SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of June , 2000. ------------- Transtel S.A. ------------------------------------------------------------------------------- (Translation of Registrant's Name Into English) Calle 15 #33-289, Autopista, Cali-Yumbo Km.2, Cali-Valle, Colombia ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.) Form 20-F X Form 40-F ____ --- (Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.) Yes ____ No X --- (If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______.) TRANSTEL S.A.-- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Pesos of June 30, 2000 purchasing power and U.S. Dollars, unless otherwise specified) General Transtel S.A. ("Transtel" or the "Company") is the largest private telephone company in Colombia, providing telephone service to both business and residential subscribers. The Company currently owns and operates telephone systems serving ten cities, with an aggregate population of 3.1 million people, located in the southwestern region of Colombia. As of June 30, 2000, such systems provided service to an aggregate of approximately 287,217 subscribers and had an average penetration of 28.7 lines per 100 people. Over the six months ended June 30, 2000 the Company has successfully rationalized and improved its subscriber base by discontinuing service to delinquent accounts while continuing to add new high quality subscribers. Despite this Company imposed churn, the Company's growth has continued apace and has now more than replenished previously terminated subscribers. The Company has also continued to grow its other businesses and as of June 30, 2000 had 23,839 cable TV subscribers, 13,732 Internet subscribers, 10,017 voice mail customers and 201,243 subscribers of special services. The Company generates revenues by providing telephone services to its commercial and residential subscribers. The Company's sources of revenue consist of: (i) basic fixed charges based either on the predecessor telephone operator or the existing competitive tariff structure, (ii) local usage charges based on the number of minutes used per month; (iii) access charges for national and international long distance tariffs collected for providing such services to and from the Company's networks generated from incoming and outgoing calls; (iv) the sale of equipment to subscribers; (v) value-added services such as video conference calling and voice mail; and (vi) connection fees from each new subscriber connected to the Company's network. In addition, the Company expects to generate additional revenues from its subscribers' growing use of the Internet. The Company's subscribers, who elect Internet service, will pay a monthly service fee and related usage charges. The Company's revenues trend for the last six months shows a different composition resulting that usage derived revenues are an increasing share of overall revenues. The last two quarters have also evidenced the increasing importance of local services revenues (those from basic charges an local usage). In the six months ended June 30, 2000, these revenues accounted for approximately 77% of revenue compared to the 43%. Aside from the decline in connection fee revenue, this fact reflects the importance of tariff increases and the Company's call completion efficiency. The trend seen in the last quarterly reports continues as revenues for local telephone services, (basic and local usage charge), are becoming more and more important in total revenue contribution to the company. This type of revenue generation is not dependent on third party operations (long distance and cellular). Also the growth of local services emphasizes the importance of the tariffs increases applied. Six months ended June 30, 1999 and 2000 The following is a discussion of the consolidated financial condition as of June 30, 1999 and 2000 and the results of operations of the Company for the ended June 30, 1999 and 2000. The discussion should be read in conjunction with the unaudited Consolidated Interim Financial Statements of the Company as of and for the six months ended June 30, 1999 and 2000, and the notes thereto included elsewhere herein. The unaudited Consolidated Interim Financial Statements have been prepared in accordance with Colombian GAAP, which differs in certain significant respects from U.S. GAAP. Note 6 to the Company's unaudited Consolidated Interim Financial Statements provides a reconciliation to U.S. GAAP of the Company's net income (loss) and shareholders' equity as of and for the ended June 30, 1999 and 2000. Unless otherwise indicated, the financial 2 information has been presented in constant Pesos as of June 30, 2000. Dollar amounts are translated from Pesos amounts at the Representative Market Rate on June 30, 2000, which was 2,139.11 Pesos to one Dollar. No representation is made that the Peso or Dollar amounts shown herein could have been or could be converted into Dollars or Pesos, as the case may be, at any particular rate or at all. Subscriber Growth The following table provides information regarding the Operating Companies:

TelePalmira TeleCartago Caucatel TeleJamundi Unitel Bugatel TeleGirardot Unitel Total ----------- ----------- -------- ----------- ---------- ------- ------------ --------- -------- Wireline Wireless ---------- --------- Municipality served Palmira Cartago Popayan Jamundi Yumbo Buga Girardot Cali N/A Population 318,000 125,900 76,600 59,100 72,000 337,400 161,000/(1)/ 1,908,600 3,058,600 Commencement date of Company's operations Sep-95 Apr-97 May-97 Jun-97 Jun-97 Jul-97 Dec-97 Jan-98 N/A Number of subscribers at New New New commencement date 15,600 13,800 10,800 System System 10,700 23,500 System 74,400 Number of subscribers as of December 31, 1999 68,803 32,844 23,721 12,737 9,784 26,931 53,454 57,932 286,206 ~~Total~~Number of subscribers as of March 31, 2000 68,138 32,816 23,687 12,700 9,756 26,904 49,799 56,949 280,749 Total subscribers as of June 30, 2000 69,208 33,310 23,862 13,275 10,125 27,558 50,174 59,705 287,217 Penetration/(2)/ 21.~~4 30.~~8 3033.96 2831.2 2036.04 1623.4 3517.21 2638.31 2530.26 28.7

(1) Includes the neighboring cities of Flandes and Ricaurte. (2) Penetration represents the number of installed lines per 100 people. In Cartago, Jamundi, Buga, Yumbo, Cali and Girardot, penetration includes the installed lines of municipal competitors of approximately 8,952 lines, 8,250 lines, 30,005 lines, 6,705 lines, 524,690 lines and 11,225 lines as per the Company's estimates, respectively. Pay-TV and Internet Subscribers

TelePalmira TeleCartago Caucatel TeleJamundi Unitel Bugatel TeleGirardot Unitel Total ----------- ----------- -------- ----------- -------- -------- ------------ --------- --------- Wireline Wireless -------- --------- Municipality served Palmira Cartago Popayan Jamundi Yumbo Buga Girardot Cali N/A Population 318,000 125,900 76,600 59,100 72,000 337,400 161,000/(1)/ 1,908,600 3,058,600 Internet Subscribers -------------------- Number of subscribers as ~~of March 31, 2000~~ 2,~~386~~472 ~~717~~742 ~~478~~494 - 2,~~874~~980 ~~463~~481 - ~~6,328~~645 13,~~246~~732 Of June 30, 2000 Internet Penetration 0.878 0.659 0.664 - 4.014 0.114 - 0.303 0.445 ~~Pay-TV Subscribers ------------------~~ Number of Homes Passed NA NA NA NA NA NA NA 40,000 40,000 Number of ~~Subscribers~~subscribers as of June 30, 2000 NA NA NA NA NA NA NA 2223,~~081(1)~~839 2223,~~081 of March 31, 2000~~839

3 Results of Operations The composition of the Company's revenues for each of periods discussed here in is as follows:

~~Three~~Six months ended ------------------------------------------------------------~~-----~~ 1999 % 2000 % ----------- ------------ --- ---------- ------------- (in thousands of constant Pesos of ~~March~~June 3130, 2000 purchasing power, except percents data) Connection fees....................~~....~~ Ps 1117,~~059~~657,~~972~~001 3527.94% Ps 13,~~645~~169,~~944~~955 5.62% Local usage charges................~~....~~ 614,~~279~~814,~~842~~358 2023.40 1329,~~625~~535,~~225~~295 4648.0 Basic charges......................~~....~~ 49,~~612~~089,~~001~~664 1514.01 612,~~178~~745,~~039~~954 20.97 Long distance charges..............~~....~~ 610,~~628~~837,~~249~~230 2116.58 48,~~294~~743,~~622~~267 14.52 Other income.......................~~....~~ 23,~~251~~865,~~243~~300 75.29 24,~~612~~821,~~100~~058 87.8 -------------- ----- ------------~~---~~ ----- Total telephone...............~~....~~ Ps 3056,~~831~~263,~~307~~553 9687.2 2859,~~355~~015,~~930~~529 95.89 Pay television services............~~....~~ 18,~~207~~243,~~283~~116 312.8 12,~~228~~493,~~549~~356 4.21 -------------- ----- ------------~~----~~ ----- Total revenues...............~~.....~~ Ps 3264,~~038~~506,~~590~~669 100.0% ~~Ps 29~~Ps61,~~584~~508,~~479~~885 100.0% ============== ===== ============~~====~~ =====

The following table expresses certain financial data from the Company's statement of income as a percentage of total revenues:

~~Three~~Six months ended ----------------------- 1999 2000 ----- ----- Revenues................................................. 100.0% 100.0% ----- ----- Costs and expenses: Operating costs...................................... 19(15.61) 21(17.84) Administrative expenses.............................. 22(25.76) 19(23.24) Marketing expenses................................... (6.4 6) (5.67) ----- ------ Total..........................................~~...~~ 4847.73 4746.65 ----- ------ Operating income........................................ 51.3 52.47 53.5 Nonoperating expenses.................................... (750.71) (7977.46) Net monetary inflation adjustment income................. 2320.6 3426.50 ----- ------ Income before income taxes and minority interest......... 6723.2 71.59 ~~----- ------~~ Income tax expense....................................... (218.26) (21.1) ----- ------ Income before minority interest.......................... 4614.06 50.48 Minority interest........................................ (2214.13) (119.76) ----- ------ Net income............................................... 230.93% ( 68.38)% ===== ======

