1998.
These auctions yielded a right of first refusal exercise price estimated at
U.S.$2.25 million for each of the five regions. However, neither the SCT nor
COFETEL has formally notified us of the exact right of first refusal exercise
price, the payment terms or the coverage and build-out requirements relating to
the concessions, all of which are necessary for us to decide whether to
exercise our right of first refusal.
In September 1998, we determined that because of many factors, including
the impact of changing technology since the initiation of the 450 MHz fixed
local wireless project in 1994, an impairment of our investment in 450 MHz TDMA
technology had occurred. As a result, we recorded a substantial non-cash
write-down of our investment in the 450 MHz fixed local wireless project.
Given the obsolescence of our existing 450 MHz network infrastructure, we may
record a non-cash write-down of substantially all of the remaining book value
of the 450 MHz project fixed assets by the end of 2003.
In January 1997,
Iusatelecomunicaciones, S.A. de C.V.
(Iusatelecomunicaciones), Iusacell Celular's 450 MHz local wireless subsidiary,
also filed for a local wireline concession. The SCT has not yet issued this
concession. While we currently do not anticipate that the provision of local
wireline service will become a significant part of our services, we may
provide, on a case-by-case basis, local wireline telephone service as part of
our overall provision of telecommunications services.
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Data Transmission
We began providing data transmission services in 1993. We provide both
public and private data transmission primarily using excess capacity in our
microwave and fiber optic backbone in our existing cellular network in Region 9
and, until March 2001, we provided satellite transmission through
Satelitrón,
S.A. de C.V.
, which we refer to as Satelitrón, a joint venture among Iusacell,
Hughes Network Systems and another partner which provided a shared hub for
private networks. On March 22, 2001, we sold our 65.9% equity interest in
Satelitrón and our ownership of the Satelitrón transmission hub, receiving
approximately U.S.$1.3 million in proceeds.
Since the latter part of 2001, we began providing fixed data transmission
services. We offer three types of services through our fiber optic network
calling: (i) private lines such as E-1, E3/DS3 and STM1 directly to carriers
and large corporate customers; (ii) Internet access to carriers and ISP
providers; and (iii) digital multiservices connection to the customer's private
branch exchange (PBX) to reduce costs for cellular and long distance calls to
carriers and corporate customers.
In January 2003, we commercially launched Mexico's first CDMA2000 1XRTT
voice and high-speed mobile data network in Mexico City. With this advanced
network, we have increased our voice capacity and offer subscribers new data
services such as high-speed access for internet, intranet, e-mail, instant
messaging, multiple download for multimedia applications and M2M solutions at
speeds of up to 144 kilobits per second (kbps). Our targeted customers are
primarily Mexican-based carriers and corporations.
Microwave Transmission
In December 1998, the SCT issued three 20-year concessions to
Punto-a-Punto Iusacell, S.A. de C.V.
(Punto-a-Punto Iusacell), a joint venture
between Iusacell Celular and Mr. José Ramón Elizondo, a former director of
Iusacell Celular, for short-haul microwave frequencies in the 15 GHz and 23 GHz
frequency bands won at auction. Punto-a-Punto Iusacell paid approximately
Ps.45.0 million (U.S.$4.3 million) for these concessions. These frequencies
are being used to interconnect our cell sites, business customers and other
networks. Additionally, we have an obligation to provide the right to use
capacity in these frequencies to other users to enable them to install their
own microwave links.
In September 1999, Punto-a-Punto Iusacell entered into an agreement with
an affiliate of the service provider in the four Cellular A-band regions in
northern Mexico to swap the right to use long-haul microwave frequency links
held by the affiliate for short-haul microwave frequency links held by
Punto-a-Punto Iusacell plus U.S.$2.45 million in cash. Punto-a-Punto Iusacell
closed this transaction in January 2000 and is currently operating installed
links in those frequencies.
Seasonality
Taken as a whole, our business is not materially affected by seasonality.
Sources of Revenues
For a breakdown of our total revenues by source for the years ended
December 31, 2001 and 2002, see Item 5, "Operating and Financial Review and
Prospects — Operating Results — Year Ended December 31, 2002 Compared to Year
Ended December 31, 2001."
Sales and Marketing
Our marketing strategy is directed to achieve profitable growth,
particularly in our mobile wireless business. We have focused our sales and
marketing strategy on the high-value digital customer, defined as the person
who utilizes and depends on cellular communications on a daily basis. We seek
to increase our average monthly revenue per subscriber, control and sustain our
churn rates, decrease the cost of acquiring additional postpaid and prepaid
subscribers and grow our mobile wireless subscriber base profitably.
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During the second half of 2002, we performed a deeper segmentation in our
subscriber base. Our mobile wireless subscribers are now cataloged according
to four different usage profiles. We are implementing distribution,
advertising, customer service support and pricing plans targeted to each
specific customer segment and to increase airtime usage. Our customer
relationship management initiatives have included a variety of tools that
manage the relationship cycle from sales, to support, to billing.
Distribution
We currently target the various segments of our subscriber base through
five sales and distribution channels: Iusacell owned and operated customer
sales and service centers, independent distributors, a corporate sales force,
commission sales agents and telemarketing. We are aggressively increasing the
number of our points of distribution in order to acquire additional
subscribers. At December 31, 2002, Iusacell had 58,259 points of distribution,
as compared to 46,106, 20,762, 6,522 and 2,280 at December 31, 2001, 2000, 1999
and 1998, respectively. As of December 31, 2002 these points of sale comprised
146 customer sales and service centers owned and operated by Iusacell, 1,654
points of sale operated by independent distributors and national retailers who
offer all of our products, and 56,459 points of sale for distribution only of
VIVA prepaid cards, also operated by independent distributors.
Our redesigned sales force compensation plan is structured to motivate the
sales force within each distribution channel through monetary incentives. This
plan provides continuous training, a basic salary and monetary incentives so
that the sales force is encouraged to activate profitable and loyal accounts,
cross-sell the full complement of our service offerings and maintain our
standards in advertising, promotions and customer service.
Customer Sales and Service Centers
We have reconfigured each of our customer sales and service centers to
offer one-stop-shopping for a variety of cellular, long distance and
accessories. Walk-in customers can subscribe to cellular service postpaid
plans, purchase prepaid cards, sign up for long distance service and purchase
equipment such as handsets and accessories. In an effort to maximize customer
loyalty, reduce postpaid churn and prepaid turnover and increase average
monthly revenue per subscriber through cross-selling, we continue to emphasize
the customer sales and service centers that we own and operate ourselves as key
distribution channels.
During 1998, we opened 22 new customer sales and service centers. In
1999, although we did not open any new customer sales and service centers, we
replaced one existing customer sales and service center and remodeled 16 other
existing customer sales and service centers. In 2000, we opened 14 new
customer sales and service centers and remodeled 6 other existing customer
sales and service centers. In 2001, we opened 29 new customer sales and
service centers. In 2002, Iusacell opened 11 new customer sales and service
centers. We now have a total of 146 customer sales and service centers
throughout our cellular and PCS regions. In the second half of 2002, we
decided to perform a series of revisions to our service centers, including
performance and location assessments. As a result, in 2003 and 2004, we will
perform the re-location and remodeling of all of the owned stores, and we will
continue opening stores in high-traffic areas and shopping centers nationwide.
In 2001 face-to-face customer service was integrated into certain of our
owned stores in an effort to further personalize the service. In 2003, we
expect to include a customer service representative in all of the stores we
own.
Corporate Sales Force
To service the needs of our corporate customers, we have created a direct
sales force, which, at December 31, 2002, included 79 full-time sales
representatives. This group of trained representatives seeks to increase sales
by:
• aggressively pursuing sales opportunities in the corporate segment;
• "bundling" combinations of services into customized packages
designed to meet customers' requirements;
• developing and marketing new services to satisfy the demands of such customers; and
• educating corporate purchasing managers about alternative pricing plans and services.
These direct sales representatives are distributed along our service
regions to deliver personalized service.
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Independent Distributors
In order to broaden our market, we maintain relationships with a broad
network of exclusive distributors and national retailers that, at December 31,
2002, sold all of our products at 1,654 points of sale in Mexico. With the
intention of relying to a lesser extent on certain large distributors, in 2002
we began to directly contract with key distribution channels that had
previously been served via third party distributors. In addition, VIVA prepaid
cards were distributed at an additional 56,459 points of sale. In order to
ensure that our standards are maintained at all distribution points, we provide
assistance to our distributors in training, promotions and advertising. We
also provide them with information on our customer base to allow the
distributors to service our customers effectively.
Commission Sales Agents
We retain commission agents as a flexible sales force in all of our mobile
wireless regions. The agents function as cellular service brokers for us,
working out of their own premises to better target their customers. These
agents provide additional distribution outlets with minimal support from
Iusacell. We used to retain commission agents as a flexible sales force
throughout our regions with management from our customer sales and service
centers. This channel was redeployed in early 2003.
Telemarketing
From time to time, Iusacell engages telemarketing service providers as a
direct marketing mechanism or to follow up on targeted outbound calls and
receive calls through an 800 number.
Electronic Means
We have implemented three important electronic tools for the sale of
prepaid airtime: sales through automated teller machines at banks, sales over
the phone by dialing *AIRE and sales through our website — www.iusacell.com.
Sales at ATM machines are charged against our customer's bank account by using
a personal identification number. We have implemented ATM sales at
Banamex-Citibank, BBVA Bancomer, Bital and Bancrecer. In first half of 2003,
we entered into additional ATM distribution agreements for the sale of prepaid
airtime. Sales using *AIRE and our website are charged to our customer's
credit card.
Advertising
In 2002, we launched an integrated media plan, including a repositioning
campaign, also emphasizing the benefits of our products. The effort is
supported by the
Iusacell
™ brand image. All product offerings have been
marketed under the single
Iusacell
™ brand name which was reinaugurated as
Iusacell Valora tu Espacio
in 2002, as part of the repositioning campaign
launched in the later part of the year. This customer-oriented campaign was
focused on customer satisfaction and supported by higher value offerings.
The purpose of the media plan is to inform and convince potential users
and subscribers about the benefits of the products and services offered by
Iusacell, with an emphasis on customer care and to target potential subscribers
through a coordinated print, radio, television and fixed and moving outdoor
advertising campaigns. A key element of this integrated media plan is a
periodic agency review, where the sales results of a given campaign are
evaluated. The integrated media plan enables us to negotiate more favorable
advertising rates. Television and print advertisements prominently feature an
ad-response telephone number to solicit new customer inquiries.
Customer Service
We view superior customer service as essential in order to distinguish
ourselves in the competitive Mexican wireless telecommunications market.
Postpaid customers can access dedicated support by dialing *611, where trained
customer service representatives are equipped to answer questions regarding
services and products 24 hours a day. We train our customer service
representatives to ensure that each customer receives prompt attention,
informed answers to any inquiries and satisfactory resolution of any concerns.
We believe that enhanced customer service, especially post-sales support, is
essential to developing brand loyalty and supports the efforts of our sales
force to cross-sell our services and products. Prepaid customers can access
support by dialing *VIVA.
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Table of Contents
The VIVA prepaid operating system has improved customer satisfaction
through automated activation, automated self service menus through the
Integrated Voice Response (IVR) system, voice messaging and other services and
has lowered the cost of support services.
To further enhance customer service, we have installed dedicated personal
computer terminals linked to our billing system so that each customer service
representative, either at a Iusacell customer sales and service center or at a
Iusacell call center, can handle customer inquiries, billing questions and
account payments with real-time data and a full customer profile in hand.
Customer data gathered from such sources as the activation process, the billing
system and exit interviews with customers who terminate service allows us to
better tailor our marketing strategy to each customer. Along with providing
information as to how we can improve our customer service, this data is
expected to enable representatives from each of the distribution channels to
better target their sales approach to each customer when cross-selling
Iusacell's services and products. We completed the process of upgrading our
Automatic Call Distribution (ACD) system in the second half of 2002. At the
same time, we also completed the process of upgrading our monitoring and
workforce management systems.
In 1998, we opened two call centers that provide more automated and
efficient service to customers. In 2002, we consolidated these facilities into
one center that manages all customer care operations for all of our concession
areas. In order to accelerate the problem resolution process at both the call
centers and in our company owned stores, we implemented the Customer Attention
Support Team (CAST) program, which has been extended to all of our corporate,
medium and small business accounts, as well as government accounts. Each of
these customers has an assigned CAST, sales and collections executive. In
addition, we are in the process of dedicating a customer support function in
each company-owned store.
In 2003, we redesigned the compensation plan for customer care
representatives. Whereas our customer care representatives previously received
a fixed salary under our compensation plan, the compensation plan today is
designed to motivate the customer service force by compensating customer care
representatives based on performance as measured according to various service
indicators. This plan provides continuous training and certification and basic
salary and monetary incentives designed to encourage resolution of customer
problems, subscriber retention, loyalty, precision and quality.
In December 2000, the certifying company,
Societé Generale de Surveillance
de México
(SGS), granted ISO 9002 Certification under the
Entidad Mexicana de
Acreditación
(EMA) to Iusacell's customer care process. Our most recent
quality audit was conducted in mid-2002; however, we did not seek
re-certification. At year-end 2002, we began the certification review process
for Customer Operations Performance Center (COPC) accreditation, which
certifies customer contact operations according to international best
practices.
Pricing
General
. Iusacell offers a variety of flexible pricing options for our
mobile wireless service. The primary components of the postpaid pricing plans
include monthly fees, additional per-minute usage charges and a number of free
minutes per month. The prepaid program markets cards which credit peso amounts
to a customer's account. The cards can be used for outgoing and long distance
incoming calls over a period of 60 days (or in the case of Ps.450.0 prepaid
cards, 90 days). See Item 4, "Information on the Company — Business Overview —
Mobile Wireless Services — Prepaid Customers." Most of the postpaid plans
include a selection of free cellular handsets. The prepaid plans do not
provide free cellular handsets.
We continually review market pricing in order to maintain a competitive
offer and attract customers from our target market. As a result, constant
adjustments to meet market and competitive conditions may require that we
increase or decrease prices over short periods of time. See Item 5, "Operating
and Financial Review and Prospects — Trend Information — Price Increases and
Rollbacks."
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Postpaid Plans
. The postpaid pricing plans are designed to target
primarily high and moderate usage postpaid subscribers. High-usage customers
are typically willing to pay higher monthly fees in exchange for larger blocks
of minutes, value-added services, a free high-end handset and lower per minute
airtime charges under a single contract. Moderate and lower-usage subscribers
typically prefer pricing options which have a lower monthly charge, fewer
minutes included, a less expensive handset and higher per minute airtime
charges than those options chosen by high-usage customers.
In March 2003, Iusacell launched a new set of postpaid value plans aimed
to position us as the best alternative for the targeted high-value market
segment. These new postpaid plans were designed according to the needs of
targeted consumer segments and are supported by advertising and marketing
campaigns that anchor the effort.
The three new postpaid value plans include a NAFTA plan, in which local
calls, as well as calls within Mexico, the U.S. and Canada, are all priced at
the same per minute rate; an unlimited nights and weekends designed to increase
cellular traffic leveraging non-peak utilization hours; and a basic plan with
affordable rates designed to compete directly with competitors' plans by
incorporating higher baseline minutes. Furthermore, we offer multi-line plans
designed to fit the communication needs of small groups of users. In addition,
special cross-border plans are offered to Region 1 subscribers whereby they can
place lower priced calls across Mexico, U.S. and Canada. Finally, in Regions
1, 4 and 8, the regions we have entered most recently, we offer local plans
with competitive per minute pricing.
We offer to our corporate customers either a flexible combination of our
various service packages at a volume rate or a large pool of minutes that can
be shared among all users at a competitive per minute price.
Prepaid Plans
. In contrast to postpaid subscribers, prepaid customers
typically generate lower levels of cellular usage, have access to a limited
number of value-added services, generally already own a handset and often are
unwilling to make a fixed financial commitment or do not have the credit
profile to purchase postpaid plan cellular services. In addition to helping
customers control costs, our prepaid programs have no monthly bill and allow
customers to prepay for cellular services in cash.
In September 1997, we introduced our VIVA prepaid service. VIVA provides
for automated reactivation and value-added services such as voice-messaging.
As of December 31, 2002, VIVA prepaid cards were available in denominations of
Ps.100.0, Ps.150.0, Ps.250.0 and Ps.450.0. In February 2003, new prepaid cards
with aggressive prices per minute were launched in an effort to increase
airtime recharges and to respond to the new tax initiatives implemented by the
Mexican government in January 2003. See Item 3, "Key Information — Risk
Factors — Risk Factors Relating to Doing Business in Mexico."
Hybrid Plans
. In 2000, we launched a hybrid plan which features elements
of postpaid and prepaid plans targeted at high school and university-aged
youths who want the status of a cellular phone but want to control their usage.
In March 2003, we decided to discontinue the hybrid plans because of the high
level of churn experienced.
Activation, Billing and Collection Procedures
We can activate a phone within 15 minutes or less for any prepaid and
postpaid customers through the use of new technologies such as Over The Air
Service Provisioning. For postpaid customers who intend to pay their monthly
charges either with a credit card or in cash there is an automatic credit
scoring process prior to the delivery and activation of a cellular telephone.
Depending on the risk profile resulting from the credit scoring, the deposit
requirements are determined automatically.
We have also implemented a system to monitor MOU levels and the number of
calls to certain geographic areas in order to identify abnormal usage by
postpaid subscribers. When abnormal usage is detected, we contact the
subscriber to determine whether such usage has been authorized. We believe
that these procedures are effective in reducing the number of billing disputes
with subscribers and losses due to cellular fraud.
Billing is currently administered using five different billing systems,
including a cellular customer care and billing system provided by
Schlumberger
Distribution Mexico, S.A. de C.V.
(SchlumbergerSema) in Regions 1, 4, 5, 6, 7,
8 and 9 which we also use for our 450 MHz fixed local wireless business, one
point of sale system that provides billing, administration and control
features, a proprietary residential long distance system, a proprietary system
for high-volume business long distance customers and a purchased system for
paging customers. We compile billing information from our switches by
electronic transfer on a half-an-hour basis for processing by our billing
systems. We have measures in place that enable us to recover billing
information that may be lost as a result of disasters.
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We invoice our postpaid customers at the end of each month for the
previous month's service. All customers have 21 credit days, after which they
receive an overdue balance notification, except for a select number of postpaid
customers distinguished by volume, which customers are allowed 36 credit days.
Our payment policy stipulates that after 60 days of non-payment, lines are
suspended, and after 120 days of nonpayment, these lines are disconnected and
considered as delinquent accounts.
We mitigate our credit exposure in five ways:
• for all customers, by obtaining a credit report from the
Buró
Nacional de Crédito
(National Credit Bureau), a Mexican affiliate of
TransUnion Corporation;
• by performing an automatic credit scoring and depending on the risk
profile, we may require our customers to prepay a certain number of
monthly fees;
• by requiring payment to be made by credit card;
• by establishing credit limits and portfolio segmentation, according to customers' credit quality; and
• by offering prepaid services, which eliminate all credit risk.
For 2000 and 2001, we reserved approximately 1.6% and 1.7% of our cellular
revenues in each year for doubtful accounts. For 2002, we reserved
approximately 1.1% of our revenues for doubtful accounts.
In addition, we also record a revenue provision for those postpaid
customers who have fallen behind on their payments and whose service had been
suspended. Toward the end of the third quarter of 1999, we changed our billing
practice for these postpaid customers. Rather than continue our policy of not
charging monthly fees upon suspension, in hopes of receiving additional
revenues from CPP tariffs for incoming local calls and from suspended customers
who ultimately pay overdue amounts and reinitiate service, we began to permit
incoming call service and continue to charge monthly fees to suspended
customers for an additional two months, but reserved a substantial portion of
the monthly fees as a revenue provision. This period was reduced to two months
in the second quarter of 2000. This change in policy resulted in additional
marginal revenue and in the increase in 1999 and 2000 reserves discussed above.
Network, Equipment and IT
Mobile Wireless Services
After a thorough analysis that we conducted in coordination with Bell
Atlantic in 1996, we elected to deploy CDMA digital technology instead of
TDMA/GSM technology. Currently, all Verizon affiliates are successfully using
CDMA technology, including those operating in the U.S. markets. CDMA offers
significantly greater call-carrying capacity, superior voice quality, longer
telephone battery life and greater fraud protection than TDMA. In addition,
CDMA is easier to upgrade than TDMA. CDMA data capabilities are superior to
any GSM/GPRS network.
In December 1997, we signed an agreement with subsidiaries of Lucent
Technologies for the replacement of Iusacell's existing analog network
equipment with Lucent Technologies analog and CDMA digital network equipment.
This replacement began in February 1998. All regions that we owned at the time
were completely swapped out as of August 1999.
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We also deployed Lucent Technologies CDMA technology in our PCS networks
in Regions 1 and 4, in northern Mexico
pursuant
to an agreement signed with
subsidiaries of Lucent Technologies on February 11, 2002. At the end of 2002,
our PCS network was comprised of 62 cell sites in Region 4 and 44 cell sites in
Region 1, the latter being served by a virtual switch located in Region 4.
As of December 31, 2002, our integrated mobile wireless network was
comprised of 7 cellular switches, 688 cellular and PCS cell sites, 123
repeaters and 32 microwave repeaters, covering 49 million inhabitants or 57%
of Mexico's total population in Iusacell's concessioned regions. During 2002,
we added 105 new cellular cell sites and 60 PCS cell sites.
Currently, we have 785 microwave links, all of which are owned by us, with
either SDH or PDH technology. Additionally, we have leased lines located
mainly in Regions 1, 4 and 8. In 1996, we launched long distance services,
supported by 3 switches and fiber optic links. Currently, we have 5,176
kilometers of fiber optic backbone network, in both metropolitan and long
distance segments, using SDH (STM16 capacity in the backbone) and two LD
switches operating. In 2001, we introduced the new Dense Wavelength Division
Multiplexing (DWDM) technology in several high-traffic segments of our fiber
optic network to increase capacity. In 2002, we expanded this technology to
three existing links of the fiber optic network.
We have a network operations and control center (NOCC) in Mexico City
which oversees, administers and provides technical support to all our cellular
regions. During 2000, we implemented a new network administration system that
provides better surveillance and administration of network performance. In
2002, we installed another center for network operations in Toluca that
provides an alternative monitoring capability for the network in the event an
emergency occurs at the NOCC in Mexico City.
In 2002, we started providing two-way Short Message Service (SMS) and
since January 2003, we have been providing Packet Switched Data (PSD) services
using 3G-1XRTT standard. Currently, we provide 1XRTT services in Mexico City,
Toluca, Cuernavaca and Valle de Bravo and expect to expand our coverage by the
end of 2003.
Our strategy for the future is to improve our coverage, to focus on our
target market (according to our marketing strategy) and to maintain superior
performance and voice quality standards. We will continue to maintain
transmitting equipment to serve both analog and digital equipment. Currently,
we are marketing tri-mode cellular and PCS telephones capable of sending and
receiving both analog and digital transmissions in order to support roaming
service between our cellular and PCS regions. We will increase coverage and
optimize technology such as the 1XRTT network in order to support the latest
data applications, the Over the Air Service Provisioning Technology and
transitions to the next-generation technology for long distance communications
services.
IT
We currently use the JD Edwards World Software for Enterprise Resource
Planning (ERP), working mainly with various accounting and administrative
modules. We implemented this system in 1994 and have been basically using the
same version of the JD Edwards World Software since implementation. However,
in recognition of the need to upgrade our technology, to improve financial
processes and to take steps to comply with the Sarbanes-Oxley Act of 2002, we
intend on implementing a new release of the JD Edwards World Software in 2003.
To improve the flow of information within the company, Iusacell intends on
implementing a corporate data warehouse system in 2003. This repository system
will contain all data related to business processes and will be updated on a
regular basis to ensure that available data will be preserved.
Competition
Wireless mobile communication systems compete principally on the basis of
quality of telecommunications services, customer service, price, breadth of
coverage area, roaming capabilities and value-added services. Operators are
largely free to set their own rates, provided such rates are set on the basis
of cost. The offering of wireless mobile communication services in Mexico is
highly competitive with one operator, Telcel, commanding a significant share of
the market.
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Iusacell faces competition from Telcel, which is the largest wireless
communications provider. Telcel holds the Cellular B-band concession and PCS
D-band. In 1999, we began to face competition from the winners of 1.9 GHz
(PCS) spectrum in the auctions concluded in May 1998. Pegaso (now Telefónica)
commercially launched its mobile wireless PCS services in Tijuana in February
1999, initiated PCS services in Monterrey, Guadalajara and Mexico City later in
1999 and, at the end of 2002, provided PCS service in 12 cities in Mexico. In
2002,
Telefónica Móviles, S.A.
(Spain) completed its acquisition of Pegaso.
Telefónica Móviles, S.A.
also operates its Cellular Band A concessions in the
northern part of Mexico through its Mexican subsidiary. In May 2002,
Telefónica announced an aggressive expansion program with over U.S.$1.5 billion
in capital expenditures planned through 2005 to expand capacity, integrate
their concession areas and overlay a GSM network on their existing
infrastructure. Unefón launched mobile wireless services in Acapulco and
Toluca in February 2000, and now provides fixed and mobile wireless services in
those two cities, as well as in Mexico City, Guadalajara, Monterrey and 10
additional cities in Mexico.
We also face competition from companies providing mobile wireless
telecommunications services using alternative existing technologies.
Nextel de
México, S.A. de C.V.
began marketing its enhanced specialized mobile radio
services in 1998 and covers 15 cities in Mexico.
In providing long distance telephone service, we face competition from 9
other concession holders, including Telmex and
Alestra S.A. de C.V.
and
Avantel
S.A. de C.V.
, joint venture companies in which AT&T and MCI WorldCom,
respectively, have beneficial ownership interests. Presubscription balloting
in which telephone customers were asked to elect their long distance carrier
was conducted in 150 cities across Mexico in 1997, 1998 and 1999. We chose not
to commit significant marketing resources to the balloting process and fared
poorly in the initial balloting results.
In providing data transmission services, we compete for customers with
Telmex, state-owned
Telecomunicaciones de México
and operational long distance
companies to form a highly competitive market with more than 20 participants.
In addition, we believe that the current Mexican data transmission industry
includes over 1,000 private networks that provide data transmission services.
Government Regulation
Telecommunications systems in Mexico are regulated by the SCT and by
COFETEL, a decentralized regulatory body within the SCT, pursuant to the 1995
Telecommunications Law (
Ley Federal de Telecomunicaciones
), which became
effective on June 8, 1995. Regulations governing international long distance,
domestic long distance, local telephony, mobile and other telecommunications
services have been promulgated under the 1995
Telecommunications Law. However, some rules from the prior Law of General
Means of Communication (
Ley de Vías Generales de Comunicación
) and the rules
promulgated under such law, including, without limitation, the
Telecommunications Rules (
Reglamento de Telecomunicaciones
) which we
collectively refer to as the Original Communications Laws, generally remain
effective if they are not inconsistent with the 1995 Telecommunications Law and
the rules promulgated under that law.
These laws and regulations define the regulatory structure applicable to
the nationwide telecommunications infrastructure and the provision of
telecommunications services. They govern, among other things:
•
applications to obtain concessions to install, maintain and operate telecommunications systems;
•
the establishment of technical standards for the provision of telecommunications services;
•
the grant, revocation and modification of concessions and permits; and
•
the auction of spectrum.
During 2001 and 2002, the SCT announced that the 1995 Telecommunications
Law would be amended to include new provisions related to competition, customer
protection, spectrum auctions, permits for commercialization of
telecommunication services and universal service. Reportedly, the amendments
will focus more on networks than on services. The SCT and the
telecommunications industry have been recently involved in discussions to
define the content of the new law. We cannot ensure that the initiative will
be presented to Congress for approval in 2003.
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The terms and conditions of concessions and permits granted under the
Original Communications Laws, which is the case for the cellular concessions
and permits granted to Iusacell and our subsidiaries, should be governed by the
Original Communications Laws and respected under the new regulatory regime
until their expiration. The 1995 Telecommunications Law may grant rights
enhancing those set forth in the Original Communications Laws. For instance,
rates charged by holders of concessions and permits granted under the Original
Communications Laws no longer require prior approval from the SCT, but only
require registration with COFETEL.
Concessions and Permits
To provide public telecommunications services in Mexico through a public
network, the service provider must first obtain a concession from the SCT.
Pursuant to the 1995 Telecommunications Law, concessions for public networks
may not exceed a term of 30 years, and concessions for radioelectric spectrum
may not exceed a term of 20 years. Concessions may be extended for a term
equivalent to the term for which the concession was originally granted, but not
to exceed such 20- or 30-year limit, as the case may be. Concessions specify,
among other things:
•
the type of network, system or service;
•
the allocated spectrum, if applicable;
•
the geographical region in which the holder of the concession may provide the service;
•
the required capital expenditure program;
•
the term during which such service may be provided;
•
the payment, where applicable, required to be made to acquire the
concession, including, where applicable, the participation of the
Mexican government in the revenues of the holder of the concession; and
•
any other rights and obligations affecting the concession holder.
In addition to concessions, the SCT may also grant permits for (i)
establishing, operating or exploiting telecommunications services not
constituting a public network (i.e., reselling) and (ii) installing, operating
or exploiting transmission-ground stations. There is no specified maximum term
for permits. Under the 1995 Telecommunications Law, only registration with the
SCT is required to provide value-added telecommunications services.
Under the 1995 Telecommunications Law and the 1993 Foreign Investment Law
(
Ley de Inversión Extranjera
), concessions may only be granted to Mexican
individuals and to Mexican corporations in which non-Mexicans hold no more than
49% of their voting shares or which are not otherwise controlled by
non-Mexicans, except that, in the case of concessions for cellular
communications services, foreign investment participation may exceed 49% with
the prior approval of the Mexican Foreign Investment Commission of the Mexican
Ministry of Economy (formerly the Ministry of Commerce and Industrial
Development). The Mexican Foreign Investment Commission ruled, upon
application of Unefón, that concessions for PCS services should be treated
identically to concessions for cellular services for foreign investment
purposes. There are no foreign investment participation restrictions with
respect to operations conducted under permits.
A concession or a permit may be terminated pursuant to the 1995 Telecommunications Law upon:
•
expiration of its term;
•
resignation by the concession holder or the permit holder;
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•
revocation;
•
expropriation; or
•
dissolution or bankruptcy of the concession holder or the permit holder.
A concession or a permit may be revoked prior to the end of its term under certain circumstances, such as:
•
unauthorized or unjustified interruption of service;
•
the taking of any action that impairs the rights of other concessionaires or permit holders;
•
failure to comply with the obligations or conditions specified in the concession or permit;
•
failure to provide interconnection services to other holders of
telecommunications concessions and permits;
•
loss of the concession or permit holder's Mexican nationality in
instances in which Mexican nationality is legally required;
•
unauthorized assignment, transfer or encumbrance of the concession
or permit, of any rights under the concession or permit or of assets
used for the exploitation of the concession or permit;
•
failure to pay to the Mexican government its fee for the concession
or permit or, where applicable, its participation in the revenues of
the holder of the concession or permit; or
•
participation of any foreign government in the capital stock of the
holder of the concession or permit.
In addition, the SCT may establish for any concession further events which
could result in revocation of that concession.
The Mexican government, through the SCT, may also temporarily seize all
assets related to a concession or permit in the event of a natural disaster,
war, significant public disturbance or threats to internal peace and for other
reasons related to preserving public order or for economic reasons. In
addition, the Mexican government has the statutory right to expropriate a
concession and assets related to its exploitation for public interest reasons.
Under Mexican law, the Mexican government is obligated to compensate the owner
of the assets in the case of a statutory expropriation or temporary seizure,
except in the event of war. If the Mexican government temporarily seizes such
assets, it must indemnify the concession or permit holder for all losses and
damages, including lost revenues.
In the case of an expropriation, the amount of the compensation is to be
determined by appraisers. If the party affected by the expropriation disagrees
with the amount appraised, it may initiate judicial action against the Mexican
government. Should no agreement be reached on the amount of the indemnity in
the case of a seizure or expropriation, the determination will be made by an
independent appraiser. Iusacell is not aware of any instance in which the SCT
has exercised any of these powers in connection with a cellular company.
The Original Concession
Our right to provide radiotelephony, local wireless and data transmission
services nationwide, as well as cellular service in Region 9, is based upon the
concession granted on April 1, 1957, as amended, which we refer to as the
Original Concession, to
Servicio Organizado Secretarial, S.A.
, which merged
into
SOS Telecomunicaciones, S.A. de C.V.
, which we refer to as SOS. The term
of the Original Concession is 50 years, and it expires on April 1, 2007. The
Original Concession may, however, be revoked prior to such date in the event
that SOS fails to comply with its terms or applicable law. The Original
Concession is renewable upon timely application to the SCT, provided that SOS
has complied with all of the requirements of the Original Concession and agrees
to any new terms and conditions established by the SCT at the time of renewal.
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In consideration for the Original Concession, SOS must make payments to
the Mexican government equal to 5% of all gross revenues derived from services
provided through its Region 9 cellular network and payments in an amount equal
to the greater of (i) 4% of all gross revenues and (ii) 10% of net income, in
either case, derived from services provided through its nationwide radio
communications network.
Under the terms of the Original Concession, SOS must continually modernize
its services. In updating its services, SOS must submit technical and economic
plans for approval by the SCT. In determining whether to approve these plans,
the SCT is authorized to consider whether the plans sufficiently address
factors such as the public interest (including, without limitation,
teledensity) and efficiency and uniformity in telecommunications throughout
Mexico.
Initially, the Original Concession authorized only the installation and
commercial operation of nationwide mobile (vehicle-installed) radiotelephone
public service in the 132-144 MHz frequency range. Since then, however, the
Original Concession has been amended numerous times, allowing us to expand the
types of telecommunications services which we may offer. In 1978, the Original
Concession was amended to grant SOS an additional allocation in the 440-450 MHz
and 485-495 MHz frequency ranges in return for yielding a portion of its
132-144 MHz frequency range allocation. SOS retained the frequencies between
138 and 144 MHz.
Between 1986 and 1989, the Original Concession was further amended to
enable SOS to provide fixed rural radiotelephony service, to offer telex and
data transmission with the obligation to link its subscribers to the network
owned by Telecom, and to interconnect its radiocommunications ground stations
through satellite.
In 1989, SOS was authorized to install, operate and maintain a mobile
public radiocommunications network with cellular technology in the 825-835 MHz
and 870-880 MHz frequency bands in Region 9. In 1990, SOS was authorized to
carry intra-regional cellular-to-cellular communications throughout Region 9
without being required to interconnect with the long distance carrier. In
1992, SOS was authorized to provide public data transmission service nationwide
through its radio communications networks without the obligation to link its
subscribers to the Telecom network.
In 1993, SOS was granted an additional 5 MHz band in the 800 MHz frequency
range for the provision of cellular service, due to the high volume of cellular
traffic experienced in Region 9. In the same year, SOS was authorized to
improve its radiocommunications public service in the 440-450 MHz and 485-495
MHz frequency
ranges by utilizing digital technology and to interconnect its
telecommunications systems through fiber optic, satellite and microwave
technologies. The SCT also clarified the ability, and indeed the obligation,
of SOS to interconnect customers of its nationwide radio communications network
regardless of whether such customers use fixed, mobile or portable telephones.
In accordance with the 1995 Telecommunications Law, SOS applied to renew
the Original Concession in March 1997. In December 1996, we applied to divide
the Original Concession into two concessions, one relating to the provision of
cellular services over the 800 MHz frequency band in Region 9, which would not
be subject to restrictions on foreign investment, and a second relating to the
450 MHz frequencies, which would be subject to restrictions on foreign
investment. We continue negotiating the terms and conditions for such
extension and division with COFETEL.
Cellular Concessions
Mexico is divided into nine cellular regions. The SCT has allocated
cellular telephone system frequencies in each region in the Cellular A-band and
the Cellular B-band. In each region, Telcel holds the Cellular B-band
concession and its cellular competitor in each region holds the Cellular A-band
concession.
In Region 9, we hold the right to provide cellular service pursuant to an
authorization granted to SOS by the SCT in 1989 under the Original Concession.
In Regions 5, 6, 7 and 8, we hold the right to provide cellular service through
our subsidiaries
Comunicaciones Celulares de Occidente, S.A. de C.V.
, known as
Comcel,
Sistemas Telefónicos Portátiles Celulares, S.A. de C.V.
, known as
Portacel,
Telecomunicaciones del Golfo, S.A. de C.V.
, known as Telgolfo, and
Portatel del Sureste, S.A. de C.V.
known as Portatel, respectively. Comcel,
Portacel, Telgolfo and Portatel each holds a 20-year concession expiring in
2010 which authorizes these subsidiaries to install, operate, maintain and
exploit mobile public radiotelephone networks with cellular technology for
commercial use in the Cellular A-band. In consideration for these
authorizations and concessions, the subsidiaries made initial payments to the
Mexican government and, in addition, must make payments as follows:
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Percent of Gross Revenues Payable
Subsidiary
To Mexican Government
Comcel
8
%
Portacel
7
%
Telgolfo
8
%
Portatel
6
%
By the terms of their concessions, Comcel, Portacel, Telgolfo and Portatel
must continually modernize their services after receiving approval of their
technical and economic plans from the SCT. In determining whether to approve
these plans, the SCT is authorized to consider whether the plans sufficiently
address factors such as the public interest (including, without limitation,
teledensity) and efficiency and uniformity in telecommunications throughout
Mexico. These concessions may be revoked or terminated prior to their
expiration dates in the event the concession holder fails to comply with the
conditions established in the concessions or applicable law. The concessions
may, however, be renewed for a term equal to the original term upon timely
application to the SCT, provided that the concession holder had complied with
all of the requirements of its concession and agrees to any new terms and
conditions established by the SCT at the time of such renewal.
PCS Concessions
In October 1998, the SCT granted to
Iusacell PCS, S.A. de C.V.
, which we
refer to as Iusacell PCS, which is a joint venture between Iusacell and José
Ramón Elizondo Anaya, a former director of Iusacell Celular, in which Iusacell
originally held a 94.9% equity interest and a 49% voting interest, a concession
for the installation and exploitation of a public network to provide fixed and
local mobile access and a concession of 1.9 MHz frequencies in Region 1 (which
includes the city of Tijuana) and Region 4 (which includes the city of
Monterrey), for a renewable 20-year term. Under the terms of its concession,
Iusacell PCS is committed to cover at least 20% of the
total population in those regions by the end of the third year of the
concession and 50% of the total population in those regions by the end of the
fifth year of the concession. We started PCS network operations and service
was available in the second quarter of 2000 and commercial operations in the
fourth quarter of 2001, and we are currently in compliance with the coverage
commitments under our concession. Upon our application, in November 2000, the
SCT granted Iusacell PCS an exemption for five years from the obligation to
take part in the long distance carrier selection by a pre-subscription process.
In July 2002, and upon request by Iusacell PCS, COFETEL granted an
authorization to transfer Iusacell PCS's rights and obligations under the PCS
concession to
Iusacell PCS de México, S.A. de C.V.
which we refer to as
Iusacell PCS de México, a wholly-owned subsidiary of Iusacell PCS. The PCS
concession was transferred to Iusacell PCS de México for consideration in the
aggregate amount of Ps.669.0 million (U.S.$64.2 million). If Iusacell PCS de
México fails to pay such amount on or before December 31, 2003, Iusacell PCS
would have the right to revoke the transfer and keep the concession, subject to
the authorization of COFETEL.
Paging
On December 14, 1995, Iusacell Celular and Infomin formed Infotelecom as a
joint venture to market national and international paging services. Infomin
has a concession, which expires on July 20, 2009, to provide nationwide paging
services in Mexico. Although the joint venture agreement between Iusacell
Celular and Infomin contemplates that Infomin will ultimately transfer its
paging concession to Infotelecom, Infomin's paging concession prohibits foreign
ownership of more than 49% of the voting shares of the entity holding the
concession. Infomin, therefore, would be unable to contribute its paging
license to the joint venture so long as Verizon continued to control the
management of Iusacell and Iusacell Celular continued to hold more than 49% of
the voting shares of Infotelecom.
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In order to eliminate this obstacle to the transfer of the paging
concession to Infotelecom, in December 1998 we sold a 2% interest in
Infotelecom to Mr. José Ramón Elizondo, a former director of Iusacell Celular.
As a result, we currently hold a 49% interest in Infotelecom. Infotelecom is
required to make monthly payments to Infomin equal to 5% of all gross revenues
for the preceding month. This payment represents the amount which Infomin as
concession holder must pay to the SCT for the right to provide paging service.
In 2000, Infomin received governmental approval to transfer its paging
concession to Infotelecom. We expect the transfer of the concession to be
implemented in 2003. The financial statements of Infotelecom are consolidated
with the financial statements of Iusacell. See Note 2 to the Consolidated
Financial Statements.
Long Distance
Our right to provide international long distance services is based upon a
long distance concession granted by the SCT to Iusatel, on October 16, 1995.
The term of the long distance concession is 30 years and may be renewed upon
timely application to the SCT, for an equal period of time, provided that
Iusatel complies with certain requirements. Upon our application, the SCT and
COFETEL modified this concession on December 17, 1997, authorizing a change in
the coverage requirements and increasing flexibility in the choice of
transmission technology.
Pursuant to the modified concession, Iusatel is required to comply with
technical specifications and had to serve using its own infrastructure a
minimum of 11 specified cities by July 31, 1998, 26 additional specified cities
by December 31, 1999 and another 13 additional specified cities by December 31,
2000. Iusatel complied with its coverage commitments in all cities except for
Saltillo in Region 4. Therefore, in 2001 the SCT substituted Tlaxcala for
Saltillo in our coverage commitment, and we are currently in compliance with
all our coverage commitments.
In February 1997, the Mexican Foreign Investment Commission conditioned
its approval of Bell Atlantic assuming management control over Iusacell Celular
upon the requirement, among others, that we transfer at least 51% of the voting
shares of Iusatel to Mexican investors on terms acceptable to the Mexican
Foreign Investment Commission. In November 1998, we complied with this
requirement by having Mr. Elizondo agree to subscribe to 5.1% of the capital
stock of Iusatel, comprising 51% of the voting shares thereof. We retained a
94.9% equity interest in Iusatel, including a 90% equity interest through the
ownership of neutral limited voting stock (
inversión
neutra
) and a 49% voting interest representing a 4.9% equity interest.
The financial statements of Iusatel are consolidated with the financial
statements of Iusacell. See Note 2 to the Consolidated Financial Statements.
Local Telephony
We believe our right to provide local telephony service is derived from
the Original Concession. The Original Concession, as granted, permitted SOS to
provide radiocommunications service to vehicle-mounted terminal equipment
nationwide.
In 1986, the SCT amended the Original Concession to authorize SOS to
provide fixed public radiotelephony service in rural areas nationwide in
accordance with plans to be approved by the SCT. In 1990, the
Telecommunications Rules were promulgated by the Mexican government which
further modified the Original Concession.
These regulations classified radiocommunications services on the basis of
the networks used to provide such services rather than on the basis of
subscriber terminal equipment. Radiocommunications networks are generally
classified as either "fixed" or "mobile." Our radiocommunications network is a
mobile network. In 1993, the SCT clarified the ability, and indeed the
obligation, of SOS to interconnect customers of its nationwide
radiocommunications network regardless of whether such customers use fixed,
mobile or portable telephones.
Pursuant to the Original Concession, the commencement of construction and
marketing of local wireless service in the 450 MHz frequency band on a
commercial basis requires the prior approval of the SCT. We have never
received the SCT's approval of our technical and economic plans for local
wireless service in the 450 MHz frequency band.
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However, Iusacell Celular has reached an agreement with the SCT on a
technical process by which we can provide local wireless service in the 450 MHz
frequency band in some of the existing service regions and has received a right
of first refusal to acquire the concessions to provide local wireless service
in such regions.
In September 1998, we determined that, because of many factors, including
the impact of changing technology since the initiation of the 450 MHz fixed
local wireless project in 1994, an impairment of our investment in 450 MHz TDMA
technology had occurred. As a result, we recorded a substantial non-cash
write-down of our investment in the 450 MHz fixed local wireless project.
In November 1998, Mr. Elizondo agreed to subscribe 5.1% of the capital
stock of Iusatelecomunicaciones, the Iusacell Celular subsidiary which provides
local wireless service in the 450 MHz frequency band on a trial basis,
comprising 51% of our total voting shares. We retained a 94.9% equity interest
in Iusatelecomunicaciones, including a 90% equity interest through the
ownership of neutral limited voting stock (
inversión neutra
) and a 49% voting
interest representing a 4.9% equity interest. The financial statements of
Iusatelecomunicaciones are consolidated with the financial statements of
Iusacell. See Note 2 to the Consolidated Financial Statements.
Data Transmission
Our right to offer telex and provide public data transmission service
throughout Mexico is derived from the Original Concession. We use our
allocations in the 138-144 MHz, 440-450 MHz and 485-495 MHz frequency bands and
excess capacity in our cellular microwave backbone in Region 9 to provide data
transmission services.
Dedicated Microwave Circuit Services Permit
On December 8, 1993, the SCT authorized SOS to use its microwave network's
excess capacity to provide dedicated circuit services. In accordance with the
terms of this permit, these dedicated microwave circuits cannot be
interconnected to public exchange networks, and the service must only be
provided through the links of the microwave network authorized by the SCT. On
February 1, 1994, the SCT authorized SOS to carry voice, data and video
conferencing through these dedicated circuit services.
Value-Added Services Permit
On June 17, 1993, SOS was granted a permit to provide through its public
network the following value-added telecommunications services to its cellular
subscribers:
•
secretarial service;
•
voice mail; and
•
data transmission.
The term of this permit is the same as that of the authorization for using
the Region 9 cellular network through which the value-added services are to be
provided. Under this permit SOS is required to make annual payments to the
Mexican government equal to 5% of all gross revenues derived directly from the
provision of these services. In October 1994, Comcel, Telgolfo and Portacel
were each granted a permit to provide secretarial services under the same terms
granted to SOS, including the making of the annual payments to the Mexican
government.
Foreign Ownership Restrictions
Pursuant to the 1995 Telecommunications Law and the 1993 Foreign
Investment Law, holders of concessions to provide telecommunications services
in Mexico, excluding providers of cellular service, cannot have a majority of
their voting shares owned by, and cannot be otherwise controlled by, foreign
persons. In February 1997, the Mexican Foreign Investment Commission
conditioned its approval of Verizon assuming management control over Iusacell
upon the requirement that, within a renewable period of 180 days, Iusacell
would transfer at least 51% of the voting shares of Iusatelecomunicaciones and
Iusatel to Mexican investors on terms acceptable to the Mexican Foreign
Investment Commission. The Mexican Foreign Investment Bureau twice extended
the transfer deadline.
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In November 1998, we complied with this requirement by transferring 51% of
the voting shares of these two subsidiaries to Mr. Elizondo by means of a
subscription to capital. We retained 49% of the voting shares of these
subsidiaries, representing 4.9% of their capital. We also hold an additional
90% of the capital of these subsidiaries through the ownership of neutral
limited voting stock (
inversión neutra
) that does not constitute voting shares
for purposes of the Mexican foreign investment laws. Consequently, we hold a
94.9% equity interest in these two subsidiaries, whose financial results we
consolidate.
To participate in the auctions for concessions for microwave frequencies
concluded in September 1997, we formed Punto-a-Punto Iusacell, a joint venture
with Mr. Elizondo. The Mexican Foreign Investment Bureau approved a capital
structure substantially similar to that authorized for Iusatel and
Iusatelecomunicaciones for the microwave joint venture. The financial
statements of Punto-a-Punto Iusacell are consolidated with the financial
statements of Iusacell. See Note 2 to the Consolidated Financial Statements.
In order to participate in the auctions for concessions for 1.9 GHz PCS
frequencies concluded in May 1998, we formed Iusacell PCS, another joint
venture with Mr. Elizondo. The Mexican Foreign Investment Bureau approved a
capital structure substantially similar to that authorized for Iusatel,
Iusatelecomunicaciones and Punto-a-Punto Iusacell, and we retained a right to
acquire Mr. Elizondo's interest in the event we are allowed to do so by the
Mexican Foreign Investment Commission.
In 2000, the Mexican Foreign Investment Commission ruled, upon application
of Unefón, that concessions for PCS frequencies, like concessions for cellular
frequencies, may be held by entities in which foreign persons have a majority
of the voting shares. Iusacell applied for similar treatment for Iusacell PCS
and its subsidiary. On July, 2002 the Mexican Foreign Investment Commission
authorized Iusacell to own a majority of the voting shares on Iusacell PCS and
Iusacell PCS de Mexico. On September, 2002, Iusacell converted its neutral
limited voting stock in Iusacell PCS into voting shares. Although Mr. Elizondo
holds a minority interest in Iusacell PCS, we expect to exercise our right to
acquire Mr. Elizondo's interest sometime in the future.
Moreover, in December 1998 Mr. Elizondo acquired a 2% interest in
Infotelecom, from Iusacell Celular. As a result, we currently hold only 49% of
this entity, complying with the condition precedent necessary to allow our
other partner, Infomin, a Mexican controlled company, to transfer its paging
concession to Infotelecom, as previously agreed.
Rates for Telecommunications Services
Under the Original Communications Laws, SCT approval was required for
rates charged for all basic and certain value-added cellular services and for
data transmission services. Historically, the SCT permitted rate increases
based on the cost of service, the level of competition, the financial situation
of the carrier and macroeconomic factors. Carriers were not allowed to
discount the rates authorized by the SCT, although operators occasionally
waived activation fees on a promotional basis. Interconnection rates were also
authorized by the SCT. All terms of interconnection (such as point of
interconnection) other than interconnection rates were negotiated between the
regional non-wireline cellular carriers and Telmex under the SCT's supervision.
Rates for dedicated circuit services through microwave networks, and dedicated
circuits and private networks through satellites were not regulated under the
Original Communications Laws.
Under the 1995 Telecommunications Law, rates for telecommunications
services, including cellular and long distance services, are now freely
determined by the providers of such services. Providers are prohibited from
adopting discriminatory practices in the application of rates. In addition,
the SCT is authorized to impose specific rate requirements on those companies
determined by the Federal Competition Commission to have substantial market
power. All tariffs for telecommunications services, other than value-added
services, must be registered with COFETEL prior to becoming effective.
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In January 2001, we negotiated a rate reduction with Telmex that decreases
both long distance and local cellular interconnection charges from U.S.$0.0330
to U.S.$0.0125 per minute. Additionally, we negotiated with Telmex the terms
regarding payment for the projects Telmex undertook to prepare its long
distance network for competition. We paid Telmex a fixed payment of
approximately U.S.$13.0 million and agreed to pay a U.S.$0.0053 per minute,
usage based surcharge to the local wireline interconnection rate for the next
four years for long distance calls terminated in Telmex's local networks.
In December 2001, Telmex, Alestra and Avantel reached an agreement to
further reduce the long distance interconnection rate from U.S.$0.0125 per
minute to U.S.$0.00975 per minute. We negotiated with Telmex to obtain similar
terms for both our long distance business and local cellular interconnection
rate and these terms have been maintained until 2003.
United States Regulation
In 1982, Bell Atlantic, like other regional Bell operating companies, was
subject to a consent decree which we refer to as the Decree, resulting from
anti-trust litigation between the United States Department of Justice against
AT&T. The Decree required AT&T to divest itself of its local telephone
companies. Under the Decree, Bell Atlantic was prohibited, with certain
limited exceptions, from providing interLATA (long distance)
telecommunications, engaging in the manufacture of customer premises equipment
(CPE), or engaging in the manufacture or sale of telecommunications equipment.
The Telecommunications Act of 1996 (hereinafter referred to as the "1996
Act"), which became effective on February 8, 1996, includes provisions that
open local telephony markets to competition and permitted regional Bell
operating companies, such as the local operating telephone companies of the
former Bell Atlantic, to provide interLATA services (long distance), video
programming and to engage in manufacturing, under certain conditions. Under
the 1996 Act, the former Bell Atlantic was allowed to provide certain interLATA
(long distance) services immediately upon enactment, including interLATA (long
distance) services permitted under the Decree, interLATA (long distance)
services originating outside the states where its subsidiaries provide local
exchange telephone services and interLATA (long distance) services that are
"incidental" to other permitted business such as wireless services.
However, the ability of Verizon and its affiliates to engage in businesses
previously prohibited by the Decree, including providing interLATA (long
distance) services originating in the states where the former Bell Atlantic
subsidiaries provide local exchange telephone service, and manufacturing CPE or
telecommunications equipment, is largely dependent on satisfying certain
conditions contained in the 1996 Act and related regulations.
Since Iusacell is a Verizon affiliate, its operations must comply with the
terms of the Decree. In 1986 and 1993, Bell Atlantic obtained waivers under
the Decree that allowed it to conduct business outside the United States,
subject to certain exceptions and restrictions. Under such exceptions and
restrictions, a foreign telecommunications entity (FTE) affiliated with
Verizon, such as Iusacell, could not provide interexchange (long distance)
telecommunications services between points in the United States or own any
international telecommunications facilities in the United States.
As to telecommunications traffic between the United States and a foreign
country, an FTE could provide only the foreign "half" of such traffic. An FTE
was prohibited from discriminating in handling traffic to and from the United
States and was limited as to interests it could own in international cable
systems and satellite facilities to and from the United States. Finally, an
FTE was prohibited from exporting to the United States any telecommunications
equipment or CPE manufactured outside the United States.
The 1996 Act eliminated certain restrictions under the Decree including:
•
restrictions that precluded an FTE from providing the U.S. "half"
of traffic originating in a foreign country;
•
restrictions on exporting to the United States telecommunications
equipment or CPE manufactured outside the United States; and
•
restrictions on providing interLATA (long distance)
telecommunications services between points in the United States or
international long distance service originating in the United States,
and from owning international telecommunications facilities in the
United States subject to the same conditions that Verizon must satisfy
under the 1996 Act and any regulations promulgated thereunder with
respect to interLATA (long distance) telecommunications services
originating in the states in which the former Bell Atlantic local
exchange subsidiaries provide service.
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Under the 1996 Act, we may now provide both the foreign "half" and the
United States "half" of telecommunications traffic originating in Mexico (or
any other foreign country) and may now carry international telecommunications
traffic which, although routed through the United States, neither originates
nor terminates in the United States. In addition, we may carry United States
originated traffic bound for Mexico (or other foreign countries) so long as the
traffic originates outside the states where the former Bell Atlantic
subsidiaries provide local exchange telephone service, except from those states
where Verizon has obtained Section 271 approval and subject to having
appropriate authority under Section 214 of the United States Communications Act
of 1934.
In 1996, Iusatel applied for and received authorization under Section 214
of the Communications Act to become a facilities-based provider of
international long distance services from the United States. This Section 214
authorization was transferred to a Peralta Group entity in January 1997 in
order not to delay the proposed change of control from the Peralta Group to
Bell Atlantic. In 2002, Iusatel USA, Inc., a subsidiary of Iusatel, applied
for and received authorization under Section 214 of the Communications Act to
become a facilities-based provider of international long distance services from
the United States.
Other laws of the United States may restrict activities of Iusacell by
virtue of Verizon's ownership interest, including laws and regulations that
restrict trade with, and investments in, specific countries, as well as the
United States Foreign Corrupt Practices Act. The Foreign Corrupt Practices Act
is also applicable to Iusacell because its securities are listed on the New
York Stock Exchange.
The Iusacell Shareholders' Agreement contains provisions designed to
require us to refrain from taking any actions that would cause Verizon to be in
violation of applicable law.
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C. ORGANIZATIONAL STRUCTURE
For a description of our two current principal shareholders, Verizon and
Vodafone, see Item 7, "Major Shareholders and Related Party Transactions —
Major Shareholders."
Grupo Iusacell, S.A. de C.V.
is a holding company for the shares of
Grupo
Iusacell Celular, S.A. de C.V.
and several other subsidiaries. The following
table shows our direct and indirect subsidiaries, their principal lines of
business, their countries of incorporation and the percentages of our ownership
interest and voting power as of December 31, 2002.
% direct and
% direct and
Country of
indirect economic
indirect voting
Subsidiary
Line of Business
Incorporation
interest
interest
Grupo Iusacell Celular, S.A. de C.V.
Operating cellular
Mexico
100.0
100.0
Iusacell PCS, S.A. de C.V.
Holding company for
Iusacell PCS de
México, S.A. de C.V.
Mexico
94.9
49.0
Iusacell PCS de México, S.A. de C.V.
(1)
Regions 1 and 4 PCS
Mexico
94.9
49.0
Iusacell Infraestructura, S.A. de C.V.
Microwave financing
Mexico
100.0
100.0
Iusacell Arrendadora, S.A. de C.V.
Leasing
Mexico
100.0
100.0
Iusacell Infraestructura de
México, S.A. de C.V.
Microwave financing
Mexico
100.0
100.0
SOS Telecomunicaciones, S.A. de C.V.
(2)
Region 9 cellular
Mexico
100.0
100.0
Comunicaciones Celulares de Occidente,
S.A. de C.V.
(5)
Region 5 cellular
Mexico
100.0
100.0
Sistemas Telefónicos Portátiles
Celulares, S.A. de C.V.
(2)
Region 6 cellular
Mexico
100.0
100.0
Telecomunicaciones del Golfo,
S.A. de C.V.
(2)
Region 7 cellular
Mexico
100.0
100.0
Iusacell, S.A. de C.V.
(2)
Sales and marketing
Mexico
100.0
100.0
Sistecel, S.A. de C.V.
(2)
Administrative services
Mexico
100.0
100.0
Iusatel, S.A. de C.V.
(2)
Long distance
Mexico
94.9
49.0
Iusatel USA, Inc.
(3)
Long distance U.S
United States
94.9
49.0
Iusatelecomunicaciones, S.A. de C.V.
(2)
Local wireless
Mexico
94.9
49.0
Grupo Iusacell Nicaragua, S.A.
(2)
Inactive
Nicaragua
100.0
100.0
Punto-a-Punto Iusacell, S.A. de C.V.
(2)
Microwave transmission
Mexico
94.9
49.0
Infotelecom, S.A. de C.V.
(2)
Paging
Mexico
49.0
49.0
Inmobiliaria Montes Urales 460,
S.A. de C.V.
(2)
Real estate
Mexico
100.0
100.0
Iusanet, S.A. de C.V.
(2)
Services
Mexico
100.0
100.0
Editorial Celular, S.A. de C.V.
(2)
Publishing
Mexico
40.0
40.0
Grupo Portatel, S.A. de C.V.
(2)
Region 8 cellular
Mexico
100.0
100.0
Portatel del Sureste, S.A. de C.V.
(4)
Region 8 cellular
Mexico
100.0
100.0
Mexican Cellular Investment, Inc.
(2)
Holding company for
Comunicaciones
Celulares de
Occidente, S.A. de
C.V.
United States
100.0
100.0
(1)
Held indirectly through
Iusacell PCS, S.A. de C.V.
(2)
Held through
Grupo Iusacell Celular, S.A. de C.V.
(3)
Held through
Iusatel, S.A. de C.V.
(4)
Held through
Grupo Portatel, S.A. de C.V.
(5)
Held through Mexican Cellular Investment, Inc.
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All of the above companies, including those in which we own directly or
indirectly a minority voting interest, except for
Editorial Celular, S.A. de
C.V.
, are consolidated with the financial statements of Iusacell. See Note 2
to the Consolidated Financial Statements.
D. PROPERTY, PLANT AND EQUIPMENT
As of December 31, 2002, we operated in our service regions a total of 146
customer sales and service centers, 582 cellular cell sites, 126 repeaters, 32
cellular microwave transmission repeaters, 106 PCS cell sites, 14 fixed local
wireless 450 MHz cell sites, 69 paging antennas, 7 switches for cellular and
PCS service, 1 switch for local wireless service and 3 switches for long
distance service.
We generally lease the land and cellular tower space where our customer
sales and service centers, cell sites, antennas, microwave transmission
equipment and switching centers are located. We own and lease administrative
offices in Mexico City as well as in Guadalajara, León, Guanajuato, Puebla,
Monterrey, Mérida, Tijuana and Ciudad Juárez. We generally own our cellular
network equipment, subject to liens.
On December 29, 1999, Iusacell Celular entered into a series of
agreements, which were amended in May 2002, with MATC Celular with respect to
Iusacell Celular's existing towers and future tower needs. As of May 30, 2003,
Iusacell Celular's subsidiaries lease from MATC Celular 715 sites, including
320 transfer sites, a number of built-to-suit sites and co-locations.
As of December 31, 2002, the book value of our property and equipment,
before accumulated depreciation of Ps.7,021.5 million (U.S.$673.5 million),
consisted of the following:
Value
(in thousands of constant pesos
as of December 31, 2002
and millions of U.S. dollars)
Property and Equipment
Buildings and facilities
Ps.1,721.5
U.S.$165.1
Communications equipment
11,571.3
1,110.0
Furniture and fixtures
397.1
38.1
Transportation equipment
62.0
5.9
Computer equipment
1,770.7
169.9
Cellular rental telephones
9.9
0.9
Land
72.1
6.9
Construction in progress
783.1
75.1
Advances to suppliers
1.1
0.1
See Item 5, "Operating and Financial Review and Prospects — Liquidity and
Capital Resources — Capital Expenditures" for a discussion of our planned
capital expenditures and existing encumbrances on our property and equipment.
See also Notes 4 and 8 to the Consolidated Financial Statements.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis in conjunction with
the Consolidated Financial Statements included elsewhere in this Annual Report.
Unless otherwise indicated, all financial information in this Annual Report is
presented in constant pesos with purchasing power as of December 31, 2002. The
U.S. dollar translations provided in this Annual Report are, unless otherwise
indicated, calculated at the Noon Buying Rate at December 31, 2002, which was
Ps.10.425 per U.S.$1.00. Sums may not add due to rounding.
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A. OPERATING RESULTS
General
The following discussion and analysis is intended to help you understand
and assess the significant changes and trends in the historical results of
operations and financial condition of Iusacell and its subsidiaries and the
factors affecting our financial resources.
The Consolidated Financial Statements have been prepared in accordance
with Mexican GAAP, which differs in certain significant respects from U.S.
GAAP. Note 23 to the Consolidated Financial Statements provides a description
of the principal differences between Mexican GAAP and U.S. GAAP as they relate
to Iusacell. Note 23 to the Consolidated Financial Statements also provides a
reconciliation to U.S. GAAP of Iusacell's net income (loss) for the years ended
December 31, 2000, 2001 and 2002 and of stockholders' equity as of December 31,
2001 and 2002.
As a Mexican company, we maintain our financial records in pesos.
Pursuant to Bulletin B-10, "Recognition of the Effects of Inflation on
Financial Information," and Bulletin B-12, "Statement of Changes in Financial
Position," issued by MIPA, Iusacell's financial statements are reported in
period-end pesos to adjust for the inter-period effects of inflation. The
presentation of financial information in period-end, or constant, currency
units is intended to eliminate the distorting effect of inflation on the
financial statements and to permit comparisons in comparable monetary units.
Bulletin B-10 requires us to restate non-monetary assets, non-monetary
liabilities and the components of stockholders' equity using the INPC. We have
not eliminated the effects of these inflation accounting principles in the
reconciliation to U.S. GAAP. See Note 23 to the Consolidated Financial
Statements.
Except where otherwise indicated, financial data for all periods in the
Consolidated Financial Statements and throughout this Annual Report have been
restated in constant pesos as of December 31, 2002, in accordance with the
fifth amendment to Bulletin B-10. References in this Annual Report to "real"
amounts are to inflation-adjusted pesos and references to "nominal" amounts are
to unadjusted historical pesos. In calendar years 2000, 2001 and 2002, the
rates of inflation in Mexico, as measured by changes in the INPC, were 9.0%,
4.4% and 5.7%, respectively. The inflation indices used are 1.1036 for 2000
figures and 1.0570 for 2001 figures.
In reporting under Mexican GAAP and in accordance with Bulletin B-10, we
are required to quantify all financial effects of operating and financing the
business under inflationary conditions. For presentation purposes, "integral
financing cost (gain)" refers to the combined financial effects of:
•
net interest expense or interest income;
•
net foreign exchange gains or losses; and
•
net gains or losses on monetary position.
Net foreign exchange gains or losses reflect the impact of changes in
foreign exchange rates on monetary assets and liabilities denominated in
currencies other than pesos. A foreign exchange loss arises if a liability is
denominated in a foreign currency which appreciates relative to the peso
between the time the liability is incurred and the date it is repaid, as the
appreciation of the foreign currency results in an increase in the amount of
pesos required to repay the specified amount of the foreign currency liability.
We incurred a foreign exchange loss in 2000 and 2002 on our U.S. dollar
denominated debt as the peso depreciated against the U.S. dollar. A foreign
exchange gain arises if a liability is denominated in a foreign currency which
depreciates relative to the peso between the time the liability is incurred and
the date it is repaid, as the depreciation of the foreign currency results in a
decrease in the amount of pesos required to repay the specified amount of the
foreign currency liability. In 2001, we incurred a foreign exchange gain on
our U.S. dollar denominated debt as the peso appreciated against the U.S.
dollar.
The gain or loss on monetary position refers to the gains and losses
realized from holding net monetary liabilities or assets and reflects the
impact of inflation on monetary liabilities and assets. For example,
a gain on  monetary position results from holding net monetary liabilities during
periods of inflation, such as in 2000, 2001 and 2002, as the purchasing power
of the peso declines over time.
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Devaluation and Inflation
Mexico experienced a severe economic crisis following the devaluation of
the peso in December 1994, when the Mexican government first allowed the peso
to fluctuate freely against the U.S. dollar. The value of the peso generally
continued to decline during subsequent years, depreciating by 54.8% relative to
the U.S. dollar in 1995 and by 22.7% in 1998. The peso has generally recovered
in recent years, depreciating by 1.5% and 13.7% against the U.S. dollar in 2000
and 2002, respectively, and appreciating by 4.8% in 2001.
Depreciation of the value of the peso has contributed to sharp increases
in inflation. Inflation, which had been 7.1% in 1994 as measured by changes in
the INPC, increased to 52.0% and 27.7% in 1995 and 1996, respectively. After a
reduction to 15.7% in 1997, inflation was 18.6% for the year 1998. Since then,
inflation has declined to 12.3% in 1999, 9.0% in 2000, 4.4% in 2001 and 5.7% in
2002.
In the past, devaluation and depreciation of the peso as well as inflation
have negatively affected our results of operations and financial condition and
may do so in the future.
Impact of Devaluation and Inflation on our Results of Operations
The general economic conditions in Mexico resulting from the devaluation
of the peso and the resulting inflation have had, and may have, an overall
negative impact on our results of operations primarily as a result of the
following factors:
•
Peso devaluations result in a decrease in the purchasing power of
Mexican consumers, resulting in a decrease in the demand for all goods
and services, including cellular telephony;
•
Due to competitive market conditions and the overall state of the
Mexican economy, we have not been able to increase our prices in line
with the inflation rate;
•
Significant inflation leads to an upward restatement of our assets,
resulting in a substantial increase in depreciation and amortization
expense; and
•
Given our net U.S. dollar liability position, devaluation of the
peso as compared to the U.S. dollar results in the recording of net
foreign exchange losses, and appreciation of the peso as compared to
the U.S. dollar results in the recording of net foreign exchange gains.
See
"— Liquidity and Capital Resources — Certain Hedging Activities" and
Item 11, "Quantitative and Qualitative Disclosures about Market Risk" for a
description of contracts we use to hedge against the devaluation of the peso
and inflation.
Tower Monetization
In December 1999, Iusacell Celular entered into a series of agreements
with MATC Celular. These agreements, which were amended in May 2002, among
other things, gave MATC Celular the right to acquire approximately 350 existing
Iusacell Celular non-strategic towers. We sold and leased back a total of 76
non-strategic towers to MATC Celular for approximately Ps.101.0 million in net
gains in 2002. During 2001 and 2002, we sold and leased back a total of 320
non-strategic cellular towers to MATC Celular and fulfilled our contractual
obligation under the existing agreements. Iusacell Celular has no further
commitment with MATC Celular to sell additional towers. Iusacell Celular is
leasing back the sold towers from MATC Celular and subleasing them to its
operating subsidiaries.
The difference between the sale price and book value of the towers sold is
being recorded as a reduction in operating expense. In 2002, we recorded an
expense reduction under Mexican GAAP of Ps.101.0 million in connection with our
sale of 76 towers to MATC Celular. However, the leasing of the towers from
MATC Celular results in an increase in our operating expenses, which we experienced in
2002. Under U.S. GAAP, the gain was deferred and recognized on a pro-rata
basis over the life of the lease. See Note 23 to the Consolidated Financial
Statements for a further discussion.
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Table of Contents
Results of Operations
The following table presents results of operations data for the years
ended December 31, 2001 and 2002.
Year Ended December 31,
2001
2002
Change
Ps.
Ps.
%
(In millions of constant
December 31, 2002 pesos except percentages)
Total revenues
6,597.2
5,527.0
(16.2
)
Cost of sales
2,019.4
2,021.1
0.1
Operating expenses
2,195.1
1,817.1
(17.2
)
Depreciation and amortization
2,768.5
2,247.1
(18.8
)
Other operating income
325.4
101.0
(69.0
)
Operating loss
(60.3
)
(457.3
)
(658.4
)
Integral financing gain (loss)
335.3
1,513.1
(351.3
)
Net (loss) profit
(528.5
)
(2,084.0
)
(294.3
)
Revenues
Total revenues consist of service revenues and telephone equipment and
other revenues. Our cellular service revenues are principally derived from the
provision of mobile wireless telephone service (cellular and PCS) in Mexico.
Our cellular service revenues also include revenues attributable to in-roaming
and long distance service revenue generated by our mobile wireless subscribers,
revenues from the provision of telecommunication services in Mexico other than
mobile wireless telephone service, including long distance service revenues
from non-mobile subscribers' and revenues from the provision of data
transmission, and paging services. Our service revenues include all Bulletin
B-10 inflation adjustments on all service revenue line items, whether mobile
wireless service revenues or other service revenues. Telephone equipment and
other revenues consist primarily of revenues from the sales of mobile telephone
equipment and accessories, as well as revenues attributable to out-roaming and
revenues from the sale of dark fiber optic cable. Revenues attributable to
out-roaming are passed through to the applicable host operator.
Year Ended December 31, 2002 Compared to Year Ended December 31, 2001
The following table presents the sources of our revenues for the years
ended December 31, 2001 and 2002:
Year Ended December 31,
2001
2002
Change
Ps.
%
Ps.
%
%
(In millions of constant pesos as of
December 31, 2002, except percentages)
Service revenues
5,955.5
90.3
4,933.6
89.3
(17.2
)
Telephone equipment and other revenues
641.7
9.7
593.4
10.7
(7.5
)
Total revenues
6,597.2
100.0
5,527.0
100.0
(16.2
)
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The table below presents service revenues by source for the years ended
December 31, 2001 and 2002:
Year Ended December 31,
2001(1)
2002(1)
Change
Ps.
%
Ps.
%
%
(In millions of constant pesos as of
December 31, 2002, except percentages)
Airtime
(2)
3,002.8
50.4
2,640.7
53.5
(12.1
)
Monthly fees
1,842.4
30.9
1,518.3
30.8
(17.6
)
Long Distance
686.4
11.5
436.4
8.8
(36.4
)
Value-added services and in-roaming
(3)
423.9
7.2
338.2
6.9
(20.2
)
Total service revenues
5,955.5
100.0
4,933.6
100.0
(17.2
)
(1)
Figures include intercompany eliminations.
(2)
Airtime includes amounts billed to other carriers for incoming
minutes under CPP, additional outgoing postpaid minutes to those
included in the package contracted for and prepaid outgoing minutes net
of unbilled minutes. Incoming and outgoing airtime is charged on a
per-minute basis.
(3)
Includes fees for value-added services, such as call waiting, call
transfer, emergency service, secretarial service and three-way calling,
and revenues from premiums for surety bonds, insurance-related charges
payable by subscribers, rural and public telephony and Iusacell's
cellular magazines, as well as in-roaming service revenue. Does not
include charges for related airtime. Customers using SMS value-added
services such as news, weather, sports and entertainment reports are
charged only for airtime. These revenues are therefore included in
airtime.
The customer base increased 12.2% in 2002, growing from 1,855,166
customers in 2001 to 2,081,200 in 2002. The 2002 growth occurred primarily
during the first half of the year as management focused on increasing the
prepaid customer base. During the second half of the year, both gross and net
additions declined comparatively, reflecting the new emphasis on high-value
customers. Year over year subscriber growth was negatively impacted by this
change in strategy. A high churn rate, particularly in the prepaid and
"incoming calls only" base, combined with continued economic pressures on
Mexican consumption contributed to the decline.
Prepaid customers increased 18.9% in 2002, from 1,451,091 customers in
2001 to 1,725,186 in 2002. The increase in 2002 reflects our efforts at that
time to expand that segment. "Incoming calls only" prepaid customers, the
substantially majority of whom generate little traffic, grew by 54.5% in 2002,
from 768,076 customers in 2001 to 1,186,962 in 2002. Revenues from these
customers do not have certain costs associated with them which we incur in
connection with postpaid customers, such as sales commissions, advertising and
bad debt expenses. A prepaid customer is included as a customer if the
customer's telephone number remains activated at the end of the reporting
period. During the third quarter 2001, we reduced the initial period for using
an activated prepaid card from 185 days to 60 days effective July 1, 2001. If
a customer has not activated a new card or recharged the airtime in its account
at the end of 60 days, the balance of the customer's account becomes zero, and
the customer loses the ability to make outgoing calls for an additional period
of 305 days. During the third quarter 2001, we began to turn over "incoming
calls only" prepaid customers who had reached the end of the additional 305-day
period without activating a new card or otherwise recharging the airtime in
their accounts. In February 2003, in coordination with the launch of
promotional prepaid cards, we extended the initial period for using an
activated Ps.450.0 prepaid card from 60 days to 90 days.
In 2002, postpaid customers declined 11.9% to 356,014 or 17.1% of total
subscribers, due to lower gross additions and increased disconnections of
customers. The December 31, 2002 postpaid subscriber data includes
approximately 48,885 public telephony customers who are considered postpaid
customers due to the contractual nature of their service.
Gross additions for 2002 totaled 1,122,024 customers, which represents a
6.7% increase over 2001. These additions were mainly derived from the
strategic focus on prepaid additions during the first half of 2002. During the
second half of 2002, however, we implemented a strategic shift, which triggered
sales of higher-value products through changes in the commission structure, but actually resulted in a
decrease in gross additions during the second half of 2002, particularly in the
low and ultra-low value prepaid segments.
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Average monthly churn for the year declined from 3.9% in 2001 to 3.4% in
2002, although churn increased during the second half of the year as we
actively sought to remove non- or low-revenue producing prepaid customers.
Postpaid subscriber churn decreased from an average monthly level of 3.8% in
2001 to 3.6% in 2002. We have adopted strict collection procedures to reduce
bad debt expense and have implemented new activation policies and retention
programs.
As a result of higher gross additions and lower average churn, net
additions increased 29.9%, from 173,947 customers in 2001 to 226,034 in 2002.
This includes the extraordinary removal during the third quarter of 2002 of
47,415 customers who were determined to be inactive prepaid users and were not
taken into consideration in the blended churn rate for the year.
Total service revenues decreased by 17.2% to Ps.4,933.6 million in 2002,
from Ps.5,955.5 million in 2001, representing 89.3% and 90.3% of total revenues
in 2002 and 2001, respectively. Service revenues decreased as a result of
fewer postpaid customers and lower nominal average monthly cellular revenue per
customer (ARPU).
Monthly fees from postpaid subscribers decreased 17.6% in 2002 from
Ps.1,842.4 million in 2001 to Ps.1,518.3 million in 2002. Monthly fees
decreased primarily due to fewer postpaid customers and an increase in the
number of hybrid subscribers as a proportion of the total postpaid base,
particularly during the first half of 2002. Airtime revenues decreased 12.1%
from Ps.3,002.8 million in 2001 to Ps.2,640.7 million in 2002, primarily as a
result of fewer postpaid subscribers. Long distance cellular revenue decreased
by 36.4% from Ps.686.4 million in 2001 to Ps.436.4 million in 2002. This
decrease is the result of fewer postpaid subscribers and a higher proportion of
incoming only subscribers in the prepaid subscriber base.
Blended average monthly minutes of use (MOUs) for 2002 decreased 25.0%,
from 84 minutes to 63 minutes, primarily due to a higher proportion of prepaid
customers in our subscriber base and reduced consumption. Among postpaid
customers, average monthly MOUs decreased 14.4%, from 250 minutes in 2001 to
214 minutes in 2002, mainly due to the increased proportion of hybrid customers
who have lower consumption patterns than the remainder of the postpaid customer
base. Average MOUs increased 3.6% among prepaid customers, from 28 minutes in
2001 to 29 minutes in 2002, primarily due to promotions aimed at increasing use
by higher value customers in the prepaid customer base.
ARPU decreased 28.5% from Ps.267.0 in 2001 to Ps.191.0 in 2002, as a
result of lower average MOUs and the higher proportion of prepaid customers in
our customer base. Postpaid ARPU decreased 13.2% from Ps.798.0 in 2001 to
Ps.693.0 in 2002, primarily as a result of a higher proportion of hybrid
customers in our customer base. Prepaid ARPU declined 11.1% from Ps.90.0 in
2001 to Ps.80.0 in 2002, due to a higher proportion of lower revenue generating
customers in the customer base during the first half of the year.
Telephone Equipment and Other Revenues
. Telephone equipment and other
revenues decreased 7.5% in 2002, from Ps.641.7 million in 2001 to Ps.593.4
million in 2002. This decrease was primarily due to lower postpaid gross sales
and lower revenues from out-roaming in 2002.
Cost of Sales
.
Our cost of sales includes cost of services, cost of
telephone equipment and other costs. Total cost of sales remained relatively
flat in 2002 at Ps.2,021.1 million. As a percentage of total revenues, cost of
sales increased to 36.6% compared to 30.6% in 2001.
Cost of Services
. Cost of services includes taxes and fees on revenues
payable to the Mexican government, interconnection costs, and technical costs
such as maintenance, repair costs, lease expenses, salaries of technical
personnel and utilities on a pro-rata basis. As a percentage of total
revenues, cost of services increased to 27.7% in 2002 from 24.6% in 2001,
although in absolute peso terms, Iusacell's cost of services declined 5.4% to
Ps.1,533.0 million in 2002 as compared to Ps.1,619.7 million in 2001. This
decrease resulted from stringent financial controls we implemented in 2002,
despite higher lease costs associated with an increased number of non-strategic
towers sold to and leased back from MATC Celular during the year. See "— Tower
Monetization."
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Table of Contents
Cost of Telephone Equipment and Other
. Cost of telephone equipment and other
includes that portion of
handset and accessory costs that are not capitalized, handset and accessory
inventory obsolescence charges and the cost of dark fiber optic cable sold.
Cost of telephone equipment and other increased 22.1% in 2002 from Ps.399.6
million in 2001 to Ps.488.1 million primarily due to partial subsidizing of
telephones sold to prepaid customers and higher cost of dark fiber optic sales.
As a percentage of revenues, other costs increased from 6.1% in 2001 to 8.8%
in 2002. As a percentage of the telephone equipment and other revenues, the
cost of telephone equipment and other increased to 82.3% in 2002 from 62.3% in
2001. The cost of a cellular handset given to a postpaid customer is amortized
over 12 months, the average length of our cellular contract, instead of being
immediately expensed in the period in which the customer receives the
telephone.
Operating Expenses
Operating expenses decreased 17.2% from Ps.2,195.1 million in 2001 to
Ps.1,817.1 million in 2002. As a percentage of total revenues, operating
expenses decreased from 33.3% in 2001 to 32.9% in 2002.
As a percentage of total revenues, sales and advertising expenses
increased to 24.7% in 2002 from 24.0% in 2001. In peso terms, sales and
advertising expenses decreased 13.7% from Ps.1,582.5 million in 2001, to
Ps.1,365.0 million in 2002, primarily because of higher television advertising
rates as well as expenses incurred in association with the consolidation of
Region 8 cellular service into our business.
General and administrative expenses decreased 26.2% from Ps.612.5 million
in 2001 to Ps.452.1 million in 2002, due to stringent cost controls, lower
headcount and restructured compensation plans. As a percentage of total
revenues, general and administrative expenses declined to 8.2% in 2002 from
9.3% in 2001.
Other Operating Income
We had other income of Ps.101.0 million in 2002 mainly as a result of the
sale of 76 towers to MATC Celular. The same towers were leased back from MATC
Celular by our subsidiary
Iusacell Arrendadora, S.A. de C.V.
See "Tower
Monetization." In 2001, we had other income of Ps.325.4 million from the sale
of 244 towers.
Depreciation and Amortization
Depreciation and amortization expenses decreased 18.8% from Ps.2,768.5
million in 2001 to Ps.2,247.1 million in 2002, primarily due to a reduced level
of capital expenditures during the period, lower handset amortization expenses
attributable to lower postpaid gross additions, more cost-effective handset
purchases and better targeted handset subsidies for high-value customers.
Operating Loss
We reported an operating loss of Ps.457.3 million in 2002, as compared to
a loss of Ps.60.3 million in 2001. Excluding the benefit of tower sales and
the impact of fiber optic inventory sales in both years, we would have reported
operating losses of Ps.611.5 million and Ps.536.6 million in 2002 and 2001,
respectively.
Integral Financing Results
We recorded an integral financing cost of Ps.1,513.1 million in 2002,
compared to a cost of Ps.335.3 million in 2001. This difference was primarily
driven by a Ps.1,028.7 million foreign exchange loss resulting from the 13.8%
depreciation of the peso against the US dollar during the year, compared to a
4.8% appreciation recorded in 2001 resulting in an exchange gain that year.
Because our interest obligations are entirely denominated in US dollars, the
depreciation of the peso also increased interest expense by Ps.45.3 million for
the year. As a result of a higher inflation rate in 2002 of 5.7% compared to a
4.4% inflation rate in 2001, gains from monetary position increased 47.5%.
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Net
Loss
We generated a net loss of Ps.2,084.0 million in 2002 compared to a loss
of Ps.528.5 million in 2001. This result was due primarily to the larger
operating loss and increased integral financing cost. Excluding the tower and
fiber optic-related benefits, we would have reported a net loss of Ps.2,238.2
million in 2002 and Ps.1,004.7 million in 2001.
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
The following table presents the sources of our revenues for the years
ended December 31, 2000 and 2001:
Year Ended December 31,
2000
2001
Change
Ps.
%
Ps.
%
%
(In millions of constant pesos as of December 31, 2002,
except percentages)
Service revenues
5,497.5
90.8
5,955.5
90.3
8.3
Telephone equipment
and other revenues
558.8
9.2
641.7
9.7
14.8
Total revenues
6,056.3
100.0
6,597.2
100.0
8.9
The table below presents service revenues by source for the years ended
December 31, 2001 and 2000:
Year Ended December 31,
2000
(1)
2001
(1)
Change
Ps.
%
Ps.
%
%
(In millions of constant pesos as of December 31, 2002,
except percentages)
Airtime
(2)
2,677.8
48.7
3,002.8
50.4
12.1
Monthly fees
1,808.2
32.9
1,842.4
30.9
1.9
Long Distance
562.5
10.2
686.4
11.5
22.0
Value-added services and
in-roaming
(3)
448.9
8.2
423.9
7.2
(5.6
)
Total service revenues
5,497.4
100.0
5,955.5
100.0
8.3
(1)
Figures include intercompany eliminations.
(2)
Airtime includes amounts billed to other carriers for incoming
minutes under CPP, additional outgoing postpaid minutes to those
included in the package contracted for and prepaid outgoing minutes net
of unbilled minutes. Incoming and outgoing airtime is charged on a
per-minute basis.
(3)
Includes fees for value-added services, such as call waiting, call
transfer, emergency service, secretarial service and three-way calling,
and revenues from premiums for surety bonds, insurance-related charges
payable by subscribers, rural and public telephony and Iusacell's
cellular magazines, as well as in-roaming service revenue. Does not
include charges for related airtime. Customers using value-added
services such as news, weather, sports and entertainment reports are
charged only for airtime. These revenues are therefore included in
airtime.
We had 1,855,166 and 1,681,219 mobile wireless subscribers at December 31,
2001 and 2000, respectively.
Prepaid subscribers increased 17.2% from 1,238,625 subscribers or 73.7% of
total subscribers, at December 31, 2000 to 1,451,091 or 78.2% of total
subscribers, at December 31, 2001. This figure includes 98,470 prepaid
subscribers in Region 8 in southern Mexico as a result of our acquisition of
Portatel which represented 6.8% of the total prepaid subscriber base at
December 31, 2001. "Incoming calls only" prepaid customers, the substantial
majority of whom generate little traffic, grew by 179.3% from 275,001 customers
at December 31, 2000 to 768,076 at December 31, 2001. Revenues from these
customers do not have certain costs associated with them which we incur in
connection with postpaid customers, such as sales commissions, advertising and
bad debt expenses. A prepaid customer is included as a customer if the
customer's telephone number remains activated at the end of the reporting period. During the third quarter 2001, we reduced the initial
period for using an activated prepaid card from 185 days to 60 days effective
July 1, 2001.
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If a customer has not activated a new card or recharged the
airtime in its account at the end of 60 days, the balance of the customer's
account becomes zero, and the customer loses the ability to make outgoing calls
for an additional period of 305 days. During the third quarter 2001, we began
to turn over "incoming calls only" prepaid customers who had reached the end of
the additional 305-day period without activating a new card or otherwise
recharging the airtime in their accounts.
Postpaid subscribers decreased 8.7% from 442,594 subscribers or 26.3% of
total subscribers at December 31, 2000 to 404,075 subscribers or 21.8% of total
subscribers at December 31, 2001. This figure includes 15,112 postpaid
subscribers in Region 8 in southern Mexico. Without including the Region 8
postpaid subscribers as of December 31, 2001, the decrease would have been
12.1% from period to period. The December 31, 2001 postpaid subscriber data
includes approximately 37,972 public telephony numbers that have been
considered postpaid customers since January 1, 2000.
Total service revenues increased by 8.3% from Ps.5,497.5 million in 2000
to Ps.5,955.5 million in 2001 and represented 90.8% and 90.3% of total revenues
in 2000 and 2001 respectively. Revenues increased primarily as a result of
total subscriber growth, greater usage as a result of the digitalization of the
postpaid subscriber base and traffic growth.
Monthly fees from postpaid subscribers grew by 1.9% from Ps.1,808.2
million in 2000 to Ps.1,842.4 million in 2001. Monthly fees increased
notwithstanding an increase in the number of lower-end subscribers in 2001.
Airtime revenues increased 12.1% from Ps.2,677.8 million in 2000 to Ps.3,002.8
million in 2001, primarily as a result of traffic growth related to calling
party pays and greater usage by postpaid subscribers. Long distance cellular
revenue increased by 22.0% from Ps.562.5 million in 2000 to Ps.686.4 million in
2001. This growth is the result of higher usage by the subscriber base.
Average monthly MOUs for all subscribers for 2001 (excluding "incoming
calls only" prepaid customers) were 117, an increase of 24.5% as compared to
the average monthly MOUs of 94 in 2000. MOUs among postpaid customers increased
by 1.6% from 246 in 2000 to 250 in 2001. MOUs among prepaid customers also
increased by 40.6% from 32 in 2000 to 45 in 2001. This increase in MOUs was
driven by traffic growth and greater usage by the total prepaid subscriber base
and the reduction of the period within which to use the prepaid card from 180
days to 60 days.
Nominal average monthly cellular revenue per subscriber for all
subscribers (excluding "incoming calls only" prepaid customers) increased 14.9%
from Ps.322.0 in 2000 to Ps.370.0 in 2001. The increase was driven mainly by
higher usage by the subscriber base, increased traffic growth and the reduction
of the period within which to use the prepaid card from 180 days to 60 days.
Postpaid subscriber churn increased to an average monthly level of 3.8% in
2001 from 3.5% in 2000. We have adopted strict collection procedures to reduce
the bad debt expense and have implemented new activation policies and retention
programs.
Telephone Equipment and Other Revenues.
Telephone equipment and other
revenues increased 14.8% from Ps.558.8 million in 2000 to Ps.641.7 million in
2001. The 14.8% increase in these revenues resulted mainly from increased out
roaming fees.
Cost of Sales
Total cost of sales increased 5.0% from Ps.1,923.9 million in 2000 to
Ps.2,019.4 million in 2001. As a percentage of total revenues, cost of sales
decreased to 30.6% in 2001 from 31.8% in 2000.
Cost of Services.
As a percentage of total revenues, cost of services
decreased to 24.6% in 2001 from 25.6% in 2000. Cost of services increased 4.7%
from Ps.1,547.6 million in 2000 to Ps.1,619.7 million in 2001. The increase was
primarily driven by the higher access costs paid to other carriers due to
increased mobile-to-mobile CPP traffic as well as lease costs following the
sale of certain transmission towers in 2001. See Item 5 — "Tower Monetization." Partially offsetting those items were the reduction of
interconnection rates in January 2001, the more efficient use of our fiber
network and the one-time adjustment in provisions of gross cellular airtime
revenues payable to the Mexican government.
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Cost of Telephone Equipment and Other.
Cost and telephone equipment and
other increased 6.2% from Ps.376.3 million in 2000 to Ps.399.6 million in 2001
primarily due to the three-month consolidation of Portatel, partial subsidizing
of telephones sold to prepaid customers and an increase in accessory
obsolescence charges. As a percentage of the telephone equipment and other
revenues, the cost of telephone equipment and other decreased to 62.3% in 2001
from 67.3% in 2000. The cost of a cellular handset given to a postpaid
customer is amortized over 12 months, the average length of our cellular
contract, instead of being immediately expensed in the period in which the
customer receives the telephone.
Operating Expenses
Operating expenses increased 7.9% from Ps.2,033.6 million in 2000 to
Ps.2,195.1 million in 2001. As a percentage of total revenues, operating
expenses slightly decreased from 33.6% in 2000 to 33.3% in 2001. As a
percentage of total revenues, sales and advertising expenses decreased to 24.0%
in 2001 from 24.6% in 2000. In peso terms, sales and advertising expenses
increased 6.2% from Ps.1,490.4 million in 2000, to Ps.1,582.5 million in 2001,
primarily because of higher television advertising rates as well as expenses
incurred in connection with the consolidation of Region 8 cellular service into
our business. General and administrative expenses increased 12.8% from Ps.543.3
million in 2000 to Ps.612.5 million in 2000, due to lower capitalization of
engineering expenses, higher consulting and vendor fees as well as charges
associated with the consolidation of Portatel, the provider of cellular service
in Region 8 which we acquired. As a percentage of total revenues, general and
administrative expenses increased slightly to 9.3% in 2001 from 9.0% in 2000.
Other Income
We had other income of Ps.325.4 million in 2001 mainly as a result of the
sale of 244 towers to MATC Celular. The same towers were leased back from MATC
Celular by our subsidiary
Iusacell Arrendadora, S.A de C.V.
See "— Tower
Monetization."
Depreciation and Amortization
In 2001, management completed a review of its depreciation and
amortization policies related to certain analog and digital network equipment
and postpaid handsets. The aim of the study was to align the estimated
remaining useful lives of those assets with current international benchmarks.
As a result of the review, a change in the weighted estimated useful life of
the network assets was made. The weighted average useful life for the network
equipment was extended to 10 years, compared to the 8.7 years previously used.
With regard to the amortization of postpaid handset costs, we shortened the
average amortization period from 18 months to 12 months. Depreciation and
amortization expenses increased 8.7% from Ps.2,546.3 million in 2000 to
Ps.2,768.5 million in 2001, primarily due to the higher postpaid handset
amortization expense in 2001.
Operating Loss
We reported an operating loss of Ps.60.3 million in our Consolidated
Financial Statements in 2001, compared to an operating loss of Ps.447.4 million
in 2000. The decreased operating loss was attributable to the benefit
resulting from the sale of our towers. Without considering this benefit, our
operating loss for 2001 would have been Ps.385.7 million.
Integral Financing Results
We recorded an integral financing cost of Ps.335.3 million in 2001
compared to an integral financing cost of Ps.579.8 million in 2000. The lower
cost was attributable to several factors. Net interest expense decreased by
17.7% from Ps.1,038.5 million in 2000 to Ps.854.8 million in 2001 as a result
of lower interest rates and a stronger peso which appreciated by 4.8% against
the U.S. dollar from December 31, 2000 to December 31,
2001. Due to the appreciation of the peso, we recorded a foreign exchange gain of Ps.237.6
million in 2001 compared to a foreign exchange loss of Ps.17.7 million in 2000.
We posted a lower gain in monetary position of Ps.281.8 million in 2001
compared to a gain of Ps.476.4 million in 2000 due to the effect on our net
peso liability position of the lower period-over-period inflation rate of 4.4%
in 2001 compared to 8.9% in 2000.
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Net Loss
As a result of the factors described above, our net loss was Ps.528.5
million in 2001 compared to a net loss of Ps.1,186.5 million in 2000.
Income Tax, Asset Tax and Employees' Profit Sharing
Beginning January 1, 1999, as a result of Mexican Income Tax Law
amendments, we must limit our tax consolidation to 60% of all our subsidiaries,
except for six entities (
Iusatel, S.A. de C.V.
,
Iusatelecomunicaciones, S.A. de
C.V.
,
Infotelecom, S.A. de C.V.
,
Iusacell PCS, S.A. de C.V., Iusacell PCS de
México, S.A. de C.V.
and
Punto-a-Punto Iusacell, S.A. de C.V.
) which are not
included in our annual consolidated income tax return (although they are
consolidated for financial reporting purposes), because we do not hold at least
51% of the voting shares of such subsidiaries.
In December 2000, the Mexican Finance Ministry (
Secretaría de Hacienda y
Crédito Público
) ruled that we could prepare consolidated tax returns for
ourselves and the subsidiaries in which we hold a majority of voting shares and
thereby apply our net operating loss carryforwards against our and such
subsidiaries' profits. In April 2001, the Mexican Finance Ministry ruled that
Iusacell Celular's net operating loss carryforwards could be transferred to
Iusacell, so that Iusacell could apply such net operating loss carryforwards
against its and its majority-owned subsidiaries' tax result.
Iusacell and its subsidiaries pay an alternative net asset tax, which is
levied on the average value of substantially all assets less certain
liabilities. This tax, which is 1.8% of the taxable base, is required to be
paid if the amount of the asset tax exceeds the computed income tax liability.
We provided for Ps.165.2 million, Ps.154.7 million and Ps.111.2 million as
asset tax for 2000, 2001 and 2002 respectively. These taxes may be applied in
subsequent years against income tax payments, to the extent income tax
liabilities for such years exceed the net asset tax calculation. Due to net
losses, we paid no income taxes in 2001 and 2002 and paid the asset taxes
specified above. In 2000, as a result of the new tax consolidation rules, we
paid Ps.47.4 million in income taxes as well as the asset tax specified above,
even though Iusacell recorded a net loss on a fully consolidated basis. In
2002, due to the change in the statutory income tax rate which became effective
annually in 2003, Iusacell and its subsidiaries reduced the deferred tax asset
in 2002, resulting in a provision of deferred income tax of Ps.9.3 million.
See Note 12 to the Consolidated Financial Statements for a discussion of our
tax loss carryforwards.
While we have no employees at the holding company level, our subsidiaries
are required under Mexican law to pay their employees, in addition to their
required compensation and benefits, profit sharing in an aggregate amount equal
to 10% of the taxable income of the relevant subsidiary (calculated without
reference to inflation adjustments or amortization of tax loss carryforwards).
There was no statutory profit sharing in any periods presented.
New Mexican Accounting Pronouncements
In November 2001, the MIPA issued the revised Bulletin C-9, "Liabilities,
Provisions, Contingent Assets and Liabilities and Commitments" (Bulletin C-9),
which establishes a methodology for valuation, presentation and disclosure of
liabilities and provisions, as well as for valuation and disclosure of
contingent assets and liabilities, and for disclosure for commitments. The
revised Bulletin C-9 states that (i) all contingent assets that have a
practical true realization must be accounted for and disclosed in the financial
statements; (ii) contingent assets that have a probable realization cannot be
accounted for in the financial statements, but must be disclosed; and (iii)
contingent assets that do not have a probable realization and cannot be
accounted for in the financial statements are not required to be disclosed.
Bulletin C-9 requires disclosure of committed amounts when it represents
significant fixed assets additions. The provisions of Bulletin C-9 were
required to be applied beginning on January 1, 2003, although early adoption
was recommended.
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In addition, in December 2001, the MIPA issued revised Bulletin C-8,
"Intangible Assets" (Bulletin C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a future economic
benefit. Revised Bulletin C-8 states that pre-operating costs should be
expensed as a period cost, unless they can be classified as development costs.
Bulletin C-8 requires that intangible assets with finite useful lives should be
amortized over their useful lives and those with an indefinite life should no
longer be amortized. The provisions of Bulletin C-8 are required to be applied
beginning on January 1, 2003.
Management is currently evaluating the impact that the adoption of these
bulletins will have on our financial statements.
U.S. GAAP Reconciliation
The principal differences between Mexican GAAP and U.S. GAAP as they
relate to Iusacell are the adjustment for the effects of inflation, minority
interest, purchase accounting, deferred income taxes, capitalization of
pre-operating costs, derivative financial instruments, provisions for
consolidation of facilities and accounting for non-monetary exchanges,
capitalized interest, goodwill and indefinite-lived intangible assets
amortization and sale-leaseback transactions. See Note 23 to the Consolidated
Financial Statements for a reconciliation to U.S. GAAP of stockholders' equity
and net profit (loss) for the respective periods presented.
New U.S. Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 143 "Accounting for Obligations Associated with the Retirement of
Long-Lived Assets." The objectives of SFAS 143 are to establish accounting
standards for the recognition and measurement of tangible long-lived asset
retirement obligations and their associated asset retirement costs. SFAS 143
is effective for fiscal years beginning after June 30, 2002.
In April 2002, the FASB issued SFAS No. 145 "Rescission of SFAS No. 4, 44,
and 64, Amendment of SFAS 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 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
30 shall be reclassified on a go forward basis. In addition, SFAS 145 requires
that capital leases that are modified so that the resulting lease agreement is
classified as an operating lease be accounted for under the sale-leaseback
provisions of SFAS 28 or 98, as applicable, instead of SFAS 13. The provisions
of this statement with regard to SFAS 4 will be effective for fiscal years
beginning after May 15, 2002, and those for SFAS 13 will be effective for
transactions occurring after May 15, 2002.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit on Activity (Including Certain Costs incurred in Restructuring)".
EITF Issue No. 94-3 required accrual of liabilities related to exit and
disposal activities at a plan (commitment) date. SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. The provisions of this statement are effective
for exit or disposal activities that are initiated after December 31, 2002.
FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees", (FIN 45) was issued on November 2002. FIN 45
requires that a liability be recognized at the inception of certain guarantees
for the fair value of the obligation, including the ongoing obligation to stand
ready to perform over the term of the guarantee. Guarantees, as defined in FIN
45, include contracts that contingently require us to make payments to a
guaranteed party based on changes in an underlying that is related to an asset,
liability or equity security of the guaranteed party, performance guarantees,
indemnification agreements or indirect guarantees of indebtedness of others.
This new accounting is effective for certain guarantees issued or modifies
after December 31,2002. In addition, FIN 45 requires certain additional
disclosures.
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SFAS 148, "Accounting for Stock-Based Compensation — Transition and
Disclosure — an amendment of SFAS No. 123", was issued on December 31, 2002.
SFAS 148 provides alternative methods of transition for a voluntary change to
the fair value-based method of accounting for stock-based employee
compensation. SFAS 148 also amends the disclosure requirements of SFAS 123,
"Accounting for Stock-Based Compensation", to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results.
In January 2003, the FASB issued Interpretation 46 "Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51" (FIN 46). FIN 46
provides a new framework for identifying variable interest entities (VIEs) and
determining when a company should include the assets, liabilities,
non-controlling interests and results of activities of a VIEs created after
January 31, 2003 and is effective beginning in the third quarter of 2003 for
VIEs created prior to issuance of the interpretation. We are presently
evaluating the impact, if any, that this new standard will have on its
financial position or results of operations.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
133, "Accounting for Derivative Instruments and Hedging Activities." This
statement is effective prospectively for contracts entered into or modified
after June 30, 2003 and prospectively for hedging relationships designated
after June 30, 2003.
In May 2003, the FASB issued SFAS No. 150, "Accounting For Certain
Financial Instruments with Characteristics of Both Liabilities and Equity."
This statement improves the accounting for certain financial instruments that,
under previous guidance, issuers could account for as equity, and requires that
these instruments be classified as liabilities in statements of financial
position. This statement is effective prospectively for financial instruments
entered into or modified after May 31, 2003 and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. This
statement shall be implemented by reporting the cumulative effect of a change
in an accounting principle for financial instruments created before the
issuance date of the statement and still existing at the beginning of the
interim period of adoption.
We are presently evaluating the impact, if any, that these new standards
will have on our consolidated financial statements.
Critical Accounting Policies and Estimates
We have identified certain key accounting policies on which our
consolidated financial condition and results of operations are dependent.
These key accounting policies most often involve complex matters or are based
on subjective judgments or decisions that require management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. We base our estimates on historical
experience, where applicable, and other assumptions that we believe are
reasonable under the circumstances. Actual results may differ from our
estimates under different assumptions or conditions. In the opinion of our
management, our most critical accounting policies under both Mexican GAAP and
U.S. GAAP are those that require management to make estimates and assumptions
that affect the reported amounts related to the accounting for revenue
recognition, allowance for doubtful accounts, the evaluation of long-lived
assets, property plant and equipment, goodwill, and deferred taxes. For a full
description of all of our accounting policies, see Notes 4 and 23 to the
Consolidated Financial Statements included in this Annual Report.