Revenues. The total revenues for the six months ended June 30, 2000 ("Interim 2000") decreased by Ps 2.998 billion, or -5%, to Ps 61.509 billion from Ps 64.507 billion in the six months ended June 30, 1999 ("Interim 1999"). The decrease in revenues for the 2000 was mainly attributable to the decrease in connection fee revenue, pay television services, and long distance charges. The number of subscribers increased from 256,078 at June 30, 1999 to 287,217 at June 30, 2000, or 12% excluding Cablevision. The number of new subscribers increased primarily as a result of organic growth of the Operating Companies. Connection fee revenue in Interim 2000 decreased by Ps 14.487 billion from Ps 17.657 billion in Interim 1999 to Ps 3.170 billion as a result of 21.649 lines sold during Interim 2000 compared to 47.988 new lines sold in Interim 1999. Pay television services were Ps 2.493 billion in Interim 2000 compared to Ps8.243 billion in Interim 1999. This decrease in Pay Television revenues is due to no charges from the usage of the network for videoconferencing and other special services were accounted in Interim 2000. Long distance charges decreased by Ps 2.094 billion from Ps 10.837 billion in Interim 1999 to Ps 8.743 billion in Interim 2000 as a result of additional revenues in Interim 1999 due to the reconciliation of additional access charges corresponding to previous periods. However, local revenues, including basic monthly charges, local usage charges, and other fees for Interim 2000 increased by Ps 19.333 billion from Ps 27.769 billion in Interim 1999 to Ps 47.102 billion in Interim 2000. 4 The increase in local revenues for Interim 1999 is attributed to the increase in the number of subscribers, in the higher usage associated with that increase and also in the higher local tariffs. Local revenues that accounted for 43% of total revenues in interim 1999 increased to 77% of total revenues in interim 2000. Costs and Expenses. Costs and expenses for Interim 2000 decreased by Ps 1.829 billion, or -6%, to Ps 28.649 billion from Ps 30.478 billion in Interim 1999. Operating costs increased by Ps 0.988 billion from Ps 9.721 billion in Interim 1999 to Ps 10.708 billion mainly as a result of increases in depreciation of Ps 0.496 billion and amortizations of Ps 0.952 billion. Administrative expenses for Interim 2000 decreased by Ps 2.070 billion to Ps 14.418 billion from Ps 16.488 billion in Interim 1999. The decrease was mainly attributable to the decreases in salaries, benefits and other labor payments of Ps 1.585 billion, and provision for doubtful accounts of Ps 1.272 billion. Marketing expenses for Interim 2000 decreased by Ps 0.747 billion to Ps 3.522 billion from Ps 4.269 billion in Interim 1999. The decrease in marketing expenses was primarily attributable to the decrease in salaries, benefits and other labor payments of Ps 1.347 billion. Operating Income. Operating income for Interim 2000 decreased by Ps 1.170 billion from Ps 34.030 billion in Interim 1999 to Ps 32.860 billion. The decrease was mainly attributable to the decrease in revenues as a result of the decrease in connection fees. Non-operating Income (Expenses). Non-operating income (expenses), net for Interim 1999 and Interim 2000 consisted of the following:

~~Three~~Six months ended ~~March~~June 3130, ---------------------------------- 1999 2000 ----------- ----------- (in thousands of constant Pesos of ~~March~~June 3130, 2000 purchasing power) Financial Income: Interest income............................... Ps 515,~~402~~806,~~142~~665 Ps 719,~~305~~094,~~753~~668 Exchange gains................................ 1732,~~085~~346,~~640~~275 1328,~~862~~132,~~985~~831 Other financial income........................ ~~391~~217,~~264~~150 4132,~~866~~739 --------------- ------------- 2248,~~879~~370,~~046~~090 2147,~~173~~360,~~604~~238 --------------- ------------- Financial Expenses: Interest expense.............................. (1125,~~389~~128,~~690~~759) (1938,~~879~~124,~~558~~726) Bank commissions.............................. (2667,~~036~~499) (7064,~~976~~131) Exchange losses............................... (1353,~~819~~205,~~659~~421) (2460,~~274~~001,~~142~~013) Bank expenses................................. (74258,~~860~~330) (85428,~~040~~583) Other financial expenses...................... (6196,~~152~~157) (69,287) --------------- ------------- (2578,~~371~~756,~~397~~166) (4498,~~709~~687,~~716~~740) --------------- ------------- Other: Sales of scrap and extra parts.............. 42,855 49,351 Other, net.................................... 19(2,~~599~~005,210) 563,~~142~~527,410 --------------- ------------- 19(1,~~599~~962,355) 563,~~142~~576,761 --------------- ------------- Total Non-operating Income (Expenses) Ps (232,~~472~~348,~~752~~431) Ps (2347,~~479~~750,~~970~~741) =============== ===============

Net non-operating expenses increased from Ps32.348 billion for Interim 1999 to Ps 47.750 billion in Interim 2000. The increase was mainly due to the net exchange loss occurred during Interim 2000 associated with the Senior Notes, the Discount Notes and other liabilities denominated in Dollars due to the devaluation of 14.16% of the Colombian peso with respect to the Dollar. Interest expense increased from Ps 25.129 billion in Interim 1999 to Ps 38.125 billion in Interim 2000 due to the higher indebtedness levels. Net Monetary Inflation Adjustment Income. Net monetary inflation adjustment income in Interim 2000 increased by Ps 2.716 billion to Ps 15.983 billion from Ps 13.267 billion in Interim 1999. 5 Income Tax Expense. Income tax expense for Interim 2000 decreased by Ps 4.827 billion to Ps 0.690 billion from Ps 5.517 billion in Interim 1999 primarily because of tax loss carry forward benefits recorded for Transtel S.A. during 2000. Minority Interest. Minority interest for Interim 2000 decreased by Ps 3.287 billion to Ps 5.935 billion from Ps 9.222 billion for Interim 1999 because of the decreased net income of the operating subsidiaries. Net Income. Total income decreased by Ps (5.742) billion from Ps 0.210 billion for Interim 1999 to Ps (5.532) billion for Interim 2000 as a result of the factors discussed above. Liquidity and Capital Resources Net cash used by operating activities during Interim 2000 was Ps 3.277 billion as compared provided to Ps 13.439 billion for Interim 1999. The decrease in cash used from operations for Interim 1999 was primarily caused by a decrease in net income and was partially offset by an increase in accounts receivable and deferred charges. Net cash used in investing activities during Interim 2000 was Ps 67.685 billion as compared to Ps 1.220 billion provided in Interim 1999. Cash used in investing activities in Interim 2000 continues to relate to the construction of new network systems and the upgrade of existing network systems. In addition, cash used in investing activities in Interim 2000 includes the net maturity of short-term and long-term investments of Ps 5.409 billion. Net cash provided by financing activities during Interim 2000 was Ps 46.313 billion as compared to Ps 11.438 billion used in Interim 1999. As of June 30, 2000, the Company's borrowings were Ps 424.109 billion, consisting primarily of the Senior Notes of Ps 320.866 billion and the Discount Notes of Ps 42.853 billion. Substantially all of the borrowings at June 30, 2000 are denominated in Dollars. The Company also has obligations under leases, some of which are not capitalized in accordance with Colombian GAAP, but are required to be capitalized under U.S. GAAP. The Company's principal liquidity requirements are to finance the construction, development and expansion of its networks , debt service (primarily on the Senior Notes), working capital and general corporate purposes, including future acquisitions. The Company's initial expansion and upgrade project (the "Expansion")was projected to require aggregate capital expenditures of approximately $178.2 million, of which approximately $7.7 million had been financed with local bank borrowings, all of which have been repaid with proceeds of the Senior Notes Offering, and $1.5 million of cash flow from operations. The Company completed the Expansion on December 31, 1998 and financed the remainder of the Expansion with (i) approximately $38.3 million of the proceeds of the Senior Notes Offering; (ii) approximately $102.1 million of Vendor Financing; (iii) the sale of investments of $8.5 million; and (iv) approximately $20.2 million of DIAN Financing. As a result of the Senior Notes Offering, the Discount Notes, the Vendor Financing, the DIAN Financing and the incurrence of certain other indebtedness, the Company will be required to satisfy certain debt service requirements. Following the disbursements in May and November 1998 and 1999 of all the proceeds in the Escrow Account, a substantial portion of the Company's cash flow is utilized to service the Senior Notes, the Vendor Financing and the DIAN Financing. The Senior Notes will require semi-annual interest payments of approximately $9.4 million and the Vendor Financing will require semi-annual interest and principal payments of approximately $7.2 million. In addition, the DIAN Financing will require semi-annual principal payments of approximately $2.0 million. The cash interest due on the Discount Notes will not exceed $44,000 in any year through 2008; however, the principal of $15.0 million plus accrued interest of $86.9 million will be due on August 13, 2008. The Company is required to meet various financial covenants under the Indenture. As of June 30, 2000 and September 10, 1999, the Company is in compliance with all such financial covenants. The Senior Notes are the exclusive obligation of the Company, which is a holding company with no business operations of its own. The operations of the Company are conducted through the Operating Companies, which are separate and distinct legal entities. Other than the obligation to repay the Intercompany Notes to the Company, the Operating Companies have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Senior Notes or the Certificates, to make any funds available to the Company to enable it to make payments on the Senior Notes and consequently, to make the funds available to the Trust to make payments on the Certificates, to make funds available in order to make investments in the Operating 6 Companies, to meet working capital needs or other liabilities of the Company or for any other reason. In addition, the Operating Companies are currently not wholly-owned subsidiaries of the Company, but instead are owned jointly by the Company and local municipalities. Any dividends issued by the Operating Companies must be distributed pro rata to all of their shareholders. As a result, the Company cannot be assured that it will be able to generate significant cash through dividends or other distributions from the Operating Companies in the foreseeable future and there can be no assurance that the Company will be able to generate any significant cash flow from the Operating Companies at any time in the future. Since the Company's assets consist primarily of its ownership interests in the Operating Companies, the Senior Notes (and therefore the Certificates) will be effectively subordinated (other than as to claims that the Company can make under the Intercompany Notes) to all existing and future debt and other liabilities (including trade payables) of the Operating Companies, and the Company's right to receive the assets of the Operating Companies upon their liquidation or reorganization will be subject to the claims of such Operating Companies' creditors (including trade creditors). Annual interest payments on the Senior Notes by the Company will be approximately $18.8 million, plus any additional interest as required, through November 1, 2007. The principal amount of the Senior Notes is due on November 1, 2007. As of June 30, 2000, the Company has lent $95.5 million (Ps 204.198 billion) of the proceeds from the Senior Notes to six of its Operating Companies as evidenced by Intercompany Notes which were executed as of December 31, 1998. Balances loaned to each subsidiary as of June 30, 2000 are as follows:

~~TelePalmira~~As ~~Unitel~~of ~~TeleJamundi~~June ~~TeleCartago~~30, ~~Bugatel~~2000 ~~Caucatel~~ ------------ ------------ ----------- --------~~----~~ ~~------------~~(in ~~-------------~~thousands ~~Total~~of ~~revenues--subscribers~~constant Pesos of June 30, 2000 purchasing power and in Dollars) Unitel........................ Ps 664,~~957~~152,~~700~~677 ~~Ps 7~~$29,~~467~~990,~~351~~359 PsTeleJamundi................... ~~869~~46,~~898 Ps 3~~539,~~719,316~~491 ~~Ps 2~~21,~~878~~756,~~227~~474 ~~Ps 2,612,093 Operating income (loss)~~TelePalmira................... 448,~~036~~750,~~206~~011 522,~~349~~789,~~898~~857 ~~232,243~~TeleCartago................... 221,~~657~~038,~~276~~650 19,~~991~~835,~~837~~235 ~~1,715,806 Net income~~ Caucatel...................... 15,795,285 7,384,045 Bugatel....................... ~~963~~7,~~945~~922,207 43,~~917~~703,~~511~~506 ~~583,824~~-------------- ~~2,279,676~~----------- 1Ps 204,~~120~~198,~~219~~321 1$95,~~688~~459,~~007~~476 ============== ===========

The Intercompany Notes bear interest at 12 1/2%, are payable in U.S. dollars, and are also due on November 1, 2007. The Intercompany Notes become due and payable upon the acceleration of the Senior Notes issued by Transtel S.A. under the Indenture. Summarized financial information on a Colombian GAAP basis of each of the Operating Companies that has issued an Intercompany Note to Transtel S.A. as of and for the six month ended June 30, 2000 are presented below. Other than TelePalmira, which began its commercial operations in 1995, the other Operating Companies listed below did not commence commercial operations until generally mid-1997. INCOME STATEMENT INFORMATION OF SUBSIDIARIES WITH INTERCOMPANY NOTES For the Six Month Ended June 30, 2000 (Amounts in thousands of constant Pesos of June 30, 2000 purchasing power)

TelePalmira Unitel TeleJamundi TeleCartago Bugatel Caucatel -------------- ------------- ------------ ------------ ------------- ------------- ~~Cash~~Total ~~flow (used) provided by operating activities~~revenues--subscribers...........~~.................~~ ~~Ps (4~~Ps15,~~796~~151,~~821)~~920 Ps 315,~~615~~503,~~493~~872 Ps~~(39~~ 1,~~911)~~766,228 Ps ~~338~~7,~~874~~849,283 Ps 96,~~397~~000,~~289~~242 Ps 15,~~306~~119,~~073~~645 ~~Cash~~Operating ~~flow~~income ~~used by investing activities~~(loss)...............~~.............~~ 19,~~052~~467,~~564~~457 (10,~~848~~834,~~553)~~139 (3468,~~426,551)~~565 (25,~~370~~883,~~397)~~917 (74,~~773~~059,~~602)~~496 (23,~~412~~293,~~924~~322 ~~Cash~~Net ~~flow provided (used) by financing activities~~income............................. 2(1,~~085~~580,~~890~~251) 69,~~452~~817,~~930~~021 1591,~~722,747~~312 ~~917~~5,~~794~~601,661 (12,~~657~~013,~~223)~~001 ~~447~~3,~~069~~355,352

7 CASH FLOW INFORMATION OF SUBSIDIARIES WITH INTERCOMPANY NOTES For The Six Month Ended June 30, 2000 (Amounts in thousands of constant pesos of June 30, 2000 purchasing power)

TelePalmira Unitel TeleJamundi TeleCartago Bugatel Caucatel -------------- -------------- ------------- -------------- -------------- --------------- ~~Current~~Cash ~~assets...................~~flow Ps(used) ~~18,495,883~~provided Psby ~~34,150,128~~operating ~~Ps 5,824,042 Ps 7,570,076 Ps 5,968,700 Ps 4,819,295 Properties, plant and equipment~~activities.. ~~89,567,305 93,790,097 49,797,605 54,177,207 42,207,624 39,390,515 Other noncurrent assets~~.......... ~~39,919,163 33,568,783 9,446,557 10,238,366 9,573,267 5,549,007 -------------- -------------- -------------- -------------- -------------- --------------- Total assets~~................~~...~~ Ps ~~147~~(9,~~982~~259,~~351~~027) Ps ~~161~~11,~~509~~615,~~008~~783 Ps 65(466,~~068,204~~477) Ps 71758,~~985,649~~739 Ps 578,~~749~~594,~~591~~607 Ps 492,~~758~~279,~~817~~717 ~~==============~~Cash ~~==============~~flow ~~==============~~used ~~==============~~by ~~==============~~investing ~~=============== Current liabilities~~activities.............. ~~Ps 16,295,360 Ps 27,279,871 Ps 1,307,630 Ps 9,981,478 Ps 12,965,745 Ps 4,228,744 Capital lease obligations~~........ ~~18,820,026 10,165,906 8,803,875 9,462,734 11,653,130 777,295 Intercompany Note to Transtel~~...... 43(656,~~557,019~~644) 58(24,~~527~~912,~~985~~610) 44(10,~~245~~288,~~999~~886) 25(5,~~686~~685,~~921~~604) 6(9,~~454~~291,~~088 14,072,444 Other noncurrent liabilities..... 3,152,865 18,~~218~~,178~~) 1(4,~~880~~916,~~372~~161) ~~1,323,511~~Cash ~~844,708~~flow ~~1,216,864~~provided ~~--------------~~(used) ~~--------------~~by ~~--------------~~financing ~~-------------- -------------- --------------- Total liabilities~~activities.............. ~~81,825,270 114,191,940 56,237,576 46,454,644 31,917,671 20,295,347 Total shareholders' equity~~....... ~~66,157,081 47,317,068 8,830,628 25,531,005 25,831,920 29,463,470 -------------- -------------- -------------- -------------- -------------- --------------- Total liabilities and shareholders' equity~~.......~~...~~ ~~Ps 147~~6,~~982~~857,~~351~~465 ~~Ps 161~~10,~~509~~377,~~008~~916 ~~Ps 65~~7,~~068~~642,~~204~~679 ~~Ps 71~~2,~~985~~344,~~649~~393 ~~Ps 57~~705,~~749,591~~911 ~~Ps 49~~1,~~758~~558,~~817 ============== ============== ============== ============== ============== ===============~~481

BALANCE SHEETS OF SUBSIDIARIES WITH INTERCOMPANY NOTES AT JUNE 30, 2000 (Amounts in thousands of constant Pesos of June 30, 2000 purchasing power)

~~Three~~TelePalmira ~~months~~Unitel ~~ended,~~TeleJamundi TeleCartago Bugatel Caucatel ------------- ------------- ------------ ------------ ~~1999 2000~~ ------------ ------------ ~~(in~~Current ~~thousands of constant Pesos of March 31, 2000 purchasing power) Net Income (Loss) Colombian GAAP~~assets........................ Ps 20,442,358 Ps 38,372,570 Ps 6,330,008 Ps 9,414,750 Ps 7,~~708~~575,~~522~~489 Ps (15,~~849~~864,~~531)~~262 ~~U.S.~~Properties, ~~GAAP~~plant and equipment..... 93,363,808 109,739,556 57,786,893 59,311,789 44,901,468 42,814,596 Other noncurrent assets.............~~...........~~ 240,~~526~~439,~~832~~036 133,~~161~~651,~~584~~059 ~~Shareholders'~~9,342,921 ~~Equity~~9,744,935 ~~Colombian~~9,901,911 ~~GAAP~~5,499,787 ------------- ------------- ------------ ------------ ------------ ------------ Total assets.................~~.......~~ 93Ps154,~~421~~245,~~198~~202 89Ps181,~~425~~763,185 Ps73,459,822 Ps78,471,474 Ps62,378,868 Ps54,178,645 ============= ============= ============ ============ ============ ============ Current liabilities Ps 22,923,354 Ps 32,573,600 Ps 3,785,562 Ps12,963,238 Ps14,932,197 ~~U.S.~~Ps ~~GAAP~~5,657,299 Capital lease obligations 16,537,831 8,659,710 7,210,037 8,875,070 10,952,607 564,183 Intercompany Note to Transtel 44,894,477 82,235,474 50,862,013 25,917,039 7,378,469 14,331,411 Other noncurrent liabilities 3,846,593 4,467,458 2,460,604 1,492,465 1,349,358 1,447,242 ------------- ------------- ------------ ------------ ------------ ------------ Total liabilities 88,202,255 127,936,242 64,318,216 49,247,812 34,612,631 22,000,135 Total shareholders' equity 66,042,947 53,826,943 9,141,606 29,223,662 27,766,237 32,178,510 ------------- ------------- ------------ ------------ ------------ ------------ Total liabilities and shareholders' Equity.........................~~....~~ 48Ps154,~~225~~245,~~809~~202 36Ps181,~~722~~763,~~837~~185 Ps73,459,822 Ps78,471,474 Ps62,378,868 Ps54,178,645 ============= ============= ============ ============ ============ ============