There are certain critical estimates that we believe require significant
judgment in the preparation of our consolidated financial statements. We
consider an accounting estimate to be critical if:
•
It requires us to make assumptions because information was not
available at the time or it included matters that were highly uncertain
at the time we were making the estimate, and
•
Changes in the estimate or different estimates that we could have
selected would have had a material impact on our financial condition or
results of operations.
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Revenue Recognition
Cellular airtime is recorded as revenue as service is provided. Until
December 31, 2001, revenue from the sale of prepaid cards was recognized at the
date of sale. We had recognized the revenue on the sale of prepaid cards at
the date of sale rather than on a deferred basis because the length of the
average consumption period for such prepaid cards was not significant, i.e.,
approximately one to one-and-a-half months, and it was not material to results
of operations for 2001 and 2000. Starting January 1, 2002, we started to
recognize revenue from the sale of the prepaid cards as service is provided
because the increasing length of the average consumption period for such
prepaid cards. Revenues from the sale of prepaid cards associated with
services that have not been provided are deferred until the services are
provided and are included in the line item "taxes and other payables" in the
accompanying consolidated balance sheets. Sales and cost of sales of equipment
and related services are recorded when goods are delivered and services are
provided. Cellular access charges are billed in advance and recognized when
the services are provided. Other revenues, mainly from paging and long
distance services, are recognized when the related services are provided.
Allowance for Doubtful Accounts
The allowance for doubtful accounts represents our estimate of losses
resulting from the failure or inability of our customers to make required
payments. We consider a number of factors in determining the proper level of
the allowance including historical collection experience, current economic
trends, the aging of the accounts receivable portfolio and changes in the
credit-worthiness of our customers. Systems to detect fraudulent call activity
are in place within our network, but if these systems fail to identify such
activity, we may realize a higher degree of uncollectible accounts. While we
believe that our estimates are reasonable, changes in our customers' trends or
any of the above mentioned factors could materially affect our bad debt
expense.
Evaluation of Long-Lived Assets
We have recognized on our balance sheets certain long-lived assets and
capitalized costs including goodwill, property, plant and equipment,
pre-operating expenses and Telmex special projects. These assets are assigned
useful lives which impact annual depreciation and amortization expense, the
assignment of which involves significant judgments and estimates. These
long-lived assets are evaluated for impairment on a periodic basis and we
recognize an impairment to the extent we believe that the carrying value is no
longer recoverable from future cash flows. Factors we take into consideration
include the future undiscounted cash flows to be generated by the assets and
the possible impact that inflation may have on our ability to generate cash
flow since, with inflation accounting, the carrying value is restated for
inflation prior to performing an impairment analysis. Key assumptions we
evaluate in preparing an undiscounted cash flow analysis include inflation,
currency fluctuations and future revenue growth. The use of different
estimates or assumptions within our undiscounted cash flow model could result
in undiscounted cash flows lower than the current carrying value of our assets,
therefore requiring the need to compare the carrying values to their fair
values. Our estimates and assumptions take into consideration all relevant
business and market factors which are known to us at the time, some of which
may change in future periods due to factors outside of our control (including
shareholder strategic decisions) . Should these factors adversely change in
future periods, we would be required to reevaluate the carrying value of our
long-lived assets and cash flow impairment calculations could possibly change.
Property, Plant and Equipment
We depreciate property, plant and equipment and other intangible assets
with a definite life using straight-line methods over the period of time we
estimate we will benefit from each asset.
Upon adoption of Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Other Intangible Assets", we were required to reassess the
useful lives of our other intangible assets, which consist primarily of Mexican
government telecommunications concessions ("Concessions"). Although Concessions
are issued with a stated term, the renewal of specific Concessions is a routine
matter involving a nominal fee and we have determined that regulatory,
competitive, and economic, factors currently exist that limit the useful life
of our Concessions. Prospectively, we will continue to periodically re-evaluate
our determination of an indefinite useful life with regard to Concessions.
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The cost of mobile wireless telephones given to customers under exclusive
service contracts is amortized on a straight-line basis. During 2001, we
reduced the amortization period of mobile wireless telephones from an average
of 18 months to 12 months. The term of service contracts varies on a customer
by customer basis. Due to the cost-ineffectiveness of tracking phones on an
individual contract basis for amortization purposes, we estimate the average
term of our contracts based on current trends.
During the second quarter of 2001, we completed a technical review of the
remaining useful lives of certain analog and digital network equipment. As a
result, the weighted-average useful life for certain communications equipment
is now ten years compared with the previous 8.7 years. This change represented
a reduction of approximately Ps.477,764.0 in depreciation expense for 2001.
The average annual rates of depreciation used by us are as follows:
2002
2001
(%)
(%)
Buildings and facilities
4
4
Communications equipment
10
10
Furniture and fixtures
10
10
Transportation equipment
17
17
Computer equipment
29
29
Cellular rental telephones
25
25
We do not capitalize integral financing cost for assets under
construction, unless the integral financing cost generated by loans are
directly attributable to those assets. For the years ended December 31, 2002,
2001 and 2000, we did not capitalize integral financing cost.
Investments in associated companies are accounted for using the equity
method based on the associated company's equity and are adjusted for the
effects of inflation in accordance with Bulletin B-10.
Goodwill
Under Mexican GAAP, we amortize goodwill on a straight-line basis over a
period of 20 years. For a discussion of goodwill under U.S. GAAP, see Note
23g. to the Consolidated Financial Statements.
Deferred Taxes
We have recorded a net deferred tax asset mainly reflecting the benefit of
tax loss carry forwards, which expire in varying amounts in the future.
Realization is dependent on generating sufficient taxable income prior to
expiration of the loss carry forwards. Although realization is not assured,
management believes it is more likely than not that a portion of the net
deferred tax asset will be realized based on our business plan estimate of
future taxable income over the next five years in an amount sufficient to
utilize the net deferred tax losses recorded. Although we feel we will use our
tax loss carry forwards, given the fact that we've experienced significant
losses, a valuation allowance for a majority of the asset has been recognized.
Our estimates and assumptions take into consideration all relevant business and
market factors which are known to us at the time, some of which may change in
future periods due to factors outside of our control (including shareholder
strategic decisions). Should these factors adversely change in future periods,
we would be required to reevaluate the recoverability of the net deferred tax
assets.
Our estimate of future taxable income is based primarily on and supported
by (i) additional increases in revenues generated by the CPP feature with an
important taxable operating margin, (ii) the change in Mexican income tax law
to increase the useful lives for network equipment from 3.3 years to 12.5
years, representing an important decrease in depreciation expense for income
tax purposes and (iii) an increase in 2002 of the potential effects of
additional cost cutting. We will continue to evaluate our deferred tax asset
every year.
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B. LIQUIDITY AND CAPITAL RESOURCES
As part of the equity recapitalization and restructuring of Iusacell
completed in August 1999, Iusacell acquired 99.5% of the capital stock of
Iusacell Celular. Prior to that time, Iusacell had nominal assets and no
operations, indebtedness or liabilities. As a result of a second exchange
offer launched in the United States by Iusacell for the remaining Iusacell
Celular ADSs, which was completed on February 29, 2000, Iusacell held 99.9% of
the capital stock of Iusacell Celular. On March 30, 2001, Iusacell Celular's
shareholders approved a 30,000 to 1 reverse stock split, which became effective
in May 2001. As a result of such transactions, Iusacell now holds 100% of the
capital stock of Iusacell Celular.
General
Our liquidity requirements arise from cash used in operating activities,
purchases of network equipment, interest and principal payments on outstanding
indebtedness and acquisitions of and strategic investments in businesses. We
have financed our growth to date through equity contributions from our
principal shareholders, public offerings and private placements of debt and
equity securities, bank debt and vendor financing.
Funds from operating activities and sales of non-strategic assets have not
been sufficient to enable us to make the interest payment on the Iusacell
senior notes which was due on June 1, 2003. In addition, funds will not be
sufficient to meet our debt service and principal amortization requirements,
working capital requirements and capital expenditure needs for our existing
businesses through 2003. We have engaged Morgan Stanley as our financial
advisor to assist us in developing a comprehensive debt restructuring plan. We
are still in the process of developing such a plan and have not yet presented a
restructuring plan to our creditors.
Our future operating performance and ability to service and repay our
indebtedness will be subject to many factors, including a successful debt
restructuring, future economic and competitive conditions and to financial,
business and other factors, many of which are beyond our control.
Changes in Financial Position
Historically, our cash generated from operating activities has not been
sufficient to meet our debt service, working capital and capital expenditure
requirements. We have relied on the capital markets for new equity and debt
financing, vendor financing and borrowings and equity contributions for our
principal shareholders to meet such funding needs. For the years ended
December 31, 2001 and 2002, our earnings were insufficient to cover our fixed
charges by Ps.279.6 million (U.S.$26.8 million) and Ps.2,945.9 million
(U.S.$282.6 million), respectively.
Total Iusacell debt, including notes payable to suppliers, was Ps.8,586.3
million (U.S.$823.6 million) at December 31, 2002. At December 31, 2001,
Iusacell's average cost of outstanding bank debt was approximately 9.95%, with
a remaining average maturity of approximately 2.9 years. At December 31, 2002,
Iusacell's ratio of debt to total capitalization was 61.6% compared to 51.5% at
December 31, 2001.
Iusacell Celular's liquidity has been provided by cash from operations,
short and long-term borrowings, vendor financing and capital contributions.
Total Iusacell Celular debt, including trade notes payable, was Ps.4,464.1
million (U.S.$428.2 million) outstanding at December 31, 2002, 4.4% higher in
pesos than the total debt of Ps.4,275.1 million (U.S.$410.1 million)
outstanding at December 31, 2001. At December 31, 2002, Iusacell Celular's
average cost of outstanding bank debt was approximately 6.3%, with a remaining
average maturity of approximately 2.0 years. At December 31, 2002, Iusacell
Celular's ratio of debt to total capitalization was 36.4% compared to 32.2% at
December 31, 2001.
Cash Flows From Operating Activities
We generated positive cash flows from operating activities in the year
ended December 31, 2001, but used cash in operating activities in the year
ended December 31, 2002. Net cash used by operating activities was Ps.489.0
million (U.S.$46.9 million) for 2002 compared to Ps.2,176.7 million (U.S.$208.8
million) generated in 2001. The decrease in 2002 resulted primarily from a
Ps.1,562.4 million (U.S.$149.9 million) larger loss from
continuing operations than in 2001, caused primarily by a Ps.1,177.8 million
(U.S.$113.0 million) increased integral financing cost and by a Ps.397.0
million (U.S.$38.1 million) increased operating loss, net of a decrease in
depreciation and amortization expense of Ps.521.5 million (U.S.$50.0 million),
and a decrease in resources used in working capital of Ps.654.4 million
(U.S.$62.8 million).
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We generated positive cash flows from operating
activities in the year ended December 31, 2000, of Ps.1,573.6 million
(U.S.$150.9 million).
Cash Flows from Financing Activities
For the year ended December 31, 2002, net cash provided by financing
activities amounted to Ps.628.9 million (U.S.$60.3 million) compared to
Ps.396.9 million (U.S.$38.1 million) for the year ended December 31, 2001. The
increase was mainly attributable to a decrease in the principal payments on
long-term debt of Ps.3,260.6 million (U.S.$312.8 million), partially offset by
a decrease in the proceeds received from long-term debt of Ps.1,981.7 million
(U.S.$190.1 million) and a decrease of Ps.985.5 million (U.S.$94.5 million)
from contributions from our shareholders. Both figures, payments and proceeds,
were materially affected by a significant foreign exchange loss in 2002. Net
cash provided by financing activities in 2000 was Ps.822.2 million (U.S.$78.9
million). The decrease in 2001 from 2000 was mainly due to a decrease in the
principal payments on long term debt of Ps.2,040.7 million (U.S.$195.8 million)
and a decrease in the proceeds received from the 2000 rights and primary
offering of Ps.1,695.6 million (U.S.$162.6 million), partially offset by an
increase in the proceeds received from long term debt of Ps.2,476.3 million
(U.S.$237.5 million) and proceeds from the sale of capital stock in 2001 of
Ps.985.5 million (U.S.$94.5 million)
Cash Flows Used for Investing Activities
Net cash used in investing activities was Ps.419.1 million (U.S.$40.2
million) in 2002. We purchased Ps.808.2 million (U.S.$77.5 million) of
property and equipment in 2002. These purchases were partially offset by a
release of a portion of the escrow account (described below) amounting to
Ps.464.9 million (U.S.$44.6 million). Net cash used in investing activities
was Ps.2,860.7 million (U.S.$274.4 million) in 2001 and was primarily
attributable to purchases of Ps.3,384.3 million (U.S.$324.6 million) of
property, equipment, the acquisition of Portatel and other assets including
additional capital contributions to associated companies, which were partially
offset by a release of a portion of the escrow account of Ps.523.5 million
(U.S.$50.2 million).
Net cash used in investing activities in 2000 was Ps.3,054.6 million
(U.S.$293.0 million). In 2000, we made investments in an aggregate amount of
Ps.3,590.9 million (U.S.$344.5 million). Substantially all of these
expenditures were for the purchase of property, equipment and other assets. In
connection with the issuance and sale of the Iusacell senior notes, we provided
security for those notes in the form of a cash escrow account in the amount of
Ps.536.3 million (U.S.$51.4 million) for fiscal year 2000.
Tax Loss Carryforwards
As of December 31, 2002, we had recorded a net deferred tax asset of
Ps.163.9 million (U.S.$15.7 million) mainly reflecting the benefit of tax loss
carryforwards, which expire in varying amounts between 2005 and 2012.
Realization is dependent on generating sufficient taxable income prior to the
expiration of the tax loss carryforwards. Although realization is not assured,
management believes it is more likely than not that a portion of the net
deferred tax asset at December 31, 2002 will be realized based on our business
plan estimate of future taxable income over the next five years in an amount
sufficient to utilize such net deferred tax losses.
Our estimate of future taxable income is based primarily on and supported
by (i) additional increase in revenues generated by the CPP feature with an
important taxable operating margin, (ii) the change in the income tax law to
increase the useful lives for network equipment from 3.3 years to 12.5 years,
representing an important decrease in depreciation expense for income tax
purposes and (iii) an increase in 2003 of the potential effects of additional
cost cutting.
The amount of the deferred tax asset considered realizable could be
reduced in the near term if estimates of future taxable income during the carry
forward periods are reduced.
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As of December 31, 2002, we had a valuation allowance of Ps.903.6 million
(U.S.$86.7 million), to reduce our deferred tax assets to estimated realizable
value. The valuation allowance primarily relates to the deferred tax assets
arising from tax loss carryforwards and tax credits. To the extent that the
Mexican tax loss carryforwards cannot be used by our subsidiaries, 60% of such
tax loss carryforwards can be used to offset our future consolidated income.
At December 31, 2002, we had net operating losses for income tax purposes
that may be carried forward and applied against future taxable earnings of
Ps.5,431.1 million (U.S.$521.0 million) expiring in various amounts from 2005
through 2012. See Note 12 to the Consolidated Financial Statements.
Capital Expenditures
In 2003 and 2004, we expect to make capital expenditures to expand our
network infrastructure, expand our cellular and long distance networks,
continue the expansion of our PCS networks in Regions 1 and 4 in northern
Mexico, enhance our billing and customer care systems, and support existing
operations and new business opportunities. The degree and timing of capital
expenditures will remain strongly dependent on the nature, timing and success
of our debt restructuring efforts, the competitive environment and economic
developments in Mexico, including inflation and exchange rates, the timing of
regulatory actions and on the availability of new funding from suitable debt
and/or equity financing.
If we acquire additional mobile wireless concessions in Mexico, we may be
required to increase our capital expenditure budget. We would expect to
finance these capital expenditures through a combination of debt and vendor
financing, equity capital and operating cash flow.
We expect capital expenditures for 2003 and 2004 to total approximately
U.S.$270.0 million, not including amounts in respect of capitalized interest.
We expect to make capital expenditures of approximately U.S.$85.0 million in
2003, including up to U.S.$62.0 million to expand and develop our cellular
network.
During the first quarter of 2003, we invested approximately U.S.$1.0
million in our cellular regions to expand our coverage. The remaining
U.S.$22.0 million will be used in system and quality upgrades.
Total capital expenditures in 2002 were U.S.$87.6 million. Of this
amount, approximately U.S.$58.2 million was used primarily for the development
of the wireless network in central regions and to construct new and remodel
existing customer sales and service centers. The balance of U.S.$29.4 million
was primarily:
•
invested in developing and launching PCS services in the cities of
Tijuana and Monterrey in Regions 1 and 4; and
•
used to develop and increase the quality of the wireless network in
the recently acquired Region 8 in southern Mexico.
Total capital expenditures in 2001 were U.S.$213.8 million of which
approximately U.S.$189.8 million was used primarily for the development of our
wireless network and to construct new and remodel existing customer sales and
service centers. Approximately U.S.$175.0 million of this amount was used for
the development of the Iusacell Celular wireless network.
Capital expenditure amounts were derived using historical pesos translated
at the exchange rate in effect at the end of the corresponding year.
Iusacell Contractual Obligations
The following table outlines our obligations for payments under our
indebtedness, including notes payable to suppliers, and operating leases for
the periods indicated using balances as of December 31, 2002. The BNP Paribas
facilities and the Harris facility are also obligations of our subsidiaries
other than Iusacell Celular.
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We did not generate sufficient cash flows from our operations to make the
June 1, 2003 U.S.$25.0 million interest payment on the Iusacell senior notes.
As a result, we are currently in default under the Iusacell senior notes. For
a more detailed discussion of the consequences of such default, please see Item
3, "Key Information — Risk Factors —
We are in default of our obligations under
the Iusacell senior notes which will enable the holders of such debt to
accelerate our repayment obligations after the expiration of a grace period
."
We have a 30-day grace period to make the payment before an event of default
will occur. If we do not make such payment within that grace period, the
holders of such notes will have the right to accelerate our obligations
thereunder, which will cause an event of default under the terms of Iusacell
Celular's senior refinancing secured loan. As a result, the lenders under that
loan will have the right to accelerate the loan, and if such lenders
accelerate, an event of default under the Iusacell Celular senior notes will
occur, permitting the holders of such notes to accelerate Iusacell Celular's
repayment obligations under the Iusacell Celular senior notes.
The following table does not reflect as current the effects of our default
under certain of our obligations, as such obligations have not yet been
declared immediately due and payable. Depending on subsequent events and the
progress of our restructuring efforts, we expect our payment obligations to
change. See Note 24 to the Consolidated Financial Statements.
Please
see "— Iusacell Celular Contractual Obligations" for a separate
discussion of Iusacell Celular's debt obligations, operating leases and other
financing arrangements:
Payments due by Period
(
Figures in thousands of U.S. Dollars as of December 31, 2002
)
Iusacell
Indebtedness
(1)
2003
2004
2005
2006
2007
Thereafter
Total
Senior notes due 2006
–
–
–
350,000
–
–
350,000
BNP Paribas facilities:
GIEK-Guaranteed Loan
5,163
5,163
5,163
5,162
2,581
–
23,232
BNP Paribas (Oslo)
Non-GIEK-
Guaranteed Loan
2,278
1,138
–
–
–
–
3,416
GTE Venholdings B.V. Loan
7,800
–
–
–
–
–
7,800
Harris facility
1,189
2,125
4,152
2,963
–
–
10,429
Total indebtedness
16,430
8,426
9,315
358,125
2,581
–
394,877
Operating
Leases
(2)
2003
2004
2005
2006
2007
Thereafter
Total
MATC Celular
27,904
27,808
27,580
27,330
27,067
93,691
231,380
Buildings and others
12,303
9,984
8,513
7,946
6,457
17,121
62,325
Total operating
leases
40,207
37,793
36,094
35,276
33,525
110,811
293,705
(1)
These amounts are principal payments.
(2)
These amounts include minimum lease payments.
The degree to which we are leveraged and the covenants with which we must
comply under our various financing agreements may adversely affect our ability
to finance future operations, to finance necessary capital expenditures, to
service our indebtedness, to compete effectively against better capitalized
competitors and to withstand downturns in our business or the Mexican economy
in general. Our high level of indebtedness could limit our ability to pursue
business opportunities that may be in our interest and that of holders of our
securities. In addition, in the event that the Iusacell Celular senior notes
have not been refinanced by March 31, 2004, the outstanding amount of the
senior refinancing secured loan will become due on that date.
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The terms of our and our subsidiaries' debt impose significant operating
and financial restrictions. These restrictions will affect, and, in many
respects, significantly limit or prohibit, our ability and the ability of our
subsidiaries to, among other things:
•
borrow money;
•
pay dividends on stock;
•
make capital expenditures and other investments;
•
use assets as security in other transactions; and
•
sell certain assets or merge with or into other companies.
Iusacell Long-Term Indebtedness
Iusacell Senior Notes
In
December 1999, Iusacell issued U.S.$350.0 million of 14 1/4% senior
notes due 2006 (the "Iusacell senior notes") under an indenture dated as of
December 16, 1999 among Iusacell, Bell Atlantic (which is now Verizon), and The
Bank of New York, as trustee, (the "Iusacell indenture"). An amount of
U.S.$133.6 million in proceeds from the issuance of the Iusacell senior notes
was deposited in a security account for purposes of payment of the first six
semiannual installments of interest thereon. The security account was closed
upon the payment of the sixth semiannual installment in December 2002. In June
2000, substantially all of the Iusacell senior notes were exchanged for
identical 14 1/4% senior notes due 2006, which we also refer to as the
Iusacell senior notes and which are also governed by the Iusacell indenture,
pursuant to an exchange offer registered with the SEC. The Iusacell indenture
restricts the ability of Iusacell and its subsidiaries to incur indebtedness.
Under circumstances involving a change of control of Iusacell or Iusacell
Celular, we will be required to make an offer to repurchase the Iusacell senior
notes.
Our cash flow was not sufficient to meet a U.S.$25.0 million interest
payment on the Iusacell senior notes that was due on June 1, 2003. If we do
not make the payment within the 30-day payment grace period, the holders of the
Iusacell senior notes will have the right to accelerate the outstanding
principal and accrued and unpaid interest on such notes.
BNP Paribas Facilities
In July 2000, our subsidiary
Iusacell Infraestructura, S.A. de C.V.
entered into financing agreements for the purpose of purchasing NERA microwave
transmission equipment consisting of:
•
a seven-year senior amortizing term facility in the principal
amount up to U.S.$30.5 million, guaranteed by the Export Import Bank of
Norway, which we refer to as the GIEK-Guaranteed Facility; and
•
a four-year senior loan in the principal amount up to U.S.$5.4
million, which we refer to as the Non-GIEK-Guaranteed Loan.
The GIEK-Guaranteed Facility bears interest at six-month LIBOR plus 0.6%.
The Non-GIEK Guaranteed Loan bears interest at six-month LIBOR plus 2.0%. We
guarantee the obligations of our subsidiary under both of these facilities. As
of December 31, 2002, our subsidiary had drawn down U.S.$25.8 million in
principal under the GIEK-Guaranteed Facility and U.S.$4.6 million in principal
under the Non-GIEK-Guaranteed Loan. On December 16, 2002 a payment of U.S.$3.7
million was made under these facilities, leaving an outstanding debt of
U.S.$26.6 million at that date. Our subsidiary obtains the funds to pay the
interest and principal on this purchase money debt through rental payments made
to it by Iusacell Celular and its subsidiaries for such microwave transmission
equipment.
GTE Venholdings B.V. Loan
On May 8, 2001, we signed a U.S.$7.8 million promissory note in favor of
GTE Venholdings B.V. that accrues interest at an annual rate equal to 11.5%,
and was scheduled to mature on May 8, 2003. On May 8, 2003, we
extended the maturity date to November 8, 2003. No other provisions were
amended under such promissory note. The proceeds from the issuance of this
note were used to complete the funding of the acquisition of Portatel.
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Harris Facility
In August 2000, our subsidiary
Iusacell Infraestructura de México, S.A. de
C.V.
entered into a purchase framework agreement for the purpose of purchasing
Harris microwave equipment. This vendor financing consisted of a five-year
senior amortizing term loan facility in the principal amount of up to U.S.$6.9
million, with interest accruing at a rate of the average term LIBOR plus 1.25%.
This agreement was amended in both June and July 2001 to increase the amount
to U.S.$10.3 million and modify the interest rate to the average term LIBOR
plus 3.50%, and was amended again in December 2001 to increase the amount to
U.S.$10.9 million. We guarantee the obligations of our subsidiary under this
facility. As of December 31, 2002, our subsidiary had drawn down U.S.$10.4
million in principal under this facility, all of which was outstanding on that
date. Our subsidiary obtains the funds to pay the interest and principal on
this purchase money debt through rental payments made to it by Iusacell Celular
and its subsidiaries for such microwave transmission equipment.
Building and Others
Building and others consisted of operating leases for our administrative
offices, sales branches and service facilities. Building leases are
peso-denominated and contain escalation clauses for inflation. The amounts in
the table represent the future annual minimum rental payments on leases current
at December 31, 2002.
Iusacell Celular Contractual Obligations
The following table outlines Iusacell Celular's obligations for payments
under its indebtedness, including notes payable to suppliers and operating
leases for the periods indicated using balances as of December 31, 2002.
Iusacell did not generate sufficient cash flows from its operations to
make the June 1, 2003 U.S.$25.0 million interest payment on the Iusacell senior
notes. Iusacell has a 30-day grace period to make the payment before an event
of default will occur. If Iusacell does not make such payment within that
grace period, the holders of such notes will have the right to accelerate
Iusacell's obligations thereunder, which will cause an event of default under
the terms of Iusacell Celular's senior refinancing secured loan. As a result,
the lenders under that loan will have the right to accelerate the loan, and if
such lenders accelerate, an event of default under the Iusacell Celular senior
notes will occur, permitting the holders of such notes to accelerate Iusacell
Celular's repayment obligations under the Iusacell Celular senior notes.
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The following table does not reflect as current the effects of Iusacell's
default under certain of its obligations, as such obligations have not yet been
declared immediately due and payable. Depending on subsequent events and the
progress of our restructuring efforts, we expect Iusacell Celular's payment
obligations to change. See Note 24 to the Consolidated Financial Statements.
Payments due by Period
(
Figures in thousands of U.S. Dollars as of December 31, 2002
)
Iusacell
Celular Indebtedness
(1)
2003
2004
2005
2006
2007
Thereafter
Total
Senior notes due 2004
—
150,000
—
—
—
—
150,000
Senior refinancing
secured loan
—
99,608
132,811
33,203
—
—
265,622
Short-term credit lines:
Banco Santander Mexicano
12,000
—
—
—
—
—
12,000
Total indebtedness
12,000
249,608
132,811
33,203
—
—
427,622
Iusacell
Celular Indebtedness
(1)
2003
2004
2005
2006
2007
Thereafter
Total
MATC Celular
10,398
10,302
10,074
10,054
10,054
29,126
80,008
Buildings and others
11,174
9,264
8,003
7,136
6,229
16,638
58,444
Total operating
leases
21,571
19,566
18,078
17,190
16,282
45,764
138,452
(1)
These amounts include principal payments.
(2)
These amounts include the minimum lease payments.
Iusacell Celular Long-Term Indebtedness
Iusacell Celular Senior Notes
In July 1997, Iusacell Celular issued U.S.$150.0 million of its 10% Senior
Notes due 2004 (the "Iusacell Celular senior notes"), under an indenture dated
as of July 25, 1997 among Iusacell Celular, the subsidiaries of Iusacell
Celular guaranteeing the Iusacell Celular senior notes and First Union National
Bank (now Wachovia Bank National Association), as trustee, which we refer to as
the Iusacell Celular indenture. Substantially all of the Iusacell Celular
senior notes were exchanged in January 1998 for identical 10% Senior Notes due
2004, which we also refer to as the Iusacell Celular senior notes and which are
also governed by the Iusacell Celular indenture, pursuant to an exchange offer
registered with the SEC.
The Iusacell Celular indenture limits the ability of Iusacell Celular to
make dividend payments to Iusacell. In addition, it restricts the ability of
Iusacell Celular and its principal subsidiaries to incur indebtedness.
In connection with the senior refinancing secured loan described below,
Iusacell Celular was required, under the terms of the Iusacell Celular
indenture, to equally and ratably secure all amounts due under the Iusacell
Celular senior notes by a second priority lien on its cellular concessions and
certain equipment.
Senior Refinancing Secured Loan
On March 29, 2001, Iusacell Celular completed the refinancing of its
senior secured credit facility by entering into an Amended and Restated Senior
Secured Credit Loan Agreement, which we refer to as the senior refinancing
secured loan, which consists of:
•
a Tranche A Loan in an aggregate principal amount of U.S.$189.8
million for the purpose of refinancing existing indebtedness under the
senior secured credit facility and under a certain bridge loan, the
proceeds of which were used to make a principal amortization payment
under the senior secured credit facility in January 2001; and
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•
a Tranche B Loan in an aggregate principal amount of U.S.$75.8
million for the purpose of paying existing indebtedness under certain
Eximbank facilities and under a certain bridge loan, the proceeds of
which were used to make a principal amortization payment under the
Eximbank facilities in January 2001.
The senior refinancing secured loan bears interest at a rate per annum
equal to one-, two-, three- or six-month LIBOR (at Iusacell Celular's option)
plus a spread ranging from 1.75% to 2.25%, depending on Iusacell Celular's
leverage ratio. Iusacell Celular's obligations under the senior refinancing
secured loan are unconditionally guaranteed, jointly and severally, by the
principal operating subsidiaries of Iusacell Celular and its subsidiaries
holding cellular concessions and are secured by a pledge of substantially all
the capital stock and equity interests held by Iusacell Celular and
substantially all assets used in connection with or related to such cellular
concessions. Upon the acquisition of Portatel, the cellular concession
covering Region 8 was mortgaged under this loan, and all capital stock and
equity interests of Portatel were pledged under this loan.
The senior refinancing secured loan begins amortizing on May 31, 2004 in
equal quarterly amounts and matures on February 28, 2006. However, in the
event that the Iusacell Celular senior notes have not been refinanced by March
31, 2004, the outstanding amount of the senior refinancing secured loan will
become due on that date.
Loan Covenant Waivers and Modifications
On December 7, 2001, Iusacell Celular and the lenders entered into an
amendment and waiver to the senior refinancing secured loan, which we refer to
as the first amendment and waiver, to permit Iusacell Celular to (i) create
liens encumbering initial deposits and margin deposits securing indebtedness
under any interest rate protection agreement or other interest hedging
agreement up to the principal amount of indebtedness of Iusacell Celular and
its subsidiaries with floating rates of interest; (ii) make loans or advances
to Iusacell (in lieu of paying dividends) at such times and in such amounts as
necessary to permit Iusacell to pay scheduled interest (including any related
tax gross-up amount) and principal payments when due in respect of the Iusacell
senior notes; and (iii) make loans or advances to Iusacell (in lieu of paying
dividends) in an amount not exceeding U.S.$5.0 million to discharge other
liabilities of Iusacell incurred in the ordinary course of business, so long as
an event of default has not occurred under the senior refinancing secured loan.
During the first half of 2003, Iusacell Celular exceeded the permitted
leverage ratio (as defined in the senior refinancing secured loan) of 2.50.
In March 2003, Iusacell Celular received notice from the lenders of the
occurrence of two defaults under the senior refinancing secured loan. One
default occurred as a result of Iusacell Celular's failure to notify the
lenders that Iusacell Celular had opened and closed several bank accounts
related to its telecommunications business. The other default occurred as a
result of Iusacell Celular's failure to notify the lenders that Iusacell
Celular had failed to register a mortgage on certain assets of Portatel with
the Telecommunications Registry, which is maintained by the SCT. Iusacell
Celular has since registered the mortgage and requested, but has not yet
received, the consent of the lenders with respect to the opening and closing of
those bank accounts.
On April 28, 2003, Iusacell Celular and the lenders entered into a
temporary amendment and waiver to the senior refinancing secured loan, which we
refer to as the second amendment and waiver, to increase the permitted leverage
ratio under the senior refinancing secured loan from 2.50 to 2.70. Under the
second amendment and waiver, Iusacell Celular temporarily agreed not to make
any restricted payment, loan or advance to, or repay any loan or advance from
any affiliate, provided that if Iusacell Celular or any of its subsidiaries
makes any payment on the principal of any indebtedness (as defined in the
senior refinancing secured loan), Iusacell Celular or the relevant subsidiary
will simultaneously prepay a pro rata amount outstanding under the senior
refinancing secured loan. On May 22, 2003, the second amendment and waiver was
extended until June 13, 2003.
On June 12, 2003, the second amendment and waiver was further extended
until June 26, 2003. On June 26, 2003, if the second amendment and waiver is
not further extended, Iusacell Celular will be in default of a financial ratio
covenant under the senior refinancing secured loan, which will constitute an
event of default under that loan as if the second amendment and waiver had
never been executed.
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Credit Ratings
Our credit ratings were lowered several times during 2002 by major credit
rating agencies. On July 29, 2002, Standard & Poor's Ratings Services
(Standard and Poor's), a division of The McGraw-Hill Companies, Inc., lowered
Iusacell's foreign and local currency corporate credit ratings from BB to B+,
with a negative outlook. On August 26, 2002, Moody's Investors Service Inc.
(Moody's) downgraded Iusacell's senior unsecured and issuer ratings from B1 to
Caa2, Iusacell's senior implied rating from Ba2 to B3 and Iusacell Celular's
senior unsecured rating from Ba2 to B3, all with a negative outlook. On
November 5, 2002, Standard & Poor's again lowered Iusacell's foreign and local
currency corporate credit rating from B+ to CCC+ and placed us on CreditWatch
with negative implications. On November 15, 2002, Moody's downgraded
Iusacell's senior unsecured and issuer ratings from Caa2 from C and Iusacell
Celular's senior unsecured rating from B3 to Ca.
Most recently, on May 27, 2003, Standard & Poor's announced that it had
lowered Iusacell's foreign and local currency corporate credit rating from CCC+
to CC, Iusacell Celular's senior secured rating from CCC+ to CC and Iusacell
Celular's unsecured debt rating from CCC- to C. On June 3, 2003, Standard &
Poor's again lowered Iusacell's foreign and local currency corporate credit
rating from CC to D and Iusacell's senior unsecured debt rating from C to D.
At the same time, Standard & Poor's affirmed Iusacell Celular's senior secured
rating at CC and Iusacell Celular's senior unsecured debt rating at C.
Subsequently, Standard & Poor's withdrew all the ratings assigned to Iusacell
and Iusacell Celular and their debt instruments.
As a result of these actions, our ability to obtain short-term and
long-term financing and the cost of such financing have been adversely
affected.
Certain Hedging Activities
On December 30, 1999, Iusacell Celular entered into a foreign exchange
hedge using forward rate contracts to hedge its exchange rate exposure for
U.S.$77.0 million, representing approximately 50% of the principal and interest
payments on its indebtedness coming due over the period from April 2000 to
April 2001. This transaction resulted in a U.S.$9.8 million loss. On November
22, 2000, Iusacell Celular entered into a second foreign exchange hedge using
forward rate contracts for U.S.$15.0 million to hedge the interest payments on
the Iusacell Celular senior notes coming due over the period from July 2001 to
January 2002. This transaction resulted in a U.S.$1.7 million loss. On August
9, 2001, Iusacell Celular entered into a third foreign exchange hedge using
forward rate contracts for U.S.$11.0 million of its indebtedness coming due
over the period from November 2001 to November 2002. This transaction resulted
in a U.S.$0.1 million loss.
In August and October 2001, Iusacell Celular entered into a foreign
exchange hedge using forward rate contracts to hedge 100% of the principal
amount of U.S.$150.0 million and interest of U.S.$34.5 million on the Iusacell
Celular senior notes. This hedge was intended to benefit from the strength of
the U.S. dollar relative to the peso to mitigate foreign exchange exposure.
This hedge would become due between July 2002 and July 2004. In October 2002,
Iusacell Celular in order to improve liquidity by eliminating cash collateral
requirements took advantage of a temporary weakness in the Mexican peso and
opted to terminate the hedge transaction resulting in a U.S.$1.7 million loss.
As of December 31, 2002, we did not have any forward rate contracts in
place.
Interest Rate Collars
In July 1998, Iusacell Celular entered into an interest rate collar
agreement for a notional amount of U.S.$35.0 million until July 30, 2002. The
collar agreement limited the maximum effective LIBOR cost to 6.12% if six-month
LIBOR was lower than 7.12%, and 7.12% if LIBOR equaled or exceeded 7.12%.
Iusacell Celular could participate in a decline in LIBOR to 5.30%.
On February 26, 1999, Iusacell Celular entered into an additional interest
rate collar agreement to limit the maximum interest rate, which must be paid on
U.S.$15.0 million of its floating rate debt until July 30, 2002. This collar
agreement limited the maximum effective LIBOR cost to 5.82% if six-month LIBOR
was lower than 6.82%,
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and 6.82% if LIBOR equaled or exceeded 6.82%. Iusacell Celular could
participate in a decline in LIBOR to 4.75%.
For the year ended December 31, 2002, due to the significant decrease in
the LIBOR interest rates, Iusacell Celular recognized additional interest
expense of U.S.$1.0 million for the interest rate collars, which was offset by
the lower interest expense on its floating rate debt.
The U.S.$50.0 million aggregate notional amount of the above interest rate
collar agreements did not quantify risk or represent assets or liabilities of
Iusacell, but were used in the determination of cash settlements under the
agreements.
Debt Restructuring
In December 2002, we engaged Morgan Stanley as our financial advisor to
assist us in developing a comprehensive debt restructuring plan. We are still
in the process of developing such a plan and nothing has yet been presented to
our creditors.
Recent Equity Offerings
On August 10, 1999, we completed a comprehensive equity recapitalization
and restructuring. As part of this transaction, we issued 23,596,780 new
series V shares at a price of U.S.$1.05 per share in a primary offering and
18,405,490 new series V shares at a price of U.S.$0.70 per share in a rights
offering. After commissions and expenses, we received net proceeds of
approximately U.S.$33.7 million, which were used primarily for the acquisition
of cellular network infrastructure equipment. In April and May 2000, we sold
10,529,700 American depositary shares representing series V shares at
U.S.$15.125 per American depositary share. After commissions and expenses, we
received net proceeds of approximately U.S.$153.0 million from these offerings,
which we used primarily to fund investments in our cellular network as well as
the first phase of our PCS network deployment in Regions 1 and 4 in northern
Mexico. See Item 4, "Information on the Company — History and Development of
the Company."
In November 2001, we completed a rights offering to holders of our
outstanding series A and series V shares and series V American depositary
shares raising an aggregate of U.S.$100.0 million. Iusacell's principal
shareholders, Verizon and Vodafone, subscribed for approximately U.S.$81.0
million of the offering. Verizon's subscription included all of the series V
shares offered to, but not subscribed for by, public shareholders. In the
United States and Mexico, public shareholders subscribed to approximately
U.S.$15.0 million and U.S.$4.0 million of the offering, respectively.
Tower Monetization
In December 1999, Iusacell Celular entered into a series of agreements
with MATC Celular. These agreements, which were amended in May 2002, among
other things, gave MATC Celular the right to acquire approximately 350 existing
Iusacell Celular non-strategic towers. We sold and leased back a total of 76
non-strategic towers to MATC Celular for approximately Ps.101.0 million in net
gains in 2002. During 2001 and 2002, we sold and leased back a total of 320
non-strategic cellular towers to MATC Celular and fulfilled our contractual
obligation under the existing agreements. Iusacell Celular has no further
commitment with MATC Celular to sell additional towers. Iusacell Celular is
leasing back the sold towers from MATC Celular and subleasing them to its
operating subsidiaries.
Dividend Policy
We have never paid dividends, and we currently have no plans to initiate
dividend payments. In addition, the Iusacell indenture, the Iusacell Celular
indenture and the senior refinancing secured loan limit both Iusacell's and
Iusacell Celular's ability to pay dividends.
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C.      RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Iusacell does not undertake research and development activities.
D.      TREND INFORMATION
In addition to the events and developments identified elsewhere in this
Item 5, "Operating and Financial Review and Prospects," our financial condition
and results of operations could also be materially affected by the following
events and developments:
Price Increases and Rollbacks
We have attempted, and continue to attempt, to exercise price leadership
in the Mexican cellular market, with a strategy of increasing our prices to
keep pace with inflation if economic and competitive conditions permit.
In late March 1999, we raised airtime prices on our postpaid plans by
approximately 12% on a weighted average basis and approximately 6% for prepaid
customers. Our competitors also increased their prices.
In mid-April 2001, after not having raised our fees for more than two
years, we increased the regular monthly fees of our postpaid plans by
approximately 4.5% on a weighted-average basis and the monthly fees for
one-single rate service of our postpaid plans by approximately 15% on a
weighted average basis. We also increased the airtime charges of one of our
postpaid plans by 4.8%. These price increases have remained effective despite
the fact that our competitors have not increased their prices. Our revenues
will be adversely affected to the extent that our price increases cannot keep
pace with inflation.
Regulatory Developments
The Mexican authorities resolved several critical regulatory issues over
the last several years and will likely continue to resolve additional important
regulatory issues during 2003 which may have a material effect on Iusacell's
financial condition and results of operations.
Local Interconnection
On November 27, 1998, COFETEL issued a resolution which established the
per-minute interconnection rate for telephone calls made from wireless
customers to wireline customers at Ps.0.2573 per full minute payable on a
per-second basis, which will be indexed on a monthly basis for inflation.
COFETEL declined to provide for any amount of reciprocity in the
interconnection fee payable by Telmex to wireless operators for interconnection
services that Iusacell and other wireless operators provide Telmex for calls
made by wireline customers to mobile wireless customers.
In March 2001, we negotiated a rate reduction with Telmex, retroactive to
January 1, 2001, that decreases the interconnection rate per minute for
telephone calls made from wireless customers to wireline customers from Ps.0.31
per full minute, payable on a per-second basis, to the peso equivalent of
U.S.$0.0125 per full minute, payable on a per-second basis.
In December 2001, Telmex, Alestra and Avantel reached an agreement to
further reduce the long distance interconnection rate from U.S.$0.0125 per
minute to U.S.$0.00975 per minute. We negotiated with Telmex to obtain similar
terms for both our long distance business and local cellular interconnection
rates and these terms have been maintained until 2003.
Calling Party Pays
On November 27, 1998, COFETEL ruled that the calling party pays modality
would be implemented by May 1, 1999 as an option for the wireless customer.
CPP is a cellular telephony payment scheme similar to the existing wireline payment scheme, which provides that the wireline or fixed
wireless party that makes a local call to a cellular telephone, not the
cellular subscriber receiving the call, will be billed for interconnection
access, and the recipient will not be billed for the airtime charges
corresponding to that call.
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The interconnection rate is frozen at Ps.1.90 per minute or fraction of a
minute. The price which Telmex may charge its customers is frozen at Ps.2.50
per minute or fraction of a minute, plus Telmex's applicable per-call local
charge. Iusacell cannot predict whether COFETEL intends to extend the same
tariff and surcharge at the same rates and for how long.
We are currently discussing with COFETEL and Telmex the possibility of
extending the CPP modality to incoming national long distance calls. If this
proposal is accepted, the mobile party pays modality would continue to apply
only to incoming international long distance calls.
Long Distance Concession
In December 1997, COFETEL authorized a modification of our concession to
provide long distance services, modifying coverage requirements and permitting
the use of microwave and other non-fiber technologies for transmission
purposes. Together with fiber-swapping agreements reached by Iusacell with two
of our competitors, the modified concession permits a more efficient, more
technologically flexible long distance network and eliminated more than
U.S.$200.0 million in Iusacell capital expenditure requirements from 1998 to
2000.
On January 1, 2001, Telmex, Avantel and Alestra announced a preliminary
agreement under which Avantel and Alestra will pay for the special projects
implemented by Telmex prior to January 1997 in order to permit competition in
long distance telephony, including the numbering and signaling plans and
expenditures to facilitate interconnection. Avantel, Alestra and Telmex agreed
that the total amount reimbursable to Telmex for such special projects by all
long distance carriers was U.S.$777.0 million, including interest payable from
December 1997 until October 1999. In March 2001, Iusatel negotiated a similar
agreement with Telmex, in which Iusatel agreed to pay for its portion of such
special projects in two parts: (i) a fixed payment of approximately U.S.$13.6
million, payable in twelve equal monthly installments beginning in April 2001,
and (ii) a U.S.$0.0053 per full minute, usage-based surcharge to the local
wireline interconnection rate from January 1, 2001 through December 31, 2004
for long distance calls terminated in Telmex's local wireline network. Since
these special projects payments relate to capital investments made by Telmex,
we are recording them as a deferred asset and consequently we are amortizing
them.
Quality Standards
In October 1999, we entered into an agreement with COFETEL to maintain
certain cellular quality standards measured in terms of connection time,
dropped calls and ineffective attempts. We currently meet these quality
standards. Failure to maintain these quality standards may result in refund
obligations to subscribers and governmental sanctions.
Although we met COFETEL's quality standards in 2000, we nevertheless
voluntarily determined to compensate our subscribers in Region 9 in light of
perceived quality problems during 1999 due to network digitalization and rapid
traffic growth. As of December 31, 1999, our postpaid subscribers each
received 20% more included minutes in each of their postpaid packages in April
and May 2000 and our prepaid customers, each received five free minutes. The
financial impact of this voluntary compensation program was not material.
Iusacell met COFETEL's quality standards, that in 2001 were as follows:
•
Drop calls 6%
•
Ineffective attempts 5%
Portatel significantly increased its quality standards in the fourth
quarter of 2001, the rate of ineffective attempts improved to 0.7% after
initial audits in the city of Mérida indicated a 14.9% rate in July 2001.
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The terms and conditions for the 2002 quality standards agreed by concessionaires and COFETEL are:
•
Drop calls 4%
•
Ineffective attempts 5%
•
Connection time 12 seconds
The 2002 quality tests began June 3, 2002 and ended December 13, 2002, and
covered 19 of our largest cities in terms of number of wireless mobile users.
The verification covered 70% of the total wireless mobile users in Mexico. The
results of the test indicated that Iusacell met COFETEL quality standards.
Other Developments
Distributor Defection
In June 2001,
SAGO Interamericana, S.A. de C.V.
(SAGO), a distributor that
represented at that time slightly less than 10% of our monthly gross postpaid
additions and approximately 2% of our monthly gross prepaid additions, notified
us that it was immediately terminating its distribution agreement with us. We
believe that this action violated the termination provisions of the
distribution agreement and we are seeking compensatory damages. In addition,
we are seeking to recover approximately Ps.44.0 million (U.S.$4.2 million) in
net receivables owed to us by SAGO.
E.
OFF-BALANCE SHEET ARRANGEMENTS
We currently do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.
F.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
For tabular disclosure of our contractual obligations, please see "—
Liquidity and Capital Resources — Iusacell Contractual Obligations" and "—
Liquidity and Capital Resources — Iusacell Celular Contractual Obligations."
ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A twelve-member Board of Directors manages Iusacell. The directors
nominated by Verizon have the power under our by-laws to approve, without the
affirmative vote of any other directors, all resolutions of the Board of
Directors, except those resolutions that the Iusacell Shareholders Agreement
grants Vodafone supermajority voting rights. Pursuant to the Iusacell
Shareholders Agreement, Daniel C. Petri is the Chairman of the Board of
Directors. Under the Iusacell Shareholders Agreement, the Chairman of the
Board possesses the tie-breaking vote on all matters except on any matter that
requires a supermajority vote. See Item 7, "Major Shareholders and Related
Party Transactions — Major Shareholders — Governance" for a description of the
Iusacell Shareholders Agreement, which governs the appointment of directors as
between our major shareholders.
A.
DIRECTORS AND SENIOR MANAGEMENT
Directors
On April 21, 2003, Iusacell elected new directors who will hold office for
a period of one year and until the election of their successors at a duly
convened general ordinary shareholders meeting.
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The following table presents information with respect to our directors as
of April 30, 2003:
Name
Age
Position(s)
Daniel C. Petri
55
Chairman of the Board of Directors
and Series A Director
Carlos Espinal G.
53
Series A Director
Alfred C. Giammarino
46
Series A Director
Lowell McAdam
49
Series A Director
Javier Martínez del Campo Lanz
43
Series A Director
José Luis Vergara Díez
45
Series A Director
Tomas Isaksson
49
Series A Director
Martin Enriquez
43
Series V Director
Anthony Gilbert
51
Series V Director
Alan Harper
46
Series V Director
Ignacio Mas
38
Series V Director
Ignacio Gómez Morin
42
Series V Director
Our by-laws authorize alternate directors to serve on the Board of
Directors in place of directors who are unable to attend meetings or otherwise
participate in the activities of the Board of Directors. The series A
alternate directors as of April 21, 2003 are any of John Lack, Charles Fallini,
Steven R. Smith, Russell A. Olson and Michael Pawlowski for any of Daniel C.
Petri, Carlos Espinal G., Alfred C. Giammarino, Lowell McAdam, Javier Martínez
del Campo Lanz and José Luis Vergara Díez, and Richard Harman for Tomas
Isaksson. The series V alternate directors as of April 21, 2003 are any of
Richard Harman, Mark Hickey, Jeff Bloszies and Jack Lester for any of Martin
Enriquez, Anthony Gilbert, Alan Harper and Ignacio Mas, and Gary Butler for
Ignacio Gómez Morin.
Executive Officers
The following table presents information relating to our executive
officers as of May 30, 2003:
Name
Age
Position(s)
Carlos Espinal G.
53
Chief Executive Officer and President*
Russell A. Olson
44
Executive Vice
President, Finance and Audit, and Chief Financial Officer*
Alejandro García
41
Vice President, Marketing
Juan Carlos Merodio
40
Senior Vice President, Legal and Regulatory
Nestor Bergero
45
Vice President, Technology
Anthony Llompart
40
Vice President, Sales*
José Bellido
44
Vice President, Human Resources
Roberto Konigs
49
Vice President, Corporate Sales
José Luis Vergara Díez
45
Vice President, Customer Service
*
Indicates an employee of Verizon who is serving as an executive officer
of Iusacell.
Biographies
Daniel C. Petri
has been a member of the Board of Directors of Iusacell
since December 2002. Mr. Petri is Group President, International for Verizon
Communications, Inc. He is responsible for Verizon's wireless and wire line
operations in Mexico, Venezuela, the Dominican Republic, Puerto Rico and
Canada. Previously, Mr. Petri served as Verizon's President, International —
Europe and Asia, and in that capacity was responsible for wireless and wire
line operations in those markets and related business development. Before the
merger of Bell Atlantic and GTE to form Verizon, Mr. Petri's responsibilities included directing the
development of Bell Atlantic's capabilities for global connectivity, such as
its investment in FLAG (Fiber optic Link Around the World). Mr. Petri has held
a series of positions overseeing various international investments of Bell
Atlantic and NYNEX. During his telecommunications career spanning more than 30
years, Mr. Petri has held a number of key positions in domestic
as well as international operations. Mr. Petri is the chairman of the board of directors
of CODETEL (Dominican Republic) and Telecomunicaciones de Puerto Rico Inc., two
Verizon affiliates, and a board member of Comañía Anónima Nacional Teléfonos de
Venezuela, TelecomAsia (Thailand) and TELUS (Canada), also Verizon affiliates.