Connection fees revenue for the six months ended June 30, 2000 were Ps0.497 billion, Ps1.949 billion, Ps0.024 billion, Ps0.096 billion, Ps0.195 billion and Ps(0.266) billion at TelePalmira, Unitel, TeleJamundi, TeleCartago, Bugatel and Caucatel, respectively. In addition to the Intercompany Notes, these six Operating Companies have capital lease obligations and short-term bank borrowings totaling Ps12.542 billion and Ps18.633 billion, respectively, included in current liabilities at June 30, 2000. As indicated in the above summarized balance sheet information, these six Operating Companies have total long-term capital lease obligations of Ps52.799 billion at June 30, 2000. As these subsidiaries install and accept the remaining Global Leases, the IBM Arrangement and the related DIAN Financing, additional financial obligations totaling Ps 110.292 billion will be incurred. Although the interest payments on the Senior Notes for the first four payments (through November 1, 1999) was paid from the Escrow Account, which was funded with a portion of the proceeds of the Senior Notes, the ability of the Company to make payments of interest after November 1, 1999 and of the $150.0 million principal balance due on November 1, 2007 will be largely dependent upon the future performance of the Operating Companies and their ability to pay the interest and principal due under the Intercompany Notes. Many factors, some of which will be beyond the Company's and the Operating Companies' control (such as prevailing economic conditions) may affect their performance. There can be no assurance that the Operating Companies will be able to generate sufficient cash flow to cover required interest and principal payments when due on the Intercompany Notes or that the Company will be able to generate sufficient cash flow for it to be able to make its principal and interest payments in the future. Although cash and interest from the Escrow Account has been sufficient service these intercompany obligations through June 30, 2000 , these six Operating Companies have not yet (through June 30, 2000) been able to generate sufficient cash flow from operations to make such interest payments had they been due in cash. If the Company is unable to make principal and interest payments in the future, it may, depending upon the circumstances which then exist, seek additional equity or debt financing, attempt to refinance its indebtedness or sell all or part of its business or assets to raise funds to repay its indebtedness. 8 On December 31, 1998, the Company sold $15.0 million (Ps32.087 billion) of its 20.32% Senior Discount Notes due 2008 in a private placement. Interest at 0.10% will be payable in cash each year through August 13, 2008. Interest at 20.22% per annum will accrue over the term of the notes, and the total accrued interest of $86.9 million (Ps185.889 billion) and principal of $15.0 million (Ps25.982 billion) will be due on August 13, 2008. The balance of the discount notes, including interest accreted but unpaid, is $16.5 million (Ps 35.295 billion) at June 30, 2000. The Discount Notes are unsecured senior obligations of the Company and will be fully and unconditionally guaranteed on a senior, unsecured basis by each Operating Company in which the Company acquires 100% of the minority interest or provides indebtedness with the proceeds of the Discount Notes. As of June 30, 2000, no guarantees have been required from nor has any indebtedness [related to the Senior Notes] been provided to any Operating Company. The Company expects to consider additional acquisitions that fit its strategic plans. Although the Company has had discussions concerning such potential acquisitions, to date, no agreements have been reached with regard to any particular transaction. Any such acquisitions that the Company might consider are likely to require additional equity and/or debt financing, which the Company will seek to obtain as necessary. Management believes that, based on its current operations and anticipated growth it will have adequate funds to meet its future cash requirements. Accounting for Inflation As a Colombian company, the Company maintains its financial records in Pesos. Colombian GAAP requires that the financial statements of Colombian companies be adjusted to account for inflation. The inflation rate for the six months ended June 30, 2000 was 6.25%. Financial statements are adjusted for the effects of inflation on the basis of changes in the Colombian MCPI. Commencing January 1, 2000, this index is applied on a one-month lagging basis to nonmonetary assets (except inventory) and liabilities and shareholders' equity accounts. Monetary balances are not adjusted because they reflect the purchasing power of the currency on the date of the balance sheet. Foreign currency balances are not adjusted because they are translated into Pesos at the exchange rate in effect on the same date. The resulting net gain or loss from exposure to inflation is reflected as "Net monetary inflation adjustment income (loss)" in the income statement for each period in question. On December 24,1998, the Colombian Congress decreed a National Fiscal Change to apply after January 1, 1999. This regulation eliminated inflation adjustments relating to inventories and revenues and expenses. Income Tax Matters Consolidated income tax returns are not permitted in Colombia. The effective statutory income tax rate for the Company was 35% for 1996, 1997, 1998 and 1999 and for the six months ended June 30, 2000. Under Colombian law, Transtel S.A. must pay a minimum tax which is presumed to be not less than the greater of 5% of shareholders' equity for tax purposes at the end of the immediately preceding year or 1.5% of gross assets for tax purposes at the end of the immediate preceding year. Adjustments to income to account for inflation are taken into account for income tax purposes; however, operating companies such as Transtel's subsidiaries are not subject to such a minimum income tax. In accordance with Law 142 of 1994 and Law 223 of 1995, entities which render basic residential telephony services and which are mixed capital companies (i.e., companies with both public and private capital, such as the Company's subsidiaries) are partially exempt from the payment of income taxes for a term of seven years from 1996 with respect to profits which are retained for upgrade, expansion or replacement of telephone systems. These companies are exempt from taxes on 100% of income related to basic telephony services for 1996; thereafter the exemption reduces by 10 percentage points each taxable year through 2000 and then reduces by 20 percentage points in 2001 and 2002. After 2002, there is no exemption. In July 1997, Law 383 of 1997 established that dividends declared from companies similar to Transtel's subsidiaries and paid to government entities are not taxable. As there is not a similar exclusion for private 9 investors such as Transtel S.A., the Company expects that future dividends paid to Transtel S.A. by the Operating Companies will be taxable. Reconciliation to U.S. GAAP The unaudited Consolidated Interim Financial Statements are prepared in accordance with Colombian GAAP, which differ from U.S. GAAP in certain significant respects. A comparison of the Company's net income (loss) and shareholders' equity at and for the semester ended June 30, 1999 and 2000, under Colombian GAAP and after reflecting the material adjustments which arise when U.S. GAAP is applied instead of Colombian GAAP, is shown below: Six months ended, --------------------------------------------- 1999 2000 -------- -------- (in thousands of constant Pesos of June 30, 2000 purchasing power) Net Income (Loss) Colombian GAAP............... Ps 209,628 Ps (5,532,189) U.S. GAAP.................... (8,579,041) (988,750) Shareholders' Equity Colombian GAAP............... 89,038,655 91,303,357 U.S. GAAP.................... 38,578,400 35,706,878 As more fully described and quantified in Note 6 to the unaudited Consolidated Interim Financial Statements, the major differences between Colombian GAAP and U.S. GAAP in each period relate to:- income taxes, revaluation of assets, depreciation expense, capitalized interest, deferred charges, capital leases, revenue recognition, reversal of monetary correction and purchase of properties from a shareholder. Recent Events Macroeconomics During the second quarter of 2000, the Colombian economy continued to demonstrate its tendency towards a slow recovery. The government estimates industry and GDP growth of 7.2% and 3.6%, respectively in the first quarter 2000. Exports have shown a steady upward tendency increasing 20.85% from last year thereby creating a foreign exchange surplus of US$1.0 billion. However, urban unemployment is at a record 20.4% (p) at the end of June 2000. Although the economy seems to be emerging from its crisis, events provoked by the guerrilla war and other political difficulties have undermined the confidence of business. The devaluation of the Colombian peso against the dollar was 5.31% in the second quarter of 2000. The devaluation for the period from January to June was 14.2%. The expectation is for a stabilization of the exchange rate over the remainder of the year. 10 Tariffs As expected, the Comision de Regulacion de Telecomunicaciones (CRT) authorized a 20 point increase in tariffs over the established annual inflation index. On the basis of this authorization the Company set in motion a gradual tariff increase of approximately 30% on an annual basis, which is being applied enacted from April to September. Company Outlook Furthermore the Colombian economy is showing a slow recovery, the activity of the telecommunications sector in Colombia has increased, especially demonstrated by the interest of foreign investors in some telecommunications companies in Colombia. It is worth mentioning the acquisition of the wireless companies Celumovil and Cocelco by Bell South and also the interest that Telefonica de Espana and Telecom from Italy have shown in the acquisition of ETB (Bogota's Telecommunications company) which is expected to be concluded at the beginning of September. Additionally, other international operators have also shown some interest in the acquisition of the second wireless company in Colombia. Transtel is continuing with the execution of the Unitel expansion plan phase II in the city of Cali which includes Fiber Optic Rings using Fast Link tecnology supplied by Siemens. The company expects to have the project finished at the end of the present year ending with a capacity of 85,000 lines. The market in the city of Cali has respond well not just because of Unitel's good quality of service but because of all the problems that the incumbent company has had due to its financial and administrative crisis. In addition to the above, the company has greatly improved its collecting process of accounts receivables through the implementation of modern and effective processes. 11 TRANSTEL S.A. CONSOLIDATED BALANCE SHEETS (Unaudited)