He is also a board member of the US ASEAN Business Council and chairman of the
Business Council for International Understanding. Mr. Petri holds a bachelor's
degree in mechanical engineering from Rugters University and a master's degree
in management science from Long Island University. He has also completed
management programs in general management, finance and marketing at the
Columbia University Graduate School of Business.
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Carlos Espinal G.
has been a member of the Board of Directors of Iusacell
since April 2002 and has served as Senior Group Vice-President, International –
Americas for Verizon Communications, Inc. since April 2002. Before being
appointed the Senior Group Vice-President, since April 2000 Mr. Espinal served
as Chairman and Chief Executive Officer of CTI Movil, a leading wireless
carrier in Argentina, of which Verizon was a significant shareholder. Before
joining CTI Movil, Mr. Espinal served as General Manager and then as President
and Chief Executive Officer of CODETEL. Prior to joining GTE/Verizon, Mr.
Espinal served as Chairman and/or Chief Executive Officer of various large
multinational firms in the industrial sector in Mexico, Venezuela and Thailand,
and was the Managing Director of Hondutel (the Honduran telephone company). He
has been a member of several professional and industry associations throughout
Latin America. After graduating with honors in electronic engineering from the
Universidad Javeriana in Colombia, Mr. Espinal enrolled in a graduate program
in telecommunications engineering at NTT in Japan. Later, he obtained a
master's degree in industrial engineering and management from the Asian
Institute of Technology in Thailand and completed the Program for Management
Development at Harvard Business School.
Alfred C. Giammarino
has been a member of the Board of Directors of
Iusacell since August 10, 2000. Mr. Giammarino was named Senior Vice-President
and Chief Financial Officer of Information Services and International of
Verizon in January 2000. Previously, he served as Senior Vice-President of
International Finance, Planning and Business Development for GTE since July
1998, where he was responsible for business development in countries where GTE
did not have existing operations. At GTE, Mr. Giammarino was also responsible
for financial analysis and administration, budgets, benchmarking and planning
for the international organization, as well as providing financial support for
all business-development activities, international strategic planning,
coordination of business transactions, due-diligence activities and project
integration. Prior to that, Mr. Giammarino served as Vice-President of
International Finance and Planning since 1997 and as Vice-President of Finance
at GTE. Mr. Giammarino began his GTE career in 1985. He served as
Vice-President of Finance and Planning for the GTE Telecommunications Products
& Services group and, prior to that, as Assistant Controller of Corporate
Accounting for GTE Corporation. Mr. Giammarino previously held positions with
Freeport-McMoRan Inc. and Arthur Andersen LLP. Mr. Giammarino is a director of
TELPRI (Puerto Rico), CANTV (Venezuela) and FLAG Telecom (UK). He holds a
bachelor's degree in accounting from St. John's University and is a certified
public accountant.
Lowell McAdam
has been a member of the Board of Directors of Iusacell
since April 21, 2003. Mr. McAdam has served as the Executive Vice President
and Chief Operating Officer of Verizon Wireless since April 2000. From
September 1997 to April 2000, Mr. McAdam served as President and Chief
Executive Officer of PrimeCo Personal Communications, L.P. (PrimeCo). Prior to
that, he served as the Executive Vice President and Chief Operating Officer of
PrimeCo since November 1994. Mr. McAdam joined AirTouch in 1993 where he
served in a number of key positions, including Vice President of International
Operations and Lead Technical Partner for cellular ventures in Spain, Portugal,
Sweden, Italy, Korea and Japan. From 1983 to 1993 he held various executive
positions with Pacific Bell.
Javier Martínez del Campo Lanz
has been a member of the Board of Directors
of Iusacell since April 4, 2001 and was an alternate member of the Board of
Directors of Iusacell from August 1999 until April 2001. Mr. Martínez del
Campo has also been a member of the Board of Directors of Iusacell Celular
since February 1997. Since 1984 he has also been a partner of the Mexico City
based law firm of
De Ovando y Martínez del Campo, S.C.
Mr. Martínez del Campo
is a member of the Mexican Bar Association and an international associate of
the American Bar Association. Mr. Martínez del Campo serves as the secretary
of the board of directors of various Mexican corporations, including
Grupo Gigante, S.A. de C.V.
, one of
Mexico's largest retailers. Mr. Martínez del Campo holds a law degree from the
Universidad Anáhuac and a master's degree from the University of San Diego.
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José Luis Vergara
has been a member of the Board of Directors of Iusacell
since April 21, 2003. Mr. Vergara was appointed Vice-President of Customer
Service of Iusacell in August 2002. Mr. Vergara has broad experience in
customer relationship management and customer service operations, which he has
acquired through 16 years of field specialization. In his field of expertise
he has held senior director positions at Citibank México and Latin America,
DirecTV and Bancomer, where he has led turn-around projects for those
companies, including the creation of a multi-country centralized customer
service operation for Citibank. Mr. Vergara has also acted as a consultant in
the aforementioned fields and in the field of strategic planning for major
Mexican and international companies. Mr. Vergara holds a graduate degree in
architecture and an MBA from the Instituto Panamericano de Alta Dirección de
Empresas (IPADE). While in college Mr. Vergara was awarded the Mexico's Best
Student Award by President Lopez Portillo in 1981.
Tomas Isaksson
has been a member of the Board of Directors of Iusacell
since April 30, 2002. Mr. Isaksson is Chief Executive Officer for the Vodafone
Americas Region, a position he has held since January 2002. He is responsible
for Vodafone's interests in the Americas and Vodafone Global Platform and
Internet Services (VGP). Previously, he served as President of VGP since its
inception in March 2000. Mr. Isaksson has worked in the telecommunications
industry for 24 years, beginning with Ericsson in 1978. During the 16 years he
was with Ericsson, he held a variety of key positions and was appointed
President and Chief Executive Officer of Ericsson Radio Systems, Inc. in the
United States in 1991. In 1994, he left Ericsson to serve as President of the
Swedish mobile operator Europolitan, and in November 1995 he was appointed
President and Chief Executive Officer. In 1999, after its merger with
AirTouch, Vodafone became Europolitan's majority owner. Mr. Isaksson holds a
master's degree in electrical engineering from the Royal Institute of
Technology in Stockholm, Sweden. He is a member of the board of directors of
Verizon Wireless and Ledstiernan AB, and a member of the Vodafone Group
Executive and Operational Review Committees.
Martin Enriquez
has been a member of the Board of Directors of Iusacell
since April 30, 2002. Mr. Enriquez is the Vice President of Governance for the
Vodafone Americas Region, which includes Verizon Wireless in the United States
and Iusacell in Mexico. In this capacity, amongst his other responsibilities,
he participates in the Executive Committee of Iusacell and the Operations
Committee of Verizon Wireless. Previously, he served as the Chief Operating
Officer of Vodafone Egypt, and was instrumental in the start-up of the network
operating company. He also worked to start up the network operating companies
of Proximus in Belgium and Vodafone Omnitel in Italy as a Director of Marketing
and Sales. Mr. Enriquez has also served as the Director of International
Marketing for AirTouch International, prior to the company's merger with
Vodafone. Before joining AirTouch, Mr. Enriquez spent 10 years with Pacific
Bell, where he held various positions in sales, sales management, customer
operations, product management and executive staff. Mr. Enriquez holds an MBA
and a master's degree in education from Stanford University and a bachelor's
degree from California State University in Hayward.
Anthony Gilbert
has been a member of the Board of Directors of Iusacell
since September 19, 2002. Mr. Gilbert has also served as the Group Management
Development Director for Vodafone Group Plc. since April 2000. Mr. Gilbert's
early career was as a consultant with Ernst and Young, initially based in
London and then in Holland, France and Belgium for 8 years. Subsequently, he
was the planning director of a listed UK engineering company and IT Planning
Director for UKAEA, then one of the largest users of computers in the UK, where
he was responsible for the operation of substantial voice and data networks.
For the following 12 years, Mr. Gilbert was a partner at Tyzack and Partners,
an executive search consultancy. He led their technology practice, which had a
wide range of multinational clients including Vodafone, and established a
venture capital practice. Mr. Gilbert holds a master's degree with honors from
Trinity College, Cambridge, a master's degree in computer sciences from London
University and an MBA from INSEAD.
Alan Harper
has been a member of the Board of Directors of Iusacell since
September 2002. Mr. Harper has also served as the Group Strategy Director of
Vodafone Group Plc. since July 2000. Mr. Harper is a member of the Executive
Committee of Vodafone Group, which is responsible for the overall business
strategy, public policy activities and the research and development for
Vodafone Group. He is also a member of the Investment Board of Vodafone
Ventures and a Trustee of the Vodafone UK Foundation. Prior to serving in his
current position, Mr. Harper served as Managing Director of Vodafone Ltd., the
UK network operator, and as Chairman of Vodafone
Paging and Vodafone Value Added & Data Services. Prior to joining
Vodafone, Mr. Harper was Strategy Director of Unitel PCN (which became One2One
and subsequently T-Mobile UK) from its inception in 1989 until 1995.
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Before this time, Mr. Harper held a variety of marketing and business development
positions with BBC Enterprises, Infotec, Mercury Communications and STC
Telecommunications.
Ignacio Mas
has been a member of the Board of Directors of Iusacell since
April 4, 2001. Mr. Mas has served as Group Business Strategy Director for
Vodafone since January 2000. He joined Vodafone from Intel Capital, Intel
Corporation's venture investing arm, where he was Senior Strategic Investments
Manager responsible for telecommunications investments in Europe, based in
Munich, Germany. From 1996 until 1999, Mr. Mas was a principal consultant at
Analysys, Ltd., a UK-based telecommunications strategic consulting firm, where
he led consulting activities in the fields of the Internet, broadband and
e-commerce. After that, Mr. Mas became a non-executive director at Analysys,
until his resignation from that position in December 2000. Prior to joining
Analysys, Mr. Mas spent 7 years at the World Bank in Washington DC, where he
worked as a financial sector economist and within the bank's treasury area. He
has taught at the Graduate School of Business at the University of Chicago as
Visiting Professor of International Business. Mr. Mas holds a doctorate in
economics from Harvard University and a bachelor's degree in mathematics and
economics from Massachusetts Institute of Technology.
Ignacio Gómez Morin
has been a director of Iusacell since April 4, 2001
and served as an alternate director of Iusacell from August 1999 to April 2001.
Mr. Gómez Morin has served as an alternate director of Iusacell Celular since
February 1997. Since 1992 he has been a partner of the law firm
De Ovando y
Martínez del Campo, S.C.
Mr. Gómez Morin holds the offices of secretary or
alternate secretary of several companies within the financial, industrial and
commercial sectors. Mr. Gómez Morin holds a law degree from the Universidad
Nacional Autónoma de México and was admitted to practice law in 1991.
Russell A. Olson
has served as Executive Vice President of Finance and
Audit and Chief Financial Officer for Iusacell since October 2001. He
previously served as Executive Director of Business Analysis for Verizon
International for the Americas since June 2000. Mr. Olson has served in a
variety of financial positions within Verizon and its predecessor company, GTE,
for over 18 years, including financial reporting, auditing, treasury,
international, strategic planning and business analysis. Mr. Olson holds a
master's degree in finance from Fairfield University and a bachelor's degree in
business administration from the University of Arizona.
Alejandro García
was appointed Marketing Vice-President for Iusacell in
August 2002. Mr. García has been responsible for the re-launching of the brand
campaign (image and perception), development of new products and services,
customer satisfaction and maintaining a consistent approach focused on the
customer needs. Previously, Mr. García was General Manager for Samsonite
Mexico and North Latin America and before that for Samsonite Brazil. Mr.
García also worked in various marketing management positions for companies such
as Procter and Gamble, Kraft Foods and American Express.
Juan Carlos Merodio
was appointed Senior Vice-President, Legal and
Regulatory Affairs of Iusacell on April 23, 2001. Mr. Merodio has been
involved in the practice of law for 20 years, primarily in the transportation
industry. During the 2 years prior to joining Iusacell, Mr. Merodio was a
partner and director of the Mexican law firm M&A Bufete Merodio, S.C. Mr.
Merodio was also in private practice as a partner of M&A Bufete Merodio y
Alfaro, S.C. from 1991 until 1995. Mr. Merodio spent 11 years working for
Grupo Servia, S.A. de C.V.
and its subsidiary
Transportación Marítima Mexicana,
S.A. de C.V.
(TMM). Mr. Merodio served as General Counsel of TMM from 1985
until 1991, as President of
Grupo Servia, S.A. de C.V.
in 1995 and as President
and Director General of TMM from 1996 until 1999. Mr. Merodio has served as a
director of
Cintra, S.A.
,
Mexicana, S.A.
and
Aeromexico, S.A.
and was
Vice-Chairman of the Mexican Shipowners Association from 1997 until 1999. He
is a graduate of the Universidad Nacional Autónoma de Mexico, a member of the
Mexican Bar Association and a member of the Association of the Bar of the City
of New York.
Nestor Bergero
was appointed Vice-President of Technology of Iusacell
effective January 2003. Prior to this appointment, Mr. Bergero served as Chief
Technology Officer and as a member of the Board of Directors of CTI Movil in
Argentina since June 2000. Mr. Bergero served in a variety of engineering
planning and network positions in CTI for over 9 years. Previously he served
as Engineering Manager of
Telecom, S.A.
and in a variety of management
positions in companies such as
Telintar, S.A.
, the Government of Cordoba,
Spain, and Sancor Cooperativas Unidas Limitadas in Argentina. He holds an
undergraduate degree with honors in electronic and electrical engineering from the
Universidad Nacional de Cordoba, and he completed a management development program at
the Universidad Austral in Argentina. He has also served on the academic faculty
of the Universidad Nacional and of the Universidad Católica, both in Cordoba,
and was awarded the GTE Excellence Award in 1997/1998.
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Anthony Llompart
was named Vice-President of Sales & Distribution for
Iusacell on April 29, 2002. Mr. Llompart served 3 years as Director Channel
Management for Verizon International and has held a variety of sales and
marketing positions for Verizon and its predecessor company, GTE, for over 8
years. These positions include sales management, product management,
distribution, and customer support. Mr. Llompart has over 12 years experience
in the wireless industry. He holds a bachelor's degree in business management
from the University of Phoenix.
Jose Bellido Valerio
has served as Vice-President of Human Resources of
Iusacell since February 2000. He served as Director of Human Resources of
Iusacell from August 1999 until January 2000. From May 1994 until April 1996,
Mr. Bellido served as Human Resources Manager of Iusacell Celular, and since
May 1996 he has served as Director of Human Resources of Iusacell Celular.
Prior to joining Iusacell Celular, Mr. Bellido served as Manager of Industrial
Relations for
Aeromexico, S.A. de C.V.
for more than 4 years. Mr. Bellido
holds a degree in labor law from the Universidad Nacional Autónoma de Mexico, a
specialized degree in law from Universidad Panamericana, a diploma in human
resources strategic planning from the University of California in Berkeley, and
a master's degree in business from the Instituto Panamericano de Alta Dirección
de Empresas (IPADE).
Roberto Konigs
was appointed Vice President, Corporate Sales of Iusacell
in May 2003. Previously, Mr. Konigs served as General Director of Tellabs in
Mexico, a position that he held for over 3 years. Mr. Konigs has more than 13
years of experience in the telecommunications industry in Latin America, and
has held executive positions for a variety of service providers and equipment
companies. Mr. Konigs holds a master's degree from the University of Waterloo
and a degree in industrial engineering from the Universidad Iberoamericana.
B.
COMPENSATION
The aggregate compensation (including, without limitation, base salary and
benefits) paid by Iusacell to all directors and executive officers in 2002 was
Ps.62.0 million (U.S.$5.9 million), compared to Ps.84.8 million (U.S.$8.1
million) in 2001. These aggregate amounts exclude any amounts paid by Verizon
and Vodafone to their employees who are directors and executive officers of
Iusacell. See Item 7, "Major Shareholders and Related Party Transactions —
Related Party Transactions."
In 2001 Iusacell granted purchase rights with respect to a total of
659,000 series V shares to its executive officers under the management employee
stock purchase plan described below, which were later exchanged for series V
shares. No purchase rights were granted under the management employee stock
purchase plan during 2002. Individuals who are currently Iusacell executive
officers and those executive officers of Iusacell whose employment was
terminated during 2001 and 2002 did not exercise any purchase rights with
respect to series V shares. For the last 23 months the stock purchase plan has
been inactive.
As part of Iusacell's general compensation policy, we conduct periodic
reviews of our management and employees to determine bonus compensation.
Iusacell also provides executive officers with use of an automobile. In
addition, we provide our executive officers with food stamps (up to Ps.1,264.0
per month), gas stamps (up to 200 liters per month) and with contributions to a
savings plan (up to Ps.1,665.8 per month).
C.
BOARD PRACTICES
Iusacell has established Executive, Finance and Strategic Planning, Audit,
and Human Resources and Compensation Committees of the Board of Directors. All
decisions of these committees require a majority vote of their members,
including the favorable vote of at least one member appointed by the series A
shareholders. Mexican law requires that the Audit Committee be comprised of a
majority of independent directors and be chaired by an independent director.
The Executive Committee, an administrative and decision-making body of the
Board of Directors, may act for the Board of Directors except where Mexican law
requires action by the Board of Directors. The members of the Executive Committee elected on April 21, 2003 are Messrs. Petri, Espinal, Giammarino,
McAdam, Isaksson and Enriquez.
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The Finance and Strategic Planning Committee reviews, evaluates and makes
recommendations to the Board of Directors regarding investment policies,
financing policies and strategic planning. The members of the Finance and
Strategic Planning Committee elected on April 21, 2003, are Messrs. Petri,
Espinal, Smith and Lester.
The Audit Committee recommends Iusacell's public accountants, reviews our
annual consolidated financial statements, provides oversight of our auditing,
accounting, financial reporting and internal control functions, and reviews
with management and our independent public accountants the plans and results of
the auditing function. The members of the Audit Committee elected on April 21,
2003, are Messrs. Martinez del Campo, Petri, Giammarino, Lester and Bloszies.
See Item 16A "Audit Committee Financial Expert."
The Human Resources and Compensation Committee reviews, evaluates and
makes recommendations to the Board of Directors regarding Iusacell's executive
compensation standards and practices, including salaries, bonus distributions,
grants under the executive employee stock purchase plan (described below) and
deferred compensation arrangements. The members of the Human Resources and
Compensation Committee elected on April 21, 2003 are Messrs. Petri, Giammarino,
McAdam and Hickey.
Iusacell does not provide benefits to directors upon termination of their
directorships.
D.
EMPLOYEES
As of December 31, 2002, Iusacell and its subsidiaries had an aggregate of
1,685 full-time and part-time employees, 96 temporary employees and 5 full-time
Verizon seconded employees or consultants, all of whom are based in Mexico. At
December 31, 2001, Iusacell and its subsidiaries had an aggregate of 2,643
full-time and part-time employees, 129 temporary employees and 8 full-time
Verizon seconded employees or consultants. At December 31, 2000, Iusacell and
its subsidiaries had an aggregate of 2,392 full-time and part-time employees,
139 temporary employees and 4 full-time Verizon seconded employees or
consultants. Approximately 33.6% of the full-time employees were members of a
labor union. We have never experienced a work stoppage and management
considers our relationship with our employees to be good.
E.
SHARE OWNERSHIP
Our directors and officers own, in aggregate, less than 1.0% of our
shares. See Item 7, "Major Shareholders and Related Party Transactions — Major
Shareholders."
Management Employee Stock Purchase Plan
Iusacell's management employee stock purchase plan became the successor to
Iusacell Celular's management employee stock purchase plan upon the completion
of Iusacell's reorganization in August 1999. The plan helps to retain key
executives and better align their interests with those of our shareholders.
The stock purchase plan is administered by a management trust with the
assistance of the trust division of
Bancrecer, S.A.
Under the stock purchase plan, the technical committee of the management
trust (the "Technical Committee"), which is comprised of certain executive
officers of Iusacell, acting upon the instructions of the Human Resources and
Compensation Committee, determines the executive employees to whom series V
shares of Iusacell will be offered for purchase under the stock purchase plan.
The Technical Committee, acting upon the instructions of the Human Resources
and Compensation Committee, determines the number of series V shares to be
offered for purchase to such executive employees, the purchase price per share
for such purchase rights, the vesting schedule for such purchase rights, the
payment terms and all other terms and conditions. The purchase price per share
for the purchase rights is one-hundredth the closing price for the series V
shares held in form of American Depositary
Shares (ADSs) on the New York Stock Exchange on the business day selected
by the Technical Committee as the date of sale, converted into pesos at the
prevailing exchange rate published by the
Banco de México
.
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Grantees who leave Iusacell forfeit unvested purchase rights and, after a
period of time, forfeit vested but unexercised purchase rights, all of which
forfeited purchase rights may be reissued by the Technical Committee to other
employees. The number of series V shares that may be granted under the stock
purchase plan cannot exceed 4.9% of the aggregate number of issued and
outstanding Iusacell shares.
Upon the completion of the Iusacell reorganization in August 1999,
outstanding purchase rights with respect to Iusacell Celular series L shares
were exchanged for rights to purchase Iusacell series V shares. In addition,
39 Iusacell management employees exercised the right to purchase 1,220,690
series V shares at U.S.$0.70 per share (Ps.6.52 on the date immediately prior
to the date of the launch of the offer) in the rights offer in respect of the
shares held in the management trust administering the plan.
In 2000, the Human Resources and Compensation Committee and the Technical
Committee granted purchase rights with respect to a total of 681,000 Iusacell
series V shares to 5 executive employees at a purchase price of Ps.15.35
(U.S.$1.47) per series V share. All such purchase rights vest in three equal
annual installments commencing a year after the date of the grant. In 2001,
the Human Resources and Compensation Committee and the Technical Committee
granted purchase rights with respect to a total of 659,000 Iusacell series V
shares to 4 executive employees at a weighted average purchase price of Ps.8.96
(U.S.$0.86) per series V share. No purchase rights were granted during 2002.
All such purchase rights vest in three equal annual installments commencing a
year after the date of the grant.
For the last 23 months, the stock purchase plan has been inactive.
ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
MAJOR SHAREHOLDERS
We have two principal shareholders. The first, Verizon, holds its
interest in us through its subsidiaries. Since February 1997, we have been
under management control of subsidiaries of Bell Atlantic, which is now
Verizon. Our second principal shareholder is a subsidiary of Vodafone Group
Plc.
Verizon is one of the largest telecommunications companies in the world,
with extensive participation in and knowledge of the wireless
telecommunications business. In August 1997, Bell Atlantic and NYNEX
Corporation, two of the original seven regional Bell operating companies formed
as a result of the break-up of AT&T in 1984, completed their merger of equals
to form the new Bell Atlantic. On June 30, 2000, the new Bell Atlantic and GTE
Corporation consummated a merger of equals, in which GTE shareholders received
1.22 shares of Bell Atlantic common stock for each GTE share they owned, and
Bell Atlantic renamed itself Verizon. Verizon had operating revenues and net
income of approximately U.S.$67.6 billion and U.S.$4.0 billion, respectively,
for the fiscal year ended December 31, 2002, and total assets of approximately
U.S.$167.5 billion at such date.
In the United States, Verizon Communications is the largest provider of
wireline and wireless telephone service in 29 states and the District of
Columbia, with 135.8 million access lines and employing 229,500 people.
Verizon Wireless, a partnership between Verizon (which owns 55%) and Vodafone
(which owns 45%) established in April 2000, is the largest wireless operator in
the United States, with more than 32.5 million subscribers. Verizon Wireless
has a presence in 49 of the top 50 U.S. markets and it covers nearly 90% of the
United States population.
Verizon has wireline and/or wireless operations in 32 countries and
territories in the Americas, Europe, Asia and the Pacific, with 3.2 million
attributable access lines and 8.7 million attributable wireless customers as of
December 31, 2002. Verizon is also the world's largest provider of print and
on-line directory information.
Verizon is a reporting company under the Exchange Act. Bell Atlantic and
GTE were reporting companies under the Exchange Act. Reports and information
filed with the Commission by Verizon, Bell Atlantic and GTE may be inspected
and copied at the public reference facility maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material may be
obtained by mail at prescribed rates by calling the SEC at 1-800-SEC-0330.
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On April 4, 2001, Vodafone acquired a 34.5% equity interest in Iusacell
from the Peralta Group for U.S.$973.4 million. Vodafone is the largest mobile
operations network company in the world, with more than 112.5 million
subscribers, calculated based on Vodafone's percentage interest in the relevant
wireless companies, and a presence in 28 countries. Vodafone also owns
interests in wireless carriers in Europe, the United States, the Asia/Pacific
region, the Middle East and Africa. Vodafone companies are among leading
mobile phone operators in the United States (with a 45% ownership interest in
Verizon Wireless), Germany (Vodafone D2) and the United Kingdom (Vodafone),
among others. Vodafone has grown substantially with its acquisition of
Mannesmann AG in 2001 and is expanding its wireless data services.
No other shareholder owns more than 5% of any class of our shares. At
April 30, 2003, based on the information made available to us, our
shareholders' ownership interests were as follows:
Number of Shares
Shareholders
A Shares
%
V Shares
%
Total
%
Verizon
(1)
657,966,431
68.4
76,152,002
8.5
734,118,433
39.4
Vodafone
(2)
303,326,053
31.6
339,617,555
37.7
642,943,608
34.5
Public investors
(3)
—
—
484,962,753
53.8
484,962,753
26.1
Total
961,292,484
100.0
900,732,310
100.0
1,862,024,794
100.0
(1)
The address of Verizon Communications Inc. is: 1095 Avenue of the
Americas, New York, New York.
(2)
The address of the Vodafone Group Plc is: Max Eunvelaan 61, 3062
MA. Rotterdam, The Netherlands.
(3)
Includes the series V shares held by the trust administering our
executive employee stock purchase plan.
Our directors and officers as a group own, in the aggregate, less than
1.0% of Iusacell's shares.
Of Iusacell's series V shares outstanding at May 30, 2003, 116,038,100
series V shares were held in the form of American Depositary Shares (ADS) by 35
holders of record based on information made available to us and provided by our
depositary, The Bank of New York. Assuming that the holders of ADSs are
located in the United States, then 23.9% of the series V shares (which includes
all of the series V shares which are held in the form of ADSs except for the
1,400,000 series V shares held by Verizon which are held in the form of ADSs)
are held in the United States. In May 2003, we completed a reverse split/ADS
ratio change by modifying the ratio of shares of common stock of Iusacell per
ADS, from ten (10) shares per ADS to one hundred (100) shares per ADS. The
ratio change did not affect holders of Iusacell's ordinary shares and was
effected without charge to investors.
In August 1999, we completed a reorganization of Iusacell. The
reorganization included U.S.$132.5 million in borrowings from our principal
shareholders between August 1998 and March 1999 that were immediately converted
into equity, an offer to exchange the shares of Iusacell Celular for shares of
Iusacell, primary equity offerings that raised U.S.$33.7 million in net
proceeds for Iusacell and a U.S.$106.5 million secondary offering by our
principal shareholders. This reorganization more than doubled the number of
Iusacell's publicly held shares. Before the August 1999 primary and secondary
offerings, Verizon (then Bell Atlantic) had a 47.2% interest in Iusacell
Celular and the Peralta Group had a 43.8% interest. After the August 1999
reorganization, Verizon and the Peralta Group each had a 40.4% interest in
Iusacell. On January 31, 2000, we launched a second exchange offer to acquire
the remaining 0.5% interest in Iusacell Celular held by public shareholders.
This offer was completed on February 29, 2000 and, as a result, we then held
99.9% of the outstanding Iusacell Celular shares. See Item 4, "Information on
the Company — History and Development of the Company." This second exchange
offer diluted both Verizon and the Peralta Group's ownership interests by
placing additional series V shares with public shareholders.
On March 30, 2000, Iusacell Celular's shareholders approved a 30,000 for 1
reverse split of its shares which became effective in May 2001. Iusacell now
holds 100% of the outstanding Iusacell Celular shares.
During the fourth quarter of 1999 and the first quarter of 2000, relatives
of Mr. Carlos Peralta sold approximately 34,900,000 series V shares on the open
market. In April and May 2000, Iusacell sold 10,529,700 American Depositary
Shares for U.S.$15.125 per ADS in a public offering, receiving approximately
U.S.$153.0 million in net proceeds. As a result, as of May 31, 2000, Verizon
held a 37.2% interest in Iusacell and the Peralta Group and associated
individuals held a 34.5% interest in Iusacell.
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On April 4, 2001, Vodafone purchased the Peralta Group's 34.5% interest in
Iusacell. In connection with this purchase, the shareholders agreement among
Iusacell, Verizon and the Peralta Group terminated and Iusacell, Verizon and
Vodafone entered into a new shareholders agreement, which we refer to as the
Iusacell Shareholders Agreement.
On September 27, 2001, our shareholders authorized a rights offering to
holders of our outstanding series V shares and ADSs. The rights offering
involved newly issued series V shares representing ADSs and series A shares for
up to U.S.$100.0 million. The subscription period began on October 5, 2001 and
ended on November 1, 2001. Iusacell's principal shareholders, Verizon and
Vodafone, purchased their pro rata portion of series A and series V shares.
Sixty-seven percent (67%) of the non-Verizon and Vodafone series V shareholders
exercised their rights to purchase additional shares. In addition, Verizon's
subscription included all of the series V shares offered to, but not subscribed
for by public shareholders.
As of April 30, 2003, Verizon held a 39.4% interest in Iusacell and
Vodafone held a 34.5% interest in Iusacell.
On June 13, 2003, Movil Access, a Mexican telecommunications service
provider and a subsidiary of
Biper, S.A. de C.V.
, which is a part of
Grupo
Salinas
, announced that it would commence a public tender offer in Mexico and
the United States to buy all of Iusacell's outstanding capital stock. Verizon
and Vodafone have announced that they have agreed to tender all of their
Iusacell shares to Movil Access. See Item 4, "Information
on the Company —
History and Development of the Company."
Governance
In accordance with Iusacell's by-laws and the Iusacell Shareholders
Agreement, our Board of Directors consists of twelve members. The series A
shareholders have the right to appoint seven directors and their alternates
(including the Chairman of the Board of Directors) and the series V
shareholders have the right to appoint five directors and their alternates.
Mexican law, Iusacell's by-laws and the Iusacell Shareholders Agreement give
Verizon, as majority owner of the series A shares, the right to elect six of
the series A directors. Under Iusacell's by-laws and the Iusacell Shareholders
Agreement, Verizon, as holder of the majority of the series A shares, has the
right to elect the Chairman of the Board of Directors, who casts the deciding
vote in the event of a tie. Vodafone, as holder of greater than 10% but less
than 20% of the capital stock of Iusacell in the form of series A shares, has
the right to appoint the remaining series A director and, as the controlling
owner of the series V shares, all five series V directors, subject to (i) the
right of any holder of a 10% or greater equity interest in Iusacell in the form
of series V shares to elect one director, and (ii) the right, granted to
Verizon under the Iusacell Shareholders Agreement, to nominate one of the
series V directors. If Vodafone is unable to elect Verizon's series V director
nominee, then Vodafone has agreed, under the Iusacell Shareholders Agreement,
to nominate a Verizon nominee as the seventh series A director.
Our by-laws and the Iusacell Shareholders Agreement provide that
resolutions of the Board of Directors will be valid when approved by a majority
vote of the members present, including a majority of the series A directors,
except for certain matters which require a supermajority vote. For actions of
the Board of Directors present and voting at such meeting, a "supermajority
vote" means the affirmative vote of a majority of the members of the Board of
Directors, including a majority of the series A directors and the series A
director or directors elected by holders of a 10% or greater equity interest in
Iusacell in the form of series A shares.
Our by-laws and the Iusacell Shareholders Agreement also provide that
resolutions of our shareholders will be valid when approved by shareholders
representing a majority of our outstanding shares, including a majority of the
outstanding series A shares, except for certain matters which require a
supermajority vote. For actions by the shareholders, "supermajority vote"
means the affirmative vote of the beneficial owners of (i) a majority of the
aggregate of the series A shares and series V shares, and (ii) 75% of the
outstanding series A shares.
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The following transactions are subject to a supermajority vote by our Board of Directors or our shareholders:
•
acquisitions of non-telecommunications businesses for a purchase price
in excess of U.S.$30.0 million;
•
certain investments, joint ventures and mergers within the
telecommunications business involving assets in excess of U.S.$100.0
million;
•
certain dispositions of assets for consideration in excess of
U.S.$30.0 million;
•
incurrence of indebtedness in an amount exceeding U.S.$100.0
million in the aggregate within any fiscal year;
•
certain issuances of capital stock in an amount exceeding U.S.$50.0
million in the aggregate within any fiscal year;
•
entering into, amending or terminating contracts with or for the
benefit of certain affiliates of Iusacell, except for any renewals or
extensions on terms substantially similar to those of certain
consulting and seconded employee arrangements of Iusacell with Verizon
affiliates;
•
termination or disposition of any telecommunication transmission
business with annual revenues of more than U.S.$10.0 million in each of
the two most recent fiscal years;
•
termination of concessions relating to telecommunications
operations;
•
the determination of how Iusacell will vote its shares and grant
proxies to vote its shares on any supermajority transaction within
entities in which Iusacell holds 10% or more of the capital stock; and
•
the granting of powers-of-attorney in connection with any such
supermajority transactions.
As provided by Mexican law, our by-laws require our Board of Directors
itself, without delegation, to approve certain matters:
•
related party transactions not in the ordinary course of business,
including Iusacell's subsidiaries' related party transactions;
•
sales/purchases of 10% or more of assets, including those
sales/purchases of assets by any of Iusacell's subsidiaries;
•
guarantees involving 30% or more of consolidated assets by Iusacell
or any of its subsidiaries; and
•
other non-ordinary course of business transactions by Iusacell or
any of its subsidiaries including more than 1% of consolidated assets.
Our by-laws and the Iusacell Shareholders Agreement provide that any
shareholder or group of shareholders holding shares that represent at least 25%
of the total capital stock of Iusacell, provided that such holdings include at
least 11% of the series V shares and at least 10% of the series A shares, which
we refer to as a Qualified Minority Shareholder, shall be entitled to elect
either the chief operations officer, the chief financial officer, the chief
marketing officer or the chief technical officer of Iusacell. Our Board of
Directors or our Executive Committee shall determine the officer to be
designated by each Qualified Minority Shareholder.
Pursuant to the Iusacell Shareholders Agreement, Verizon and Vodafone have
agreed to some restrictions on the transfer of their Iusacell shares. Verizon
and Vodafone have granted to each other a right of first refusal on the
transfer of any series A shares.
Pursuant to the Iusacell Shareholders Agreement, each of Verizon and
Vodafone has the right to cause us to facilitate two registered secondary
public offerings of their respective shares and on one occasion, a
shelf-registration for sale of their respective shares in a bona-fide public
offering for a period not to exceed 180 days. After one party's exercise of
its registration rights, all other parties having registration rights may elect
to include
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their shares in the offering. Any party holding registration rights
may not exercise such rights during the 90-day period commencing on the
effective date of any registration statement filed by Iusacell for a primary
equity offering in which gross proceeds are expected to exceed U.S.$30.0
million.
The Iusacell Shareholders Agreement also provides that if we register any
equity securities for a primary or secondary public offering, we must permit
Verizon and Vodafone (and anyone to whom they have transferred shares other
than in a public offering) to include their shares in such offering. We have
agreed to bear all expenses of any of the above-described primary or secondary
public offerings, other than the fees of counsel to the holders of the
registration rights and any underwriting commissions or discounts. In
addition, we have agreed not to effect any public sale or distribution of
securities similar to those being registered during the period commencing 21
days prior to the effective date of a registration statement covering the
registered securities and continuing until 90 days following such effective
date.
B.
RELATED PARTY TRANSACTIONS
General Policy
We adopted a policy on transactions with related parties in November 1993
in connection with the acquisition by Bell Atlantic of its initial holdings in
Iusacell. This policy provides that we will not, and will not permit any of
our subsidiaries to, enter into any contract or transaction with or for the
benefit of any of their affiliates (excluding transactions with, between or
among wholly owned subsidiaries), which is not at a price and on other terms at
least as favorable to us or the subsidiary as those which could be obtained on
an arm's-length basis from an unaffiliated third party. This policy has been
formalized in the Iusacell Shareholders Agreement.
Consulting and Secondment Agreements
Iusacell Celular and Verizon have entered into a series of consulting and
secondment agreements pursuant to which Verizon has agreed, for an indefinite
term, to provide Iusacell with management, technical, marketing, legal and
other consulting services and seconded employees. Seconded employees generally
agree to expatriate assignments of two to three years duration, with such
employees' compensation being paid by Verizon and reimbursed by Iusacell.
Verizon charges Iusacell for the provision of seconded employees at cost, and
for the provision of consulting services at or below market rates. Vodafone
has entered into a similar agreement with Iusacell.
With respect to consulting services and seconded employees provided in
2002, Iusacell Celular has been credited by Verizon for a total of U.S.$7.2
million to adjust for previous overcharges. At December 31, 2001, Iusacell
Celular owed Verizon U.S.$6.3 million for consulting services and seconded
employees provided in 1999, 2000 and 2001. Vodafone charged Iusacell a total
of U.S.$219,216.0 for consulting fees and secondment agreements in 2001.
In March 2001, Verizon and Iusacell agreed that Verizon would accept a
transfer of all rights in connection with a U.S.$15.0 million advance paid by
Iusacell Celular to an affiliate of Nortel Networks Inc. in exchange, on a
dollar-for-dollar basis, for the cancellation of all existing charges invoiced
by Verizon to Iusacell with respect to consulting services and seconded
employees and a credit against any and all future such charges until the sum of
all canceled charges equals U.S.$15.0 million.
With respect to consulting services for 2003, Iusacell and Verizon have
reached an agreement in which Iusacell Celular will pay a fixed fee of U.S.$1.8
million plus any applicable tax gross-up amount.
We cannot predict whether these consulting and secondment agreements will
continue to remain in place, as Verizon and Vodafone have announced that they
would tender all of their Iusacell shares to Movil Access. See Item 4,
"Information on the Company — History and Development of the Company."
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Roaming Agreements
GTE Telecommunications Services, Inc., which we refer to as TSI, provides
clearinghouse services for roaming arrangements. In 2002, TSI paid Iusacell
U.S.$134,821.0 for such services. In October 2001, we entered into an
inter-carrier roaming agreement with Verizon Wireless in the United States.
Interests of Directors
The Peralta Group, which was one of our principal shareholders until April
4, 2001, owns
Fraccionadora y Constructora Mexicana, S.A. de C.V.
, known as
Fracomex, a company engaged in real estate investment and management that has
entered into 13 lease agreements with some subsidiaries of Iusacell. In 2002,
Iusacell paid Fracomex total rent payments of U.S.$450,329.0.
Two Peralta Group members lease land to Iusacell at the Peralta Group
industrial complex in Pastejé, Mexico, upon which Iusacell has built and
operates warehouses. These land leases expire in December 2015, but can be
terminated before then if either party gives the other one year's prior written
notice. Currently, Iusacell pays these two Peralta Group entities U.S.$26,301.0
per month for these land leases. In 2002, payments for these leases totaled
U.S.$315,617.0.
In 2002,
Manufacturas Electrónicas Pastejé, S.A. de C.V.
, a joint venture
between the Peralta Group and Mr. Marco Antonio de la Torre Barranco, an
alternate director of Iusacell until April 2001, provided telephone and
accessory repair services to Iusacell in the amount of Ps.0.9 million
(U.S.$92,105.0).
Mr. Fernando de Ovando, a director of Iusacell until April 2000, Mr.
Javier Martínez del Campo, a director of Iusacell since April 2001 and a
director of Iusacell Celular since February 1997, and Mr. Ignacio Gómez Morin,
a director of Iusacell since April 2001 and an alternate director of Iusacell
Celular since February 1997, are members of the law firm of
De Ovando y
Martínez del Campo, S.C.
, which, in 2002, provided legal services to Iusacell
in the amount of approximately Ps.1.1 million (U.S.$105,516.0).
C.
INTERESTS 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
Although we are a party to legal proceedings in the ordinary course of our
business, management believes that none of these proceedings, individually or
in the aggregate, are likely to have a material adverse effect on Iusacell.
Suit against SAGO
In June 2001,
SAGO Interamericana, S.A. de C.V.
a distributor that at that
time represented slightly less than 10% of our monthly gross post paid
additions and approximately 2% of our monthly gross prepaid additions, notified
us that it was immediately terminating its distribution agreement. We believe
that this action violated the termination provisions of the distribution agreement, and have filed a
lawsuit seeking compensatory damages. We cannot predict whether we will
prevail in this lawsuit.
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Telemedic Lawsuit
In March 2002,
Telemedic S.A de C.V.
filed a lawsuit against Iusacell
seeking compensatory damages. We are now in the process of submitting evidence
to the judge. Compensatory damages, if any, shall be determined by the judge
at the end of the process.
Ingran Lawsuit
In May 2003,
Comercializadora Ingran, S.A. de C.V.
filed a lawsuit against
Iusacell, seeking compensatory and consequential damages. We recently filed
before the court an answer to the lawsuit and the period for submission of
evidence to the judge will begin in the near future. Compensatory damages, if
any, will be determined by the judge at the end of the period.
Injunctive action against additional 10% excise tax
On January 1, 2002, the Mexican Congress approved a surcharge that
assesses an additional 10% federal excise tax on certain wireless
telecommunications services. The tax resulted in a 10% increase in the monthly
bills of postpaid mobile wireless customers and in the cost of prepaid cards in
denominations of Ps.200.0 (U.S.$19.18) or more for the year 2002. In February
2002, we filed an injunctive action (amparo) challenging the Mexican
government's implementation of the tax. In October 2002, we received a
preliminary ruling in favor of Iusacell by a Federal Judge, and the Mexican
government subsequently filed an appeal. In June 2003, Mexico's Supreme Court
rejected the appeal and affirmed the ruling in favor of Iusacell.
In 2003, the Mexican government implemented a modified version of the
additional 10% excise tax on certain wireless telecommunications services,
which was approved by the Mexican Congress. In March 2003, we filed an
injunctive action (amparo) challenging this implementation. Until this
injunctive action is resolved, we will continue to pay the full modified
additional 10% excise tax to the Finance Ministry.
Dividend Policy
Since becoming a public company in 1999, we have not paid any dividends.
We do not contemplate paying dividends in the foreseeable future.
B.
SIGNIFICANT CHANGES
No significant change has occurred since the date of the financial statements filed under Item 18.
ITEM 9.  THE OFFER AND LISTING
A.
OFFER AND LISTING DETAILS
Iusacell's series A and series V shares have been listed on the Mexican
Stock Exchange since August 4, 1999, with the series V shares trading under the
symbol CEL. ADSs representing 10 Iusacell series V shares were listed on the
New York Stock Exchange since August 4, 1999 until May 12, 2003, when we
implemented a change in the ADR ratio. From that date, one ADS represents 100
Iusacell series V shares and trades under the symbol CEL. The series V ADSs
are evidenced by American depositary receipts issued under a deposit agreement
with The Bank of New York, as depositary. Each of the Iusacell series A and
series V shares are without par value and are in registered form. With respect
to limitations on the rights of series A and series V shares, see Item 5,
"Operating and Financial Review and Prospects — Liquidity and Capital
Resources," Item 7, "Major Shareholders and Related Party Transactions — Major
Shareholders — Governance" and Item 10, "Additional Information — Memorandum
and Articles of Association."
Iusacell Celular's series D and L shares were listed on the Mexican Stock
Exchange until February 29, 2000. ADSs representing 10 Iusacell Celular series
D shares were listed on the New York Stock Exchange from June 21, 1994 until
August 10, 1999 and traded under the symbol CEL.d. ADSs representing 10
Iusacell Celular series L shares were listed on the New York Stock Exchange
from June 21, 1994 until February 29, 2000 and traded under the symbol CEL
until August 4, 1999 and thereafter, until February 29, 2000 under the symbol
CEL.y.
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The following tables present, for the periods indicated, the high and low
sales prices of (i) the Iusacell series V shares on the Mexican Stock Exchange,
as reported by the Mexican Stock Exchange, and (ii) the Iusacell series V ADSs
on the New York Stock Exchange, as reported by the New York Stock Exchange.
Mexican Stock Exchange (in Ps.) — Series V Shares
Mexican Stock Exchange
Price per Share
(pesos)
Previous five years:
Series V Shares
High
Low
1998
—
—
1999
—
—
2000
23.70
7.80
2001
13.80
2.05
2002
4.11
0.45
Mexican Stock Exchange
Price per Share
(pesos)
Previous two years (by quarter):
Series V Shares
High
Low
2001:
First Quarter
13.80
7.10
Second Quarter
8.50
6.00
Third Quarter
6.53
2.10
Fourth Quarter
3.80
2.05
2002:
First Quarter
4.11
2.85
Second Quarter
3.26
1.61
Third Quarter
1.73
0.72
Fourth Quarter
0.82
0.45
Mexican Stock Exchange
Price per Share
(pesos)
Previous six months:
Series V Shares
High
Low
December 2002
0.69
0.54
January 2003
0.64
0.57
February 2003
0.58
0.39
March 2003
0.44
0.33
April 2003
0.46
0.37
May 2003
0.46
0.41
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New York Stock Exchange
Price per Share
(dollars)
Previous five years:
Series V American
Depository Shares
High
Low
1998
—
—
1999
—
—
2000
26.500
8.000
2001
13.500
2.050
2002
4.500
0.420
New York Stock Exchange
Price per Share
(dollars)
Previous two years (by quarter):
Series V American
Depository Shares
High
Low
2001:
First Quarter
13.500
7.100
Second Quarter
9.400
6.500
Third Quarter
7.250
2.070
Fourth Quarter
4.180
2.050
2002:
First Quarter
4.500
3.090
Second Quarter
3.650
1.600
Third Quarter
1.740
0.660
Fourth Quarter
0.850
0.420
New York Stock Exchange
Price per Share
(dollars)
Previous six months:
Series V American
Depository Shares
High
Low
December 2002
0.700
0.480
January 2003
0.740
0.500
February 2003
0.530
0.390
March 2003
0.420
0.310
April 2003
0.600
0.360
May 2003
(1)
0.490
0.405
Source
: Bloomberg L.P., Reuters.
(1)
The prices presented do not reflect the effect of our reverse split/ADS
ratio change that occurred in May 2003.
B.
PLAN OF DISTRIBUTION
Not applicable.
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C.
MARKETS
Trading on the New York Stock Exchange
ADSs representing Iusacell series V shares have been listed on the New
York Stock Exchange since August 4, 1999. In May 12, 2003 we implemented a
reverse split/ADS ratio change. Since May, 2003 one ADS represents 100
Iusacell series V shares and trades under the symbol CEL.
ADSs representing ten Iusacell Celular series D shares were listed on the
New York Stock Exchange from June 21, 1994 until August 10, 1999 and traded
under the symbol CEL.d. ADSs representing ten Iusacell Celular series L shares
were listed on the New York Stock Exchange from June 21, 1994 until February
29, 2000 and traded under the symbol CEL until August 4, 1999 and thereafter,
until February 29, 2000, under the symbol CEL.y.
Trading on the Mexican Stock Exchange
General
The Mexican Stock Exchange, which was founded in 1894 and has operated
continuously since 1907, is located in Mexico City and is Mexico's only stock
exchange. The Mexican Stock Exchange is organized as a corporation, and its
shares are owned by Mexico's 33 operating brokerage firms. These firms are
exclusively authorized to trade on the floor of the Mexican Stock Exchange.
Electronic trading on the Mexican Stock Exchange takes place between the
hours of 8:30 a.m. and 3:00 p.m., Mexico City time, on each weekday other than
public holidays. Lot sizes are of 1,000 shares. Brokerage firms are permitted
to buy odd lots for their own account. The Mexican Stock Exchange publishes an
official daily price list that includes price information for each listed
security.`
Since January 11, 1999, the trading of equity securities listed on the
Mexican Stock Exchange is made through the Electronic Negotiation System, an
automated, computer-linked system commonly known as
BMV-SENTRA Capitales
. The
trading of debt securities on the Mexican Stock Exchange commenced in November
1995 through the system known as
BMV-SENTRA Títulos de Deuda
.
The BMV-SENTRA system allows participation in the securities markets
through work stations set up for this purpose on the trading floor of the
Mexican Stock Exchange and on the trading desks of each member broker. Member
brokers must maintain the number of work stations authorized by the Mexican
Stock Exchange, which work stations must be located in the territory of Mexico.
To access the BMV-SENTRA system, each member broker is given a password.
Transactions may be carried out through ordinary matched transactions
during a trading day or through an auction process. Ordinary transactions may
take the form of firm bids and offers that are matched on a given trading date,
or matched transactions (
operaciones de cruce
) in which the same broker or
brokers act for the seller and for the purchaser of the relevant securities.
Matched transactions may only occur if existing bids or offers made on better
terms are first matched. Auctions may only be initiated with the approval of
the Mexican Stock Exchange in order to (i) determine the market price of a
security, (ii) commence the trading of a security on a trading day or (iii)
reinitiate trading of a security, the trading of which was suspended.
Securities may only be traded at prevailing market prices (which may be
adjusted for corporate events) or at auction prices.
Settlement is effected two trading days after a share transaction is
completed on the Mexican Stock Exchange. Deferred settlements, even if by
mutual agreement, are not permitted without the approval of the CNBV. Most
securities traded on the Mexican Stock Exchange are on deposit with
S.D.
Indeval, S.A. de C.V., Institución para el Depósito de Valores
, known as
Indeval, a privately owned central securities depositary that acts as a
clearing house, depositary, custodian, settlement, transfer and registration
institution for Mexican Stock Exchange transactions.
The Mexican Stock Exchange publishes a daily official price list that
includes information on each listed security. The Mexican Stock Exchange may
suspend trading of a particular security for various reasons.
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Trading may be suspended in the event of disclosure of material non-public information, if the
Mexican Stock Exchange considers that the suspension is necessary for the
public to be fully informed. The Mexican Stock Exchange may also suspend
trading of a particular security as a result of significant price fluctuations
during a given trading day (fluctuations exceeding a given price level by more
than 15%) or as a result of unusual movements in the price of a security, but
in this last case, during no more than five consecutive trading days. The
Mexican Stock Exchange may also suspend trading generally as a result of
fortuitous events or force majeure, or if unusual market fluctuations arise.
As of December 31, 2002, approximately 169 Mexican companies were listed
on the Mexican Stock Exchange, excluding mutual funds. During 2002, the ten
most actively traded equity issues represented approximately 69% of the total
volume of the shares traded on the Mexican Stock Exchange, not including public
offerings. Although there is substantial participation by the public in the
trading of securities on the Mexican Stock Exchange, a major part of such
activity reflects transactions of institutional investors. There is no formal
over-the-counter market for securities in Mexico.
The Mexican Stock Exchange is Latin America's second largest exchange in
terms of market capitalization, but it remains relatively small and illiquid
compared to major world stock markets and is subject to significant volatility.