~~Three~~1999 ~~months~~2000 ~~ended,~~2000 -------------- -------------- --------~~----~~ ~~December~~(Thousands 31(Thousand of pesos of June 30, 1999) ~~March~~of 31Dollars) ASSETS Current Cash.................................................................. Ps 12,389,346 ~~2000~~Ps 5,498,798 $ 2,571 Short-term and temporary investments.................................. 25,884,515 285,684 134 Accounts receivable, net.............................................. 66,196,633 101,224,971 47,321 Inventories........................................................... 2,861,442 1,854,674 866 Prepaid expenses...................................................... 813,558 2,426,164 1,134 -------------- ---- ---------- -------- ~~Basic~~Total ~~Charge~~current ~~Average~~assets............................................... ~~subscribers~~108,145,494 ~~277~~111,~~120~~290,291 ~~283~~52,~~401~~026 ~~Basic~~Noncurrent ~~charge~~Accounts ~~revenues~~receivable................................................... ~~(Ps000)~~46,909,620 553,~~884~~928,~~832~~308 625,~~178~~211 Properties,~~039~~ ~~Average~~plant ~~basic~~and ~~charge~~equipment, ~~per~~net.................................. ~~subscriber~~368,632,592 ~~per~~477,605,817 ~~month~~223,273 ~~(Ps)~~Deferred 7monetary correction.......................................... 5,~~079~~633,088 7,~~267~~364,294 ~~Local~~3,443 ~~Usage~~Deferred ~~Local~~costs........................................................ ~~usage~~69,905,464 ~~revenues~~53,081,539 ~~(Ps000)~~24,815 15Long-term investments................................................. 3,~~047~~374,~~845~~232 7,130,507 3,333 Other assets.......................................................... 6,579,748 13,~~625~~587,~~225~~175 ~~Local~~6,352 ~~usage~~Reappraisal ~~revenue~~of ~~per~~assets................................................. ~~subscriber~~38,545,143 ~~per~~40,395,116 ~~month~~18,884 -------------- -------------- -------- Total assets....................................................... (Ps) 18647,~~100~~725,381 16Ps 764,~~026~~383,047 ~~Tariff~~$357,337 ~~per~~============== ~~pulse~~============== (======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term debt....................................................... Ps) 4013,16323,307 41Ps 18,632,798 $ 8,711 Current portion of other long-term debt.02.............................. ~~Average~~1,872,580 ~~pulses~~3,888,811 ~~per~~1,818 ~~subscriber~~Current ~~per~~portion ~~month~~of capital lease obligations.......................... ~~451~~10,587,636 ~~391~~12,542,044 ~~Long~~5,863 ~~Distance~~Accounts ~~Long~~payable...................................................... ~~distance~~41,189,712 ~~revenues~~73,121,148 ~~(Ps000)~~34,183 4Tax liabilities....................................................... 15,~~182~~886,~~821~~803 420,~~294~~631,~~622~~194 9,645 Labor liabilities..................................................... 340,326 2,689,555 1,257 Other liabilities..................................................... 1,823,027 2,444,240 1,143 Accrued pension obligations........................................... 684,597 1,243,186 581 -------------- -------------- -------- Total ~~minutes~~current ~~(in~~liabilities.......................................... ~~thousands)~~85,707,988 87135,~~878~~192,976 8963,~~541~~201 ~~Minutes~~Long-term ~~per~~liabilities ~~subscriber~~12 ~~per~~1/2% ~~month~~Senior Notes due 2007......................................... ~~106~~284,517,170 ~~105~~320,866,500 ~~Access~~150,000 ~~charge~~20.32% ~~tariff~~Senior ~~per~~Discount ~~minute~~Notes ~~(Ps)~~due 452008.75................................ 31,223,853 42,853,461 20,033 Other long-term debt.................................................. 7,072,334 7,512,562 3,512 Capital lease obligations............................................. 47,439,212 52,876,110 24,719 Deferred monetary correction.51......................................... ~~Cablevision~~7,357,306 ~~Average~~13,030,465 ~~subscribers~~6,092 26Accrued pension obligations........................................... 7,~~702~~576,809 256,~~533~~471,898 ~~Operating~~3,026 ~~recurring~~Other ~~revenues~~liabilities..................................................... ~~(Ps000)~~12,756,980 114,~~515~~217,~~608~~760 16,645 -------------- -------------- -------- Total liabilities.................................................. 483,651,652 593,021,732 277,228 -------------- -------------- -------- Minority interest....................................................... 75,~~549~~035,075 ~~Revenue~~80,057,958 ~~per~~37,426 ~~subscriber~~-------------- ~~per~~-------------- ~~month~~-------- Commitments Shareholders' equity: Common stock, Ps1 par value, 50 billion shares authorized; 34,611,747,976 shares issued and outstanding (Ps5,039,801,222 in 1998)............................ 1852,~~920~~317,241 1652,~~039~~317,241 24,457 Retained earnings..................................................... 20,855,511 17,900,113 8,368 Surplus from reappraisal of assets.................................... 15,865,902 21,086,003 9,858 -------------- -------------- -------- Total shareholders' equity......................................... 89,038,654 91,303,357 42,683 -------------- -------------- -------- Total liabilities and shareholder's equity......................... Ps 647,725,381 Ps 764,383,047 $357,337 ============== ============== ======== Memorandum accounts..................................................... Ps 184,464,719 Ps 323,376,804 $151,174 ============== ============== ========

The accompanying notes are an integral part of the consolidated financial statements. 12 TRANSTEL S.A. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

For the Six Months Ended June 30, For the Three ~~months~~Months ~~ended~~Ended June 30, ------------------------------------------------- ---------------------------------- ~~December 31,~~1999 %2000 ~~March.~~2000 ~~31,~~2000 %2000 ---- ---- ---- ---- ---- (Thousands of Pesos of June 30, (Thousands of (Thousands of (Thousands of 2000 purchasing power) Dollars-- Pesos of June 30, Dollars -- Unaudited) 2000 purchasing Unaudited power) Revenues................................... Ps 64,506,669 Ps 61,508,885 $ 28,754 Ps 30,980,661 $ 14,483 -------------- -------------- --------- -------------- ~~(in~~--------- ~~thousands~~Costs ofand ~~constant~~expenses: ~~Pesos~~Operating ofcosts.......................... ~~March~~9,720,204 3110,708,416 ~~2000~~5,006 ~~purchasing~~4,058,611 ~~power~~1,897 ~~except~~Administrative ~~percents~~expenses.................. ~~data)~~16,487,668 ~~Connection~~14,418,040 ~~fees~~6,740 8,571,848 4,007 Marketing expenses....................... Ps4,269,167 113,~~329~~522,~~911~~086 ~~31.2%~~1,646 Ps 1,~~645~~508,~~944~~173 5.706 -------------- -------------- --------- -------------- --------- 30,477,039 28,648,542 13,392 14,138,632 6,610 ~~Local~~-------------- ~~usage~~-------------- ~~charges~~--------- -------------- --------- Operating income...................... 1534,~~047~~029,~~845~~630 ~~41.5~~32,860,343 1315,~~625~~362 16,~~225~~842,029 ~~46.0~~7,873 ~~Basic~~-------------- ~~charges~~-------------- --------- -------------- --------- Non operating income (expenses) Financial income......................... 548,~~884~~370,~~832~~090 ~~16.2 6~~47,~~178~~360,~~039~~238 ~~20.9~~22,140 ~~Long~~25,511,196 ~~distance~~11,926 ~~charges~~Financial expenses....................... 4(78,~~182~~756,~~821~~166) ~~11.5 4~~(98,~~294~~687,~~622~~740) ~~14.5~~(46,135) ~~Other~~(52,551,784) ~~income~~(24,567) Other.................................... (1,~~680~~962,~~960~~355) 3,576,761 1,672 3,518,828 1,645 -------------- -------------- --------- -------------- --------- (~~4.6~~32,348,431) 2(47,~~612~~750,~~100~~741) ~~8.8~~(22,323) (23,521,760) (10,996) -------------- -------------- --------- -------------- --------- ~~Total~~Net ~~telephone~~monetary inflation adjustment income... 13,268,005 15,983,180 7,472 5,460,737 2,553 -------------- -------------- --------- -------------- --------- Income (loss) before income taxes and minority interest.................. Ps14,949,204 341,~~764~~092,~~450~~782 ~~95.8~~511 28(1,~~355~~218,~~930~~994) 95(570) Income tax (expense) benefit.8.............. ~~Pay~~(5,517,258) ~~television~~(689,765) ~~services~~(323) (132,630) (15) -------------- -------------- --------- -------------- --------- Income (loss) before minority interest.......................... 19,~~515~~431,~~608~~946 ~~4.2~~403,017 188 (1,~~228~~251,~~549~~624) 4(585) Minority interest.......................... (9,222,318) (5,935,206) (2,774) (2,372,034) (1,109) -------------- -------------- --------- -------------- --------- ~~Total~~Net ~~revenues~~income (loss)...................... Ps 36209,~~280~~628 Ps (5,~~058~~532,189) ~~100.0%~~$ (2,586) Ps 29(3,~~584~~623,~~479~~658) ~~100~~$ (1,694) ============== ============== ========= ============== ========= Earnings per share (in single Pesos and Single Dollars per share)................ Ps 0.01 Ps -0.16 $ - $ -0.10 $ - ============== ============== ========= ============== =========

The accompanying notes are an integral part of the consolidated financial statements. 13 TRANSTEL S.A. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) Six months Ended June 30, 1999 and 2000 (Thousands of Pesos of June 30, 2000, except shares)

~~Three~~Common ~~months~~Shares ~~ended~~Outstanding ---------------------------- Number Amount Retained Surplus from Total ----------- ----- ~~December 31, 1999 March 31, 2000~~ -------- Earnings Reappraisal Shareholders' -------------- (Thousands) of Assets Equity -------------- ------ ~~Revenues.................................................... 100.0% 100.0%~~ ------ --~~---~~ ~~Costs~~Balance ~~and~~at ~~expenses:~~December ~~Operating~~31, ~~costs~~ 1998..........~~...............................~~ ~~(17.6)~~34,611,748 ~~(21.8)~~Ps ~~Administrative~~52,318,388 ~~expenses~~Ps 20,646,340 Ps 16,829,605 Ps 89,794,333 Net income............................~~.....~~ ~~(19.3)~~209,628 ~~(19.2)~~209,628 ~~Marketing~~Movement ~~expenses~~during the period............~~..........................~~ (~~6.9~~965,307) (~~6.6~~965,307) ---------- ------------- ~~Total~~-------------- ~~................................................ (43.8) (47.6)~~ -------------- -------------- ~~Operating~~Balance ~~income~~at June 30, 1999.............. 34,611,748 52,318,388 20,855,968 15,864,298 89,038,654 ========== ============= ============== ============== ============== Balance at December 31, 1999..........~~...................~~ ~~56.2~~34,611,748 Ps 52.4,317,241 ~~Nonoperating~~Ps ~~expenses~~23,432,302 Ps 19,136,931 Ps 94,886,474 Net income............................~~..........~~ (~~142.4~~5,532,189) (~~79.4~~5,532,189) ~~Net~~Movement ~~monetary~~during ~~inflation~~the ~~adjustment income~~ period............~~.......~~ ~~8.0~~1,949,072 ~~34.5~~1,949,072 ---------- ------------- ~~Income~~-------------- ~~before income taxes and minority interest ........... (78.2) 7.5 Income tax expense ......................................... 10.3 (2.1)~~ -------------- -------------- ~~Income~~Balance ~~before~~at ~~minority~~June ~~interest~~30, 2000..............~~..............~~ ~~(67.9)~~34,611,748 ~~5.4~~Ps ~~Minority~~52,317,241 ~~interest~~Ps ~~..........................................~~17,900,113 ~~(8.8)~~Ps ~~(11.7)~~21,086,003 ~~------~~Ps ~~-----~~91,303,357 ~~Net~~========== ~~income~~============= ~~.................................................~~============== ~~(76.7)% (6.3)%~~ ============== ==============

Retained earnings balances consist of the following: June 30, ------------------------------ 1999 2000 ------------- ------------- Legal reserve................................. Ps 708,146 Ps 1,142,932 Appropriated for future construction.......... 947,528 5,753,127 Appropriated for future acquisitions.......... 5,425,774 16,536,243 Unappropriated retained earning............... 13,774,520 (5,532,189) ------------- ------------- Ps 20,855,968 Ps 17,900,113 ============= ============= The accompanying notes are an integral part of the consolidated financial statements. 14 TRANSTEL S.A. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (Unaudited)

For the Six Months Ended June 30, For the Three ~~months~~Months ~~ended~~Ended June 30, ------------------------------------------------ ~~December 31, 1999 March 31, 2000~~ ------------------------ 1999 2000 2000 2000 2000 ---- ---- ---- ---- ----- (inThousands ~~thousands~~of (Thousands of ~~constant~~Pesos of June 30, 2000 (Thousands Pesos of ~~March~~(Thousands 31purchasing power) of June 30, 2000 of Dollars-- purchasing Dollars Unaudited) power) ~~Financial~~Unaudited) ~~Income~~Sources of working capital: ~~Interest~~Net income (loss)...................................~~....~~ Ps 209,628 Ps (75,~~009~~532,~~477~~189) $ (2,586) Ps 7(3,~~305~~623,~~753~~658) ~~Exchange~~$ ~~gains~~(1,694) Items that do not utilize (provide) Working capital: Depreciation................................... 2,462,103 2,604,851 1,218 1,175,426 549 Amortization................................... 416,~~503~~729,~~471~~430 136,~~862~~773,~~985~~904 ~~Other~~3,167 ~~financial~~1,446,872 676 Deferred income taxes.......................... (1,006,012) 0 0 0 0 Allowance for writedown of properties, plant and equipment............................ ~~136~~43,~~718~~181 479,529 224 231,808 108 Accretion of Interest on Senior Discount Note.. 2,881,041 6,239,465 2,917 4,~~866~~453,389 2,082 Allowance for doubtful accounts................ 1,271,711 0 0 0 0 Minority interest.............................. 9,222,116 5,935,206 2,774 3,372,705 1,577 Net inflation adjustment from non-current balance sheet accounts......................... (13,267,714) (15,983,181) (7,472) (5,456,896) (2,550) Deferred monetary correction, net.............. (790,294) (3,098,615) (1,449) (1,321,076) (618) ------------- ------------- -------- 34------------- -------- Working capital provided by operations........... 7,~~630~~755,~~713~~190 21(2,~~173~~581,~~604~~030) (1,207) 278,570 130 ------------- ------------- -------- ------------- -------- Financial ~~Expenses~~resources generated otherwise: ~~Interest~~Senior ~~expense~~notes AND discount notes................ 19,114,579 8,936 18,761,905 8,771 Accrued Pension obligations...................... 4(50,~~604~~988) 263,~~508~~493 123 361 0 Increase (19decrease) in other debt.............. (3,~~879~~301,~~558~~401) ~~Bank~~7,512,562 ~~commissions~~3,512 7,455,844 3,486 Capital lease obligations...................... 13,763,246 12,032,833 5,625 (366,915) (172) Increase in other liabilities.................. (~~243~~132,~~972~~986) 1,880,896 879 1,766,253 826 Investment by minority interest................ (~~470~~4,~~976~~333,941) ~~Exchange~~(1,713,062) ~~losses~~(800) (1,371,362) (641) ------------- ------------- -------- ------------- -------- 5,943,930 39,091,301 18,275 26,246,086 12,270 ------------- ------------- -------- ------------- -------- Total financial resources generated........ 13,699,120 36,510,271 17,068 26,524,656 12,400 ------------- ------------- -------- ------------- -------- Financial resources utilized: Purchases of properties, plant and Equipment..................................... (1065,~~832~~829,~~141~~028) (2470,~~274~~767,~~142~~806) ~~Bank~~(33,083) ~~expenses~~(30,131,438) (14,086) Increase in accounts receivable................ 2,466,462 1,153 2,466,462 1,153 Increase in deferred charges................... (5,053) (2) (4,297) (2) Decrease in long-term investments.............. 82132,~~397~~419 (855,~~040~~240,089) ~~Other~~(2,450) ~~financial~~860,951 ~~expenses~~402 Decrease in other assets....................... 1,300,670 1,518,149 710 859,357 402 Increase in deferred costs..................... (~~640~~5,~~501~~149,252) 0 0 0 0 Increase in other assets Noncurrent accounts receivable................. 331,060 155 Decrease in accounts receivable................ 2,856,516 0 0 0 0 ------------- ------------- -------- ------------- -------- (766,~~029~~688,~~710~~675) (4472,~~709~~028,~~716~~337) (33,672) (25,617,905) (11,976) ------------- ------------- -------- ------------- ~~Other~~-------- Effect of revaluing to constant pesos............ 34,571,671 25,229,407 11,794 7,451,556 3,483 ------------- ------------- -------- ------------- -------- Increase (decrease) in working capital..... Ps(18,417,884) Ps(10,288,659) $ (4,810) Ps 8,358,307 $ 3,907 ============= ============= ======== ============= ======== Changes in working capital components: ~~Donations~~Cash................................................ Ps 8,182,491 Ps (92131,~~487~~038) ~~Sales~~$ of(61) ~~scrap~~Ps (365,483) $ (171) Short-term and ~~extra~~temporary ~~parts~~investments................ (43,377,698) (8,845,326) (4,135) (2,678,473) (1,252) Accounts receivable................................. ~~169~~32,~~230~~107,376 ~~Other~~19,894,608 ~~net~~9,300 11,599,345 5,423 Inventories......................................... (280,019) (672,807) (315) (196,796) (92) Prepaid expenses.................................... ~~331~~(116,~~990~~025) 562,~~142~~014,532 942 1,971,015 921 Short-term debt..................................... 2,658,599 (4,868,018) (2,276) 3,429,289 1,603 Short-term and current portion of Other long-term debt................................ (149,212) (321,293) (150) 459,822 215 Current portion of capital lease obligations........ (5,750,087) (2,464,084) (1,152) 3,838,372 1,794 Accounts payable.................................... (5,595,344) (22,397,740) (10,471) (6,612,416) (3,091) Tax liabilities..................................... (9,385,617) 6,164,661 2,882 (4,241,811) (1,983) Labor liabilities ................................. 797,656 (1,441,993) (674) 2,241,795 1,048 Current Portion Pension obligations................. (50,654) (239,438) (112) (372) Other liabilities................................... 2,540,650 3,019,277 1,412 (1,085,980) (508) ----------- -- ------------- ~~408,733 56,142~~ -------- ------ ------- -------- ~~Total~~Increase ~~Non-operating Income~~ (~~Expenses~~decrease) in working capital.....~~...............~~ Ps 28(18,~~009~~417,~~735~~884) Ps (2310,~~479~~288,~~970~~659) $ (4,810) Ps 8,358,307 $ 3,907 ============= ============= ======== ============= ========

The accompanying notes are an integral part of the consolidated financial statements. 15 TRANSTEL S.A. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