For example, there was a sharp decline of 38.8% in the Mexican Stock Exchange
Index (
Indice de Precios y Cotizaciones
), which is based on the share prices of
30 major Mexican issuers, from July 14, 1998 to September 10, 1998 following a
decrease in oil prices and concerns about increasing inflation in Mexico.
During 1999, however, the Mexican Stock Exchange Index experienced steady
incremental growth, even though there was only one registered day of 5% growth
or more. During the first six months of 1999, the index gained 52%, and by
year-end 1999, the increase reached 82%, driven mainly by a booming local
economy and U.S. economic performance. During 2000, the deceleration in the
U.S. economy as well as the political uncertainty generated by the Mexican
presidential elections during the first six months of the year, led the Mexican
Stock Exchange Index to experience one-day gains or losses of more than 3% on
several occasions and ended the year 2000 with a 21% loss. During 2001, the
continued deceleration in the U.S. economy and its implications on the Mexican
economy as well as the political and economic uncertainty resulting from the
congress's consideration and approval of a new tax reform, led the Mexican
Stock Exchange Index to experience 1-day gains or losses of more than 3% on
several occasions and ended the year 2001 with a 12.7% gain. During 2002, the
U.S. economy continued its negative trend and its implications on the Mexican
economy led the Mexican Stock Exchange Index to experience 1-day gains or
losses of more than 3% on several occasions and ended the year 2002 with a
14.8% loss.
Market Regulation and Registration Standards
On April 28, 1995, the National Banking and Securities Commission Law (
Ley
de la Comisión Nacional Bancaria y de Valores
) was enacted, which merged the
former Mexican National Securities Commission with the Mexican National Banking
Commission to create the National Banking and Securities Commission (
Comisión
Nacional Bancaria y de Valores
), which we refer to as CNBV, which now has
supervisory jurisdiction over both banking and securities activities. The CNBV
regulates the public offering and trading of securities and imposes sanctions
on illegal use of privileged information. The CNBV regulates the Mexican
securities market, the Mexican Stock Exchange and brokerage houses through a
Board of Governors composed of 13 members, five of which are appointed by the
Mexican Ministry of Finance and Public Credit.
In order to offer securities to the public in Mexico, an issuer must meet
qualitative and quantitative requirements, and only securities for which a
listing application has been approved by the Mexican National Securities
Commission may be listed on the Mexican Stock Exchange. CNBV approval does not
imply any kind of certification or assurance relating to the merits or the
quality of the securities or the solvency of Iusacell. In June of 2000, the
CNBV adopted new general rules setting forth the requirements to become
registered in the National Securities Registry, which we refer to as RNV, and
to maintain such registration. These new rules also repealed CNBV's 1993
general rules that established Subsection A and B of the RNV. The new rules
provide that to become registered in the RNV, an issuer is generally required
to have:
•
at least three years operating history unless the issuer is a
holding company, in which case the issuer's principal subsidiaries must
have an operating history of at least three years;
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•
stockholders' equity of at least 20,000,000
Unidades de Inversión
,
which we refer to as UDIs, and which are inflation-indexed currency
units (equivalent to Ps.64.5 million or U.S.$6.19 million as of
December 31, 2002);
•
profits for the last three years of operation taken as a whole; and
•
a public float of at least 15% of the capital stock on a fully
diluted basis, or of at least 7% of said capital, also on a fully
diluted basis, if the issuer's offer represents a value of at least 160
million UDIs, in both cases excluding the shares of certain persons
related to the issuer.
The new rules also provide that to maintain their registration in the RNV,
issuers are required to have:
•
stockholders' equity of at least 15,000,000 UDIs (equivalent to
Ps.48.4 million or U.S.$4.64 million as of December 31, 2002);
•
at least 36 transactions per six-month period on their publicly traded shares;
•
an average share price per six-month period higher than one peso;
•
no less than 8 million shares of the issuer and no less than 12% of
the issuer's paid-in capital placed with the investment public at
large; and
•
at least 100 stockholders.
The CNBV has the authority to waive some of these requirements under
certain circumstances. The Mexican Stock Exchange carries out an annual review
of each issuer to determine if it continues to meet the eligibility
requirements for registration in the RNV. The Mexican Stock Exchange may
request issuers to submit a correction program when such issuers have failed to
comply with maintenance requirements. If the program is not submitted or
complied with by the issuer, the registration and listing with the Mexican
Stock Exchange may be canceled by the CNBV. Mexican securities which are
offered outside Mexico are required to be registered in the Special Section of
the RNV.
Iusacell shares are registered under the Securities and Special Section of
the RNV.
Pursuant to the Mexican Securities Market Law, the CNBV must be notified
before shareholders of a company listed on the Mexican Stock Exchange effect
one or more simultaneous or successive transactions outside the Mexican Stock
Exchange affecting 10% or more of such company's capital stock. The holders of
the shares being transferred in the transactions are also obligated to inform
the CNBV of the results of the transactions within three days of completion of
the last transaction, or that the transactions have not been completed. The
CNBV will notify the Mexican Stock Exchange of these transactions, without
specifying the names of the parties involved.
Issuers of listed securities are required to file unaudited quarterly
financial statements and audited annual financial statements as well as various
periodic reports with the CNBV and the Mexican Stock Exchange.
D.
SELLING SHAREHOLDERS
Not applicable.
E.
DILUTION
Not applicable.
F.
EXPENSES OF THE ISSUE
Not applicable.
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ITEM 10.  ADDITIONAL INFORMATION
A.
SHARE CAPITAL
Not applicable.
B.
MEMORANDUM AND ARTICLES OF ASSOCIATION
General
Iusacell was incorporated on August 6, 1998 as a variable capital
corporation (
sociedad anónima de capital variable
) established under the laws
of Mexico. Iusacell was registered in the Public Registry of Commerce of the
Federal District of Mexico under Commercial Number 242349 on November 3, 1998.
We were initially formed for the purpose of acquiring and holding the shares of
Grupo Iusacell Celular, S.A. de C.V.
On March 8, 2001, Iusacell's shareholders
approved new by-laws, which became effective on April 4, 2001, upon the closing
of the sale by the Peralta Group to Vodafone of its series A and series V
shares of Iusacell. On April 30, 2002 and on April 21, 2003, Iusacell's
shareholders approved amendments to our by-laws, in order to reflect certain
provisions of the Mexican Securities Market law (
Ley del Mercado de Valores
)
and its regulation.
Iusacell's corporate purpose is found under Article Two of its by-laws.
Iusacell's primary purpose is to act as a holding company. The duration of our
existence under our by-laws is indefinite.
Directors
Under Mexican law, any member of the Board of Directors who has a conflict
of interest with Iusacell in any transaction must disclose such fact to the
other members of the Board of Directors and abstain from voting on such matter
at the relevant meeting of the Board of Directors. Any member of the Board of
Directors who violates such provision may be liable for damages caused to us.
Additionally, members of the Board of Directors may not represent any
shareholders at any shareholders' meeting.
Voting Rights and Shareholders' Meetings
Each series A and series V share entitles the holder thereof to one vote
at any general meeting of the shareholders of Iusacell. Series A shareholders
are entitled to vote at a special meeting of the series A shareholders to elect
seven of the twelve members of our Board of Directors and the corresponding
alternate directors. Series V shareholders are entitled to vote at a special
meeting of the series V shareholders to elect five of the twelve members of our
Board of Directors and the corresponding alternate directors.
Under our by-laws, any shareholder or group of shareholders holding shares
of the same series of Iusacell shares representing at least 10% of the total
capital stock of Iusacell shall be entitled to designate one director
corresponding to such series and the corresponding alternate director for each
10% of the total capital stock of Iusacell represented by the shares of such
series held by such shareholder or group of shareholders. In addition, any
Qualified Minority Shareholder shall be entitled, acting at a special
shareholders meeting, to designate and, as the case may be, remove or
substitute a member of each Committee, which shall be one of the members
designated by series V shareholders.
Under Mexican law, the holders of shares of any series (or category of
holders such as the Qualified Minority Shareholder) are also entitled to vote
at a special meeting of the holders of shares of such series or category of
holders on any action that would prejudice the rights of such holders, and such
a holder would be entitled to judicial relief against any such action taken
without the approval of the required majority of holders of the relevant series
or category of holders at such a meeting. Any determination that an action
does not require a vote at a special meeting would be subject to judicial
challenge by an affected shareholder, and the necessity for a vote at a special
meeting would ultimately be determined by a court. Mexican law does not
provide extensive guidance on the criteria to be applied in making such a
determination.
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General shareholders' meetings may be ordinary or extraordinary meetings.
Extraordinary general meetings are meetings called to consider the matters
specified in Article 182 of the
Ley General de Sociedades Mercantiles
, which we
refer to as the Mexican Companies Law, including, principally, changes in the
fixed share capital, any amendments to the by-laws, liquidation, issuance of
preferred stock, merger, transformation from one type of company to another,
change in nationality and change of corporate purpose. Under our by-laws, an
extraordinary general shareholders' meeting may also be called to consider
certain items (so long as they have not been approved at a meeting of the Board
of Directors or Executive Committee of the Board of Directors) for which our
by-laws require a supermajority vote, as generally identified in Item 7, "Major
Shareholders and Related Party Transactions — Major Shareholders — Governance."
General shareholders' meetings called to consider all other matters are
ordinary meetings. An ordinary general meeting of the shareholders of Iusacell
must be held at least annually during the four months following the end of each
fiscal year to consider matters specified in Article 181 of the Mexican
Companies Law, including, principally, the approval of the report of the Board
of Directors regarding the performance of Iusacell, the approval of the
financial statements of Iusacell for the preceding fiscal year, appointment of
directors and statutory auditors and determination of their compensation, and
the declaration of dividends.
Special meetings are meetings of the holders of a particular series of
shares or category of holders called to consider matters relevant only to
holders of such series of shares or category of holders or which would
prejudice the rights of such holders. Special meetings of the series A and the
series V shareholders and the Qualified Minority Shareholders, respectively,
are to be held at least once a year if necessary to elect the members of the
Board of Directors (or any committee of the Board of Directors) representing
such shareholders and to address other matters relating to the relevant series
or category of holders.
Under our by-laws, the quorum on a first call for an ordinary general
shareholders' meeting of the series A and series V shareholders is at least 50%
plus one share of the outstanding series A and series V shares. If a quorum is
not available on the first call, a second meeting may be called and validly
held regardless of the number of shares represented. In order for a resolution
of the ordinary general shareholders meeting to be validly adopted as a result
of a first or subsequent call, attendance by and the favorable vote of the
holders of a majority of the series A shares is required.
The quorum on a first call for an extraordinary general meeting is 75% of
the outstanding series A and series V shares. If a quorum is not available on
the first call, a second meeting may be called and convened, provided that at
least 50% plus one share of the aggregate of the outstanding series A and
series V shares are present. Whether on a first or second call, in order for a
resolution of an extraordinary general meeting to be validly adopted, the
favorable vote of the holders of a majority of the outstanding shares present,
including a majority of the outstanding series A shares present, is required;
provided, however, that the affirmative vote of at least 75% of the outstanding
series A shares present is required to approve the supermajority items referred
to above, as well as to approve amendments to certain provisions of the
by-laws, early dissolution of Iusacell and the designation of the corresponding
liquidators.
The quorum on a first call for a special meeting is 75% of the outstanding
shares of the corresponding series or category of holders. If a quorum is not
available on the first call, a second meeting may be called and convened,
provided that at least 51% of the outstanding shares of the corresponding
series or category of holders, as the case may be, are present. Whether on a
first or second call for a special meeting to take action, the favorable vote
of a majority of the outstanding shares present of the corresponding series or
category of holders is required.
The by-laws provide that the controlling shareholders' obligation
specified in Article 30 of the by-laws for the repurchase of shares in the
event of delisting can be waived if 95% of the outstanding shares approved such
delisting in a shareholders meeting and if the amount to be offered per share
to the public investors is less than 300,000 UDIs.
Holders of ADSs are entitled to instruct the depositary as to the exercise
of the voting rights pertaining to the series V shares represented by the ADSs.
Under Mexican law, holders of 20% of our outstanding capital stock may
have any shareholder action set aside by filing a complaint with a Mexican
court of competent jurisdiction within 15 days after the close
of the general shareholders' meeting at which such action was taken, by showing that the
challenged action violates Mexican law or our by-laws. Relief under these
provisions is only available to holders:
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•
whose shares were not represented when the action was taken or, if
represented, were voted against it; and
•
whose complaint makes reference to the clause of the by-laws or the
legal provision that was infringed.
Shareholders' meetings may be called by the Board of Directors, any of the
statutory auditors or any Mexican court of competent jurisdiction. In
addition, the Board of Directors or any of the statutory auditors may be
required to call a meeting of shareholders upon the written request of holders
of 10% of the outstanding capital stock. In addition, the Board of Directors
or the statutory auditors must call a shareholders' meeting at the written
request of any shareholder if no ordinary general shareholders' meeting has
been held for two consecutive years or if the shareholders' meetings held
during such period have not considered the items mentioned in Article 181 of
the Mexican Companies Law discussed above. Notice of a meeting must be
published in the Official Gazette of the Federation (
Diario Oficial de la
Federación
) and in a newspaper of general circulation in Mexico City at least
15 days prior to the meeting. In order to attend a shareholders' meeting, a
shareholder must request and obtain an admission card by furnishing, at least
48 hours before the time set for holding the shareholders' meeting, appropriate
evidence of its ownership of shares or depositing such shares with our
corporate secretary of the Board of Directors or with an institution authorized
to accept such deposit. If so entitled to attend the meeting, a shareholder
may be represented by proxy signed before two witnesses.
Under Mexican law, an action for civil liabilities against members of the
Board of Directors may be initiated by a shareholders' resolution taken at a
general shareholders' meeting. In the event shareholders decide to bring such
an action, the persons against whom such action is brought will immediately
cease to be members of the Board of Directors. Additionally, shareholders
representing not less than 15% of the outstanding shares of Iusacell may
directly take such action against members of the Board of Directors, provided
that (i) such shareholders have not voted in favor of a resolution approved at
the relevant general shareholders' meeting pursuant to which it was resolved
not to take any action against the directors who are to be sued, and (ii) the
claim in question covers damages alleged to have been caused to Iusacell and
not only to the individual shareholders' interests.
Shareholder Conflicts of Interest
Under Mexican law, any shareholder that has a conflict of interest in
connection with any transaction must abstain from voting at the relevant
shareholders' meeting. A shareholder that votes on a business transaction in
which his interest conflicts with that of Iusacell may be liable for damages if
the transaction would not have been approved without such shareholder's vote.
Dividend Rights
Each series A and series V share has the same dividend rights. The
declaration and payment of such dividends will depend upon Iusacell's results
of operations, financial conditions, cash requirements, future prospects and
other factors deemed relevant by the shareholders. In addition, Mexican law
provides that Mexican companies may only pay dividends from retained earnings
included in the year-end financial statements that have been approved by their
shareholders. Dividends may be paid only after all losses for previous years
have been paid for, a legal reserve equal to 20% of paid-in capital has been
achieved and shareholders have approved the dividend payment. Some of
Iusacell's subsidiaries, including Iusacell Celular, have outstanding debt
obligations which limit the amount of dividends that can be paid in any given
year or prohibit dividends entirely. Iusacell and its subsidiaries may agree
to similar restrictions in the future as they incur additional debt.
In accordance with the Iusacell Shareholders Agreement, each of Verizon
and Vodafone has the right to cause Iusacell to pay dividends during any fiscal
year in an amount of up to 25% of the consolidated net income for the prior
fiscal year, provided that such payment is not in violation of applicable law
or contractual provisions and would not adversely affect the foreseeable cash
flow or capital requirements of Iusacell. Consolidated net income for these
purposes will be determined in accordance with Mexican GAAP. However, the
Iusacell Shareholders Agreement provides that, if consolidated net income as so
determined exceeds consolidated net income determined in accordance with U.S. GAAP by more than 10%, consolidated net income will be determined in accordance
with U.S. GAAP.
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The Iusacell Shareholders Agreements also provides that any declaration
and/or payment of dividends that would (i) in any fiscal year exceed 25% of
Iusacell's consolidated net income for the prior fiscal year or (ii) be subject
to Mexican withholding tax (except for dividends required by Vodafone or
Verizon, as discussed above) may be made only upon the approval of holders of a
majority of all outstanding shares, including holders of a majority of the
series A shares. Under Mexican law, shareholders approve the declaration and
payment of dividends generally, but not necessarily, upon the recommendation of
the Board of Directors.
Holders of series V ADSs on the applicable record date are entitled to
receive dividends declared on the shares underlying series V ADSs. The
depositary will fix a record date for the holders of ADSs in respect of each
dividend distribution.
At the annual ordinary general meeting of shareholders of Iusacell, the
Board of Directors will generally submit the financial statements of Iusacell
for the previous fiscal year, together with a report by the Board of Directors,
to the series A and series V shareholders for their approval. The series A and
series V shareholders, having approved the financial statements, will determine
the allocation of Iusacell's net profits for such fiscal year. At least 5% of
such net profits must be allocated to a legal reserve until the amount of the
legal reserve equals 20% of Iusacell's capital stock. Such reserve is not
available for distribution except as a stock dividend. Additional amounts may
be allocated to other reserve funds as the shareholders determine including a
reserve to repurchase shares. The remaining balance of net profits, if any, is
available for distribution as dividends but only after losses, if any, of
previous years have been paid for.
All shares of each series outstanding at the time a dividend or other
distribution is declared are entitled to share pro rata in such dividend or
other distribution. Partially-paid shares participate in any distribution to
the extent that such shares have been paid at the time of the distribution.
The covenants contained in the Iusacell indenture limit Iusacell's ability
to declare and distribute dividends to its shareholders. The covenants
contained in the Iusacell Celular indenture and in the terms of the senior
refinancing secured loan limit Iusacell Celular's ability to declare and
distribute dividends to Iusacell.
Liquidation
In the event that we are liquidated, one or more liquidators must be
appointed at an extraordinary general shareholders' meeting to wind up our
affairs. All outstanding shares would be entitled to participate equally in
any distribution upon liquidation. Partially-paid shares participate in any
distribution to the extent that such shares have been paid at the time of the
distribution.
Changes in Share Capital and Rights of Shareholders
An increase of capital stock may be effected through the issuance of new
shares for payment in cash or in kind, by capitalization of indebtedness or by
capitalization of certain items of shareholders' equity. No increase of
capital stock may be effected until all previously issued shares of capital
stock have been fully paid. A reduction of capital stock may be effected to
absorb losses, to make reimbursements to shareholders, or to release
shareholders from payments not made. A reduction of capital stock to absorb
losses may be effected by reducing the value of all outstanding shares. A
reduction of capital stock shall also be effected on a pro rata basis.
Shareholders may also approve the redemption of fully-paid shares with
retained earnings. Such a redemption would be effected by a repurchase of
shares listed on the Mexican Stock Exchange or by lot.
The by-laws require that, unless a shareholders' meeting resolves
otherwise, any capital increase effected pursuant to a capital contribution be
represented by new series A and series V shares in proportion to the number of
shares of each such series outstanding. Our by-laws provide that the series V
shares may not exceed 50% less one share of our capital stock.
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The fixed portion of our capital stock may only be increased or decreased
by resolution of an extraordinary general meeting of the shareholders and an
amendment to the by-laws, whereas the variable portion of our capital stock may
be increased or decreased by resolution of an ordinary general meeting of
shareholders.
No resolution by the shareholders is required for decreases in capital
stock based on the exercise of the right to withdraw variable shares or the
purchase by Iusacell of its own shares or for increases in capital stock based
on offers by Iusacell of shares it previously purchased.
Preemptive Rights
In the event of a capital increase through the issuance of new shares for
payment in cash or in kind, a holder of existing shares has a preferential
right to subscribe for a sufficient number of new shares to maintain the
holder's existing proportionate holdings of shares. Preemptive rights must be
exercised within the period and under the conditions established for such
purpose by the shareholders, under Mexican law, and our by-laws. In no case
may such period be less than 15 days and no greater than 30 days following the
publication of notice of the capital increase in the Official Gazette of the
Federation or following the date of the shareholders' meeting at which the
capital increase was approved if all shareholders were represented. Otherwise,
such rights will lapse.
Under Mexican law, preemptive rights may not be waived in advance by a
shareholder, and cannot be represented by an instrument that is negotiable
separately from the corresponding share. In addition, holders of ADSs that are
U.S. persons or are located in the United States may be restricted in their
ability to participate in the exercise of preemptive rights.
Other Provisions
Fixed and Variable Capital, Withdrawal Rights
As a
sociedad anónima de capital variable
, we may issue shares
constituting fixed capital and shares constituting variable capital. The
issuance of variable capital shares, unlike the issuance of fixed capital
shares, does not require an amendment of our by-laws, although it does require
approval at an ordinary general meeting of shareholders.
Under the by-laws and CNBV regulations, variable capital may not be
greater than ten times the minimum fixed portion of our capital stock specified
in the by-laws. No shares of Iusacell representing variable capital are
currently outstanding. Outstanding variable capital shares may be fully or
partially withdrawn. In contrast, the minimum fixed capital required by law
cannot be withdrawn. A holder of variable capital shares that wishes to effect
a total or partial withdrawal of such shares would be required to notify us in
an authenticated written notice to that effect. If we received that notice
prior to the last quarter of the fiscal year, the withdrawal would become
effective at the end of the fiscal year in which the notice was given.
Otherwise, the withdrawal would become effective at the end of the following
fiscal year.
Redemption of variable capital shares of Iusacell would be made at the
lower of (i) 95% of the average share price quoted on the Mexican Stock
Exchange during the 30 business days prior to the date on which the withdrawal
were to become effective or (ii) the book value per variable capital share as
calculated from our financial statements for the fiscal year at the end of
which the withdrawal were to become effective, as approved by our shareholders
at an ordinary general meeting. Any such amount to be paid by Iusacell would
become due on the day following the ordinary general meeting approving the
financial statements.
The covenants contained in the Iusacell indenture limit Iusacell's ability
to issue variable capital shares. The covenants contained in the Iusacell
Celular indenture and the senior credit refinancing secured loan limit Iusacell
Celular's ability to issue variable capital shares.
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Forfeiture of Shares
As required by Mexican law, Iusacell's by-laws provide that "current or
future foreign shareholders of the Company agree with the Ministry of Foreign
Relations to consider themselves as Mexican nationals with respect to the
shares that they may acquire or of which they may be owners, and therefore not
to invoke the protection of their governments with respect to such shares under
penalty, should they violate this agreement, of forfeiting for the benefit of
the Nation the shares that they may have acquired."
In the opinion of
De Ovando y Martínez del Campo, S.C.
, special Mexican
counsel to Iusacell and Iusacell Celular, under this provision a non-Mexican
shareholder is deemed to have agreed not to invoke the protection of his own
government by requesting such government to interpose a diplomatic claim
against the Mexican government with respect to its rights as a shareholder, but
is not deemed to have waived any other rights it may have with respect to its
investment in Iusacell, including any rights under U.S. securities laws (the
enforceability of which may be challenged in Mexico).
If the shareholder should invoke such governmental protection in violation
of this agreement, its shares could be forfeited to the Mexican government.
Mexican law requires that such a provision be included in the by-laws of all
Mexican corporations unless such by-laws prohibit ownership of capital stock by
foreign investors.
Purchase of Our Own Shares
According to Mexican law, we may repurchase any series of our shares on
the Mexican Stock Exchange at any time at the then prevailing market price.
Any such repurchase must be done by affecting our shareholders' equity account,
while we hold the repurchased shares, or by reducing our capital stock, if such
shares are to be converted into treasury stock. No resolution from a
shareholders' meeting is required for such reduction, but a shareholders'
meeting must approve, for each year, the maximum amount of funds that may be
used to repurchase shares, which amount may not exceed the amount of our net earnings (including retained
earnings). During the period we own repurchased shares, such shares may not be
represented at any shareholders' meeting. Repurchased shares may be placed
among the investing public, without the need of approval from our Board of
Directors or shareholders, and the corresponding capital increase shall not
require a resolution of a shareholders' meeting.
Under our by-laws and according to Mexican law, Iusacell's subsidiaries
are not allowed to own directly or indirectly any of the capital stock of
Iusacell. Also, Iusacell's subsidiaries are not allowed to own any capital
stock of any controlling shareholder of Iusacell.
The covenants contained in the Iusacell indenture limit Iusacell's ability
to repurchase its own shares. The covenants contained in the Iusacell Celular
indenture and in the terms of the senior refinancing secured loan limit
Iusacell Celular's ability to repurchase its own shares.
Repurchase in the Event of Delisting
In the event that the registration of our shares in the Securities Section
of the RNV is canceled, whether upon our request or pursuant to a resolution
adopted by the CNBV, our by-laws and CNBV regulations require that our
controlling shareholders make a public offer to purchase the shares owned by
minority holders prior to such cancellation. The shares must be purchased by
our controlling shareholders at least and at the higher of (i) the quotation
price on the Mexican Stock Exchange or (ii) the book value of the shares, as
reflected in the last quarterly report filed with the CNBV and the Mexican
Stock Exchange prior to the date of the offer except in the case that such
value had been modified in accordance with criteria applicable to determination
of relevant information. In this case the most recent Company's financial
information must be considered. The quotation price on the Mexican Stock
Exchange will be the average per volume for the last 30 trading days prior to
the date of the offer. In any event, such period cannot exceed six moths. If
the trading period is less than 30 days, the days in which the shares were
actually traded will be taken into consideration for purposes of the
calculation. In the event that no trading of shares has occurred, the offer
price will be the book value. In accordance with our by-laws and as provided
by Mexican law, our Board of Directors, within the five days prior to the date
of the offer, shall disclose its opinion on the price, taking into
consideration the minority shareholders' interests. The Board of Directors
opinion shall be rendered in conjunction with the Audit Committee
opinion.
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In the event of conflict of interests by the Board of
Directors, its opinion shall be rendered in conjunction with the opinion of an Independent Expert (as
defined by Mexican Securities regulation) appointed by the Audit Committee. If
after said offer our controlling shareholders fail to acquire 100% of our
capital stock, the cancellation of the registration of our shares will not
become effective until our controlling shareholders have created a trust with
the funds required to purchase the remaining shares at the same offering price,
with such trust being effective for at least six months.
The controlling shareholders may, so long as the Board of Directors
approve and the Audit Committee renders an opinion, request the CNBV to
authorize a different basis for the calculation of the share offer price. The
Audit Committee opinion must include the reasons for setting forth a different
price and must be accompanied by a report from an independent expert. In
determining whether to authorize a different basis, the CNBV takes into account
Iusacell's financial condition as well as its business outlook.
Appraisal Rights
Whenever the shareholders approve a change of corporate purpose, change of
nationality, spin-off or transformation from one type of corporate form to
another, any shareholder entitled to vote on such change or transformation who
has voted against it has the right to withdraw from Iusacell and receive an
amount generally equivalent to the book value of our shares (in accordance with
our last balance sheet approved by a shareholders' meeting), provided such
shareholder exercises its right to withdraw within 15 days following the
adjournment of the meeting at which the change or transformation was approved.
Foreign Investment Regulation
Foreign investment in capital stock of Mexican corporations in certain
economic sectors, including telephone and cellular services, is regulated by
the 1993 Foreign Investment Law, as amended, and the regulations issued
under that law in 1998, which we refer to as the 1998 Regulations. Under
the 1993 Foreign Investment Law, foreign investment is defined in general as
the participation of foreign investors in the voting capital stock of Mexican
corporations and in activities which are regulated by the 1993 Foreign
Investment Law. Foreign investors are defined as non-Mexican individuals,
non-Mexican legal entities and foreign entities without legal personality.
The Mexican Foreign Investment Commission, the Mexican Foreign Investment
Bureau and the Mexican National Registry of Foreign Investment are responsible
for the administration of the 1993 Foreign Investment Law and the 1998
Regulations. In order to comply with foreign investment restrictions, Mexican
companies that are engaged in specified restricted industries typically limit
particular classes of their stock to ownership by Mexican individuals and by
Mexican corporations in which foreign investment has a minority participation.
As a general rule, the 1993 Foreign Investment Law allows foreign
investments in up to 100% of the capital stock of Mexican companies, except for
those engaged in specified restricted industries, such as basic telephone
service, where foreign investments are limited to 49% of the voting capital
stock. Foreign investors may, however, participate in excess of 49% of the
voting capital stock of a Mexican corporation engaged in the cellular telephone
business with the prior approval of the Mexican Foreign Investment Commission.
Iusacell has received such approval and, as a result, neither our series A nor
our series V shares are restricted to Mexican ownership. See Item 4,
"Information on the Company — Business Overview — Government Regulation —
Foreign Ownership Restrictions."
Foreign states and foreign governments are prohibited under the 1995
Telecommunications Law from holding a concession or permit to provide
telecommunications services, from receiving any such concession or permit as a
guarantee or from being the beneficiary of any such guarantee, or from directly
or indirectly owning shares of Mexican companies, including Iusacell.
C.
MATERIAL CONTRACTS
On December 29, 1999, Iusacell Celular entered into a series of agreements
with MATC Celular, the Mexican subsidiary of American Tower
Corporation, with respect to Iusacell Celular's existing towers
and future tower needs.
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Under these agreements, which were amended in May 2002, MATC Celular, among other
things, is required to build towers or find space on existing towers, which
Iusacell Celular's subsidiaries lease. The term of the lease is 10 years with
two five-year renewal periods. As of May 30, 2003, Iusacell Celular's
subsidiaries lease from MATC Celular 715 sites, including 320 transfer sites, a
number of built-to-suit sites and co-locations.
See
also, Item 5, "Operating and Financial Review and Prospects
— Liquidity
and Capital Resources," for a summary of Iusacell's material credit agreements
and indentures.
D.
EXCHANGE CONTROLS
There are currently no exchange controls in Mexico, however, Mexico has
imposed foreign exchange controls in the past. Pursuant to the provisions of
the North American Free Trade Agreement and in the event Mexico experiences
serious balance of payment difficulties or the threat thereof in the future,
Mexico remains free to impose foreign exchange controls on investments made in
Mexico, including those made by U.S. and Canadian investors.
E.
TAXATION
General
The following is a general summary of material U.S. and Mexican federal
income tax consequences of the acquisition, ownership and disposition of
Iusacell ADSs, the Iusacell Celular senior notes and the Iusacell senior notes
(the "Note" or the "Notes") by U.S. holders.
For purposes of this summary, a "U.S. holder" is any holder of any of such
securities that is, for United States federal income tax purposes:
•
a citizen or resident of the United States;
•
a corporation, partnership, or other entity created or organized in
or under the laws of the United States, or any political subdivision
thereof;
•
an estate the income of which is includible in gross income for
United States federal income tax purposes regardless of source; or
•
a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust.
This summary does not constitute, and should not be construed as, legal or
tax advice to holders of Iusacell ADSs or Notes. This summary does not purport
to consider all the possible U.S. or Mexican federal income tax consequences of
the purchase, ownership and disposition of the Iusacell ADSs or Notes and is
not intended to reflect the individual tax position of any beneficial owner
thereof. The summary is based upon Mexican federal tax laws, their regulations
and administrative rules issued by the Mexican Ministry of Finance and Public
Credit, the Tax Treaty mentioned below and the Internal Revenue Code of 1986,
as amended (the "Code"), U.S. Treasury regulations promulgated thereunder,
published rulings by the U.S. Internal Revenue Service ("IRS") and court
decisions, all as in effect as of the date hereof, all of which authorities are
subject to change or differing interpretations, which changes or differing
interpretations could apply retroactively. Readers are cautioned that this is
not a complete analysis or listing of all potential tax effects that may be
relevant to a decision to purchase, hold or dispose of the Iusacell ADSs or
Notes.
This summary of U.S. federal income tax consequences is limited to
investors who hold the Iusacell ADSs or Notes as "capital assets" within the
meaning of section 1221 of the Code (i.e., generally, property held for
investment) and does not purport to deal with investors in special tax
situations, such as financial institutions, tax exempt organizations, insurance
companies, regulated investment companies, dealers in securities or currencies,
persons holding notes as a hedge against currency risks or as a position in a
"straddle," "conversion transaction," or
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"constructive sale" transaction for
tax purposes, persons owning (actually or constructively) 10% or more of the
voting shares of the company, or persons whose functional currency (as defined
in section 985 of the Code) is not the U.S. dollar. In general, for U.S.
federal income tax purposes, holders of Iusacell ADSs will be treated as the
owners of the series V shares represented by those Iusacell ADSs.
Holders and prospective purchasers of the Iusacell ADSs or Notes should
consult their own tax advisors concerning the application of Mexican and U.S.
federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the Iusacell ADSs or
Notes arising under the laws of any state, locality or foreign government or
other taxing jurisdiction.
Mexico and the United States have signed and ratified a Convention for the
Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to
Taxes on Income and related Protocols (collectively, the "Tax Treaty"). The
Tax Treaty is currently in effect and provisions of the Tax Treaty that may
affect holders of Iusacell ADSs or Notes are summarized below. Holders should
consult with their tax advisors as to their entitlement to the benefits
afforded by the Tax Treaty. Mexico has also executed treaties to avoid double
taxation with other countries as well as agreements providing for the exchange
of information with respect to tax matters, some of which presently are in
force. The following summary does not take into account the effect of any such
treaties. Readers should consult their tax advisors as to their entitlement to
the benefits afforded by such other treaties.
The U.S. Treasury has expressed concerns that parties to whom ADSs are
released may be taking actions that are inconsistent with the claiming of
foreign tax credits for U.S. holders of ADSs. Accordingly, the analysis of
creditability of Mexican taxes described below could be affected by future
actions that may be taken by the U.S. Treasury.
Taxation of Distributions of Iusacell ADSs
U.S. Federal Income Tax Considerations
Distributions paid out of Iusacell's current or accumulated earnings and
profits (as determined for U.S. federal income tax purposes) with respect to
the series V shares represented by Iusacell ADSs will be includible in the
gross income of a U.S. corporate holder as ordinary income when the
distributions are received by the depositary or by the U.S. holder of a
certificated ADS, and will not be eligible for the dividends received
deduction. We expected that under recently enacted law, such distributions by
Iusacell to U.S. individual holders generally should be treated as "qualified
dividend income" and thus, such holders would be subject to tax at the capital
gains rates for these distributions made after December 31, 2002 but before
January 1, 2008. To the extent that a distribution exceeds earnings and
profits, it will be treated first as a return of the U.S. holder's tax basis to
the extent of such tax basis, and then as gain from the sale or disposition of
a capital asset. The amount of any dividend paid in pesos will equal the U.S.
dollar value of the pesos received, calculated by reference to the exchange
rate in effect on the date the distribution is includible in income, regardless
of whether the pesos are converted into U.S. dollars. For U.S. holders, that
date would be the date the depositary receives the dividend, regardless of
whether the pesos are converted into U.S. dollars. In addition, if dividends
received in pesos are not converted into U.S. dollars on the day they are
received, U.S. holders may recognize foreign currency gain or loss (generally
treated as ordinary gain or loss) upon the disposition of such pesos measured
by the differences between such U.S. dollar value and the amount realized on
such disposition. Distributions generally will constitute foreign source
"passive income" (or, in the case of some holders, "financial services income")
for U.S. foreign tax credit purposes; however, assuming a U.S. individual
holder has "qualified dividend income", special rules will apply in determining
such holder's foreign tax credit limitations.
Distributions of additional series V shares, if any, to U.S. holders of
Iusacell ADSs that are made as part of a pro rata distribution to all
shareholders of Iusacell generally will not be subject to U.S. federal income
tax.
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Mexican Tax Considerations
Apart from any liability that may result to Iusacell from our paying of
dividends to our shareholders, dividends, either in cash or in any other form,
paid with respect to the series V shares represented by Iusacell ADSs, will not
be subject to a Mexican withholding tax.
Taxation of Capital Gains of Iusacell ADSs
U.S. Federal Income Tax Considerations
In general, upon the sale or other disposition of Iusacell ADSs, a U.S.
holder generally will recognize gain or loss equal to the difference between
the amount realized on such sale or disposition (if the amount realized is
denominated in a foreign currency then its U.S. dollar equivalent, determined
at the spot rate on the date of disposition) and the U.S. holder's adjusted tax
basis in the shares (in U.S. dollars). Such gain or loss will be treated as
capital gain or loss if the Iusacell ADSs were held as a capital asset and will
be long-term capital gain or loss if the Iusacell ADSs have been held for more
than one year on the date of such sale or other disposition. For this purpose,
a U.S. holder's holding period for the Iusacell ADSs will generally include its
holding period for the Iusacell Celular ADSs. The deductibility of capital
losses is subject to limitations. Gain or loss recognized by a U.S. holder on
a sale or other disposition of Iusacell ADSs generally will be treated as from
sources within the United States for U.S. federal income tax purposes.
Mexican Tax Considerations
The sale or other disposition of Iusacell ADSs by holders who are
non-residents of Mexico (as described below) will not be subject to Mexican
tax. Deposits of shares in exchange for Iusacell ADSs and withdrawals of
shares in exchange for Iusacell ADSs will not give rise to Mexican tax.
Gains realized by an individual who is not a resident of Mexico on the
sale or other disposition of shares representing capital stock of a Mexican
corporation (like Iusacell) through a recognized stock exchange, such as the
Mexican Stock Exchange and high liquidity markets of countries with which
Mexico has signed a treaty to avoid double taxation, are exempt from Mexican
income tax if the stock is listed on an authorized in Mexico (each a
"recognized exchange"), currently the Mexican Stock Exchange only, and
otherwise complies with the requirements to be considered a real trade. The
Iusacell series V shares are currently listed on the Mexican Stock Exchange.
Under current law, gains realized by a non-resident holder on the sale or
disposition of shares not conducted through a recognized stock exchange
generally are subject to a Mexican tax at a rate of 25% of the gross sales
price. However, if the holder is a resident of a country which is not
considered to be a low tax rate country (by reference to a list of low rate
countries published by the Mexican Ministry of Finance and Public Credit), the
holder may elect to designate a resident of Mexico as its representative, in
which case taxes would be payable at a maximum rate of 34% on the gain on such
disposition which maximum rate will be gradually reduced by one percent per
year until 2005. In 2005 and thereafter, said maximum rate will be 32%. The
United States is not considered to be a low tax rate country.
However, even if the sale is not conducted through a recognized stock
exchange, pursuant to the Tax Treaty gains realized by qualifying U.S. holders
from the sale or other disposition of shares will not be subject to Mexican
income tax so long as:
•
less than 50% of the assets of Iusacell consist of real property
situated in Mexico;
•
such U.S. holder did not own 25% or more of the shares representing
capital stock of Iusacell, directly or indirectly, during the 12-month
period preceding such disposition; or
•
the gain is not attributable to a permanent establishment of the
U.S. holder in Mexico.
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Brokerage commissions paid in connection with transactions on the Mexican
Stock Exchange are subject to a value added tax of 15%.
For purposes of Mexican taxation, an individual is a resident of Mexico if
he or she has established his or her home in Mexico, unless he or she has
resided in another country for more than 183 days, whether consecutive or not,
during a calendar year and can demonstrate that he or she has become a resident
of that other country for tax purposes. An individual of Mexican birth is
deemed to be a Mexican resident for tax purposes, unless proof is submitted to
the contrary.
A legal entity is a resident of Mexico if it (i) was established under
Mexican law or (ii) has its main management in Mexico. If a legal entity has a
permanent establishment in Mexico, such permanent establishment shall be
required to pay taxes in Mexico on income attributable to such permanent
establishment in accordance with relevant tax provisions.
Other Mexican Taxes
There are no inheritance or succession taxes applicable to the ownership,
transfer or disposition of Iusacell ADSs or shares. There are no Mexican
stamp, registration or similar taxes or duties payable by holders of Iusacell
ADSs or shares.
Information Reporting and Backup Withholding
Each U.S. holder who holds ADSs through a broker participating in the
Depositary Trust Company ("DTC"), or indirect participant holding Iusacell ADSs
through DTC on behalf of a beneficial owner and each paying agent making
payments in respect of Iusacell ADSs will generally be required to provide the
IRS with information, including the name, address and taxpayer identification
number of the beneficial owner of the Iusacell ADSs, and the aggregate amount
of dividends and sale proceeds paid to such beneficial owner during the
calendar year. These reporting requirements, however, do not apply with respect to certain
beneficial owners, including corporations, securities broker-dealers, other
financial institutions, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
In the event that a beneficial owner of Iusacell ADSs fails to establish
its exemption from such information reporting requirements or is subject to the
reporting requirements described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law, or underreports
its tax liability, as the case may be, a holder may be subject to backup
withholding at the rate of 30% in 2002 and 2003 (and at a lower rate in
subsequent years) with respect to dividends and proceeds from the sale or
disposition of Iusacell ADSs. This backup withholding tax is not an additional
tax and any amounts withheld from a payment to a holder of Iusacell ADSs will
be refunded (or credited against such holder's U.S. federal income tax
liability, if any) provided that the required information is furnished to the
IRS.
The U.S. Treasury Department has issued final regulations (the
"Regulations") that unify current certification procedures and modify reliance
standards. Potential investors and holders of Iusacell ADSs should consult
their own tax advisors concerning the adoption of the Regulations and the
potential effect on their acquisition, ownership and disposition of Iusacell
ADSs.
United States Tax Consequences to Holders of Notes
Payments of Interest and Additional Amounts
Generally, payments of interest and any additional amounts (i.e.,
"gross-up payment") paid by Iusacell or Iusacell Celular (the "Additional
Amounts") will be taxable to a U.S. holder as ordinary income at the time such
payments are accrued or are received, in accordance with the U.S. holder's
regular method of accounting for Federal income tax purposes.
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Market Discount
If a U.S. holder purchases a Note for less than its principal amount, the
difference will be treated as a "market discount" for U.S. federal income tax
purposes subject to a
de minimis
exception.
Under the market discount rules, a U.S. holder will be required to treat
any payment on a Note, or any gain on its sale, exchange, retirement or other
disposition, as ordinary income to the extent of the accrued market discount
which was not previously included in income. If the Note is disposed of in a
non-taxable transaction (other than a non-recognition transaction described in
section 1276(c) of the Code), accrued market discount will be includible as
ordinary income to the U.S. holder as if it had sold the Note at its fair
market value. In addition, a U.S. holder may be required to defer, until the
maturity of a Note or its earlier disposition (including a non-taxable
transaction other than a transaction described in section 1276(c) of the
Internal Revenue Code), the deduction of all or a portion of the interest
expense in respect of any indebtedness incurred or continued to purchase or
carry the Note. Market discount will be considered to accrue on a
straight-line basis during the period from the date of acquisition to the
maturity date of the Note, unless the U.S. holder elects to accrue on a
constant-yield basis.
A U.S. holder of a Note may elect to include market discount in income as
it accrues on either a ratable or a constant yield basis. If a U.S. holder
makes this election, the rules regarding the treatment of gain upon the
disposition of the Note and upon the receipt of certain cash payments as
ordinary income and regarding the deferral of interest deductions will not
apply. Currently, if a U.S. holder elects to include market discount in income
as it accrues, the election will apply to all market discount obligations
acquired during or after the first taxable year to which the election applies.
Currently this election may not be revoked without the consent of the Internal
Revenue Service.
Amortizable Bond Premium
If a U.S. holder purchases a Note for more than the amount payable at
maturity (or on an earlier call date), that excess will be considered an
"amortizable bond premium." This holder may elect to amortize the premium to
offset the interest and Additional Amounts from the Note such holder would
otherwise be required to include in income (subject to special rules for early
redemption provisions). In any tax year, the holder can only use as much of
the premium as the constant yield method would allocate to that year. The U.S.
holder's basis in the Note will be reduced by the amount of bond premium offset
against interest and Additional Amounts. Currently, if a U.S. holder elects to
amortize the premium to offset the interest from a Note, the election will
apply to all debt instruments acquired during or after the first taxable year
to which the election applies. Currently, this election may not be revoked
without the consent of the Internal Revenue Service.
Sale, Exchange or Retirement of a Note
Except as discussed above, upon the sale, exchange or retirement of a
Note, a U.S. holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement and
such U.S. holder's adjusted tax basis in the Note. For this purpose, the
amount realized does not include any amount attributable to accrued interest on
the Note (which will be taxable as such). A U.S. holder's adjusted tax basis
in a new note will generally be the cost of the Note plus the market discount,
if any, the U.S. holder previously included in income
minus
any amortizable
bond premium and any payments other than payments of stated interest made on
the Note. Such gain or loss generally will be long-term capital gain or loss
if the Note has been held for more than one year at the time of such sale,
exchange or retirement. The deductibility of capital losses is subject to
limitations. Gain or loss recognized by a U.S. holder on a sale or other
disposition of a Note generally will be treated as from sources within the
United States for U.S. federal income tax purposes.
Foreign Tax Credit and Effect of Withholding Taxes
Interest and Additional Amounts paid on Notes will constitute income from
sources outside the United States for United States federal income tax
purposes, and, with certain exceptions, will be grouped together with other
items of "passive" income (or, in the case of some holders, "financial services
income"), for purposes of computing the foreign tax credit allowable to a U.S.
holder.
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A U.S. holder will be
required to include foreign withholding taxes, if any, imposed on payments on a
Note (including any Additional Amounts payable by Iusacell or Iusacell Celular)
in gross income as interest income. Such treatment will be required regardless
of whether, as will generally be true, Iusacell or Iusacell Celular is required
to pay additional amounts so that the amount of Mexican withholding taxes does
not reduce the net amount actually received by the holder of the Note.
Subject to certain limitations, a U.S. holder may be entitled to a credit
against its United States Federal income tax liability, or a deduction in
computing its United States Federal taxable income, for foreign income taxes
withheld by Iusacell or Iusacell Celular (which, as described above, would
include amounts withheld on Additional Amounts paid by Iusacell or Iusacell
Celular with respect to Mexican taxes). The foreign tax credit provisions are
complex, and U.S. holders are urged to consult their own tax adviser as to the
availability, if any, of a tax credit or deduction to them.
Information Reporting and Backup Withholding
For each calendar year in which the Notes are outstanding, each DTC
participant or indirect participant holding an interest in a Note on behalf of
a beneficial owner of a Note and each paying agent making payments in respect
of a Note will generally be required to provide the IRS with certain
information, including such beneficial owner's name, address and taxpayer
identification number (either such beneficial owner's Social Security number or
its employer identification number, as the case may be), and the aggregate
amount of interest, principal and Additional Amounts paid to such beneficial
owner during the calendar year. These reporting requirements, however, do not
apply with respect to certain beneficial owners, including corporations,
securities broker-dealers, other financial institutions, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
In the event that a beneficial owner of a Note fails to establish its
exemption from such information reporting requirement or is subject to the
reporting requirements described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law, or underreports
its tax liability, as the case may be,
a holder may be subject to backup withholding at the rate of 30% in 2002
and 2003 (and at a lower rate in subsequent years) of each payment of interest,
principal and Additional Amounts with respect to Notes. This backup
withholding tax is not an additional tax and will be allowed as a refund or
credit against the beneficial owner's United States Federal income tax
liability if the required information is furnished to the IRS.
Prospective purchasers of Notes are advised to consult their own tax
advisers as to the consequences of acquiring and disposing of the Notes,
including, without limitation, (i) the applicability and effect of any state,
local or non-U.S. tax laws to which they may be subject, and of any legislative
or administrative changes in law, (ii) the United States Federal income tax
consequences of foreign withholding taxes by Iusacell or Iusacell Celular (and
of the payment by Iusacell or Iusacell Celular of Additional Amounts with
respect thereto) and (iii) the availability of a credit or deduction for
foreign withholding taxes.
Mexican Tax Consequences to Holders of Notes
The following is a summary of the principal consequences under current
Mexican federal tax law, their regulations and administrative rules issued by
the Mexican Ministry of Finance and Public Credit and the Tax Treaty, in force
as of the date of this report, of the purchase, ownership and disposition of
Notes by a Foreign Holder. A "Foreign Holder" is a holder who (i) is not a
resident of Mexico for tax purposes and (ii) will not hold Notes or a
beneficial interest in Notes in connection with the conduct of a trade or
business through a permanent establishment in Mexico.
Taxation of Payments of Interest and Principal
Under the Mexican Income Tax Law, payments of interest made by Iusacell or
Iusacell Celular to a Foreign Holder in respect of their respective Notes will
be subject to Mexican withholding taxes assessed at a rate of 4.9% if, (i) the
Notes have been placed through banks or brokers in a country with which Mexico
has executed a treaty to avoid double taxation and such treaty is in force,
(ii) the Notes have been registered in the Special Section of the
National Registry of Securities (the "Special Section"), and (iii) as has
been the case in the past, the issuer provides the information required under
general rules issued by the Ministry of Finance and Public Credit (the "Reduced
Rate Regulation"), which is described below. Otherwise, payments of interest
made by Iusacell or Iusacell Celular to a Foreign Holder in respect of their
respective Notes will be subject to Mexican withholding taxes assessed at a
rate of 10%.
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The information requirements under the "Reduced Rate Regulation" are
generally described below:
•
that Iusacell and Iusacell Celular, as is the case, have timely
filed with the Mexican Ministry of Finance and Public Credit
information relating to the registration of their respective Notes in
the Special Section and to the issuance of their respective Notes; and
•
that Iusacell and Iusacell Celular timely file each quarter of the
calendar year with the Mexican Ministry of Finance and Public Credit
information representing that no "party related" to Iusacell or
Iusacell Celular, as the case may be, directly or indirectly, is the
effective beneficiary of 5% or more of the aggregate amount of the
interest payment, and Iusacell and Iusacell Celular maintain records
evidencing compliance with this requirement.
Under the Mexican Income Tax Law and the Reduced Rate Regulation any of
the following would be a "party related" to Iusacell or Iusacell Celular, as
the case may be: (1) shareholders of Iusacell or Iusacell Celular, as the case
may be, that own, directly or indirectly, individually or collectively with
related persons (within the meaning of the Mexican Income Tax Law and the
Reduced Rate Regulation) more than 10% of the voting stock of Iusacell or
Iusacell Celular, as the case may be, or (2) corporations if more than 20% of
their stock is owned directly or indirectly, individually or collectively by
related persons of Iusacell or Iusacell Celular, as the case may be.
Apart from the Reduced Rate Regulation, other special rates of Mexican
withholding income tax may apply. In particular, under the Tax Treaty, the
Mexican withholding tax is reduced to 4.9% (the "Treaty Rate") for some holders
that are residents of the United States within the meaning of the Tax Treaty
provided they satisfy the
circumstances contemplated in the Tax Treaty and provided that the Notes
are considered to be regularly and substantially traded on a recognized
securities market, which is not expected to be the case. During 2003, the Tax
Treaty is not expected, generally, to have any material effect on the Mexican
tax consequences to holders of Notes because, as described above, with respect
to a Foreign Holder, Iusacell and Iusacell Celular will be entitled to withhold
taxes in connection with interest payments under their respective Notes at the
Reduced Rate so long as the Reduced Rate Regulation requirements described
above are met. Otherwise, holders of the Notes should consult their tax
advisors as to the possible application of the Treaty Rate.
Interest paid on Notes held by a non-Mexican pension or retirement fund
will be exempt from Mexican withholding tax if the fund (i) has been duly
incorporated as a fund pursuant to the laws of its country of origin, (ii) is
the effective beneficiary of the interest paid, (iii) is registered with the
Mexican Ministry of Finance and Public Credit for that purpose, and (iv) the
relevant interest income is exempt from taxes in that country.