~~1999~~For ~~2000~~the ~~2000~~Six Months Ended June 30, For the Three Months Ended June 30, --------------------------------------------------------------------------------- 1999 2000 2000 2000 2000 ---- ---- ---- ---- ---- (Thousands ~~(Thousand~~of Pesos of ~~pesos~~June 30, 2000 (Thousands (Thousands of ~~March~~(Thousands 3130, purchasing power) of Pesos of June Dollars-- 30, Dollars-- Unaudited) 2000) ~~ASSETS~~purchasing ~~Current~~Unaudited) power Cash flows from operating activities: Net income for the period.........................~~........................................~~ Ps 13209,~~352,079~~628 Ps (5,~~682~~532,~~936~~189) $ (2,~~912~~586) ~~Short-term~~Ps ~~and~~(3,623,658) ~~temporary~~$ ~~investments~~(1,694) Adjustments to reconcile net income with net cash Provided by operations: Depreciation................................... 422,~~595~~462,~~441~~103 2,~~872~~604,~~431~~851 1,~~472~~218 ~~Accounts receivable~~1,175,426 ~~net~~549 Amortization...................................~~..........~~ 526,~~072~~729,~~845~~430 866,~~854~~773,~~128~~904 443,~~505~~167 ~~Inventories~~1,446,872 676 Deferred income taxes.......................... (1,006,012) 0 0 0 0 Allowance for property plant and equipment..... 43,181 479,529 224 231,808 108 Allowance for doubtful accounts................ 1,271,711 0 0 0 0 Accretion of Interest on discount Senior notes.~~..........~~ 2,~~633~~881,~~282~~041 16,~~988~~239,~~025~~465 12,~~019~~917 ~~Prepaid~~4,453,389 ~~expenses~~2,082 Minority interest..............................~~.......................~~ ~~621~~9,~~500~~222,116 ~~441~~5,~~075~~935,206 ~~226~~2,775 ~~--------------~~2,030,335 ~~---------------~~949 ~~--------~~Net ~~Total~~inflation ~~current~~adjustment ~~assets~~from balance Sheet Accounts................................. (13,267,714) (15,983,181) (7,472) (5,456,896) (2,551) Deferred monetary correction, net............... ~~111~~(790,~~275,147~~292) 97(3,~~838~~098,~~595~~615) 50(1,~~134~~449) ~~Noncurrent~~(1,321,076) (618) Changes in operating assets and liabilities: Accounts receivable............................~~......................~~ 53(29,~~778~~250,~~193~~862) 54(17,~~971~~428,~~645~~146) 28(8,~~168~~147) ~~Properties~~(8,801,822) ~~plant and equipment~~(4,115) ~~net~~Inventories.................................... ~~322~~280,~~842,185~~019 ~~434~~672,~~063,955~~807 ~~222~~315 196,~~419~~796 ~~Deferred~~92 ~~monetary~~Prepaid ~~correction~~expenses...............................~~..........~~ 3116,~~724,523~~025 6(2,~~077~~014,532) (942) 3(1,~~114~~971,015) (921) Deferred costs................................. (5,149,252) (5,053) (2) (4,297) (2) Other assets...................... ~~68,801,259 53,537,857 27,433 Long-term investments~~............. 1,300,671 1,518,148 710 859,355 402 Accounts payable...............................~~....~~ 35,~~181~~595,~~655~~344 722,~~238~~397,~~295~~740 10,471 (6,612,416) (3,~~709~~091) ~~Other~~Labor ~~assets~~liabilities.............................. (797,656) 1,441,993 674 2,241,795 1,048 Tax liabilities................................ 59,~~060~~385,~~709~~617 13(6,~~999~~164,~~932~~661) 7(2,~~174~~882) ~~Reappraisal~~(4,241,811) of(1,983) ~~assets~~Accrued pension obligations.................... (334) 24,055 11 45,786 21 Other liabilities.............................. 37(2,~~130~~673,~~087~~636) 39(1,~~709~~138,~~742~~380) 20(534) 680,~~348~~402 320 ------------- ------------- --------- -------------- --------- ~~Total~~Net ~~assets~~cash (used for) provided by operating activities.....................~~...................................~~ Ps(13,438,872) ~~605~~(3,~~793~~277,~~758~~059) Ps(1,532) ~~707~~(18,~~437~~671,~~963~~027) ~~$362~~(8,~~499~~728) ~~==============~~------------- ~~===============~~------------- ~~========~~--------- ~~LIABILITIES~~-------------- ~~AND~~--------- ~~SHAREHOLDERS'~~Cash ~~EQUITY~~flows ~~Current~~from ~~liabilities~~investing ~~Short-term~~activities: ~~debt~~Purchases of properties, plant and equipment......~~................................................~~ Ps(30,614,550) 26(70,~~284~~584,~~953~~954) Ps(32,997) 14(43,~~733~~445,~~370~~926) ~~$ 7~~(20,~~550~~310) ~~Current~~Advances ~~portion~~on ofproperties ~~other~~plant ~~long-term~~and ~~debt~~equipmen.........~~.....................~~ 1(14,~~730~~115,~~199~~520) 3(182,~~322,949~~852) 1(85) 369,~~703~~978 ~~Current~~173 ~~portion~~Purchases of ~~capital lease obligations~~investments.......................... 6(3,~~670~~833,~~638~~446) 8(2,~~434~~325,~~506~~672) 4(1,~~322~~087) ~~Accounts~~222,330 ~~payable.....................................................~~104 ~~42,084,250~~Proceeds ~~77,268,178~~from ~~39,593~~sale ~~Tax~~of ~~liabilities~~temporary investments.......~~...............................................~~ 12(2,~~274~~482,~~468~~189) 24(1,~~103,813~~160) ~~12,351~~Proceeds ~~Labor~~from ~~liabilities....................................................~~sale/maturity ~~619,809~~of ~~433,905~~short-term ~~222 Other liabilities~~investments...........................~~.........................~~ 347,~~307~~343,~~091~~563 35,~~421~~408,~~087~~662 12,~~753~~527 ~~Accrued pension obligations.......................................... 678~~5,~~060~~408,662 12,~~205,105~~528 ~~618~~ ------------- ------------- --------- -------------- --------- ~~Total~~Net ~~current~~cash ~~liabilities~~(used for) provided by investing activities.....................~~.....................~~ 93(1,~~649~~219,~~468~~953) ~~132~~(67,~~922~~684,~~913~~816) 68(31,~~112~~642) ~~Long~~(39,927,145) (18,665) -~~term~~------------ ~~liabilities~~------------- 12--------- ~~1/2~~-------------- %--------- ~~Senior~~Cash ~~Notes~~flows ~~due~~from ~~2007~~financing activities: Senior Notes...................................... ~~249~~19,~~491~~114,~~121~~579 ~~292~~8,~~734~~936 19,~~000~~114,579 ~~150~~8,~~000~~936 ~~20.32%~~Issuance ~~Senior~~of ~~Discount~~other ~~Notes due 2008~~debt............................~~....~~ (26,~~199~~099,~~918~~141) 3720,~~240~~537,~~925~~080 199,~~083~~601 ~~Other long-term debt................................................. 7~~14,~~791~~850,~~049~~225 546,~~966~~942 28Repayments ~~Capital~~of ~~lease obligations~~debt................................~~............~~ 3620,~~080~~288,~~877~~353 51(7,~~596~~835,~~664~~207) 26(3,~~439~~663) ~~Deferred monetary correction......................................... 7~~(3,~~848~~174,~~401~~965) 9(1,~~698,523~~484) ~~4,970~~Dividend ~~Accrued~~paid ~~pension~~to ~~obligations~~minority interest................~~..........................~~ 6(2,~~934~~380,~~430~~532) ~~6,273,650~~0 ~~3,215~~0 ~~Other~~0 ~~liabilities~~0 Repayments of capital lease obligations...........~~.........................................~~ 13(3,~~925~~246,~~805~~261) 1214,~~066~~496,~~458~~916 6,~~181~~777 16,968,797 7,932 ------------- ------------- --------- -------------- --------- ~~Total~~Net ~~liabilities~~cash provided by (used for) financing activities.....................~~..............................~~ ~~441~~(11,~~921~~437,~~069~~581) ~~542~~46,~~588~~313,~~099~~368 ~~278~~21,~~028~~651 47,758,636 22,326 ------------- ------------- --------- -------------- --------- ~~Minority~~Effect ~~interest~~of revaluing to constant pesos...............~~.....................................~~ 7034,~~451~~571,~~491~~670 7524,~~424~~517,~~667~~469 3811,~~648~~462 10,474,112 4,896 ------------- ------------- --------- -------------- --------- ~~Commitments~~Net ~~Shareholders' equity: Common stock, Ps1 par value, 50 billion shares authorized; 34,611,747,976 shares issued and outstanding~~ (~~5,039,801,222~~decrease) increase in ~~1998)~~cash...................~~..........~~ 508,~~699~~475,~~200~~264 50(131,~~699,383~~038) ~~25,979~~(61) ~~Retained earnings.................................................... 27~~(365,~~715,884~~424) ~~20,858,151~~(171) ~~10,688~~Cash ~~Surplus~~at ~~from~~beginning ~~reappraisal~~ of ~~assets~~period ......................~~.............~~ 153,~~006~~914,~~114~~082 175,~~867~~629,~~663~~836 92,~~156~~632 5,864,222 2,742 ------------- ------------- --------- -------------- --------- ~~Total~~Cash ~~shareholders'~~at ~~equity~~end of period.............................~~.............~~ 93Ps 12,~~421~~389,~~198~~346 89Ps 5,~~425~~498,~~197~~798 45$ 2,~~823~~571 Ps 5,498,798 $ 2,571 ============= ============== ---------~~-----~~ --------------- --------- ~~Total~~Supplemental ~~liabilities~~disclosure ~~and~~of ~~shareholder's~~cash ~~equity~~flows inform: Cash paid during the period for: Interest....................................... Ps ~~605~~2,~~793~~885,~~758~~976 Ps ~~707~~20,~~437~~439,~~963~~592 $~~362~~ 9,~~499~~555 Ps 19,886,305 $ 9,297 ============= ============= ========== ============= ========= ~~Memorandum~~Income ~~accounts~~taxes...................................~~................~~ Ps ~~275~~3,~~967~~613,~~754~~000 Ps ~~323~~7,~~502~~769,~~613~~099 $~~253~~ 3,~~171~~632 Ps 5,676,195 $ 2,654 ============= ============= ========== ============= =========