Iusacell and Iusacell Celular, have agreed, subject to the exceptions and
limitations contained in the indentures under which the Notes were issued, to
pay additional amounts in respect of the Mexican withholding taxes mentioned
above to the holders of the Notes. Payment of these additional amounts with
respect to the Notes will be subject to Mexican withholding tax at the same
rate generally applicable to interest paid in the Notes.
Under the Mexican Income Tax Law, a Foreign Holder will not be subject to
any Mexican income taxes in respect of payments of principal made by Iusacell
or by Iusacell Celular in connection with the Notes.
Taxation of the Sale and other Disposition of the Notes
Under the Income Tax Law gains resulting from a Foreign Holder's sale or
other disposition of Notes are considered interest.
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Transfer and other Taxes
There are no Mexican stamp, registration, or similar taxes payable by a
Foreign Holder in connection with the purchase ownership or disposition of the
Notes. A Foreign Holder of Notes will not be liable for Mexican estate, gift,
inheritance or similar tax with respect to the Notes, although gratuitous
transfers of the Notes may in some circumstances cause a Mexican income tax to
be imposed on the recipient.
F.
DIVIDENDS AND PAYING AGENTS
Not applicable.
G.
STATEMENT BY EXPERTS
Not applicable.
H.
DOCUMENTS ON DISPLAY
We file Annual Reports with and furnish other information to the SEC as
may be applicable from time to time. You may read and copy any documents filed
or furnished by Iusacell at the SEC's public reference rooms in Washington,
D.C., New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. In addition, because
Iusacell's American depositary shares are listed on the New York Stock
Exchange, reports and other information concerning Iusacell can also be
inspected at the office of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
I.
SUBSIDIARY INFORMATION
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Iusacell's earnings are affected by changes in interest rates as a result
of long-term borrowings. For a description of Iusacell's long-term borrowings,
see Item 5, "Operating and Financial Review and Prospects — Liquidity and
Capital Resources — Iusacell Long-Term Indebtedness."
Iusacell has fixed rate debt under the Iusacell senior notes, a U.S.$7.8
million loan made by GTE Vendholdings due 2003 and under the Harris Facility.
Iusacell also guarantees variable debt borrowed by its infrastructure
equipment purchase subsidiaries under the BNP Paribas Facilities. Under the
BNP Paribas Facilities, the GIEK-Guaranteed Facility bears interest at
six-month LIBOR plus 0.6%, while the Non-GIEK Guaranteed Loan bears interest at
six-month LIBOR plus 2.0%. The Harris Facility bears interest at a rate of
six-month LIBOR plus 1.25%.
Iusacell Celular has fixed rate debt under its Iusacell Celular senior
notes and a Banco Santander credit facility. Iusacell Celular also had, as of
December 31, 2002, variable debt under the senior refinancing secured loan.
Iusacell Celular's senior refinancing secured loan bears interest at a
variable rate per annum equal to one, two, three or six-month LIBOR (at
Iusacell Celular's option) plus a spread ranging from, depending on Iusacell
Celular's leverage ratio, of 1.75% to 2.25%.
We do not enter into derivative financial contracts for trading or
speculative purposes. However, we have managed the exposure to interest rate
risk through the use of interest rate collars and the exposure to foreign
exchange risk through forward rate contracts.
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In July 1998, Iusacell Celular entered into an interest rate collar
agreement on a notional amount of U.S.$35.0 million until July 30, 2002. The
collar agreement limited the maximum effective LIBOR cost to 6.12% if six-month
LIBOR was lower than 7.12% and 7.12% if LIBOR equaled or exceeded that level.
On February 26, 1999, Iusacell Celular entered into a second interest rate
collar agreement to limit the maximum interest rate Iusacell Celular must pay
on U.S.$15.0 million of its floating rate debt until July 2002. Under the
terms of this second collar agreement, Iusacell Celular's maximum effective
LIBOR cost was limited to 5.82% if six-month LIBOR was lower than 6.82% and, if
six-month LIBOR equalled or exceeded 6.82%, then Iusacell Celular's maximum
effective LIBOR cost would be limited to 6.82%. These interest rate collar
agreements expired on July 30, 2002.
The following table summarizes the debt obligations and derivative
instruments that are sensitive to changes in interest rates held by Iusacell as
of December 31, 2002. With respect to the debt, the tables present principal
payment obligations that exist by maturity date and the related average
interest rate. Average interest rates for liabilities are calculated based on
weighted averages. Dollar-denominated amounts have been converted to Mexican
pesos based on the exchange rate published by
Banco de México
at December 31,
2002, which was U.S.$1.00 = Ps.10.4393.
As of December 31, 2002 — Expected Maturity Date
2003
2004
2005
2006
2007
Thereafter
Total
Fair Value
in millions of Mexican pesos (U.S. dollars)
Fixed Rate Debt
U. S. Dollar denominated
219.1
1,588.1
43.2
3,653.8
—
—
5,535.2
2,247.5
Weighted-average interest rate
12.4
%
11.5
%
14.2
%
14.2
%
—
—
—
—
Mexican Peso denominated
—
—
—
—
—
—
—
—
Weighted average interest rate
—
—
—
—
—
—
—
—
Variable Rate Debt
U. S. Dollar denominated
77.7
1,105.6
1,440.3
400.5
26.9
—
3,051.1
3,051.1
Weighted-average interest rate
3.5
%
4.0
%
4.3
%
4.5
%
5.3
%
—
—
—
Mexican Peso denominated
—
—
—
—
—
—
—
—
Weighted-average interest rate
—
—
—
—
—
—
—
—
Interest Rate Derivatives
—
—
—
—
—
—
—
—
Interest Rate Collars
Average Cap Rate
—
—
—
—
—
—
—
—
Average Floor Rate
—
—
—
—
—
—
—
—
Note: To determine the weighted-average interest rate for variable rate
debt, LIBOR interest rate was forecasted by CIEMEX-WEFA assuming 1.33%. for
2003, 1.84% for 2004, 2.24% for 2005, 2.4% for 2006 and 3.15% for 2007.
Foreign Currency Risk
Iusacell's primary foreign currency exposure relates to our foreign
currency denominated debt. Iusacell's debt obligations are denominated in U.S.
dollars while we generate revenues in Mexican pesos. Therefore, we are exposed
to currency exchange rate risks that could significantly affect our ability to
meet our obligations. The exchange rate of pesos to the U.S. dollar is a
freely floating rate and the peso has experienced significant devaluations in
recent years. Any significant decrease in the value of the peso relative to
the U.S. dollar in the near term may have a material adverse effect on Iusacell
and on our ability to meet our long-term debt obligations.
In December 1999, Iusacell Celular used forward-rate contracts to hedge
its exchange rate exposure for U.S.$77.0 million, approximately 50% of the
principal and interest payments coming due over the period April 2000 to April
2001. In November 2000, Iusacell Celular entered into another forward-rate
contract to hedge its exchange rate exposure for U.S.$15.0 million of interest
payments coming due between then and January 2002. In August 2001, Iusacell
entered into another forward-rate contract for U.S.$11.0 million to hedge its
exchange rate exposure of interest payments coming due between then and
November 2002. In August and October 2001, Iusacell Celular hedged using
forward rate contracts 100% of the principal U.S.$150.0 million and U.S.$34.5
million of associated interest of the Iusacell Celular senior notes. In
October 2002, we opted to unwind the full foreign exchange hedge contracted in 2001; however, we will continue to look for opportunities to enter into cost
efficient, foreign exchange hedging positions when appropriate.
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The following table summarizes Iusacell's debt that is sensitive to
changes in foreign currency exchange rates as of December 31, 2002. With
respect to the debt, the tables present principal payment obligations that
exist by maturity date and the related average interest rate. Average interest
rates for liabilities are calculated based on weighted average.
Dollar-denominated amounts have been converted to Mexican pesos based on the
exchange rate published by
Banco de México
at December 31, 2002, which was
U.S.$1.00 = Ps.10.4393.
As of December 31, 2002 — Expected Maturity Date
2003
2004
2005
2006
2007
Thereafter
Total
Fair Value
In millions of Mexican Pesos (U.S. dollars)
Fixed Rate Debt
—
—
—
—
—
—
—
—
U. S. Dollar denominated
219.1
1,588.1
43.2
3,653.8
—
—
5,535.2
2,247.5
Weighted-average interest rate
12.4
%
11.5
%
14.2
%
14.2
%
—
—
—
—
Variable Rate Debt
U. S. Dollar denominated
77.7
1,105.6
1,440.3
400.5
26.9
—
3,051.1
3,051.1
Weighted-average interest rate
3.5
%
4.0
%
4.3
%
4.5
%
5.3
%
—
—
—
Forward Exchange Derivatives
Receive Mexican Pesos/
Pay U.S. Dollars
—
—
—
—
—
—
—
—
Average exchange rate
—
—
—
—
—
—
—
—
Receive U.S. Dollars/
Pay Mexican Pesos
—
—
—
—
—
—
—
—
Average exchange rate
—
—
—
—
—
—
—
—
Note: To determine the weighted-average interest rate for variable rate
debt, LIBOR interest rate was forecasted by CIEMEX-WEFA assuming 1.33%. for
2003, 1.84% for 2004, 2.24% for 2005, 2.4% for 2006 and 3.15% for 2007.
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
On June 1, 2003, we failed to make a U.S.$25.0 million interest payment
which was due on the Iusacell senior notes. While we have a 30-day grace
period to make the payment before an event of default will occur, we do not
expect to make the June 1, 2003 interest payment within that grace period. As
a result, an event of default under the Iusacell indenture will occur and the
holders of those notes will have the right to declare the Iusacell senior notes
immediately due and payable.
During the first half of 2003, Iusacell Celular exceeded the permitted
leverage ratio (as defined in the senior refinancing secured loan) of 2.50. On
April 28, 2003, Iusacell Celular and the lenders entered into the second
amendment and waiver to increase the permitted leverage ratio under the senior
refinancing secured loan from 2.50 to 2.70. Under the second amendment and
waiver, Iusacell Celular temporarily agreed not to make any restricted payment,
loan or advance to, or repay any loan or advance from any affiliate, provided
that if Iusacell Celular or any of its subsidiaries makes any payment on the
principal of any indebtedness (as defined in the senior refinancing secured
loan), Iusacell Celular or the relevant subsidiary will simultaneously prepay a
pro rata amount outstanding under the senior refinancing secured loan. On May
22, 2003, the second amendment and waiver was extended until June 13, 2003. On
June 12, 2003, the second amendment and waiver was further extended until June
26, 2003. On June 26, 2003, if the second amendment and waiver is not further
extended, Iusacell Celular will be in default of a financial ratio covenant
under the senior refinancing secured loan, which will constitute an event of
default under that loan as if the second amendment and waiver had never been
executed. See Item 5, "Operating and Financial Review and Prospects —
Liquidity and Capital Resources — Iusacell Celular Long-Term Indebtedness –
Loan Covenant Waivers and Modifications."
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ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM
15.       CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
The Chief Executive
Officer and Chief Financial Officer of Iusacell have evaluated the
effectiveness of Iusacell's disclosure controls and procedures (as such term is
defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act) as of a date
within 90 days prior to the filing date of this Annual Report (the "Evaluation
Date"). Based on such evaluation, such officers have concluded that, as of the
Evaluation Date, Iusacell's disclosure controls and procedures are effective in
alerting them on a timely basis to material information relating to Iusacell
(including its consolidated subsidiaries) required to be included in Iusacell's
reports filed or submitted under the Exchange Act.
Changes in Internal Controls.
Since the Evaluation Date, there have not
been any significant changes in Iusacell's internal controls or in other
factors that could significantly affect such controls. No significant
deficiencies and material weaknesses were identified that required corrective
actions.
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Iusacell has two audit
committee financial experts serving on our Audit Committee. Such financial
experts are Mr. Alfred C. Giammarino, a Series A Director, and Mr. Jack Lester,
a Series V alternate Director.
For a description of Mr. Giammarino's relevant experience, see Item 6,
"Directors, Senior Management and Employees — Directors and Senior Management —
Biographies."
Jack Lester has been an alternate member of the Board of Directors of
Iusacell since March 2001. Mr. Lester has been the Chief Financial Officer of
Vodafone Americas Inc. (VAI) since 2000. At VAI, Mr. Lester is responsible
for, among other things, financial planning and analysis, accounting, financial
reporting, cash management, investment management and risk management.
Previously, he had served as Director of Finance of Satellite Services for
Vodafone AirTouch from 1999 to 2000 and for AirTouch International from 1996 to
1999. Prior to that, Mr. Lester had served as Director of Corporate
Development for AirTouch Communications from 1991 to 1996. Mr. Lester also
previously held the position of Financial Analyst at AT&E Corporation and of
Venture Analyst at Equitec Leasing Company. Mr. Lester holds an M.B.A. from
the University of Southern California and a bachelor's degree in Business
Administration — Accounting from the University of California, Berkeley.
ITEM 16B.
CODE OF ETHICS
In May, 2002 we adopted a code of ethics. Our code of ethics applies to
all of our employees, including the principal executive officer, principal
financial officer, principal accounting officer and controller and persons
performing similar functions. During 2002, we implemented training courses in
the code of ethics to all our employees. Every new employee is provided also
with training and a copy of our code of ethics. Our code of ethics, together
with an English translation, is also posted on our internet website:
www.iusacell.com.
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers, which has been appointed by Iusacell's Board of
Directors, has served as Iusacell's independent public accountants for each of
the fiscal years in the three-year period ended December 31, 2002. Each year, the Audit Committee submits a recommendation to Iusacell's Board of Directors
to ratify the re-appointment of Iusacell's independent public accountants.
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Table of Contents
The following table presents the aggregate fees for professional audit
services and other services rendered by PricewaterhouseCoopers to Iusacell in
2002.
Fees Paid to PricewaterhouseCoopers
2002
Thousands of pesos
Audit Fees
(1)
9,385
Audit-related Fees
(2)
3,421
Tax Fees
(3)
1,213
All Other Fees
(4)
1,044
Total
15,063
(1)
Audit fees include services performed by the independent accountant
to comply with generally accepted accounting standards in Mexico and the
United States. Audit fees also include fees for services provided by
the independent accountants in connection with statutory and regulatory
filings or engagements, comfort letters, statutory audits, attest
services, consents and assistance with and review of documents filed
with the SEC.
(2)
Audit-related fees include employee benefit plan audits, accounting
consultations and audits in connection with internal control reviews,
attest services that are not required by statute or regulation and
consultation concerning financial accounting and reporting standards.
(3)
Tax fees include fees for tax compliance, tax planning and tax
advice. Tax compliance generally involves preparation of original and
amended tax returns, claims for refund and tax payment-planning
services. Tax planning and tax advice encompass assistance with tax
audits and appeals, employee benefit plans and requests for rulings or
technical advice from taxing authorities.
(4)
All other fees include mainly services related to the purchasing
information system implementation and design.
PART III
ITEM 17.
FINANCIAL STATEMENTS
We have responded to Item 18 in lieu of responding to this Item 17.
ITEM 18.
FINANCIAL STATEMENTS
See pages F-1 to S-II.
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Table of Contents
ITEM 19.
EXHIBITS
Documents filed as exhibits to this Annual Report.
Exhibit
No.
Exhibit
1.1*
By-laws (
estatutos
) of
Grupo Iusacell, S.A. de C.V.
, as amended on
April 21, 2003, (English translation).
2.1
Shareholders Agreement dated as of March 30, 2001 by and among
Iusacell, Bell Atlantic Latin America Holdings, Inc., Bell
Atlantic International, Inc., Bell Atlantic New Zealand Holdings,
Inc. and Vodafone Americas B.V. (incorporated herein by reference
to Exhibit 2(a) of Iusacell's Annual Report on Form 20-F for
fiscal year 2000 — File No. 001-14938).
2.2
Indenture dated as of December 16, 1999 among
Grupo Iusacell, S.A.
de C.V.
, Verizon Communications Inc. and The Bank of New York, as
trustee (incorporated herein by reference to Exhibit 4.1 of the
Registration Statement F-4 — Registration Number 333-95547).
2.3
Indenture dated as of July 25, 1997 among
Grupo Iusacell Celular,
S.A. de C.V.
, certain subsidiaries of
Iusacell Celular, S.A. de
C.V.
and First Union National Bank, as trustee (incorporated
herein by reference to Exhibit 4.1 of the Registration Statement
F-4 — Registration Number 333-37431).
4.1
Agreement for Equipment, Furnish and Installation for Iusacell's
Cellular Network, dated as of December 10, 1997, among
Grupo
Iusacell Celular, S.A. de C.V.
, Lucent Technologies World
Services, Inc. and
Lucent Technologies de México, S.A. de C.V.
(incorporated herein by reference to Exhibit A of Iusacell
Celular's Annual Report on Form 20-F for fiscal year 1997).
4.2
Amended and Restated Credit Agreement, dated as of July 25, 1997,
as amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
and JP Morgan, as sole Bookrunner and Lead
Arranger, and The Chase Manhattan Bank, as Administrative Agent
and Collateral Agent, BNP Paribas, Citibank N.A., The
Toronto-Dominion Bank and
BBVA Bancomer S.A.
, as Arrangers
(incorporated herein by reference to Exhibit 4(b) of Iusacell's
Annual Report on Form 20-F for fiscal year 2000 — File No.
001-14938).
4.3*
Amended and Restated Master Lease Agreement (English version),
dated as of May 16, 2002, among
MATC Celular, S. de R.L. de C.V.
,
Grupo Iusacell Celular, S.A. de C.V.
and
Iusacell Arrendadora,
S.A. de C.V.
4.4*
Amended and Restated Master Lease Agreement (English version),
dated as of May 16, 2002, between
MATC Celular, S. de R.L. de C.V.
and
Grupo Iusacell Celular, S.A. de C.V.
, for and on behalf of
itself and its affiliates.
4.5*
Amended and Restated Build-to-Suit and Site Development Agreement,
dated as of May 16, 2002, between
MATC Celular, S. de R.L. de C.V.
and
Grupo Iusacell Celular, S.A. de C.V.
, for and on behalf of
itself and its affiliates.
4.6
First Amendment and Waiver, dated as of December 7, 2001, to the
Amended and Restated Credit Agreement, dated as of July 25, 1997,
as amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent
(incorporated herein by reference to Exhibit 4.3 of Grupo
Iusacell's Annual Report on Form 20-F for fiscal year 2001 — File No. 001-14938)
109
Table of Contents
Exhibit
No.
Exhibit
4.7*
Second Amendment and Waiver, dated as of April 28, 2003, to the
Amended and Restated Credit Agreement, dated as of July 25, 1997,
as amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.
4.8*
First Amendment to the Second Amendment and Waiver, dated as of
April 28, 2003, to the Amended and Restated Credit Agreement,
dated as of July 25, 1997, as amended and restated as of March 29,
2001 among
Grupo Iusacell Celular, S.A. de C.V.
, the lenders party
thereto, and JP Morgan Chase Bank as Administrative Agent and
Collateral Agent.
4.9*
Second Amendment, dated as of June 10, 2003, to the Second
Amendment and Waiver dated as of April 28, 2003, to the Amended
and Restated Credit Agreement, dated as of July 25, 1997, as
amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.
7.1*
Computation of ratio of earnings to fixed charges.
8.1*
List of subsidiaries.
12.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
12.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
*
Filed herewith.
110
Table of Contents
GLOSSARY OF TELECOMMUNICATIONS TERMS
1XRTT:
A member of CDMA 2000 which is a family of standards that defines the radio
interface allowing a smooth transition from CDMA (1S-95) systems. This
family of standards involve some variants and the services, offerings, such
as voice and packet data on a single carrier (1XRTT), data only (1X-DO).
Analog:
A transmission method employing a continuous electrical signal that varies in
amplitude or frequency in response to changes in sound, light, position,
etc., impressed on a transducer in the sending device.
Band:
A range of frequencies between two defined limits.
CDMA:
Code Division Multiple Access, the highest-capacity commercial digital
standard available. CDMA increases capacity by transmitting a large number
of simultaneous conversations over a single channel, assigning unique codes
that can be re-assembled at the receiving end.
Cellular A-band:
The range of frequencies used to provide cellular wireless service between
825-835 MHz and between 870-880 MHz of the radio spectrum.
Cellular B-band:
The range of frequencies used to provide cellular wireless service between
835-845 MHz and between 880-890 MHz of the radio spectrum.
Channel:
A pathway for the transmission of information between a sending point and a
receiving point.
Covered POPS:
The number of POPs in a defined area for whom a cellular signal is accessible.
CPP:
Calling Party Pays is a cellular telephony payment structure in which the
party that places a call to a cellular telephone is billed for
interconnection access, and the recipient is not billed for the airtime
charges corresponding to the call.
Digital:
A method of storing, processing and transmitting information through the use
of distinct electronic or optical pulses that represent the binary digits 0
and 1. Digital transmission and switching technologies employ a sequence of
discrete, distinct pulses to represent information, as opposed to the
continuous analog signal.
Hertz:
The unit measuring the frequency with which an alternating electromagnetic
signal cycles through the zero-value state between lowest and highest states.
One hertz (abbreviated Hz) equals one cycle per second; KHz (kilohertz)
stands for thousands of hertz; MHz (megahertz) stands for millions of hertz;
and GHz (gigahertz) stands for billions of hertz.
IMTS:
Improved mobile telephone service; IMTS systems are analog mobile telephone
systems that employ a single powerful radio base station to communicate with
IMTS mobile telephones that are within approximately a 25-mile radius.
LATA:
Local access and transport area; an area in which a local exchange carrier is
permitted to provide service as designated by the 1982 United States federal
court decree resulting from antitrust litigation brought by the United States
Department of Justice against AT&T corporation
PCS:
Personal communications services. PCS represents a digital wireless
communica-tions service with the ability to provide features such as voice,
video and data applications, short messaging, voicemail, caller
identification, call conferencing and call forwarding.
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Table of Contents
PCS A-band:
The range of frequencies used to provide PCS wireless services between
1.850-1.865 GHz and between 1.930-1.945 GHz of the radio spectrum.
PCS B-band:
The range of frequencies used to provide PCS wireless services between
1.870-1.885 GHz and between 1.950-1.965 GHz of the radio spectrum.
PCS D-band:
The range of frequencies used to provide PCS wireless services between
1.865-1.870 GHz and between 1.945-1.950 GHz of the radio spectrum.
PCS E-band:
The range of frequencies used to provide PCS wireless services between
1.885-1.890 GHz and between 1.965-1.970 GHz of the radio spectrum.
Penetration Rate:
A cellular operator's subscribers within a defined area derived by total POPs
within that area.
POPs:
The population for a particular area based on the 2000 Mexican census.
Population figures for 1996, 1997, 1998 and 1999 have been calculated by
applying the forecast annual population growth rate for 1995, as published by
the
Instituto Nacional de Estadística, Geografía e Informática
(the National
Institute of Statistics, Geography and Information Processing, "INEGI") to
the official 1990 census figures. Population figures for 2002 have been
calculated by applying the forecast annual population growth rate for 2002 to
the data derived from the 2000 Mexico census. Where the population
information is set forth without reference to a year, the information given
is as of December 31, 2002. The SCT divides Mexico into nine geographic
Regions for the provision of cellular service (individually a "Region" and
collectively the "Regions"). Information regarding the numbers of POPs
within a given Region has been calculated using the national population
growth rate, as published by INEGI. Information regarding the number of POPs
within a given city has been calculated using the growth rate for that city,
as published by INEGI, which may not be the same as the national growth rate
published by INEGI. The number of POPs in any Region or other geographic
area should not be confused with the current number of users of wireless
services in that Region or other geographic area and is not indicative of the
number of users of wireless services in the future.
Roaming:
A service offered by mobile communications providers which allows a
subscriber to use his or her telephone while in the service area of another
carrier.
Switch:
A device that opens or closes circuits or selects the paths or circuits to be
used for transmission of information. Switching is the process of
interconnecting circuits to form a transmission path between users.
TDMA:
Time division multiple access, a standard of digital cellular technology,
which provides more call carrying capacity than analog, but less than CDMA,
by interlacing conversations on a single channel through time-sharing
methods
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Table of Contents
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all requirements for filing on
Form 20-F and has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
GRUPO IUSACELL, S.A. DE C.V.
By: /s/ CARLOS ESPINAL G.
Carlos Espinal G.
President and Chief Executive Officer
By: /s/ RUSSELL A. OLSON
Russell A. Olson
Executive Vice President and
Chief Financial Officer
Date: June 25, 2003
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Table of Contents
CERTIFICATIONS
I, Carlos Espinal G., certify that:
1.
I have reviewed this annual report on Form 20-F of
Grupo Iusacell, S.A.
de C.V.
;
2.
Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4.
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a.
designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b.
evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date");
c.
and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a.
all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b.
any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
6.
The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: June 25, 2003
By:
/s/ Carlos Espinal G.
Carlos Espinal G.
President and Chief Executive Officer
114
Table of Contents
CERTIFICATIONS
I, Russell A. Olson, certify that:
1.
I have reviewed this annual report on Form 20-F of
Grupo Iusacell, S.A.
de C.V.
;
2.
Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4.
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a.
designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b.
evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date");
c.
and presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a.
all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b.
any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
6.
The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: June 25, 2003
By:
/s/ Russell A. Olson
Russell A. Olson
Executive Vice President and Chief Financial Officer
115
Table of Contents
GRUPO IUSACELL, S.A. DE C.V.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
INDEX
CONTENTS
PAGE
Report of Independent Accountants
F-2
Consolidated Balance Sheets — December 31, 2002 and
2001
F-4
Consolidated Income Statements — Fiscal Years Ended
December 31, 2002, 2001 and 2000
F-5
Consolidated Statements of Changes in Stockholders'
Equity — Fiscal Years Ended December 31, 2002, 2001 and
2000
F-6
Consolidated Statements of Changes in Financial
Position — Fiscal Years Ended December 31, 2002, 2001
and 2000
F-7
Notes to the Consolidated Financial Statements
F-8
Schedule II — Valuation and Qualifying Accounts
S-II
F-1
Table of Contents
REPORT OF INDEPENDENT ACCOUNTANTS
Mexico City, February 28, 2003, except for Note 24 for which the date is June 13, 2003
The Board of Directors and Stockholders of
Grupo Iusacell, S. A. de C. V.:
We have audited the accompanying consolidated balance sheets of Grupo
Iusacell, S. A. de C. V. and subsidiaries (the Company) as of December 31, 2002
and 2001, and the related consolidated statements of income, of changes in
stockholders' equity and of changes in financial position for each of the three
years in the period ended December 31, 2002 and the financial statement
schedule included in this Form 20-F. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards in Mexico and the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement and are prepared in
accordance with generally accepted accounting principles. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements and financial
statement schedule referred to above present fairly, in all material respects,
the consolidated financial position of Grupo Iusacell, S. A. de C. V. and
subsidiaries as of December 31, 2002 and 2001, and the consolidated results of
its operations, changes in stockholders' equity and changes in its consolidated
financial position for each of the three years in the period ended December 31,
2002, in conformity with accounting principles generally accepted in Mexico.
Accounting principles generally accepted in Mexico vary in certain
significant respects from accounting principles generally accepted in the
United States and as allowed by Item 18 to Form 20-F. The application of the
latter would have affected the determination of consolidated net income for
each of the three years in the period ended December 31, 2002 expressed in
constant Mexican pesos and the determination of consolidated stockholders'
equity at December 31, 2002 and 2001 also expressed in constant Mexican pesos
to the extent summarized in Note 23 to the consolidated financial statements.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As mentioned in
Note 24 to the consolidated financial statements, on June 1, 2003, the Company
failed to make its scheduled interest payment on its Senior Notes due 2006.
This will constitute an event of default if the Company does not make such
interest payment within a thirty-day cure period. If an event of default
occurs, it would permit the holders of the notes to accelerate their maturity.
Additionally, the Company's main subsidiary, Grupo Iusacell Celular, S.A.
de C.V. has incurred a technical default and violated a financial leverage
covenant under its Amended and Restated Syndicated Loan. The subsidiary has
obtained an amendment that will expire on June 26, 2003 or earlier under
certain circumstances. If such amendment is not extended, upon its expiration
Grupo Iusacell Celular, S.A. de C.V. will be in default and such event will
permit the lenders to demand the outstanding principal and interest on the
debt.
Lastly, as discussed in Note 24 to the consolidated financial statements,
the Company's two largest shareholders have recently agreed to tender all of
their shares, representing 73.90% of the Company's outstanding shares to an
unrelated party. This event, if consummated, will transfer control of the
Company to a new unrelated party. Under the indentures governing the Senior
Notes due 2006 and the Senior Notes due 2004, this constitutes a change of
control under which the holders of the notes have the right to require the
Company and Grupo Iusacell Celular, S.A. de C.V., respectively, to repurchase
such holders' notes. This also constitutes a change of control and would
constitute an event of default under the Amended and Restated Syndicated Loan
so the lenders under the Amended
F-2
Table of Contents
and Restated Syndicated Loan would have the right to declare all amounts
outstanding under the Amended and Restated Syndicated Loan immediately due and
payable.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These matters and management's plans are more
fully discussed in Note 24 to the consolidated financial statements. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
PRICEWATERHOUSECOOPERS
/s/ José S. Oropeza de la Cruz
José S. Oropeza de la Cruz
Audit Partner
F-3
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Notes 1, 2, 3 and 4)
Expressed in thousands of
constant Mexican pesos as of December 31, 2002
December 31,
2002
2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 4c.)
Ps. 160,035
Ps. 439,185
Current portion of escrow account (Note 10b.)
—
464,859
Accounts receivable:
Trade, net of Ps.93,603 and Ps.222,912 of
allowance for doubtful accounts in 2002 and 2001,
respectively (Note 4e.)
640,643
629,217
Due from related parties (Note 5)
—
1,409
Recoverable taxes and other
537,000
687,340
1,177,643
1,317,966
Inventories – Net (Note 6)
35,698
268,149
Total current assets
1,373,376
2,490,159
Investments (Note 7)
34,421
36,005
Property and equipment — Net (Note 8)
9,367,325
10,008,780
Other assets — Net (Note 9)
2,278,230
2,787,346
Excess of cost of investments in subsidiaries over
book value – Net of accumulated amortization of
Ps.990,498 in 2002 and Ps.860,716 in 2001 (Note 4j.)
2,069,276
2,193,990
Total assets
Ps. 15,122,628
Ps. 17,516,280
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable (Note 10g.)
Ps. 125,272
Ps. 116,306
Current portion of long-term debt (Note 10)
77,672
28,211
Trade accounts payable
351,479
807,755
Notes payable to suppliers, short-term (Note 11)
12,406
130,541
Due to related parties (Note 5)
181,392
63,507
Taxes and other payables
643,612
914,719
Income tax (Note 12)
73,137
57,604
Employee profit sharing (Note 12)
—
2,821
Total current liabilities
1,464,970
2,121,464
Long-term debt (Note 10)
8,193,075
7,622,616
Notes payable to suppliers, long-term (Note 11)
96,463
61,795
Due to related parties (Note 5)
—
81,347
Other accounts payable, long-term (Notes 4d. and 4m.)
3,018
57,862
Total liabilities
9,757,526
9,945,084
Commitments and contingencies (Note 13)
—
—
STOCKHOLDERS' EQUITY:
Contributed capital (Notes 14, 15 and 16):
Capital stock
7,139,558
7,139,558
Capital contributed
1,404,961
1,404,961
8,544,519
8,544,519
Earned capital (Note 16):
Accumulated (losses) profits:
Legal reserve
20,065
20,065
For prior years
(1,333,740
)
(805,252
)
For the year
(2,084,037
)
(528,488
)
(3,397,712
)
(1,313,675
)
Accumulated other comprehensive income
208,135
208,135
Total majority stockholders' equity
5,354,942
7,438,979
Minority interest
10,160
132,217
Total stockholders' equity
5,365,102
7,571,196
Total liabilities and stockholders' equity
Ps. 15,122,628
Ps. 17,516,280
The accompanying twenty-four notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Notes 1, 2, 3 and 4)
Expressed in thousands of
constant Mexican pesos as of December 31, 2002
Years ended December 31,
2002
2001
2000
Revenues:
Services
Ps. 4,933,603
Ps. 5,955,461
Ps. 5,497,454
Telephone equipment sales and other
593,353
641,737
558,850
5,526,956
6,597,198
6,056,304
Cost of sales:
Cost of services
1,533,026
1,619,711
1,547,575
Cost of telephone equipment sales and other
488,093
399,644
376,288
2,021,119
2,019,355
1,923,863
Gross profit
3,505,837
4,577,843
4,132,441
Operating expenses
1,817,063
2,195,070
2,033,599
Depreciation and amortization
2,247,065
2,768,521
2,546,289
Other operating income (Note 8)
100,979
325,436
—
Operating loss
(457,312
)
(60,312
)
(447,447
)
Integral financing cost (gain):
Interest expense – Net
900,075
854,773
1,038,462
Foreign exchange (gain) loss  — Net
1,028,698
(237,606
)
17,740
Gain from monetary position
(415,625
)
(281,823
)
(476,396
)
1,513,148
335,344
579,806
Equity participation in net loss (profit) of associated
companies and net loss (gain) on sale of equity
investments (Notes 2 and 7)
9,741
(6,890
)
20,767
Loss from continuing operations before assets tax,
income tax and minority interest
(1,980,201
)
(388,766
)
(1,048,020
)
Provisions for:
Assets tax
111,220
154,749
165,246
Income tax
9,250
—
—
120,470
154,749
165,246
Loss from continuing operations before minority interest
(2,100,671
)
(543,515
)
(1,213,266
)
Minority interest
16,634
21,874
17,399
Loss from continuing operations
(2,084,037
)
(521,641
)
(1,195,867
)
Profit from discontinued operations (net of income tax)
(Note 19)
—
—
(9,370
)
Loss after discontinued operations
(2,084,037
)
(521,641
)
(1,186,497
)
Cumulative effect of the adoption of the new accounting
pronouncement (Note 4d.)
—
6,847
—
Net loss for the year
(Ps. 2,084,037)
(Ps. 528,488)
(Ps. 1,186,497)
Weighted-average number of shares of common stock
outstanding (thousands)
1,862,025
1,495,140
1,396,672
Basic net loss per share of common stock (pesos):
Loss from continuing operations
(Ps. 1.12)
(Ps. 0.35)
(Ps. 0.86)
Profit from discontinued operations
—
—
0.01
Cumulative effect of the adoption of the new accounting
pronouncement
—
(0.00
)
—
Basic net loss per share of common stock
(Ps. 1.12)
(Ps. 0.35)
(Ps. 0.85)
The accompanying twenty-four notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(Notes 1, 2, 3 and 4)
Expressed in thousands of constant Mexican pesos
as of December 31, 2002
Accumulated
Accumulated profits (losses)
other
Total
Capital stock
Capital
comprehensive
Minority
stockholders1
subscribed
contributions
Legal reserve
Prior years
For the year
income
interest
equity
Balance at
December 31, 1999
Ps. 5,684,848
Ps. 178,606
Ps. 401,310
Ps. 39,761
Ps. 6,304,525
Application of
1999 net profit
Ps. 20,065
Ps. 381,245
(401,310
)
—
Increase in capital
stock from the
primary offering
469,211
1,226,355
1,695,566
Decrease in minority
interest
(12,866
)
(12,866
)
Comprehensive loss
for the year
(1,186,497
)
Ps. 208,135
(978,362
)
Balance at
December 31, 2000
6,154,059
1,404,961
20,065
381,245
(1,186,497
)
208,135
26,895
7,008,863
Application of 2000
net loss
(1,186,497
)
1,186,497
—
Increase in capital
stock
985,499
985,499
Increase in minority
interest
105,322
105,322
Comprehensive loss
for the year
(528,488
)
(528,488
)
Balance at
December 31, 2001
7,139,558
1,404,961
20,065
(805,252
)
(528,488
)
208,135
132,217
7,571,196
Application of
2001 net loss
(528,488
)
528,488
—
Decrease in minority
interest
(122,057
)
(122,057
)
Comprehensive loss
for the year
(2,084,037
)
(2,084,037
)
Balance at December
31, 2002
Ps. 7,139,558
Ps. 1,404,961
Ps. 20,065
(Ps. 1,333,740)
(Ps. 2,084,037)
Ps. 208,135
Ps. 10,160
Ps. 5,365,102
The accompanying twenty-four notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Notes 1, 2, 3 and 4)
Expressed in thousands of constant
Mexican pesos as of December 31, 2002
Year ended December 31,
2002
2001
2000
Operating Activities:
Loss from continuing operations
(Ps. 2,084,037)
(Ps. 521,641)
(Ps. 1,195,867)
Items not requiring the use of resources:
Depreciation and amortization
2,247,065
2,768,521
2,546,289
Equity participation in net loss (gain) of associated
companies and net loss (gain) on sale of equity
investments
9,741
(6,890
)
20,767
Deferred income tax
9,250
—
—
Minority interest
(16,634
)
(21,874
)
(17,399
)
165,385
2,218,116
1,353,790
Resources (used for) provided by operating activities:
Trade accounts receivable
(11,426
)
72,221
177,792
Related parties, net
37,402
(95,761
)
28,371
Recoverable taxes and other
(59,800
)
(55,038
)
116,278
Inventories
232,451
21,069
(41,969
)
Trade accounts payable
(539,743
)
270,705
(166,229
)
Taxes and other payables
(271,107
)
(321,716
)
57,159
Income tax
15,533
16,878
38,680
Employee profit sharing
(2,821
)
2,816
(449
)
Other
(54,844
)
54,248
764
Resources (used for) provided by operating
activities before discontinued operations, extraordinary
item and cumulative effect of the adoption of the new
accounting pronouncement
(488,970
)
2,183,538
1,564,187
Cumulative effect of the adoption of the new accounting
pronouncement
—
(6,847
)
—
Amortization of tax loss carryforwards
—
—
—
Profit from discontinued operations
—
—
9,370
Resources (used for) provided by operating activities
(488,970
)
2,176,691
1,573,557
Financing activities:
Proceeds from long-term debt
658,756
2,640,498
164,248
Principal payments on long-term debt
(38,836
)
(3,299,457
)
(1,258,761
)
Proceeds from related parties financing
—
81,347
—
Increase (decrease) in notes payable
8,966
(10,947
)
13,043
Increase in capital stock
—
985,499
—
Effect of rights and primary offerings
—
—
1,695,566
Accumulated effect of deferred taxes
—
—
208,135
Resources provided by financing activities
628,886
396,940
822,231
Investing activities:
Purchase of property and equipment
(808,224
)
(2,044,030
)
(2,262,344
)
(Purchase) sale of common stock of associated companies
(167,019
)
4,202
(20,719
)
Acquisition of Portatel, net of cash
—
(523,553
)
—
Increase in telephones to be amortized
—
(551,524
)
(1,150,163
)
Decrease in escrow account
464,859
523,527
536,311
Disposal (purchase) of other assets
91,318
(269,357
)
(157,682
)
Resources used for investing activities
(419,066
)
(2,860,735
)
(3,054,597
)
Net decrease in cash and cash equivalents
(279,150
)
(287,104
)
(658,809
)
Cash and cash equivalents at the beginning of the year
439,185
726,289
1,385,098
Cash and cash equivalents at the end of the year
Ps. 160,035
Ps. 439,185
Ps. 726,289
The accompanying twenty-four notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002, 2001 AND 2000
Except as otherwise noted, expressed
in thousands of constant Mexican pesos as of December 31, 2002.
Amounts expressed in U.S. Dollars are in thousands.
Note 1 — Entity, Nature of Business and Principal Stockholders
Entity and nature of business
As a part of the recapitalization and restructuring plan of
Grupo
Iusacell, S.A. de C.V.
, a new holding company,
Nuevo Grupo Iusacell, S.A. de
C.V.
was incorporated on August 6, 1998 to acquire and hold all of the
outstanding shares of
Grupo Iusacell, S.A. de C.V
. On March 1, 2000, both
companies changed their names:
Nuevo Grupo Iusacell, S.A. de C.V.
changed its
name to
Grupo Iusacell, S.A. de C.V.
(New Iusacell), and
Grupo Iusacell, S.A.
de C.V.
changed its name to
Grupo Iusacell Celular, S.A. de C.V.
(Old
Iusacell). In July 1999, New Iusacell initiated an offer to exchange its two
series of common stock for the four series of common stock of Old Iusacell then
outstanding on a one for one basis. As a result of the exchange, New Iusacell
acquired 99.50% of Old Iusacell shares when the offer expired on August 10,
1999.
New Iusacell and its subsidiaries (Old Iusacell and its subsidiaries prior
to the recapitalization) are referred to collectively herein as the Company.
On February 1, 2000, New Iusacell launched a second exchange offer and at
its conclusion, Old Iusacell's ADS depositary, The Bank of New York, converted
the remaining, non-exchanged Old Iusacell ADSs into New Iusacell shares. As a
result of these transactions, New Iusacell increased its ownership in Old
Iusacell to 99.99%.
In April 2000, New Iusacell launched a primary public offering under which
New Iusacell sold 10,529,700 series V ADSs at a price of U.S.$.015125 per ADS
raising Ps.1,695,566 (U.S.$159,370) in net proceeds.
On June 15, 2000, New Iusacell launched a private purchase offer under
which the Company expected to purchase the remaining Old Iusacell shares not
tendered during the two exchange offers. Pursuant to this private offer, New
Iusacell purchased a total of 9,717 series L shares of Old Iusacell and 392
series D shares of Old Iusacell. When this offer expired on September 29,
2000, there were 38,684 shares of Old Iusacell not owned by New Iusacell.
These 38,684 shares represented 0.002% of the total outstanding shares of Old
Iusacell at December 31, 2000.
On March 30, 2001, Old Iusacell's stockholders approved a 30,000 to 1
reverse stock split. Upon implementation of the reverse split in the second
quarter of 2001, the Company increased its ownership in Old Iusacell to
100.00%.
On September 27, 2001, at ordinary and extraordinary stockholders'
meetings, the Company's stockholders approved a capital stock increase for
Ps.985,499 (U.S.$100,000) through the issuance of 224,461,739 series A shares
and 210,320,870 series V shares. The Company's major stockholders' subscribed
to their proportional part of the increase and the Company launched a rights
offering for the unsubscribed series V shares. When the offer expired, a total
of 82,046,734 series V shares were subscribed to, leaving 40,694,059 series V
shares unsubscribed to, which were then subscribed to by Verizon
Communications, Inc. (Verizon) through some of its subsidiaries.
Old Iusacell is a holding company incorporated on October 6, 1992. Its
subsidiaries are primarily engaged in the wireless telecommunications business
and hold concessions to operate cellular telephone systems in five market areas
(each a Region) in Mexico. New Iusacell, through Old Iusacell, holds the
non-wire line cellular concessions for Region 5 (Guadalajara), Region 6 (Leon),
Region 7 (Puebla), a cellular authorization for Region 9 (Mexico City), and in
2001, acquired the company that holds the concession for Region 8 (Mérida)
(Note 2).
F-8
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
New Iusacell subsidiaries also hold concessions to provide long distance
services, nationwide and international paging services and, starting on
December 2001, to provide commercial wireless personal communication services
(PCS) in Regions 1 and 4 in northern Mexico.
Principal stockholders
In February 1997, after execution of a definitive agreement between Old
Iusacell's principal stockholders and approval by the Mexican government, Bell
Atlantic Corporation (Bell Atlantic) assumed management control of Old Iusacell
from Carlos Peralta and companies and individuals controlled by or related to
him (together, the Peralta Group). After the incorporation of New Iusacell,
Bell Atlantic also has management control of New Iusacell.
On June 30, 2000, Bell Atlantic and GTE Corporation, completed their
merger, creating Verizon. References made to Verizon with respect to dates
prior to June 30, 2000 are references to Bell Atlantic prior to its acquisition
of GTE Corporation.
On April 4, 2001, after obtaining the authorization of the Mexican
regulatory agencies and the finalization of a stockholders' agreement between
the Peralta Group and Vodafone Group Plc (Vodafone), the Peralta Group and
Vodafone closed the transaction under which the Peralta Group sold its 34.50%
ownership in New Iusacell to Vodafone. Verizon and Vodafone hold substantial
ownership interests (direct or indirect) in New Iusacell.
Note 2 — Acquisitions, Dispositions and Company Structure
During 2001, the Company incorporated two new subsidiaries:
Iusacell PCS
de México, S.A. de C.V.
for the financing of the development of the PCS
services in Regions 1 and 4, and Iusatel USA, Inc. to be engaged in the long
distance business in the United States of America. Iusatel USA, Inc. started
operations in December 2002.
On March 22, 2001, the Company sold its 65.00% equity interest in
Satelitrón, S.A. de C.V
. As a result of the sale, the Company recorded a gain
of Ps.4,203 (U.S.$429) before taxes.
During 2002,
Inflight Phone de México, S.A. de C.V.
and
Promotora Celuar,
S.A. de C.V.
, were merged into
Iusacell, S.A. de C.V
. The merger was recorded
as of July 31, 2002.
Acquisition of Grupo Portatel, S.A. de C.V.
On October 19, 2001, Old Iusacell completed the acquisition of a 78.34%
ownership in
Grupo Portatel, S.A. de C.V.
and its subsidiaries (Portatel) for
Ps.552,317 (U.S.$56,588). The Company also reached an agreement to acquire the
remaining 21.66% ownership in Portatel for Ps.157,630 (U.S.$16,150). The
Company closed the acquisition of this remaining ownership on February 8, 2002.
Portatel is engaged in the wireless communications business and holds the
concession to operate cellular telephone systems in the Region 8, which covers
the Mexican states of Yucatan, Campeche, Quintana Roo, Chiapas and Tabasco in
the southeast of Mexico.
The consolidated income statements of the Company include the consolidated
results of Portatel beginning October 19, 2001. The assets acquired and
liabilities assumed were recorded at estimated fair values as determined by the
Company's management based on information currently available, on current
assumptions as to future operations and independent appraisals. A summary of
the assets acquired and liabilities assumed in the acquisition is as follows:
Estimated fair values:
Assets acquired
Ps. 696,534
Liabilities assumed
(206,210
)
Goodwill (amortized by the straight-line method over the
remaining life of the concession)
219,623
Purchase price
Ps. 709,947
F-9
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Company Structure
Under the laws established by the Mexican government, due to Verizon's
control of New Iusacell, New Iusacell may not own the majority of the voting
stock of Mexican companies that hold concessions to provide telecommunications
services other than cellular service. As of November 1998, Old Iusacell and
Jose Ramon Elizondo, a then director of New Iusacell (the Mexican National),
entered into a joint venture formation agreement (the Agreement) pursuant to
which they agreed to participate together in the microwave frequencies leasing,
long distance, local telephony, PCS and paging businesses.
Old Iusacell and the Mexican National agreed that Old Iusacell would own
94.90% of the economic interest and 49.00% of the voting shares of
Iusatel,
S.A. de C.V.
(Iusatel), the Company's long distance concessionaire,
Iusatelecomunicaciones, S.A. de C.V.
(Iusatelecomunicaciones), the Company's
fixed wireless local telephony operation,
Punto-a-Punto Iusacell, S.A. de C.V.
(Punto-a-Punto Iusacell), a microwave frequencies concessionaire and
Iusacell
PCS, S.A. de C.V.
(Iusacell PCS), which holds concessions for 1.9GHz
frequencies in Regions 1 and 4. The Mexican National would own 5.10% of the
economic interest and 51.00% of the voting shares of these companies.
On July 29, 2002, the Mexican Government granted the Company the right to
own up to 99.99% of the voting shares of Iusacell PCS. After this resolution
was obtained, at an extraordinary stockholders' meeting held on September 12,
2002, Iusacell PCS's stockholders approved the conversion of neutral shares of
Iusacell PCS held by New Iusacell into voting shares of Iusacell PCS. After
this conversion, New Iusacell holds 94.90% of the voting shares and economic
interest of Iusacell PCS.
Iusatel, Iusatelecomunicaciones and Punto-a-Punto Iusacell (and until
September 12, 2002 Iusacell PCS) are each referred herein as a Non-Cellular
Subsidiary and together, the Non-Cellular Subsidiaries.
The Mexican National does not have the unilateral right to approve actions
at the shareholder or board level of the Non-Cellular Subsidiaries. Under each
company's by-laws, all shareholder or board action must also be approved by the
majority of the shares held by Old Iusacell (or New Iusacell) or a majority of
the board members designated by Old Iusacell (or New Iusacell), respectively.
The Agreement, together with each joint venture company's by-laws, enable
Old Iusacell or New Iusacell, as the case may be, to have management control
over the day-to-day operations and financial administration of the Non-Cellular
Subsidiaries. The Mexican National cannot alone, among other things, select,
terminate or determine the compensation of management or establish operating
and capital decisions in the ordinary course of business.
Old Iusacell signed a joint venture agreement with a Mexican company which
holds a fifteen-year concession to provide nationwide and international paging
services through July 2009. As of December 31, 2002, Infotelecom is owned
49.00%, 49.00% and 2.00%, by Old Iusacell, Banorte, S.A. (which acquired
Infomin, S.A. de C.V.
's interest in Infotelecom in exchange for the retirement
of debt) and the Mexican National, respectively. Old Iusacell committed to
contribute up to U.S.$10,500. As of December 31, 2000, Old Iusacell had
invested all U.S.$10,500. If a partner does not fulfill its responsibilities
under the joint venture agreement, sanctions could cause such partner to lose
its investment and incur a penalty of up to U.S.$1,000.
F-10
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS — (Continued)
The subsidiaries of New Iusacell, which are included in the consolidated
financial statements, are the following:
Economic interest
(direct or indirect,
as of December 31)
Subsidiary
2002
2001
(%)
(%)
Iusacell PCS, S.A. de C.V
. (Regions 1 and 4)
95
95
Iusacell PCS de México, S.A. de C.V.
95
95
Iusacell Infraestructura, S.A. de C.V.
100
100
Iusacell Arrendadora, S.A. de C.V.
100
100
Iusacell Infraestructura de México, S.A. de C.V.
100
100
Grupo Iusacell Celular, S.A. de C.V.
100
100
S.O.S. Telecomunicaciones, S.A. de C.V.
(Region 9)
100
100
Iusacell, S.A. de C.V.
100
100
Sistecel, S.A. de C.V.
100
100
Comunicaciones Celulares de Occidente, S.A. de C.V.
(Region 5)
100
100
Sistemas Telefónicos Portátiles Celulares, S.A. de C.V.
(Region 6)
100
100
Telecomunicaciones del Golfo, S.A. de C.V.
(Region 7)
100
100
Inflight Phone de México, S.A. de C.V.
—
100
Inmobiliaria Montes Urales 460, S.A. de C.V.
100
100
Mexican Cellular Investments, Inc.
100
100
Iusanet, S.A. de C.V.
100
100
Promotora Celular, S.A. de C.V.
—
100
Iusatelecomunicaciones, S.A. de C.V.
95
95
Grupo Iusacell Nicaragua, S.A.
100
100
Infotelecom, S.A. de C.V.
49
49
Punto a Punto Iusacell, S.A. de C.V.
95
95
Grupo Portatel, S.A. de C.V.
and subsidiary (Region 8)
100
78
Iusatel, S.A. de C.V.
95
95
Iusatel USA, Inc.
95
95
Note 3 — Basis of Presentation
a. Basis of presentation
The Company's consolidated financial statements have been prepared in
conformity with Mexican GAAP. The consolidated financial statements have been
presented in thousands of constant Mexican pesos as of December 31, 2002 as
required by Bulletin B-10, "Recognition of the Effects of Inflation on
Financial Information," as amended, issued by the Mexican Institute of Public
Accountants (MIPA) (Bulletin B-10).
b. Consolidated financial statements
Those companies in which the Company holds 50% or more of the capital
stock and/or exercises control over operating and financing activities are
included in the consolidated financial statements. In addition, while the
Company owns less than 50% of the voting common stock of the Non-Cellular
Subsidiaries, it consolidates them because it exercises management control over
their day-to-day operations and financial administration by appointment of the
stockholders and other arrangements (Note 2). All significant inter-company
balances and transactions have been eliminated in consolidation.
c. Use of estimates
The preparation of financial statements in conformity with Mexican GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
F-11
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
assets and
liabilities at the dates of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ from those estimates.
Note 4 — Accounting Policies
A summary of the Company's significant accounting policies is as follows:
a. Monetary unit
The financial statements are presented in Mexican pesos (Ps.), the
currency that, based on Mexican laws, must be used to prepare the accounting
records of the Company and its Mexican subsidiaries.
b. Effects of inflation on the financial statements
The consolidated financial statements of the Company have been prepared in
accordance with Bulletin B-10. The Third Amendment to Bulletin B-10 requires
the restatement of all comparative financial statements to constant Mexican
pesos as of the date of the most recent balance sheet presented. Accordingly,
the consolidated financial statements have been restated as follows:
•
The balance sheet amounts as of December 31, 2001 presented
in the consolidated financial statements have been restated to
constant Mexican pesos as of December 31, 2002 based on the National
Consumer Price Index (NCPI) published by
Banco de México
(the
Mexican Central Bank).
•
Consolidated income statements for the current and prior
years have been restated to constant Mexican pesos as of December
31, 2002 using the NCPI from the periods in which the transactions
occurred.
•
Bulletin B-12, "Statement of Changes in Financial
Information," issued by the MIPA (Bulletin B-12), addresses the
presentation of the statement of changes in financial position when
financial statements have been restated to constant Mexican pesos as
of the latest balance sheet date. Bulletin B-12 identifies the
origin and application of resources representing differences between
beginning and ending balance sheet amounts in constant Mexican
pesos, excluding the effect of holding non-monetary assets.
Bulletin B-12 also provides that monetary and foreign exchange gains
and losses should not be eliminated from resources provided by
operating or financing activities.
The items that originate from the recognition of effects of inflation on
financial information are as follows:
Restatement of non-monetary assets
Inventories are valued at the average price of the purchases made during
the period and are restated using the NCPI, without exceeding net realizable
value.
Based on the Fifth Amendment to Bulletin B-10, property and equipment,
net, and depreciation for the year are restated using the NCPI, without
exceeding net realizable value.
F-12
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Property and equipment are depreciated using the straight-line method,
based on the restated values. During the second quarter of 2001, the Company
completed a technical review of the remaining useful lives of certain analog
and digital network equipment. As a result, the weighted-average useful life
for certain communications equipment is now ten years compared with the
previous 8.7 years. This change represented a reduction of approximately
Ps.477,764 in depreciation expense for 2001. The average annual rates of
depreciation used by the Company are as follows:
2002
2001
(%)
(%)
Buildings and facilities
4
4
Communications equipment
10
10
Furniture and fixtures
10
10
Transportation equipment
17
17
Computer equipment
29
29
Cellular rental telephones
25
25
The Company does not capitalize integral financing cost for assets under
construction, unless the integral financing cost generated by loans are
directly attributable to those assets. For the years ended December 31, 2002,
2001 and 2000, the Company did not capitalize integral financing cost.
Investments in associated companies are accounted for using the equity
method based on the associated company's equity and are adjusted for the
effects of inflation in accordance with Bulletin B-10.
Restatement of stockholders' equity
The contributed and earned capital accounts include the effect of
restatement determined by applying the NCPI factor from the date capital was
contributed or earned. The restatement represents the amount required to
maintain the contributions and accumulated results in constant Mexican pesos as
of December 31, 2002.
The excess or deficit from restatement of capital account is an element of
stockholders' equity that includes surplus or deficit from holding non-monetary
assets, which represents the excess or deficit in specific values of net
non-monetary assets in comparison with the increase attributable to general
inflation as measured by the NCPI.
Integral financing (gain) cost
Integral financing (gain) cost is comprised of net interest expense,
foreign exchange gains and losses, gains and losses from net monetary position
and fluctuations in the market value of hedge derivative contracts on
foreign-denominated debt.
Foreign exchange gains and losses on transactions denominated in
currencies other than Mexican pesos result from fluctuations in exchange rates
between the date transactions are recorded and the date of settlement or period
end.
Gains and losses from net monetary position represent the effects of
inflation, as measured by the NCPI, on the Company's monetary assets and
liabilities at the beginning of each month. If monetary liabilities exceed
monetary assets, there is a gain from monetary position. If monetary
liabilities are less than monetary assets, there is a resulting loss from
monetary position.
c.      Cash and cash equivalents
Cash and cash equivalents consist primarily of bank deposits. The Company
invests its excess cash in deposits with major banks.
F-13
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
d.      Financial instruments
Effective January 1, 2001, Bulletin C-2, "Financial Instruments," issued
by the MIPA (Bulletin C-2), requires that all financial instruments be recorded
in the balance sheet at their fair value and changes in the fair value be
recorded in each period in the income statement. Bulletin C-2 also requires
that derivative financial instruments used for hedging purposes be recorded in
the balance sheet and valued using the same valuation criteria used to value
the hedged asset or liability.
The Company's financial instruments consist principally of cash and cash
equivalents, accounts receivable and payable, notes payable, long-term debt,
and foreign currency and interest hedge contracts.
Until October, 2002, the Company used derivative financial instruments to
manage the risk of variable interest rates and foreign currency exchange
fluctuations, which under Bulletin C-2, are classified as hedge transactions.
On October 7 and 10, 2002, the Company early terminated the derivative
financial instruments used for hedging purposes (Note 21).
The carrying amounts of the Company's financial instruments, as reflected
in the balance sheet, approximate their fair value as of December 31, 2002 and
2001, except for long-term debt which has a quoted market value and for the
foreign currency and interest rate hedge contracts, which as of January 1,
2001, were valued using the same valuation criteria used to value the hedged
asset or liability (Note 21).
As a result of the adoption of this new accounting pronouncement, the
Company recognized a cumulative loss on derivative financial instruments of
Ps.6,847 as of January 1, 2001. Prior to January 1, 2001, the Company recorded
interest rate and foreign currency hedge contracts on a cash basis.
e.      Allowance for doubtful accounts
The Company cancels service to customers with invoices that are 60 days
past due. The allowance for doubtful accounts represents the Company's
estimate of the probable loss inherent in all accounts receivable due to
general historical trends of customer performance and factors surrounding the
specific customer's credit risk. The Company wrote off accounts receivable for
Ps.190,645 and Ps.126,021 in 2002 and 2001, respectively. The charge to income
for the year for the allowance for doubtful accounts amounted to Ps.61,336,
Ps.114,613 and Ps.99,919 in 2002, 2001 and 2000, respectively.
f.      Investment in associated companies
The Company carries under the equity method long-term investments in
associated companies in which it owns between 20.00% and 50.00% of the
company's voting common stock and over which the Company can exercise
significant influence. Under the equity method, such investments are carried
at cost adjusted for the Company's share of the net income or losses of these
companies and the effects of restatement of non-monetary assets in the
associated companies. The effects of transactions with such associated
companies are eliminated before applying the equity method.
g.      Cellular telephones
The cost of cellular telephones given to customers under exclusive service
contracts is amortized based on the nature and terms of the service contracts
to match costs with the timing of earned revenues. During the second quarter
of 2001, the Company decided to reduce the amortization period of cellular
telephones from an average of eighteen months to twelve months. This change
represented an increase of approximately Ps.194,855 in amortization expense for
2001. Until December 31, 2001, the cost of such telephones was included in
other assets, net of accumulated amortization. Starting January 1, 2002, it is
included in Recoverable taxes and other. Such cost does not exceed market
value.
F-14
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At the end of the contract term, the customer keeps the cellular
telephone. In the event of an early termination of an exclusive service
contract, the customer either (i) is required to return the phone to the
Company or (ii) acquires the telephone at its book value on the date of
termination.
The cost of cellular telephones sold to customers is recorded as cost of
sales based on the average cost of such telephones. Telephones leased to
customers are included in fixed assets and are depreciated over the initial
lease period, generally two years.
h.      Concessions
Costs related to the acquisition of concessions granted by the Mexican
government to provide cellular telephone services have been capitalized and are
included in other assets. Such costs are amortized on a straight-line basis
over the initial term of the respective concession. The Mexican government
requires the Company's compliance with the specific terms of each concession.
Through December 31, 2002, the Company had complied substantially with such
requirements, except for certain informational requirements of the Mexican
authorities.
The Company believes that such noncompliance does not expose it to any
risk of concession forfeiture, or any other material liability.
i. Advertising
Advertising costs are expensed as incurred. The cost of prepaid media
advertising (including television air time, magazine, directory and other print
media) is deferred and recorded in other assets until the advertising airtime
or space is used, at which time, such cost is recognized as an operating
expense. Advertising expense amounted to Ps.280,151, Ps.455,560 and Ps.369,792
for 2002, 2001 and 2000, respectively.
j.      Excess of cost of investments in subsidiaries over book value
The excess of cost over the book value of net assets of acquired
subsidiaries is amortized on a straight-line basis over twenty years.
Amortization expense was Ps.178,153, Ps.179,513 and Ps.174,403 in 2002, 2001
and 2000, respectively.
k. Evaluation of long-lived assets
The Company evaluates the recoverability of its long-lived assets when
events and circumstances indicate that such assets might be impaired. The
Company determines impairment by comparing the undiscounted cash flows
estimated to be generated by these assets to their respective carrying amounts.
In the event impairment exists, a loss is recognized based on the amount by
which the carrying value exceeds the fair value of the asset. If quoted market
prices for an asset are not available, fair market value is determined
primarily using the anticipated cash flows discounted at a rate commensurate
with the risk involved. Losses on property and equipment to be disposed of are
determined in a similar manner, except that fair market values are reduced for
the cost to dispose.
l.      Deferred income taxes and employee profit sharing
As of January 1, 2000, the Company adopted the provisions of revised
Bulletin D-4, "Accounting Treatment of Income Tax, Assets Tax and Employee
Profit Sharing," issued by the MIPA (Bulletin D-4). This revised Bulletin
significantly modifies the previous accounting treatment for the calculation of
deferred taxes by the partial liability method to a method based on
comprehensive assets and liabilities. The new method requires the recognition
of future tax consequences based on the difference between the financial
statements and tax basis of assets and liabilities -temporary differences- as
of the date of the financial statements.
The accumulated effect at the beginning of the year, because of the
adoption of Bulletin D-4, increased the deferred tax asset by Ps.173,102 and
increased stockholders' equity by the same amount (Note 12).
F-15
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Employee profit sharing is a statutory labor obligation payable to
employees and determined, for each subsidiary with employees, on its pretax
income, as adjusted, in accordance with the provisions of Mexican labor and tax
laws.
m.      Seniority premiums
In accordance with Mexican labor law, the Company's employees are entitled
to seniority premiums upon retirement after 15 years of service or upon
dismissal, disability or death. The Company follows Bulletin D-3, "Labor
Obligations," issued by the MIPA (Bulletin D-3). Under Bulletin D-3, the
actuarially determined projected benefit obligation is computed using estimates
of salaries that will be in effect at the time of payment.
Personnel not yet eligible for seniority premiums are also included in the
determination of the obligation with necessary adjustments made in accordance
with the probability that these employees will reach the required seniority.
At December 31, 2002, the average seniority of the eligible employees was less
than 4 years. The Company's liability and related costs for seniority premiums
are immaterial for all periods presented.
In accordance with Mexican labor law, the Company is liable for severance
payments to employees who are dismissed under certain circumstances. Such
compensation is expensed when paid.
The Company has no employee pension plans and does not provide for
post-retirement benefits.
n.      Profit (loss) per share
Basic profit (loss) per share is computed by dividing profit (loss)
available to common stockholders by the weighted-average number of common
shares outstanding for the year. The computation of diluted profit (loss) per
share is similar to basic profit (loss) per share, except that the denominator
is increased to include the number of additional common shares that would have
been outstanding if the potentially dilutive common shares had been
issued. For the years ended December, 31, 2002, 2001 and 2000, the
Company did not compute nor disclose diluted profit (loss) per share because,
for those years, the Company incurred losses from continuing operations.
o.      Revenue recognition
Cellular air time is recorded as revenue as service is provided. Until
December 31, 2001, revenue from the sale of prepaid cards was recognized at the
date of sale. The Company had recognized the revenue on the sale of prepaid
cards at the date of sale rather than on a deferred basis because the length of
the average consumption period for such prepaid cards was not significant,
i.e., approximately one to one-and-a-half months, and it was not material to
results of operations for 2001 and 2000. Starting January 1, 2002, the Company
started to recognize revenue from the sale of the prepaid cards as service is
provided because the increasing length of the average consumption period for
such prepaid cards. Revenues from the sale of prepaid cards associated with
services that have not been provided are deferred until the services are
provided and are included in taxes and other payable in the accompanying
consolidated balance sheet. Sales and cost of sales of equipment and related
services are recorded when goods are delivered and services are provided.
Cellular access charges are billed in advance and recognized when the services
are provided. Other revenues, mainly from paging and long distance services,
are recognized when the related services are provided.
p.      Foreign currency transactions
Foreign currency transactions are recorded at the exchange rates in effect
at the transaction date. Assets and liabilities denominated in foreign
currencies are translated to Mexican pesos using the exchange rates in effect
at the time of settlement or valuation at each balance sheet date, with the
resulting exchange differences being recognized as exchange gains or losses.
F-16
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
q.      Comprehensive income (loss)
Comprehensive income (loss) includes the Company's consolidated net loss
and any other item that, because of specific accounting guidance, is recorded
directly as a part of stockholders' equity, and which are not capital stock
increases, decreases and/or distributions.
The comprehensive income (loss) line included in the consolidated
statement of stockholders' equity represents the result of the performance of
the Company during the year (Note 20).
r.      New accounting pronouncements
In November 2001, the MIPA issued the revised Bulletin C-9, "Liabilities,
Provisions, Contingent Assets and Liabilities and Commitments" (Bulletin C-9),
which establishes a methodology for valuation, presentation and disclosure of
liabilities and provisions, as well as for valuation and disclosure of
contingent assets and liabilities, and for disclosure for commitments. The
revised Bulletin C-9 states that (i) all contingent assets that have a
practical true realization must be accounted and disclosed in the financial
statements; (ii) contingent assets that have a probable realization cannot be
accounted for in the financial statements, but must be disclosed; and (iii)
contingent assets that do not have a probable realization and cannot be
accounted for in the financial statements are not required to be disclosed.
Bulletin C-9 requires disclosure of committed amounts when it represents
significant fixed assets additions. The provisions of Bulletin C-9 are
required to be applied beginning on January 1, 2003, although early adoption is
recommended.
In addition, in December 2001, the MIPA issued revised Bulletin C-8,
"Intangible Assets" (Bulletin C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a future economic
benefit. Revised Bulletin C-8 states that pre-operating costs should be
expensed as a period cost, unless they could be classified as development
costs. Bulletin C-8 requires that intangible assets with finite useful lives
should be amortized over its useful life and that indefinite life intangibles
no longer be amortized. 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 and Bulletin C-9 will have on its consolidated financial
statements.
Note 5 — Related parties
Accounts and notes payable to related parties, including interest, as of
December 31, are as follows:
2002
2001
Short-term
Verizon
Ps. 178,904
Ps. 61,384
Vodafone
2,488
2,123
Total short-term
Ps. 181,392
Ps. 63,507
Long-term due to Verizon
Ps. —
Ps. 81,347
Accounts payable result from services rendered by the seconded employees
assigned by Verizon and a note payable to Verizon as explained in the following
paragraph.
On May 8, 2001, in connection with the negotiations for the purchase of
Portatel, Verizon, through one of its affiliates, provided the Company with
financing for U.S.$7,800 which consisted of a two-year note payable due May 8,
2003, bearing interest at a fixed annual interest rate of 11.50%. Interest and
principal are payable at the maturity of the note.
F-17
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following is an analysis of the related party transactions described
above:
Years ended December 31,
2002
2001
2000
Service revenue
Ps. 35,515
Ps. 5,556
Ps. 12,777
Cellular telephones repair expense
Ps. 16,509
Ps. 18,332
Technical expense
Ps. 21,163
62,715
94,030
Lease expense
—
6,505
8,185
Interest expense
8,744
5,748
—
Total expenses
Ps. 29,907
Ps. 91,477
Ps. 120,547
Acquisition of handsets
Ps. 28,917
Ps. —
Ps. —
Note 6 — Inventories, Net
As of December 31, inventories, net, consisted of the following:
2002
2001
Cellular telephones and accessories
Ps. 138,936
Ps. 377,612
Less: Allowance for obsolete and
slow-moving inventories
(103,238
)
(117,069
)
35,698
260,543
Goods in transit
—
6,893
Advances to suppliers
—
713
Ps. 35,698
Ps. 268,149
Note 7 — Investments
As of December 31, the Company's investments were as follows:
2002
2001
Entity
Ownership
Investment
Ownership
Investment
Editorial Celular, S.A. de C.V
.
40.00
%
Ps. 13,874
40.00
%
Ps. 17,026
AMCEL
—
15,526
—
15,526
Other
—
5,021
—
3,453
Ps. 34,421
Ps. 36,005
Editorial Celular, S.A. de C.V.
is accounted for by the equity method.
For each of the three years in the period ended December 31, 2002, the
Company's share of net (losses) earnings of
Editorial Celular, S.A. de C.V.
was
of (Ps.9,741) Ps.2,687 and (Ps.20,767), respectively.
For the year ended December 31, 2001, the gain on sale of equity
investments was Ps.4,203.
F-18
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 8 — Property and Equipment, Net
a.     At December 31, property and equipment, net, consisted of:
2002
2001
Buildings and facilities
Ps. 1,721,540
Ps. 1,715,913
Communications equipment
11,571,302
10,774,064
Furniture and fixtures
397,065
206,103
Transportation equipment
62,008
84,233
Computer equipment
1,770,721
1,528,919
Cellular rental telephones
9,928
9,658
15,532,564
14,318,890
Accumulated depreciation
(7,021,487
)
(5,946,248
)
8,511,077
8,372,642
Land
72,110
69,739
Construction in progress
783,055
1,565,384
Advances to suppliers
1,083
1,015
Ps. 9,367,325
Ps. 10,008,780
b.     Depreciation expense was Ps.1,449,679, Ps.1,318,236 and Ps.1,365,798
for 2002, 2001 and 2000, respectively.
c.     In December 1999, the Company entered into a series of agreements with
MATC Celular, S. de R.L. de C.V.
(an affiliated company of American Tower
Corporation) ("MATC Celular"). These agreements, among other things, gave MATC
Celular the right to acquire approximately 350 existing Old Iusacell
non-strategic towers. During 2002 and 2001, Old Iusacell and some of its
subsidiaries sold 76 and 244 non-strategic towers to MATC Celular,
respectively, for Ps.114,126 (U.S.$11,400) and Ps.368,633 (U.S.$36,600),
respectively, generating a gain on the sale, before taxes, of Ps.100,979 and
Ps.325,436, respectively. As a part of this agreement, a subsidiary of New
Iusacell signed a lease contract for the same towers with MATC Celular for a
minimum mandatory term of ten years, a term that could be automatically
extended for two additional periods of five years each (Note 13a.).
Under Mexican GAAP, Bulletin D-5, "Leases" (Bulletin D-5), establishes the
general criteria for capital and operating lease transactions. Sale-leaseback
transactions are recognized with the use of the general criteria of
Bulletin D-5. The timing of the recognition of a gain derived from
sale-leaseback transactions should be based on the subsequent lease
classification criteria of the leaseback portion of the transaction. If the
subsequent leaseback is accounted for as an operating lease, full immediate
gain recognition is allowed, whereas, if the subsequent leaseback is accounted
for as a capital lease, the gain is deferred and amortized in proportion with
the estimated useful life of the asset leased. Based upon this criteria, the
sale-leaseback agreement with MATC Celular was recorded by the Company as an
operating lease and consequently, the Ps.100,979 and Ps.325,436 gains were
recognized at the date of the sale and have been recorded as other operating
income in the consolidated income statements for the years ended December 31,
2002 and 2001.
F-19
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 9 — Other Assets, Net
a.     At December 31, other assets consisted of the following:
2002
2001
Concessions
Ps.
1,556,405
Ps.
1,556,405
Cellular telephones (Note 4g.)
—
3,512,320
Prepaid expenses
362,165
378,506
Advance payments
615,059
530,674
Pre-operating expenses
139,875
143,752
Other
106,186
104,808
Deferred income taxes, net (Note 12)
163,852
182,969
2,943,542
6,409,434
Accumulated amortization
(665,312
)
(3,622,088
)
Ps.
2,278,230
Ps.
2,787,346
b.     Concessions and cellular telephone amortization expense was Ps.619,233,
Ps.1,270,772 and Ps.1,006,088 in 2002, 2001 and 2000, respectively. In January
2002, cellular telephones were reclassified to current assets (Note 4g.)
Note 10 — Notes Payable and Long-Term Debt
As of December 31, 2002 and 2001, the long-term debt of the Company
consisted of the following:
U.S. Dollars 2002
2002
2001
Secured senior notes due 2004
U.S.$150,000
Ps.
1,565,895
Ps.
1,453,824
Unsecured senior notes due 2006
350,000
3,653,755
3,392,257
BNP credit agreement
23,232
242,530
195,754
BNP refaccionario loan
3,416
35,665
34,545
Amended and restated syndicated loan
265,622
2,772,902
2,574,447
Current portion of long-term debt
792,270
8,270,747
7,650,827
7,440
77,672
28,211
U.S.$784,830
Ps.
8,193,075
Ps.
7,622,616
a. Secured senior notes due 2004
On July 25, 1997, Old Iusacell completed an offering of long-term, secured
senior notes due July 15, 2004 for U.S.$150,000, accruing interest at a fixed
rate of 10.00%, payable semi-annually starting January 15, 1998 (the Notes Due
2004). The Notes Due 2004 are redeemable at the option of Old Iusacell, in
whole or in part, at any time on or after July 15, 2001 starting at a
redemption price of 105.00% of principal amount plus accrued interest, if any,
declining to 102.50% after July 15, 2002, and finally to 100.00% after July 15,
2003.
The Notes Due 2004 may also be redeemed at a price equal to 100.00% of
principal amount plus accrued interest, if any, in the case of legal changes
adversely affecting the treatment of the withholding taxes on payments to
holders of the Notes Due 2004.
F-20
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
b. Unsecured senior notes due 2006
On December 16, 1999, New Iusacell completed an offering of long-term,
unsecured senior notes due December 1, 2006 for U.S.$350,000, accruing interest
at a fixed rate of 14.25%, payable semi-annually starting June 1, 2000 (the
Notes Due 2006). New Iusacell invested approximately U.S.$133,600 of the net
proceeds of the offering in securities in escrow to secure the first six
semi-annual interest payments on the Notes Due 2006. This investment was
restricted as to withdrawal and was utilized to meet the Company's interest
commitment on the Notes Due 2006. The last interest payment made with the
proceeds invested in the escrow account was in December 2002.
At any time prior to December 1, 2002, New Iusacell may redeem in the
aggregate up to 35.00% of the original principal amount of the Notes Due 2006
with the proceeds of one or more public equity offerings by New Iusacell at a
redemption price of 114.25% of principal amount plus accrued interest, if any.
The Notes Due 2006 may also be redeemed at a price equal to 100.00% of
principal amount plus accrued interest, if any, in the case of legal changes
adversely affecting the treatment of the withholding taxes on payments to
holders of the Notes Due 2006.
c. BNP credit agreement, as amended
On July 12, 2000, a subsidiary of New Iusacell obtained financing to
acquire microwave transmission equipment. The financing consists of a
seven-year secured term facility provided by BNP Paribas (guaranteed by the
Eximbank of Norway) in the principal amount of up to U.S.$30,479. At December
31, 2002, U.S.$25,814 of this facility had been drawn down.
Loans outstanding under the BNP credit agreement provide for interest at a
rate per annum equal to 0.60% above six-month LIBOR. The BNP credit agreement
also included a commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest under the
credit agreement is paid semi-annually starting on December 2000. Fees under
the credit agreement were paid quarterly starting on September 2000. Principal
payments are due in ten equal semi-annual installments which began in December
2002.
For the years ended December 31, 2002 and 2001, the weighted-average
interest rates were 2.45% and 2.52%, respectively.
The BNP Credit agreement is guaranteed by New Iusacell.
d. BNP refaccionario loan, as amended
On July 12, 2000, a subsidiary of New Iusacell obtained financing to
acquire microwave transmission equipment. The financing consists of a four
year secured term facility provided by BNP Paribas in the principal amount of
U.S.$5,379. At December 31, 2002, U.S.$4,555 of this facility had been drawn
down.
Loans outstanding under the BNP refaccionario loan provide for interest at
a rate per annum equal to 2.00% above six-month LIBOR. The BNP refaccionario
loan also included a commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest under the
refaccionario loan is paid semi-annually starting on December 2000. Fees under
the credit agreement were paid quarterly starting on September 2000. Principal
payments are due in four equal semi-annual installments which began in December
2002.
For the years ended December 31, 2002 and 2001, the weighted-average
interest rates were 3.87% and 3.92%, respectively.
The BNP refaccionario loan is guaranteed by New Iusacell.
F-21
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
e. Amended and restated syndicated loan, as amended
On March 29, 2001, Old Iusacell completed the restructuring of its
long-term bank loan, its revolving credit facility, and the payment of the
Eximbank financing and the Commerzbank financing by entering into an amended
and restated senior secured loan agreement (the amended and restated syndicated
loan), which consists of:
(i)  The Tranche A Loan for an aggregate principal amount of U.S.$189,805
for the purpose of refinancing existing indebtedness under the long-term bank
loan and the revolving credit facility and under a certain bridge loan used to
pay the January 2001 principal amortization payments under the long-term bank
loan and the revolving credit facility.
(ii)  The Tranche B Loan for an aggregate principal amount of U.S.$75,817
for the purpose of paying existing indebtedness under the Eximbank financing
and the Commerzbank financing and under a certain bridge loan used to pay also
in January 2001 a principal amortization payment under the Commerzbank
financing.
The amended and restated syndicated loan provides for interest at a rate
per annum equal to one, two, three or six-month LIBOR at Old Iusacell's option
plus a spread ranging, depending on Old Iusacell's leverage ratio, from 1.75%
to 2.25% with quarterly interest payments which began on May 29, 2001.
Principal installments will be due beginning 2004 through 2006.
There was no gain or loss recognized from this loan restructuring.
On December 7, 2001 the amended and restated syndicated loan was amended,
and a waiver and consent were granted by the lenders allowing Old Iusacell to
(i) create liens encumbering initial deposits and margin deposits securing
indebtedness under any interest rate protection agreement or other interest
hedging agreement up to the principal amount of indebtedness of Old Iusacell
and its subsidiaries with floating rates of interest; (ii) make loans or
advances to New Iusacell in lieu of paying dividends at such times and in such
amounts as necessary to permit New Iusacell to pay scheduled interest
(including any tax gross-up with respect thereto) and principal payments as and
when due in respect to the Notes Due 2006 and (iii) make loans or advances to
New Iusacell in lieu of paying dividends in an amount not to exceed U.S.$5,000,
so long as an event of default has not occurred, to discharge other liabilities
of New Iusacell incurred in the ordinary course of business.
f. Covenants and collateral
The amended and restated syndicated loan, the BNP credit agreement, the
BNP refaccionario loan, the Notes Due 2004 and the Notes Due 2006 contain
certain restrictive covenants, including the maintenance of certain financial
ratios, restrictions on incurring additional debt, limitations on capital
expenditures and restrictions on the sale or lease of Old Iusacell's assets.
As of December 31, 2002 and 2001, New Iusacell and Old Iusacell had complied
with such covenants.
Old Iusacell's obligations under the amended and restated syndicated loan
are unconditionally guaranteed, jointly and severally, by the principal
operating and cellular concession-holding subsidiaries of Old Iusacell and are
secured by the pledge of substantially all capital stock and equity interests
held by Old Iusacell and by all cellular concessions, and by a first lien on
substantially all assets used in connection with or related to such
concessions.
F-22
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
At December 31, 2002, the Company's debt matures as follows:
Years ended December 31,
U.S. Dollars
Mexican pesos
2003
U.S.$7,440
Ps.
77,672
2004
255,910
2,671,521
2005
137,973
1,440,342
2006
388,365
4,054,259
2007
2,582
26,953
Total
U.S.$792,270
Ps.
8,270,747
g. Notes payable
As of December 31, notes payable consisted of the following:
U.S. Dollars
2002
2002
2001
Handset facility
U.S.$12,000
Ps.
125,272
Handset facility
—
—
Ps.
116,306
Total
U.S.$12,000
Ps.
125,272
Ps.
116,306
On February 25, 2002, Old Iusacell obtained a handset acquisition
financing facility from
Banco Santander Mexicano, S.A.
(Santander), which
consisted of a one-year unsecured credit facility in a principal amount of
U.S.$12,000. Loans outstanding under this facility provided for interest at an
annual variable rate of LIBOR plus a spread of 1.00%. Interest was paid
quarterly. At the maturity date of this facility, February 25, 2003, Old
Iusacell reached an agreement with Santander to refinance a portion of this
facility under which Old Iusacell paid Santander U.S.$7,000 plus accrued
interest, and refinance the remaining U.S.$5,000. The refinanced facility
consists of an unsecured five-months credit facility in a principal amount of
U.S.$5,000. This loan provides for interest at an annual fixed rate of 3.84%.
Interest and principal will be paid in five equal monthly installments starting
March 25, 2003.
This facility contains certain restrictive covenants. As of December 31,
2002, Old Iusacell had complied with such covenants.
In February 2001, Old Iusacell obtained a handset acquisition financing
facility from Santander, which consisted of a one-year unsecured credit
facility in a principal amount of U.S.$12,000. Loans outstanding under this
facility provided for interest at an annual rate of 6.9938%. Interest was paid
quarterly and the principal was paid on February 19, 2002.
Note 11 — Notes Payable to Suppliers
As of December 31, notes payable to suppliers consisted of the following:
U.S. Dollars
2002
2002
2001
Short-term:
The Harris Facility
U.S.$1,188
Ps.
12,406
The Motorola Facility
—
—
Ps.
88,261
The TV Azteca Facility
—
—
42,280
Total short-term
U.S.$1,188
Ps.
12,406
Ps.
130,541
Long-term:
The Harris Facility
U.S.$9,241
Ps.
96,463
Ps.
61,795
F-23
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Motorola Facility
On March 31, 2000, Portatel, through one of its subsidiaries, obtained a
five-year credit facility from Motorola Credit Corporation (Motorola) to be
used solely to acquire communications equipment, in the principal amount of
U.S.$9,106 (the Motorola Facility). Drawdowns under the Motorola Facility were
available for one year. Loans outstanding under the Motorola Facility accrue
interest at a variable annual rate of six-month LIBOR plus 6.00%. Principal
and interest are payable in April 2002. Portatel drew down the entire
U.S.$9,106 during 2000 and 2001. As a part of the agreement, Portatel was
required to keep an escrow account to deposit monthly the accrued interest on
the loans outstanding. This facility was repaid on April, 2002.
The TV Azteca Facility
On November 5, 2001, the Company, through one of its subsidiaries,
obtained a credit facility from
TV Azteca, S.A. de C.V.
to be used solely to
acquire television air time, in the principal amount of Ps.40,000 (the TV
Azteca Facility). The facility provides for interest at a variable annual rate
of TIIE times 1.50. Principal and interest are payable in six monthly
installments starting January 31, 2002. This facility was repaid during 2002.
The Harris Facility
On August 18, 2000, the Company through one of its subsidiaries entered
into a framework agreement, as amended, with its supplier
Harris, S.A. de C.V.
for the purchase, construction, installation and financing of microwave
equipment in a principal amount of up to U.S.$10,873.
As of December 31, 2002, the Company had drawn down five Tranches in a
principal amount of U.S.$10,429 which consists of:
(i)  Tranches 1, 2A, 2B and 2C in a principal amount of U.S.$6,376 bearing
interest at a rate of average term LIBOR plus 1.25%; interest is paid
semiannually starting six months after each draw dawn date. Principal payments
are due in six equal semiannual installments starting two years after each draw
dawn date.
(ii)  Tranche 2D in a principal amount of U.S.$4,053 bearing interest at a
rate of average term LIBOR plus 3.50%; interest is paid semiannually starting
six months after the draw dawn date. Principal payments are due in four equal
semiannual installments starting two years after the draw dawn date.
The five tranches are guaranteed by the Company.
NOTE 12 – Income Tax, Net Assets Tax and Employee Profit Sharing
For the year ended December 31, 2002, the provision for income taxes
consisted of current income tax and assets tax of Ps.111,220 and deferred
income tax of Ps.9,250.
For the years ended December 31, 2001 and 2000, the provision for income
taxes consisted of current income tax and assets tax of Ps.154,749 and
Ps.165,246, respectively.
Old Iusacell has filed annual consolidated income tax returns since the
tax year beginning January 1, 1994. Starting the year ended December 31, 2000,
New Iusacell is the holding company for tax consolidation purposes.
The statutory income tax rate in Mexico is 35%. As a result of the
amendment to the income tax law enacted on January 1, 2002, the 35% statutory
income tax rate will be reduced annually starting in 2003, and continue to
decrease until the statutory rate is 32% in 2005. Consequently, the effect of
the gradual decrease in the statutory
F-24
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Income Tax rate reduced the deferred tax
asset in 2002. For the years ended December 31, 2002 and 2001, the Company
generated tax losses of Ps.1,981,005 and Ps.613,904, respectively.
At December 31, 2002 and 2001, the main temporary differences the Company
recognizes for the calculation of deferred income taxes were as follows:
2002
2001
Allowance for doubtful accounts
Ps.
93,603
Ps.
222,912
Liability accruals
32,887
75,273
Income tax losses carry forwards and tax credits
6,117,358
4,099,899
Inventories
(35,698
)
(268,149
)
Property and equipment
(2,682,327
)
(2,160,999
)
Telephones to be amortized
(141,345
)
(184,941
)
Concessions
(308,268
)
(325,840
)
Temporary differences
3,076,210
1,458,155
Income tax rate
35
%
35
%
1,076,674
510,354
Valuation allowance
(903,572
)
(327,385
)
Deferred income tax asset
173,102
182,969
Income tax rate change
(9,250
)
—
Net deferred income tax asset
Ps.
163,852
Ps.
182,969
The Company has recorded a net deferred tax asset of Ps.163,852
reflecting, mainly, the benefit of tax loss carry forwards, which expire in
varying amounts between 2005 and 2012. Realization is dependent on generating
sufficient taxable income prior to expiration of the loss carry forwards.
Although realization is not assured, management believes it is more likely than
not that most of the net deferred tax asset at December 31, 2002 will be
realized based on the Company's business plan estimate of future taxable income
over the next five years in an amount sufficient to utilize the net deferred
tax losses recorded as of December 31, 2002.
The Company's estimate of future taxable income is based primarily on and
supported by (i) additional increase in revenues generated by the Calling Party
Pays feature with an important taxable operating margin, (ii) the change in the
income tax law to increase the useful lives for network equipment from 3.3
years to 12.5 years, representing an important decrease in depreciation expense
for income tax purposes and (iii) an increase in 2003 of the potential effects
of additional cost cutting.
The amount of the deferred tax asset considered realizable could be
reduced in the near term if estimates of future taxable income during the carry
forward periods are reduced. As of December 31, 2002 and 2001, the Company had
a valuation allowance of Ps.903,572 and $ 327,385, respectively, to reduce
its deferred tax assets to estimated realizable value. The valuation allowance
primarily relates to the deferred tax assets arising from tax loss carry
forwards and tax credits.At December 31, 2002, the Company had the following
net operating losses for income tax purposes that may be carried forward and
applied against future taxable earnings:
F-25
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year of
Amount
Expiration
loss
of loss
year
1993
Ps.
24,657
2003
1994
100,729
2004
1995
243,207
2005
1996
114,057
2006
1997
190,463
2007
1998
289,891
2008
1999
197,155
2009
2000
657,873
2010
2001
613,904
2011
2002
1,981,005
2012
These losses are indexed for inflation from the year incurred to the sixth
month of the year utilized. Accordingly, these amounts include inflation up to
June 2002. Due to the restructuring of the Company related to Verizon's
assumption of management control (Note 2), the Company did not include
additional tax losses for Ps.1,018,114, relating to one of its subsidiaries,
Iusatelecomunicaciones, and may not be able to apply these losses against other
subsidiaries' profits in 2003 and beyond.
The 1.8% net assets tax is calculated on the average value of
substantially all assets less certain liabilities. This tax is required to be
paid if this computation exceeds the amount of income tax. The 1.8% net assets
tax paid may be utilized as a credit against future income tax in the years in
which the Company generates an income tax in
excess of the assets tax. The assets tax is available as a carry forward
for up to ten years and is subject to restatement based on the NCPI when used.
As of December 31, 2002, net assets tax available as a carry forward was
Ps.497,718 which expires in 2007.
Employee profit sharing, generally 10%, is computed on taxable income,
with adjustments to exclude inflationary effects and the restatement of
depreciation expense. In the years ended December 31, 2002 and 2001, the
Company did not generate any taxable income for profit sharing purposes.
The effective rate reconciliation as of December 31, was as follows:
2002
2001(*)
2000(*)
Loss on continuing operations before taxes
(Ps.1,980,201
)
(Ps.388,766
)
(Ps.1,048,020
)
Statutory Income Tax rate
35
%
35
%
35
%
Income Tax (benefit) expense at statutory rate
(693,070
)
(136,068
)
(366,807
)
Add (deduct):
Inventory purchases less cost of sales
(210,000
)
(1,591
)
(14,689
)
Depreciation and amortization
(285,605
)
(247,961
)
(195,197
)
Differences between interest and inflationary
gains or losses
215,418
80,219
84,981
Provision for doubtful accounts
19,662
(3,993
)
19,191
Telephones to be amortized
133,366
205,940
(43,857
)
Goodwill amortization
62,354
62,830
61,041
Income tax rate change
3,238
—
—
Other
61,285
174,242
225,081
Income Tax (benefit) expense for the year
(Ps.693,352
)
(Ps.214,866
)
(Ps.230,256
)
Effective rate
35
%
55
%
22
%
Net assets tax
Ps.
111,220
Ps.
154,749
165,246
(*) Certain reclassifications were made in prior years to conform to
classifications used in the most recent year.
F-26
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 13 — Commitments and Contingencies
As of December 31, 2002, the Company had the following commitments and
contingent liabilities:
a.     The Company has entered into operating lease agreements for
administrative offices, sales branches and service facilities and since 2001,
operating lease agreements with MATC Celular for the lease of towers (Note
8c.). These lease agreements expire at various dates through 2011, and some
agreements contain options for renewal. Lease expense was Ps.382,842,
Ps.166,117 and Ps.173,426 for the years ended December 31, 2002, 2001 and 2000,
respectively.
Future annual minimum rental payments under existing leases as of December
31, 2002 are as follows:
2003
Ps.
419,157
2004
393,990
2005
376,278
2006
367,750
2007
349,494
Thereafter
1,155,209
Ps.
3,061,878
b.     The Company may have contingent liabilities for taxes and penalties
that the tax authorities may assess based on audits of prior years' tax
returns.
c.     In April 1998, Old Iusacell learned that the Montes Urales property was
subject to two liens. Such liens were not identified when
Inmobiliaria Montes
Urales 460, S.A. de C.V.
was acquired in 1994, nor was Old Iusacell notified of
such liens subsequent to the acquisition. During 2002, the liens have been
removed.
d.     Old Iusacell has certain commitments derived from its joint venture
agreement with
Infomin, S.A. de C.V.
(Note 2).
e.     During April 2001, Iusatel, a subsidiary of the Company, reached an
agreement to settle the outstanding amounts due related to the special projects
implemented by
Teléfonos de México, S.A. de C.V.
(Telmex) to permit competition
in long distance telephony. Iusatel agreed to pay for its portion of such
special projects in two parts: (i) a fixed payment of approximately
U.S.$13,600, payable in twelve equal monthly installments beginning in April
2001, and (ii) a U.S.$0.0053 per full minute, usage-based surcharge to the
local wire line interconnection rate from January 1, 2001 through December 31,
2004 for long distance calls terminated in Telmex's local wire line network.
f.
Iusacell, S.A. de C.V.
, a subsidiary of the Company, decided to sue and
seek compensatory damages from one of the Company ´s distributors as a result of
the latter's decision to breach their distribution agreement. In the same act,
such distributor also sued Iusacell, S.A. de C.V. The decision of the Court in
the first instance has been not to set a favorable opinion to any of the parts.
Both parties have appealed the Court's decision.
g.     On January 1, 2002 the Mexican Congress approved a tax law reform that
assesses an additional 10% excise tax on certain wireless telecommunications
services. In February 2002, the Company filed an injunction action to
challenge the Mexican government's implementation of the tax. The Company has
obtained a favorable resolution against this 10% excise tax and the Mexican
government has filed an appeal.
In February 2003, the Company has filed an injunction action to challenge
the Mexican government regarding the same excise tax for the year 2003.
h.     A supplier of the Company has sued
Iusacell, S.A. de C.V.
for the
improper termination of their agreement. The Company has obtained a favorable
resolution in the first instance. The supplier has filed an appeal.
F-27
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
i.     A client of the Company has sued
SOS Telecomunicaciones, S.A. de C.V.
,
a subsidiary of the Company. The process is in a preliminary stage.
j.     As discussed in Note 10, the Company has important borrowings, which
require, among other things, compliance with certain financial ratios,
specifically a debt/EBITDA ratio at the
Grupo Iusacell Celular, S.A. de C.V.
level, on a quarterly basis. If the Company incurs operating losses during the
first quarter of 2003 and/or the debt has a substantial increase due to the
Mexican peso devaluation relative to the U.S. dollar, the Company might not be
in compliance with the financial covenant ratio under the Amended and Restated
Syndicated loan agreement.
If the Company breaches the financial covenant ratio and does not obtain a
waiver, this could result in the acceleration of the Amended and Restated
Syndicated loan, and because of cross-defaults, the Notes due 2004, the Notes
due 2006, the BNP Credit Agreement and the BNP Refaccionario loan could become
due and payable. Based upon current projections, the Company believes it is
probable that it does not comply with the existing financial covenant ratio
unless it is modified or waived. The Company plans to request an amendment to
the debt/EBTIDA covenant ratio, increasing it to 3.5x from 2.5x.
The Company has started to explore, together with external financial and
legal advisors, the possibility of entering into a debt restructuring process.
Although no assurances can be given, the Company expects to successfully
conclude such restructuring during 2003.
The Company's ability to fulfill its long-term financial commitments
depends on the results of theses negotiations.
Note 14 — Contributed Capital
During the years ended December 31, 2002, 2001 and 2000, the following
transactions took place:
On February 1, 2000, New Iusacell launched a second exchange offer of its
series V ADS and shares, for Old Iusacell's series D and L ADSs and shares on a
one-for-one basis. At the end of the second exchange offer, New Iusacell
exchanged 5,670,360 series V shares for 33,070 Old Iusacell series D shares and
5,637,290 Old Iusacell series L shares.
In March 2000, Old Iusacell's ADS depositary, The Bank of New York,
converted 1,171,464 series L shares that had previously been held in the form
of series L ADSs into New Iusacell's series V shares.
In April 2000, New Iusacell launched a primary public offering under which
New Iusacell sold 10,529,700 series V ADSs at a price of U.S.$.015125 per ADS.
Pre-emptive stockholder rights were exercised for 71,752 series V shares.
Proceeds from the offering amounted to Ps.1,695,566 (U.S.$159,370) net of
expenses.
At the September 29, 2001 stockholders' meeting, the Company's
stockholders approved a capital increase of up to Ps.985,499 (U.S.$100,000)
through the issuance of 224,461,739 series A shares and 210,320,870 series V
shares. The increase was subscribed by the principal stockholders' of the
Company and through a public rights offering.
The changes in the number of shares of common stock for the period January
1, 2000 through December 31, 2002 are as follows:
F-28
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Old Iusacell's shares
New Iusacell's shares
Series A
Series B
Series D
Series L
Series A
Series V
Balance as of 1/01/00
—
—
59,912
6,830,705
736,830,745
578,200,864
Effect of second exchange offer
—
—
(33,070
)
(6,808,754
)
—
6,841,824
Effect of primary offering
—
—
—
—
—
105,297,000
Issuance of common stock upon exercise
of preemptive rights
—
—
—
—
—
71,752
Effect of private offering
—
—
(392
)
(9,717
)
—
—
Balance as of 12/31/00
—
—
26,450
12,234
736,830,745
690,411,440
Effect of the reverse stock split
—
—
(26,450
)
(12,234
)
—
—
Issuance of common stock for the
capital stock increase
—
—
—
—
224,461,739
210,320,870
Balance as of 12/31/01
—
—
—
—
961,292,484
900,732,310
No changes for the year
—
—
—
—
Balance as of 12/31/02
—
—
—
—
961,292,484
900,732,310
Each series A and series V share entitles the holder to one vote at any
general meeting of the stockholders of New Iusacell. Series A stockholders are
entitled to vote at a special meeting of the series A stockholders to elect
seven of the twelve members of the Board of Directors and the
corresponding alternate directors. Series V stockholders are entitled to vote
at a special meeting of the series V stockholders to elect five of the twelve
members of the Board of Directors and the corresponding alternate directors.
New Iusacell's bylaws require that, unless a stockholders' meeting
resolves otherwise, any capital increase effected pursuant to a capital
contribution be represented by new series A and V shares in proportion to the
number of shares of each such series outstanding. The bylaws provide that the
series V shares may not exceed 50% less one share of New Iusacell's capital
stock.
Note 15 — Executive Employee Stock Purchase Plan
The Stock Purchase Plan is administered by a management trust with the
assistance of the trust division of a Mexican bank. Under the Stock Purchase
Plan, a committee, which is composed of certain executive officers of the
Company (the Technical Committee), determines to which executive employees
series V shares of New Iusacell will be offered for purchase. The Technical
Committee also determines the number of series V shares to be offered for
purchase to such executive employees, the purchase price per share, the vesting
schedule, the payment terms and all other terms and conditions thereof.
The number of series V shares that may be subject to purchase rights
granted under the Stock Purchase Plan cannot exceed 4.9% of the aggregate
number of issued and outstanding New Iusacell shares.
F-29
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
A summary of the changes of the stock options for employees for the year
ended December 31, is presented below.
2002
2001
2000
Weighted- average
Weighted- average
Weighted- average
Shares
exercise price
Shares
exercise price
Shares
exercise price
Outstanding at beginning
of year
6,485,124
Ps.
11.05
6,485,124
Ps.
10.84
7,695,234
Ps.
10.26
Granted
—
—
659,000
8.96
681,000
15.35
Exercised
—
—
—
—
1,210,110
11.02
Cancelled / Forfeited
—
—
659,000
6.92
681,000
8.44
Outstanding at the end of
the year
6,485,124
11.05
6,485,124
11.05
6,485,124
10.84
Shares exercisable at year end
5,826,124
5,826,124
5,804,124
The following table summarizes Stock Purchase Plan options outstanding as
of December 31, 2002, 2001 and 2000:
Outstanding
Exercisable
Weighted-average
Weighted-average
Range of prices
Number
Remaining life
Exercise price
Number
Exercise price
December 31, 2000
Ps.
4.31 - 9.17
2,695,417
4.48
7.16
2,695,417
Ps.
7.16
11.46 - 15.35
3,789,707
5.58
13.46
3,108,707
13.04
December 31, 2001
Ps.
4.31 - 9.17
2,036,417
3.26
7.24
2,036,417
Ps.
7.24
11.46 - 15.35
4,448,707
4.98
12.79
3,789,707
13.46
December 31, 2002
Ps 4.31 -   9.17
2,036,417
3.26
7.24
2,036,417
Ps.
7.24
11.46 - 15.35
4,448,707
4.98
12.79
3,789,707
13.46
Note 16 — Earned Capital
Under Mexican law, a legal reserve must be created and increased annually
by 5% of the annual net earnings until it reaches 20% of the nominal amount of
a corporation's capital stock. This reserve is not available for dividends,
but may be used to reduce a deficit or be transferred to capital.
Dividends paid will be free of income tax if paid out of the Net Taxable
Income Account (CUFIN). A 35% rate will be paid on the amount exceeding the
balance of the CUFIN by multiplying the dividend paid by a factor of 1.5385.
The applicable tax will be payable by the Company, and it may be credited
against the income tax the Company is subject to in the following three fiscal
years. Dividends paid will not be subject to any tax withholding.
F-30
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
At December 31, 2002, the balance on the CUFIN is approximately
Ps.147,157. New Iusacell currently cannot pay dividends under the covenants of
the Notes Due 2006.
December 31, 2002
Accumulated
Historical
adjustments for
value
inflation
Total
Capital stock subscribed
Ps.
5,923,198
Ps.
1,216,360
Ps.
7,139,558
Capital contributions
1,209,952
195,009
1,404,961
Legal reserve
16,688
3,377
20,065
Accumulated profits from prior years
(1,721,429
)
387,689
(1,333,740
)
Net loss for the year
(1,897,484
)
(186,553
)
(2,084,037
)
Accumulated other comprehensive income
173,102
35,033
208,135
Total
Ps.
3,704,027
Ps.
1,650,915
Ps.
5,354,942
December 31, 2001
Accumulated
Historical
adjustments for
value
inflation
Total
Capital stock subscribed
Ps.
5,923,198
Ps.
1,216,360
Ps.
7,139,558
Capital contributions
1,209,952
195,009
1,404,961
Legal reserve
16,688
3,377
20,065
Accumulated profits from prior years
(1,421,153
)
615,901
(805,252
)
Net loss for the year
(300,276
)
(228,212
)
(528,488
)
Accumulated other comprehensive income
173,102
35,033
208,135
Total
Ps.
5,601,511
Ps.
1,837,468
Ps.
7,438,979
Note 17 — Foreign Currency Position
The balance sheet as of December 31 includes assets and liabilities
denominated in U.S. Dollars, as follows:
2002
2001
Monetary assets
U.S.$14,150
U.S.$242,652
Monetary liabilities
875,766
896,115
Net monetary liability position in U.S. Dollars
U.S.$861,616
U.S.$653,463
Equivalent in nominal Mexican pesos
Ps.
8,994,668
Ps.
5,991,929
As of December 31, 2002 and 2001, most of the communications equipment and
inventories of cellular telephones and accessories are of foreign origin (Notes
6 and 8).
F-31
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
During 2002, 2001 and 2000, interest income and interest expense on assets
and liabilities denominated in U.S. Dollars were as follows:
2002
2001
2000
Interest income
U.S.$1,356
U.S.$9,446
U.S.$7,459
Interest expense
82,317
90,128
74,017
Net interest expense
U.S.$80,961
U.S.$80,682
U.S.$66,558
Equivalent in nominal Mexican pesos
Ps.
845,176
Ps.
739,814
Ps.
639,609
Operating results for the years ended December 31, 2002, 2001 and 2000
include depreciation and amortization expenses, related to fixed assets and
inventories of foreign origin.
The exchange rates as of December 31, 2001 and 2000 were Ps.10.4393 and
Ps.9.1695, per U.S. Dollar, respectively. At the issuance date of these
financial statements, February 28, 2003, the exchange rate in effect was
Ps.11.03 per U.S. Dollar.
Note 18 — Project 450
A subsidiary was established to provide fixed wireless local telephony
services using the 450 MHz frequency band (Project 450). At December 31, 2002
and 2001, Old Iusacell's investment in Project 450 amounted to Ps.29,014 and
Ps.32,852, respectively.
Given the capabilities of digital technology and the success the Company
has had thus far with its deployment, the Company is exploring alternatives for
providing local telephony service, including fixed or limited zone wireless
service in the 800 MHz and 1.9 GHz bands.
Note 19 — Discontinued Operations
In December 1998, Old Iusacell decided to discontinue the operations of
Cellular Solutions, a subsidiary entity dedicated to the sale of accessories
for cellular handsets. Cellular Solutions transferred all its existing
inventories as of December 31, 1998 to another subsidiary of Old Iusacell and
terminated all of Cellular Solutions' employees during January and February
1999.
Financial information regarding Cellular Solutions as of and for the year
ended December 31, 2000, was as follows:
Current assets
Ps.
2,188
Total assets
2,188
Total liabilities
446
Revenues
—
Gross profit
—
Loss from operations before income taxes
—
Provision for income taxes
—
Profit on disposal
(9,370
)
Net profit
(Ps.9,370
)
F-32
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note  20 — Comprehensive Income
For the years ended December 31, 2002, 2001 and 2000, comprehensive income
consisted of the following:
2002
2001
2000
Net (loss) profit for the year
(Ps
2,084,037
)
(Ps.
528,488
)
(Ps.
1,186,497
)
Other comprehensive income:
Accumulated effect of deferred taxes
—
—
208,135
Total other comprehensive income
—
—
208,135
Total comprehensive income
(Ps
2,084,037
)
(Ps.
528,488
)
(Ps.
978,362
)
Note  21 — Financial Instruments
The Company determines the fair value of outstanding financial instruments
as follows:
a.
Cash and cash equivalents: the carrying value approximates fair value
due to its short-term nature.
b.
Restricted cash: the Company estimated fair value of restricted cash,
which was held in U.S.A. treasury bonds, based on public rates available
for U.S. treasury bonds of the same duration.
c.
Accounts receivable and payable: the carrying value approximates fair
value due to its short-term nature.
d.
Notes payable: Carrying value approximates fair value due to its
short-term nature.
e.
Long-term debt: the Company estimates the fair value of its long-term
debt based on public and current rates available for debt of the same
remaining duration.
f.
Derivatives: the Company determined the fair value of derivative
financial instruments as follows:
Foreign-currency exchange forward contracts
The Company purchased foreign-currency exchange forward contracts with
contract terms of up to three years to protect itself against the adverse
effect that exchange rate fluctuations may have on foreign currency-denominated
liabilities, principally U.S. dollars.
During 2001, 2000 and 1999, the Company used derivative instruments to
hedge its foreign-currency exposure of approximately 50% of the principal and
interest payments coming due over the next year. In August and October 2001,
the Company also used foreign-currency exchange forward contracts to hedge its
exchange rate exposure on the Notes due 2004 for U.S.$150,000 and its interest
payments of U.S.$34,500. Until its early termination, these derivatives were
highly effective since a foreign currency rate change on the forward contract
is offset by a corresponding change in the value of the hedged loan.
In October 2002, the Company early terminated its foreign-currency
exchange forward contracts hedging its exchange rate exposure on the Notes due
2004, paying a termination fee of U.S.$1,687.
As of December 31, 2002, the Company does not have any foreign-currency
exchange contracts.
F-33
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Interest rate collars
In July 1998, Old Iusacell entered into an interest rate collar agreement
for a notional amount of U.S.$35,000 until July 30, 2002. The collar agreement
limits the maximum effective LIBOR cost to 6.12% if six-month LIBOR is lower
than 7.12% and 7.12% if LIBOR equals or exceeds 7.12%. Old Iusacell can
participate in a decline in LIBOR to 5.30%.
On February 26, 1999, Old Iusacell entered into an additional interest
rate collar agreement to limit the maximum interest rate, which must be paid on
U.S.$15,000 of its floating rate debt until July 30, 2002. This collar
agreement limits the maximum effective LIBOR cost to 5.82% if six-month LIBOR
is lower than 6.82% and 6.82% if LIBOR equals or exceeds 6.82%. Old Iusacell
can participate in a decline in LIBOR to 4.75%.
These interest rate collars expired during 2002.
At December 31, the fair values of financial instruments were as follows:
2002
2001
Carrying
Fair
Carrying
Fair
value
value
value
value
Cash and cash equivalents
Ps
160,035
Ps.
160,035
Ps.
439,185
Ps.
439,185
Restricted cash
—
—
464,859
464,859
Accounts receivable
1,036,298
1,036,298
1,317,966
1,317,966
Accounts payable
1,361,507
1,361,507
2,177,951
2,177,951
Foreign currency hedge
contracts
—
—
—
(179,073
)
Interest rate collar
—
—
—
(15,284
)
Notes payable
125,272
125,272
116,306
116,306
Long-term debt:
Unsecured senior notes due
2004
1,565,895
782,947
1,453,824
1,497,439
Unsecured senior notes due
2006
3,653,755
1,096,126
3,392,257
3,646,676
BNP credit agreement
242,530
242,530
195,754
195,754
BNP refaccionario loan
35,665
35,665
34,545
34,545
Amended and restated
syndicated loan
2,772,902
2,772,902
2,574,447
2,574,447
Note  22 — Segment Information
The Company's segment data is prepared in accordance with International
Accounting Standard No.14 (revised). Reportable segments are those that are
based on the Company's method of internal reporting.
The Company has three reportable segments that it operates and manages as
strategic business units that offer different products and services. The
Company measures its reportable segments based on operating profit (loss),
including inter-segment revenues and corporate expenses that are allocated to
the operating segments and excluding any non-recurring items. Inter-segment
transactions are accounted for at current market prices. The Company evaluates
the performance of its segments and allocates resources to them based on
earnings before interest, taxes, depreciation and amortization (EBITDA) and
operating income (loss). The accounting policies underlying the reported
segment data are the same as those described in the summary of significant
accounting policies (Note 4).
F-34
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company's three reportable segments and their principal activities
are:
Cellular
- The Company operates and provides wireless cellular telephone
services in five of the nine Regions in the Mexican market. The Company serves
customers in large metropolitan areas such as Mexico City, Guadalajara, León,
Puebla and Mérida. The Company's services include "value added services" such
as voice mail and caller identification of incoming calling numbers.
Long distance
- The Company provides long distance services for which its
first natural market is its cellular subscriber base. The Company is also
providing these services to residential and commercial entities. The Company
uses its own switches and transmission equipment and a combination of fiber
optic lines, microwave links, satellite transmission and lines leased from
Telmex to provide these services.
Other businesses
- The Company provides paging, local telephony, microwave
links and data transmission services. It has concessions for PCS services,
which started to be provided at the end of 2001.
The tables below present information about reportable segments for the
years ended December 31, 2002, 2001 and 2000 under Mexican GAAP measurement:
Year ended December 31, 2002
Long
Other
Total
Reconciling
Total
Cellular
distance
Businesses
segments
items
(2)
consolidated
Revenues — third party
Ps.
5,221,715
Ps.
269,996
Ps.
35,245
Ps.
5,526,956
—
Ps.
5,526,956
Revenues — affiliates
4,166,390
324,935
1,482,485
5,973,810
(Ps.
5,973,810
)
—
Depreciation and
amortization
1,967,917
123,857
157,115
2,248,889
(1,824
)
2,247,065
Operating loss
(59,763
)
(138,351
)
(203,973
)
(402,087
)
(55,225
)
(457,312
)
EBITDA
(1)
1,908,154
(14,494
)
(46,858
)
1,846,802
(57,049
)
1,789,753
Total assets
18,632,206
1,381,134
13,043,793
33,057,133
(17,934,505
)
15,122,628
Capital expenditures
494,759
13,306
342,877
850,942
—
850,942
Year ended December 31, 2001
Long
Other
Total
Reconciling
Total
Cellular
distance
Businesses
segments
items
(2)
consolidated
Revenues — third party
Ps.
6,216,388
Ps.
310,206
Ps.
70,604
Ps.
6,597,198
—
Ps.
6,597,198
Revenues — affiliates
3,184,173
668,920
1,456,965
5,310,058
(Ps.
5,310,058
)
—
Depreciation and
amortization
2,616,612
107,725
52,717
2,777,054
(8,533
)
2,768,521
Operating loss
(443,297
)
(124,534
)
(79,334
)
(647,165
)
586,853
(60,312
)
EBITDA
(1)
2,173,315
(16,809
)
(26,617
)
2,129,889
578,320
2,708,209
Total assets
29,261,228
988,266
2,237,742
32,487,236
(14,970,956
)
17,516,280
Capital expenditures
1,629,171
94,582
171,951
1,895,704
—
1,895,704
F-35
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Year ended December 31, 2000
Long
Other
Total
Reconciling
Total
Cellular
distance
Businesses
segments
items
(2)
consolidated
Revenues — third party
Ps.
5,866,914
Ps.
73,531
Ps
119,214
Ps.
6,059,659
(Ps.
3,355
)
6,056,304
Revenues — affiliates
2,31,679
559,371
706,605
4,197,655
(4,197,655
)
—
Depreciation and
amortization
2,434,616
95,758
24,096
2,554,470
(8,181
)
2,546,289
Operating loss
(139,139
)
(130,013
)
(169,634
)
(438,786
)
(8,661
)
(447,447
)
EBITDA
(1)
2,295,477
(34,255
)
(145,538
)
2,115,684
(16,842
)
2,098,842
Total assets
28,350,475
1,184,201
2,182,042
31,716,718
(14,302,881
)
17,413,837
Capital expenditures
1,862,823
86,419
323,779
2,273,021
—
2,273,021
(1)
EBITDA as used by the Company is operating profit (loss) plus the sum of
depreciation and amortization. The Company's reconciliation of EBITDA to
consolidated net profit (loss) under Mexican GAAP as of December 31, 2002,
2001 and 2000, is as follows:
(2)
Reconciling items primarily reflect inter-segment eliminations and
certain non-recurring items.
Years ended December 31,
2002
2001
2000
EBITDA
Ps
1,789,753
Ps.
2,708,209
Ps.
2,098,842
Depreciation and amortization
(2,247,065
)
(2,768,521
)
(2,546,289
)
Integral financing cost
(1,513,148
)
(335,344
)
(579,806
)
Equity participation in net (loss)
gain of associated companies and
net (loss) gain
on sale of equity investments
(9,741
)
6,890
(20,767
)
Assets tax and income tax
(120,470
)
(154,749
)
(165,246
)
Minority interest
16,634
21,874
17,399
Profit from discontinued operations
—
—
9,370
Cumulative effect of the adoption of
the new accounting pronouncements
—
(6,847
)
—
Net loss for the year
(Ps
2,084,037
)
(Ps.
528,488
)
(Ps.
1,186,497
)
NOTE  23 — Significant Differences Between Mexican GAAP and United States Generally Accepted Accounting Principles
The Company's consolidated financial statements are prepared on a Mexican
GAAP basis, which differs in certain significant respects from United States
generally accepted accounting principles (U.S. GAAP).
The reconciliation to U.S. GAAP does not include the reversal of the
adjustments to the financial statements for the effects of inflation required
under Mexican Bulletin B-10. The application of Bulletin B-10 represents a
comprehensive measure of the effects of price-level changes in the financial
statements based on historical cost for Mexican and U.S. accounting purposes.
The principal differences, other than inflation accounting, between Mexican and
U.S. GAAP are listed below together with an explanation, where appropriate, of
the adjustments that affect consolidated net income for each of the three years
in the period ended December 31, 2002, and stockholders' equity as of December
31, 2002 and 2001.
F-36
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
a.     Deferred income taxes
Under Mexican GAAP, the Company applies revised Bulletin D-4. Under the
methodology of Bulletin D-4, the Company recognized future tax consequences
based on the difference between the financial statements and tax basis of
assets and liabilities — temporary differences — as of the date of the
financial statements. For purposes of the reconciliation to U.S. GAAP, the
Company has applied Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes", for all periods presented. The U.S. GAAP
adjustment to deferred income taxes exists as a result of the other U.S. GAAP
adjustments changing the book basis of the Company and as a result impacting
various deferred tax balances and the related valuation allowance.
SFAS 109 requires an asset and liability method of accounting whereby
deferred taxes are recognized for the tax consequences of all temporary
differences between the financial statement carrying amounts and the related
tax basis of assets and liabilities. Under U.S. GAAP, the effect on deferred
taxes of a change in tax rate is recognized in income in the period that
includes the enactment date.
b.     Pre-operating costs
Under Mexican GAAP, the Company capitalized certain pre-operating costs,
primarily related to the development of the PCS network in regions 1 and 4
until 2001. Under U.S. GAAP, pre-operating costs are expensed as incurred.
c.     Derivative financial instruments
As mentioned in Note 21, the Company entered into interest rate collar
agreements to hedge an aggregate notional amount of U.S.$50,000 of its floating
rate debt. Additionally, during 2001 the Company purchased foreign-currency
forward exchange contracts, which at December 31, 2001, hedged a notional
amount of U.S.$201,000 in debt. The Company employs risk management strategies
using foreign currency forwards and interest rate collar agreements. The
Company does not hold derivatives for trading purposes.
As mentioned in Note 4e., effective January 1, 2001, the Company adopted
Bulletin C-2, which requires that all financial instruments, including those
used for hedging purposes, be recorded in the balance sheet at their fair value
and changes in the fair value to be recorded in the income statement for each
period. Bulletin C-2 also requires that derivative financial instruments used
for hedging purposes, be recorded in the balance sheet and valued using the
same valuation criteria used to value the hedged asset or liability. Based on
this valuation criteria, under Mexican GAAP since the hedged liabilities are
not carried at fair value, the Company did not record the derivative financial
instruments related to those hedged liabilities at fair value but rather, the
Company keeps the derivative financial instruments valued at the exchange rate
at the end of the year. Prior to January 1, 2001, derivative financial
instruments were recorded on a cash basis under Mexican GAAP.
On December 30, 1999 Old Iusacell entered into a foreign currency hedge
utilizing forward-rate contracts, hedging its exchange rate exposure for up to
U.S.$77,000 or approximately 50% of the principal and interest payments coming
due over the period April 2000 to April 2001.
Under U.S. GAAP, effective January 1, 2001, the Company adopted SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities", as amended by
SFAS 137 and 138. Under SFAS 133, all derivatives are also recognized on the
balance sheet at their fair value.
The Company's derivative financial instruments are classified as cash flow
hedges based on certain criteria established by SFAS 133. Accordingly, the
effective portion of the gain or loss of the hedged instrument is reported in
accumulated other comprehensive income, and its ineffective portion is reported
in earnings. All of the Company's derivatives were considered highly effective.
The Company has no derivative financial instruments at December 31, 2002.
F-37
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Prior to January 1, 2001, the differential to be paid or received as
interest rates changed was accrued and recognized as an adjustment of interest
expense at the balance sheet date. Additionally, the related amount payable or
receivable from counter-parties was included in accrued other expenses at the
balance sheet date.
The cumulative effect on the adoption of this new accounting pronouncement
amounted to Ps.6,847 as of January 1, 2001.
d.     Gain from the exchange of non-monetary assets
During 2002 and 2001, the Company entered into certain fiber optic cable
swap agreements to exchange certain long-distance fiber optic cables fair
valued at Ps.121,215 and Ps.150,812, respectively. Under Mexican GAAP, the
Company recorded the transactions as both acquisitions (at the carrying value
of the asset sold) and sales of fixed assets based on the contract amount,
resulting in a gain on the sale of Ps.53,172 and Ps.145,229, for the years
ended December 31, 2002 and 2001, respectively. Under U.S. GAAP, because the
assets exchanged are similar productive assets and, on a net basis, no cash was
exchanged, the transactions did not result in the recognition of earnings.
Consequently, under U.S. GAAP, the acquisitions and sales would not have been
recorded.
In December 1998, the Company entered into another similar fiber optic
cable swap agreement with Bestel for Ps.258,609, resulting in a gain on the
sale of Ps.225,208 that was not recorded under U.S. GAAP.
The cumulative gains recorded under Mexican GAAP for exchange of
non-monetary assets taking place in 1999, 2001 and 2002 is Ps.423,609 at
December 31, 2002.
e.     Sale-leaseback transaction with MATC Celular
As mentioned in Note 8c., during 2002 and 2001 the Company sold and
leased-back 76 and 244, respectively, non strategic towers to MATC Celular.
Under Mexican GAAP, sale-leaseback transactions are recognized with the
use of the general criteria for capital and operating lease transactions
pursuant to Bulletin D-5, "Leases". The timing of the recognition of a gain
derived from sale-leaseback transactions should be based on the subsequent
lease classification criteria of the leaseback portion of the transaction. If
the subsequent leaseback is accounted for as an operating lease, full immediate
gain recognition is allowed whereas if the subsequent leaseback is accounted
for as a capital lease, the gain is deferred and amortized in proportion with
the estimated useful life of the asset leased. Based upon these criteria, the
sale-leaseback agreement with MATC was recorded by the Company as an operating
lease and consequently, the Ps.100,979 and Ps.325,436 gains were recognized at
the date of the sale.
Under U.S. GAAP, SFAS 28, "Accounting for Sales with Lease Backs", this
sale-leaseback transactions should be recognized as a single financing
transaction in which any profit or loss on the sale is deferred and amortized
by the seller, who becomes the lessee. As the Company retained "more than a
minor part but less than substantially all" of the use of the assets leased and
the profit on the sale does not exceed the present value of the minimum lease
payments, the Company deferred Ps.86,643 and Ps.286,319 of the gains at the
transaction dates. In addition, as the leaseback qualified as an operating
lease, the Company is amortizing the deferred gain against the gross rental
charged to expense over the lease term. Consequently, the U.S. GAAP net income
for the years ended December 31, 2002 and 2001 was decreased Ps.70,503 and
Ps.276,008, respectively.
f.     Capitalized interest
Mexican GAAP allows, but does not require, capitalization of financing
costs as part of the cost of assets under construction. Financing costs
capitalized include interest costs, gains from monetary position and foreign
exchange losses. Under Mexican GAAP, the Company did not capitalize any
financing costs for each of the years ended December 31, 2002, 2001 and 2000.
F-38
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
U.S. GAAP requires the capitalization of interest during the construction
of qualifying assets. In an inflationary economy, such as Mexico, acceptable
practice is to capitalize interest net of the monetary gain on the related
Mexican Peso debt, but not on U.S. dollar or other stable currency debt.
U.S.GAAP does not allow the capitalization of foreign exchange losses.
g.     Goodwill and indefinite-lived intangible assets
Under Mexican GAAP, the Company amortizes goodwill on a straight-line
basis over a period of 20 years.
In July 2001, the FASB issued SFAS 141, "Business Combinations," and No.
142, "Goodwill and Other Intangible Assets." SFAS 141 supercedes Accounting
Principles Board Opinion (APB) No. 16, "Business Combinations" and amends or
supercedes a number of related interpretations of APB 16. SFAS 141 eliminates
the pooling-of-interests method of accounting for business combinations and
changes the criteria to recognize intangible assets apart from goodwill. SFAS
142 supercedes APB 17, "Intangible Assets." Under SFAS 142, goodwill and
indefinite-lived intangible assets are no longer amortized but are reviewed
annually, or more frequently if impairment indicators arise, for impairment.
SFAS 141 is effective for any business combination accounted for by the
purchase method that is completed after June 30, 2001. Accordingly, the
Company applied SFAS 141 to the Portatel acquisition and SFAS 142 to the
intangible assets acquired therein.
Effective January 1, 2002, the Company adopted the provisions of SFAS 142.
Goodwill is no longer amortized but is reviewed for impairment on an annual
basis at the reporting unit level. The impairment test is performed in two
phases. The first step of the goodwill impairment test compares the fair value
of the reporting unit with its carrying value, including goodwill. If the fair
value of the reporting unit exceeds its carrying value, goodwill of the
reporting unit is considered not impaired; however if the carrying value of the
reporting unit exceeds its fair value, an additional procedure must be
performed. The additional procedure compares the implied fair value of the
reporting unit (as defined by SFAS 142) with the carrying amount of that
goodwill. An impairment loss is recorded to the extent that the carrying amount
of goodwill exceeds its implied fair value. Upon adoption of SFAS 142,
goodwill was tested for impairment and no impairment charges were recorded.
Under Mexican GAAP goodwill continues to be amortized. For U.S. GAAP
purposes, the reversal of goodwill amortization under Mexican GAAP increased
the net income for the year ended December 31, 2002 in Ps.178,153.
Additionally, the Company defined concessions as intangible assets with
definite life, consequently, under both Mexican GAAP and U.S. GAAP, the
amortization of this intangible asset continues.
F-39
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The impact of adopting SFAS 142 on net loss and loss per share adjusted to
exclude amortization expense related to goodwill is as follows:
Years ended December 31,
2002
2001
2000
Net loss for the year under U.S. GAAP
(Ps
1,913,649
)
(Ps.
855,206
)
(Ps.
1,200,451
)
Amortization of goodwill
—
177,411
174,403
Pro-forma net loss for the year
under U.S. GAAP
(Ps
1,913,649
)
(Ps.
677,795
)
(Ps.
1,026,048
)
Basic and diluted net loss per share:
Reported loss per share
(Ps
1.03
)
(Ps.
0.57
)
(Ps.
0.86
)
Pro-forma basic and diluted loss per
share
(Ps
1.03
)
(Ps.
0.45
)
(Ps.
0.73
)
h.     Effect of inflation accounting on U.S. GAAP adjustments
In order to determine the net effect on the financial statements of
recognizing certain of the adjustments described above, it is necessary to
recognize the effects of applying the Mexican GAAP inflation accounting
principles (see Note 4b.) to such adjustments.
i.     Minority interest
Under Mexican GAAP, the minority interest in consolidated subsidiaries is
presented as a separate component within the stockholders' equity section of
the consolidated balance sheet. For U.S. GAAP purposes, minority interest is
not included in stockholders' equity and accordingly, is excluded to arrive at
U.S. GAAP stockholders' equity.
j.     Provision for consolidation of facilities
During the year ended December 31, 1996, the Company recorded a charge and
related provision for consolidation of facilities related to the pending sale
and anticipated loss on the sale of its then corporate headquarters. Since the
Company has not had the ability to remove such headquarters from operations,
under U.S. GAAP, pursuant to the provisions of SFAS 121, "Accounting for the
Impairment of Long-Lived assets and for Long-Lived Assets to Be Disposed Of,"
an impairment charge would not have been recorded at December 31, 1996,
therefore, under U.S. GAAP the charge and related provision recorded by the
Company in 1996 has been reversed.
F-40
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
k.     Net income (loss) and stockholders' equity under U.S. GAAP
The following is a summary of net (loss) profit and stockholders' equity
adjusted to take into account certain material differences between Mexican GAAP
and U.S. GAAP:
Years ended December 31,
2002
2001
2000
Net loss under Mexican GAAP
(Ps.
2,084,037
)
(Ps.
528,488
)
(Ps.
1,186,497
)
Pre-operating costs (Note 23b.)
3,877
(40,571
)
(20,183
)
Derivative financial instruments (Note 23c.)
170
—
6,496
Gain from the exchange of non-monetary assets
(Note 23d.)
(53,172
)
(145,229
)
—
Depreciation of the gain from the exchange of
non-monetary assets (Note 23d.)
24,737
22,521
—
Gain on the sale lease-back
transaction (Note 23e.)
(70,503
)
(276,008
)
—
Capitalized interest (Note 23f.)
95,495
101,836
—
Depreciation of capitalized interest (Note 23f.)
(10,184
)
—
—
Amortization of goodwill (Note 23g.)
178,153
2,102
—
Minority interest (Note 23i.)
1,252
8,327
—
Effect of inflation accounting on U.S. GAAP
adjustments (Note 23h.)
563
304
(267
)
Net loss under U.S.GAAP
(Ps.
1,913,649
)
(Ps.
855,206
)
(Ps.
1,200,451
)
Weighted-average number of shares outstanding
basic (thousands)
1,862,025
1,495,140
1,396,672
Basic and diluted net loss per share (pesos)
(Ps.
1.03
)
(Ps.
0.57
)
(Ps.
0.86
)
For the year ended December 31, 2001, there was no effect on the loss per
share calculation for the cumulative effect of the adoption of the new
accounting pronouncement.
F-41
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The weighted-average number of shares outstanding under the Stock Purchase
Plan at December 31, 2002 and 2001 was 6,485,124. Because of the anti-dilutive
effect, outstanding options during 2002 and 2001 are not included in the
computation of diluted (loss) per share for 2002 and 2001.
As of December 31,
2002
2001
Stockholders' equity under Mexican GAAP
Ps.
5,365,102
Ps.
7,571,196
Pre-operating costs (Note 23b.)
(139,875
)
(143,752
)
Derivative financial instruments (Note 23c.)
—
(194,357
)
Gain from the exchange of non-monetary
assets (Note 23d.)
(423,609
)
(370,437
)
Accumulated amortization on the gain from the
exchange of non-monetary assets (Note 23d.)
47,258
22,521
Gain on the sale lease-back transaction (Note 23e.)
(346,511
)
(276,008
)
Capitalized interest (Note 23f.)
197,331
101,836
Accumulated depreciation on capitalized
interest (Note 23f.)
(10,184
)
—
Amortization of goodwill (Note 23g.)
180,255
2,102
Minority interest (Note 23i.)
(581
)
(123,888
)
Provision for consolidation of facilities (Note 23j.)
20,866
20,866
Stockholders' equity under U.S. GAAP
Ps.
4,890,052
Ps.
6,610,079
Provided below is an analysis of changes in stockholders' equity under U.S.
GAAP:
As of December 31,
2002
2001
Opening balance
Ps.
6,610,079
Ps.
6,674,275
Increase in capital stock
—
985,499
Net loss for the year
(1,913,649
)
(855,206
)
Other comprehensive income:
Inflation effects
(563
)
(304
)
Derivative financial instruments
194,185
(194,185
)
Closing balance
Ps.
4,890,052
Ps.
6,610,079
l) Discontinued operations
As described in Note 19, in December 1998, Old Iusacell decided to
discontinue the operations of its subsidiary, Cellular Solutions, which was in
the business of selling accessories for cellular handsets, and consequently,
recognized a gain from discontinued operations amounting to Ps.9,370, for the
year ended December 31, 2000. Under U.S. GAAP, the closing of this subsidiary
does not constitute a discontinued operation under APB No.30. Accordingly, the
gain (loss) from discontinued operations is recorded as operating income
(expense).
m) Depreciation
Under Mexican GAAP, depreciation is not included in the measure of gross
profit. Under U.S. GAAP, Ps.1,435,126, Ps.1,295,716 and Ps.1,365,798 for the
years ended December 31, 2002, 2001 and 2000, respectively, are reclassified to
cost of sales.
F-42
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
n) Impairment of long-lived assets
During the year ended December 31, 2002, the Company adopted SFAS 144,
"Accounting for the Impairment of Long-Lived Assets." SFAS 144 provides
guidance on the accounting for the impairment or disposal of long-lived assets.
SFAS 144 supercedes SFAS 121 and applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board
Opinion No. 30 (APB 30), "Reporting Results of Operations Reporting the Effects
of Disposal of a Segment of a Business". SFAS 144 develops one accounting model
(based on the model in SFAS 121) for long-lived assets that are to be disposed
of by sale, as well as addresses the principal implementation issues. The
adoption of SFAS 144 had no effect on the consolidated financial position or
results of operations of the Company.
o) Supplementary U.S. GAAP disclosures
1)
Cash flow information
Under U.S. GAAP, SFAS 95, "Statement of Cash Flows", a statement of cash
flows is required, which presents only movements in cash and excludes non-cash
items. SFAS 95 does not provide any specific guidance with respect to
inflation-adjusted financial statements. However, it is accepted practice to
adjust cash flows from operating activities for the monetary gains and losses
and unrealized foreign exchange gains and losses.
Years ended December 31,
2002
2001
2000
(*)
Operating activities:
Net loss under U.S. GAAP
(Ps. 1,913,649
)
(Ps. 855,206
)
(Ps. 1,200,451
)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation
1,435,126
1,295,716
1,365,798
Amortization
619,233
1,448,182
1,180,490
Gain on the sale of towers
(30,476
)
(49,427
)
—
Equity in (profit) loss of associated companies
9,741
(2,687
)
20,767
Gain on sale of equity investments
—
(4,203
)
—
Increase in allowance for doubtful accounts
61,336
114,613
99,919
Increase in allowance for obsolete and
slow-moving inventories
11,213
69,777
44,825
Minority interest
(17,886
)
(30,201
)
(17,399
)
Deferred income taxes and employee
profit sharing
9,250
—
—
Gain on net monetary position and foreign
exchange losses
612,510
(519,733
)
(458,389
)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable
(214,434
)
(153,519
)
122,302
Inventories
221,238
(60,161
)
(86,796
)
Increase (decrease) in:
Trade accounts payable and related parties
(460,636
)
163,194
8,175
Taxes and other payable
(224,163
)
(277,254
)
162,609
Income tax
16,637
21,874
38,231
Other
(55,014
)
(11,980
)
765
Net cash provided by operating activities
80,026
1,148,985
1,280,846
F-43
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Years ended December 31,
2002
2001
2000
(*)
Financing activities:
Proceeds from notes payable and
long-term debt
68,981
854,133
742,033
Payments of notes payable and long-term debt
(38,836
)
(795,503
)
(1,437,776
)
Decrease in escrow account
464,859
462,019
536,311
Proceeds from related parties financing
—
81,347
—
Proceeds from equity offerings
—
985,499
1,695,566
Net cash provided by financing activities
495,004
1,587,495
1,536,134
Years ended December 31,
2002
2001
2000
(*)
Investing activities:
Purchase of property and equipment, net
(863,694
)
(2,054,136
)
(2,262,344
)
Proceeds from sales of investments in
associated companies
(167,019
)
4,203
(20,719
)
Proceeds from the sale of towers
114,126
378,933
—
Acquisition of Portatel, net of cash
—
(523,553
)
—
Purchase of other assets
87,441
(780,311
)
(1,079,528
)
Net cash used in investing activities
(829,146
)
(2,974,864
)
(3,362,591
)
Translation and inflation effects in cash
(25,034
)
(48,719
)
(113,199
)
Net decrease in cash
(279,150
)
(287,103
)
(658,810
)
Cash at beginning of year
439,185
726,288
1,385,098
Cash at the end of year
Ps.
160,035
Ps.
439,185
Ps.
726,288
Interest paid
Ps.
782,583
Ps.
494,579
Ps.
927,025
Income tax paid
Ps.
154,999
Ps.
120,781
Ps.
148,809
(*)
Certain reclassifications were made in prior years to conform to classifications used in the most recent year.
2)
The assets tax charged to the provision for assets tax
for the years ended December 31, 2002, 2001 and 2000 was as
follows:
Years ended December 31,
2002
2001
2000
Asset tax not offset by current taxes
Ps.
111,220
Ps.
154,749
Ps.
165,246
Deferred tax
9,250
—
—
Provision for taxes
Ps.
120,470
Ps.
154,749
Ps.
165,246
F-44
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
3)
Deferred income taxes
Significant components of deferred income taxes under U.S. GAAP are as
follows:
December 31, 2002
SFAS 109
SFAS 109
applied to
applied to
Mexican GAAP
U.S. GAAP
Balances
Adjustments
Total
Deferred assets:
Allowance for doubtful accounts
Ps.
30,898
Ps.
30,898
Net operating loss carryforwards and
tax credits
1,957,555
1,957,555
Reorganization reserve
3,914
3,914
Gain from the exchange of non-monetary assets
—
120,432
120,432
Pre-operating costs
—
44,760
44,760
Gain on the sale lease-back transaction
—
110,884
110,884
Valuation allowance
(811,447
)
(216,189
)
(1,027,636
)
Deferred tax assets
1,180,920
59,887
1,240,807
Deferred liabilities:
Inventories
12,020
12,020
Property and equipment
858,345
858,345
Cellular telephones to be amortized
48,057
48,057
Concessions
98,646
98,646
Capitalized interest
—
59,887
59,887
Deferred tax liabilities
1,017,068
59,887
1,076,955
Net deferred tax assets
Ps.
163,852
Ps.
—
Ps.
163,852
F-45
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
December 31, 2001
SFAS 109
SFAS 109
applied to
applied to
Mexican GAAP
U.S. GAAP
Balances
Adjustments
Total
Deferred assets:
Allowance for doubtful accounts
Ps.
78,019
Ps.
78,019
Net operating loss carryforwards and tax credits
1,434,964
1,434,964
Reorganization reserve
26,346
26,346
Gain from the exchange of non-monetary assets
—
Ps.
121,771
121,771
Pre-operating costs
—
50,313
50,313
Derivative financial instruments
—
68,025
68,025
Gain on the sale lease-back transaction
—
96,602
96,602
Valuation allowance
(327,396
)
(301,069
)
(628,465
)
Deferred tax assets
1,211,933
35,642
1,247,575
Deferred liabilities:
Inventories
93,852
93,852
Property and equipment
756,338
756,338
Cellular telephones to be amortized
64,730
64,730
Concessions
114,044
114,044
Capitalized interest
—
35,642
35,642
Deferred tax liabilities
1,028,964
35,642
1,064,606
Net deferred tax assets
Ps.
182,969
Ps.
—
Ps.
182,969
F-46
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
4)
Stock Purchase Plan
As mentioned in Note 15, the Company has a fixed stock option plan, the
Stock Purchase Plan. This plan grants options to purchase New Iusacell common
stock at a price equal to the market price of the stock at the date of the
grant. The Company applies APB 25, "Accounting for Stock Issued to Employees,"
and related interpretations in accounting for its plan. The Company has adopted
the disclosure-only provisions of SFAS 123, "Accounting for Stock Based
Compensation". The Company recognizes no compensation expense for its Stock
Purchase Plan as the exercise price of the options equals the market price of
the stock on the grant date. If the Company had elected to recognize
compensation expense based on the fair value at the grant dates for 2001, 2000
and 1999, in accordance with the provisions of SFAS 123, net (loss) profit and
earnings per share would have been changed to the following pro forma amounts:
Years ended December 31,
2002
2001
2000
Under Mexican GAAP:
Net loss
As reported
(Ps. 2,084,037
)
(Ps. 528,488
)
(Ps. 1,186,497
)
Pro forma
(2,088,224
)
(535,866
)
(1,196,319
)
Basic and fully diluted
As reported
(1.12
)
(0.35
)
(0.85
)
loss per share
Pro forma
(1.12
)
(0.36
)
(0.86
)
Under U.S. GAAP:
Net loss
As reported
(Ps. 1,913,649
)
(Ps. 855,206
)
(Ps. 1,200,451
)
Pro forma
(1,917,836
)
(862,584
)
(1,210,273
)
Basic and fully diluted
As reported
(1.03
)
(0.57
)
(0.86
)
loss per share
Pro forma
(1.03
)
(0.58
)
(0.87
)
These results may not be representative of the effects on pro forma net income
for future years.
The Company determined the pro forma amounts using the Black-Scholes
option-pricing model based on the following weighted-average assumptions:
2002
2001
2000
Dividend yield
0
%
0
%
0
%
Expected volatility
99
%
74
%
67
%
Risk-free interest rate
4
%
4
%
14
%
Expected lives (in years)
4.0
4.0
4.0
5)
New Accounting Pronouncements
In June 2001 the Financial Accounting Standards Board (FASB) issued SFAS
143, "Accounting for Obligations Associated with the Retirement of Long-Lived
Assets", which is effective for fiscal years beginning after June 15, 2002.
The objectives of SFAS 143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation and its
associated asset retirement cost.
F-47
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GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." As a result, companies will no longer be allowed to classify
gains and losses from extinguishments of debt as extraordinary items
unless they meet the criteria of APB 30. Gain and losses from extinguishments
of debt that have been classified as extraordinary in prior years that do not
meet the criteria of APB 30 shall be reclassified on a going forward basis.
In addition, SFAS 145 requires that capital leases that are modified so
that the resulting lease agreement is classified as an operating lease be
accounted for under the sale-leaseback provisions of SFAS 28 or 98, as
applicable, instead of SFAS 13. The provisions of this statement with regard
to SFAS 4 will be effective for fiscal years beginning after May 15, 2002, and
those for SFAS 13 will be effective for transactions occurring after May 15,
2002.
In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated
with Exit or Disposal Activities." The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance was provided by Emerging Issue Task Force (EITF) Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS 146 replaces Issue No. 94-3. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.
FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees," (FIN 45) was issued in November 2002. FIN 45
requires that a liability be recognized at the inception of certain guarantees
for the fair value of the obligation, including the ongoing obligation to stand
ready to perform over the term of the guarantee. Guarantees, as defined in FIN
45, include contracts that contingently require the Company to make payments to
a guaranteed party based on changes in an underlying that is related to an
asset, liability or equity security of the guaranteed party, performance
guarantees, indemnification agreements or indirect guarantees of indebtedness
of others. This new accounting is effective for certain guarantees issued or
modified after December 31, 2002. In addition, FIN 45 requires certain
additional disclosures.
SFAS 148, "Accounting for Stock-Based Compensation – Transition and
Disclosure – an amendment of FASB Statement No. 123," was issued on December
31, 2002. SFAS 148 provides alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. SFAS 148 also amends the disclosure requirements of SFAS 123,
"Accounting for Stock-Based Compensation," to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results
In January 2003, the FASB issued FASB Interpretation 46 "Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51" (FIN 46). FIN 46
provides a new framework for identifying variable interest entities (VIEs) and
determining when a company should include the assets, liabilities,
non-controlling interests and results of activities of a VIE in its
consolidated financial statements. FIN 46 is effective immediately for VIEs
created after January 31, 2003 and is effective beginning in the third quarter
of 2003 for VIEs created prior to issuance of the interpretation.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities". SFAS 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS 149
is effective prospectively for contracts entered into or modified after June
30, 2003 and prospectively for hedging relationships designated after June 30,
2003.
In May 2003, the FASB issued SFAS No. 150, "Accounting For Certain
Financial Instruments with Characteristics of Both Liabilities and Equity".
SFAS 150 improves the accounting for certain financial instruments
F-48
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
that, under previous guidance, issuers could account for as equity, and requires that these
instruments be classified as liabilities in statements of financial position.
SFAS 150 is effective prospectively for financial instruments entered into or
modified after May 31, 2003 and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. SFAS 150 shall be
implemented by reporting the cumulative effect of a change in an
accounting principle for financial instruments created before the issuance
date of the Statement and still existing at the beginning of the interim period
of adoption.
The Company is presently evaluating the impact, if any, that these new
standards will have on its consolidated financial statements.
6)
U.S. GAAP requires the desegregation of the account
balances as disclosed below. There is no similar requirement
under Mexican GAAP. As of December 31, the account balances were
as follows:
2002
2001
Recoverable taxes and other:
Interconnection fees
Ps.
69,513
Ps.
93,505
Recoverable VAT
179,644
340,185
Other taxes
57,889
23,352
Telephones to be amortized
141,345
—
Other
88,609
230,298
537,000
687,340
Taxes and other payables:
Taxes and rights payable
246,241
217,314
Interest payable
123,063
129,180
Other
274,308
568,225
Ps.
643,612
Ps.
914,719
7)
A significant portion of our trade receivables is
represented by a small number of distributors. The Company's
three largest distributors accounted for 52% and 44% of our net
trade accounts receivables as of December 31, 2002 and 2001,
respectively. Management has established certain measures to
reduce the risk associated with this concentration such as
certain guarantees and property liens. Management believes that
this distributor concentration will be reduced over time as the
size of our operations grows. However, results of operations
could be negatively affected, at least in the short term, if any
defaults on payment occur with respect to these distributors.
NOTE 24 – Subsequent Events
Debt restructuring efforts
A summary of subsequent events relating to the Company's debt
restructuring efforts are as follows:
a.
Technical defaults on amended restated syndicated loan
On March 27, 2003, the Company announced that Old Iusacell received
notification from lenders of the occurrence of two technical defaults under the
U.S.$265,622 Amended and Restated Syndicated Loan Agreement dated as of March
29, 2001 (the Credit Agreement). The underlying defaults are due to the failure
to obtain the consent of the lenders prior to the closing and opening of
certain bank accounts and the failure to effect the registration of a mortgage
on certain newly acquired assets within the time period specified in the Credit
Agreement.
F-49
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GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company effected the registration of the mortgage and requested,
but has not yet received, the consent of the lenders with respect to the bank
accounts.
b.
Amendment and waiver under the Credit Agreement
On April 28, 2003, as part of its debt restructuring effort, Old Iusacell
received a temporary Amendment and Waiver (the Amendment) of the Debt/EBITDA
leverage ratio and certain other provisions and technical defaults
under the Credit Agreement. The Amendment was scheduled to expire on May
22, 2003 and at its expiration date the Amendment was extended to June 13, 2003
and further extended to June 26, 2003. If the Amendment is not extended, upon
its expiration Old Iusacell will be in default of its Debt/EBITDA leverage
ratio, which will constitute an event of default under the Credit Agreement,
and the lenders under the Credit Agreement will have the remedies they would
otherwise have had if the Amendment had not been executed.
The Amendment contains covenants which expire on June 30, 2003 which
restrict Old Iusacell from making any loans, advances, dividends or other
payments to New Iusacell and require a proportionate prepayment of the loan
under the Credit Agreement if the Company makes any principal payments of any
of its indebtedness for borrowed money, excluding capital and operating leases.
There is no assurance that the Company will obtain an extension of the
Amendment at its expiration date and if the extension is not obtained, the
lenders under the Credit Agreement can request the acceleration of its
indebtedness in which case, the Credit Agreement, and due to cross-defaults,
the Senior Notes due 2006 and the Senior Notes due 2004, would become
immediately due and payable.
c.
Extinguishment of Santander refinanced credit facility
On May 29, 2003, Old Iusacell reached an agreement with Santander to repay
the remaining balance of U.S.$3,000 under a refinanced credit facility. Under
this agreement, Old Iusacell and Santander agreed to settle the remaining
amount for U.S.$1,500. Old Iusacell recognized the difference as an early
extinguishment of debt under Mexican GAAP and therefore, recognize this amount
as an extraordinary gain in 2003.
d.
Suspension of interest payment on Senior Notes
On June 2, 2003, the Company announced that it determined that pending an
agreement with its lenders on a restructuring plan, it would suspended the
payment of U.S.$24,938 interest payment due June 1, 2003 on its Senior Notes
due 2006. The Company has a thirty-day cure period to make the interest
payment, before an event of default would occur. If the interest payment is not
made within the thirty-day period an event of default would occur under the
indenture governing the bonds, and the bondholders would have the right to
accelerate the due date of the principal of the bonds or take other legal
actions as they deem appropriate.
e.
Principal shareholders acceptance of tender offer to sell controlling interest
On June 13, 2003, the Company announced that its two largest shareholders,
Verizon and Vodafone, agreed to tender all of their shares, representing
approximately 73.90% of the Company's outstanding shares, in a public tender
offer to be commenced in Mexico and the United States of America by Movil
Access, S.A. de C.V., a Mexican telecommunications service provider. Once the
National Banking and Securities Commission (Comisión Nacional Bancaria y de
Valores) approves the tender offer and Verizon and Vodafone tender all of their
shares, Verizon and Vodafone will lose the ability to manage the Company.
Verizon and Vodafone will no longer be in a position to determine the Company's
policies and strategies, provide personnel to the Company on a secondment or
consulting basis, manage the Company's operations or provide the technical
support, as well as operating synergies that the Company has historically
relied on.
Under the indentures governing the Senior Notes due 2006 and the Senior
Notes due 2004, this constitutes a change of control under which the
bondholders have the right to require New Iusacell and Old Iusacell,
respectively, to repurchase such bondholders' notes. This also constitutes a
change of control and would constitute an event of
F-50
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
default under the Credit
Agreement so the lenders under the Credit Agreement would have the right to
declare all amounts outstanding under the Credit Agreement immediately due and
payable.
The Company continues to evaluate with the assistance of an external
financial advisor the alternatives for restructuring its debt. The Company's
ability to operate as a going concern is dependent upon its ability to
successfully negotiate with its bank syndicate and note holders to preclude
acceleration. However, although no assurances can be given, the Company remains
confident that it will be able to continue operating as a going concern.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business, and as such do
not include any adjustments that might result from the outcome of these
uncertainties.
10% excise tax on telecommunications services
On June 6, 2003, the Company was officially notified that by disposition
of the appeal filed by the Mexican government, Mexico's Supreme Court affirmed
the ruling by a federal district court in favor of the Company in their
injunction filed against the special telecommunications tax enacted by the
Mexican Congress on January 1, 2002 (Note 13g.).
F-51
Table of Contents
GRUPO IUSACELL
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
Years Ended 2000, 2001 and 2002
(Amounts expressed in Thousands of Mexican Pesos (Ps.)
with Purchasing Power as of December 31, 2002)
Balance at
Charged to
Charged to
Balance at
beginning
costs and
other
end of
of period
expenses
accounts
Deductions
period
Allowance for obsolete and
slow-moving inventories
2000
Ps.
9,430
Ps.
45,290
Ps.
0
Ps.
466
Ps.
54,254
2001
54,254
69,777
0
6,962
117,069
2002
117,069
11,213
0
25,044
103,238
Allowance for doubtful
accounts
2000
Ps.
179,490
Ps.
99,919
Ps.
0
Ps.
45,089
Ps.
234,320
2001
234,320
114,613
0
126,021
222,912
2002
222,912
61,336
0
190,645
93,603
S-II
Table of Contents
EXHIBIT INDEX
Exhibit
No.
Exhibit
1.1*
By-laws (
estatutos
) of
Grupo Iusacell, S.A. de C.V.
, as amended on
April 21, 2003, (English translation).
2.1
Shareholders Agreement dated as of March 30, 2001 by and among
Iusacell, Bell Atlantic Latin America Holdings, Inc., Bell
Atlantic International, Inc., Bell Atlantic New Zealand Holdings,
Inc. and Vodafone Americas B.V. (incorporated herein by reference
to Exhibit 2(a) of Iusacell's Annual Report on Form 20-F for
fiscal year 2000 — File No. 001-14938).
2.2
Indenture dated as of December 16, 1999 among
Grupo Iusacell, S.A.
de C.V.
, Verizon Communications Inc. and The Bank of New York, as
trustee (incorporated herein by reference to Exhibit 4.1 of the
Registration Statement F-4 — Registration Number 333-95547).
2.3
Indenture dated as of July 25, 1997 among
Grupo Iusacell Celular,
S.A. de C.V.
, certain subsidiaries of
Iusacell Celular, S.A. de
C.V.
and First Union National Bank, as trustee (incorporated
herein by reference to Exhibit 4.1 of the Registration Statement
F-4 — Registration Number 333-37431).
4.1
Agreement for Equipment, Furnish and Installation for Iusacell's
Cellular Network, dated as of December 10, 1997, among
Grupo
Iusacell Celular, S.A. de C.V.
, Lucent Technologies World
Services, Inc. and
Lucent Technologies de México, S.A. de C.V.
(incorporated herein by reference to Exhibit A of Iusacell
Celular's Annual Report on Form 20-F for fiscal year 1997).
4.2
Amended and Restated Credit Agreement, dated as of July 25, 1997,
as amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
and JP Morgan, as sole Bookrunner and Lead
Arranger, and The Chase Manhattan Bank, as Administrative Agent
and Collateral Agent, BNP Paribas, Citibank N.A., The
Toronto-Dominion Bank and
BBVA Bancomer S.A.
, as Arrangers
(incorporated herein by reference to Exhibit 4(b) of Iusacell's
Annual Report on Form 20-F for fiscal year 2000 — File No.
001-14938).
4.3*
Amended and Restated Master Lease Agreement (English version),
dated as of May 16, 2002, among
MATC Celular, S. de R.L. de C.V.
,
Grupo Iusacell Celular, S.A. de C.V.
and
Iusacell Arrendadora,
S.A. de C.V.
4.4*
Amended and Restated Master Lease Agreement (English version),
dated as of May 16, 2002, between
MATC Celular, S. de R.L. de C.V.
and
Grupo Iusacell Celular, S.A. de C.V.
, for and on behalf of
itself and its affiliates.
4.5*
Amended and Restated Build-to-Suit and Site Development Agreement,
dated as of May 16, 2002, between
MATC Celular, S. de R.L. de C.V.
and
Grupo Iusacell Celular, S.A. de C.V.
, for and on behalf of
itself and its affiliates.
4.6
First Amendment and Waiver, dated as of December 7, 2001, to the
Amended and Restated Credit Agreement, dated as of July 25, 1997,
as amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent
(incorporated herein by reference to Exhibit 4.3 of Grupo
Iusacell's Annual Report on Form 20-F for fiscal year 2001 — File
No. 001-14938).
Table of Contents
Exhibit
No.
Exhibit
4.7*
Second Amendment and Waiver, dated as of April 28, 2003, to the
Amended and Restated Credit Agreement, dated as of July 25, 1997,
as amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.
4.8*
First Amendment to the Second Amendment and Waiver, dated as of
April 28, 2003, to the Amended and Restated Credit Agreement,
dated as of July 25, 1997, as amended and restated as of March 29,
2001 among
Grupo Iusacell Celular, S.A. de C.V.
, the lenders party
thereto, and JP Morgan Chase Bank as Administrative Agent and
Collateral Agent.
4.9*
Second Amendment, dated as of June 10, 2003, to the Second
Amendment and Waiver dated as of April 28, 2003, to the Amended
and Restated Credit Agreement, dated as of July 25, 1997, as
amended and restated as of March 29, 2001 among
Grupo Iusacell
Celular, S.A. de C.V.
, the lenders party thereto, and JP Morgan
Chase Bank as Administrative Agent and Collateral Agent.
7.1*
Computation of ratio of earnings to fixed charges.
8.1*
List of subsidiaries.
12.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
12.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
*
Filed herewith.