The accompanying notes are an integral part of the consolidated financial statements. 16 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Thousands of Pesos of June 30, 2000 purchasing power, unless otherwise specified) (Unaudited) NOTE 1--BASIS OF PRESENTATION The interim consolidated financial statements as of and for the six months ended June 30, 1999 and 2000 are unaudited and have been prepared in accordance with accounting principles generally accepted in Colombia. In the opinion of management, such interim financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results for the interim periods. The results of operations for the six months ended June 30, 2000 are not necessarily an indication of the results to be expected for the full year. The financial information has been presented in constant Colombian Pesos of June 30, 2000 purchasing power. U.S. Dollar amounts are translated from Peso amounts at the Representative Market Rate on June 30, 2000, which was 2,139.11 Pesos to one Dollar. No representation is made that the Peso or Dollar amounts could have been or could be converted into Dollars or Pesos, as the case may be, at any particular rate or at all. These interim consolidated financial statements should be read in conjunction with the Company's consolidated financial statements as of and for the three years ended December 31, 1999, 1998, 1997 and 1996 and the notes thereto. See Note 6 for a description of the significant differences between Colombian and U.S. GAAP. In accordance with Colombian GAAP, reappraisals of properties, plant and equipment are required and recorded in offsetting accounts which are shown under the asset caption "Reappraisal of assets" and the shareholders' equity caption "Surplus from reappraisal of assets". Those reappraisals should be calculated based on appraisals made by specialists at least every three years; however, unless otherwise considered inappropriate, the appraisals are updated in the intervening years using specific indices or the official Colombian middle-income consumer price index applied on a one-month's lagging basis. NOTE 2--OPERATING SUBSIDIARIES As of June 30, 2000, Transtel has formed nine operating subsidiaries as shown in the following chart:

~~For~~Date ~~the~~Date ~~Three~~commercial ~~Months~~Percent ~~Ended~~Primary ~~March~~Incorporated ~~31,~~operations ~~1999~~Owned ~~2000~~by ~~2000~~Subsidiary Area served by Transtel began Transtel ------------- --------------- ----------- ~~(Thousands (Thousands of pesos of March 31, 2000) of Dollars) Revenues........................................ Ps 32,038,590 Ps 29,584,479 $ 15,159~~ ------------- ----------- ----------- ----- -------- ~~Costs~~Empresa ~~and~~de ~~expenses:~~Telefonos ~~Operating~~de ~~costs~~Jamundi S.A., E.S.P. ("TeleJamundi").......................... ~~6,277,309 6,444,234 3,302 Administrative expenses~~........~~...............~~ ~~7,264,313~~Jamundi ~~5,665,464~~9/29/93 ~~2,903~~6/1/97 ~~Marketing~~99.8% ~~expenses~~Unitel S.A. E.S.P. ("Unitel")....................... ~~2,034,902~~Yumbo ~~1,951,655~~3/11/94 6/1~~,000~~/97 ~~-------------~~95 ~~---------------~~Empresa ~~-----------~~de ~~15,576,524~~Telefonos ~~14,061,353~~de ~~7,205~~Palmira ~~------------- --------------- ----------- Operating income~~S.A., E.S.P.~~.........................~~ ~~16,462,066~~Palmira ~~15,523,126~~and ~~7,954 ------------- --------------- ----------- Nonoperating income~~ (~~expenses~~''TelePalmira'') ~~Financial income~~................................ ~~22,879,046~~Candelaria ~~21,173,604~~5/31/95 ~~10,849~~9/1/95 ~~Financial~~60 ~~expenses~~Telefonos de Cartago S.A., E.S.P.~~.......................~~ (~~25,371,397~~"TeleCartago") ~~(44,709,716) (22,910) Other~~..................................~~.......~~ ~~19,599~~Cartago ~~56,142~~1/3/97 294/1/97 ~~-------------~~65 ~~---------------~~Caucatel ~~----------- (2,472,752) (23,479,970) (12,032) ------------- --------------- ----------- Net monetary inflation adjustment income~~S.A.~~...... 7~~,~~566,323~~ ~~10,197,154 5,225 ------------- --------------- ----------- Income before income taxes and minority interest~~E.S.P. ("Caucatel").................~~....~~ ~~21,555,637~~Popayan ~~2,240,310~~4/30/97 5/1~~,147~~/97 ~~Income~~51 ~~tax~~Bugatel ~~expense~~S.A., E.S.P. ("Bugatel")...................~~......~~ (Buga 6~~,779,177)~~/16/97 ~~(636,820)~~7/1/97 ~~(326)~~60 ~~-------------~~Empresa ~~---------------~~de ~~-----------~~Telecomunicaciones ~~Income~~de ~~before~~Girardot ~~minority interest~~S.A.~~.......... 14~~,~~776,460~~ ~~1,603,490 821 Minority interest~~E.S.P. ("TeleGirardot")............................ ~~(7,067,938)~~Girardot ~~(3,453,021)~~12/31/97 (1~~,769)~~/1/98 ~~-------------~~60 ~~---------------~~Suscripciones ~~-----------~~Audiovisuales ~~Net income~~E.U................... Cali 1/31/98 100 Cablevision E.U............ ~~Ps 7,708,522 Ps (1,849,531) $ (948) ------------- --------------- ----------- Earnings per share (in single Pesos and ------------- --------------- ----------- single Dollars per share)~~...................... ~~Ps 0~~.~~22 Ps - 0~~.05 $Cali -1/31/98 ~~0.0002 ============= =============== ===========~~100

17 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(Continued) In addition to the above subsidiaries, Transtel formed Telequilichao S.A. E.S.P. as a 98% owned subsidiary on December 27, 1996, Invercable S.A. as a 100% owned subsidiary on July 27, 1998 and Unicable S.A. as a 100% owned subsidiary on July 27, 1998; however, they have had no operations to date. In July and September, 1998 the Company acquired 97% of Suscripciones Audiovisuales S.A. and Cablevision S.A. (together "Cablevision") for Ps15,849,675 and Ps 7,242,293 in cash, respectively. The Company acquired the remaining 3% of both companies on December 15, 1998 for Ps 854,385 in cash. Cablevision owns and operates the only license for the operation of pay television services in the city of Cali and its surrounding area. Transtel used a portion of the proceeds from the Senior Notes to finance this purchase. NOTE 3--EARNINGS PER SHARE Earnings per share are computed dividing net income applicable to common shares by the weighted average number of subscribed and paid shares outstanding for the three months ended June 30, 1999 and 2000, respectively. Transtel's weighted average number of shares used in the computation of earnings per share was 34,611,747,976 in 1999 and 34,611,747,976 in 2000. NOTE 4--DEBTS On October 28, 1997, the Company received the net proceeds from the sale of $150 million (Ps320.9 billion) of 12 1/2% Senior Notes due 2007. These Senior Notes were sold to a pass through trust which issued certificates ("Certificates") representing pro rata interests in the Senior Notes to qualified institutional buyers in the United States of America or non-U.S. persons outside the United States. Interest payments on the Senior Notes are due on May 1 and November 1, commencing May 1, 1998. A portion of the net proceeds of the 12 1/2% Senior Notes due 2007 was used to pay all existing short and long-term debt existing at October 28, 1997, costs of issuance, a Central Bank fee and the Escrow Account. On December 31, 1998, the Company sold $15.0 million (Ps32.1 billion) of its 20.32% Senior Discount Notes due 2008 in a private placement. The net proceeds of approximately $14.3 million (Ps30.6 billion) were to pay for capital expenditures, to provide working capital and/or to fund future acquisitions. Interest at 0.10% will be payable in cash each year through August 13, 2008. Interest at 20.22% will accrue over the term of the Senior Discount Notes, and the accrued interest of $86.9 million (Ps185.9 billion) and principal of $15.0 million (Ps32.1 billion) will be due on August 13, 2008. The Senior Discount Notes are unsecured senior obligations of the Company and will be fully and unconditionally guaranteed on a senior, unsecured basis by each subsidiary of the Company in which the Company acquires 100% of the minority interest or provides indebtedness with the proceeds of the Senior Discount Notes. If such a guarantee is issued by a subsidiary, it must also be issued to the holders of the Senior Notes and Certificates. As of August 30, 1999 the Company has not acquired any minority interests or provided indebtedness to any subsidiary. The indentures of the 12 1/2% Senior Notes due 2007 and Senior Discount Notes due 2008 impose certain limitations on the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, incur liens, pay dividends or make certain other restricted payments, consummate certain asset sales, enter into certain transactions with affiliates, issue preferred stock, merge or consolidate with any other person or sell, assign, transfer, lease, convey, or otherwise dispose of all or substantially all of the assets of the Company and its subsidiaries. Under the most restrictive of these covenants, the Company may pay dividends of no more than Ps6,445,865 as of June 30, 2000. 18 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Transtel S.A. is dependent upon transfer of funds from its subsidiaries to make the required interest and principal payments on the Senior Notes and the Certificates and the Senior Discount Notes. The subsidiaries have not guaranteed the payment of the Senior Notes and have no obligations to remit dividends on other distributions to Transtel S.A. for payment on the Senior Notes and the Certificates and the Senior Discount Notes. NOTE 5--OTHER NONCURRENT LIABILITIES Other noncurrent liabilities as of June 30, 1999 and 2000 consisted of the following:

~~Common~~1999 ~~Shares~~2000 ~~Outstanding~~ ----~~--------------------~~ ~~Number Amount Retained Surplus from Total~~ ------ ~~------~~Payable ~~Earnings~~to ~~Reappraisal~~Siemens ~~Shareholders'~~AG ~~(Thousands)~~for ~~--------------~~Transtel ofSiemens ~~Assets~~Purchase ~~Equity ---------------- ---------------- Balance at December 31, 1998~~Agreement...................................................... ~~34,611,748~~ Ps 504,~~699~~028,~~200~~235 Ps 204,~~007~~249,~~361~~612 Ps(1) ~~16,308,750~~Payable Psto ~~87,015,311~~Siemens ~~Net~~AG ~~income~~for TeleGirardot Siemens Purchase Agreement...................................................... 73,~~708~~264,~~522~~395 74,~~708~~249,~~522~~612 ~~Movement~~(2) ~~during~~Payable ~~the~~to ~~period~~IBM................................................... (1794,~~302~~150 873,~~636)~~791 (~~1,302,636~~3) ~~----------~~Unearned ~~-------------~~interest ~~--------------~~income......................................... ~~---------------~~189,025 ~~----------------~~0 ~~Balance~~Cable attelevision ~~March~~fees ~~31,~~paid ~~1999~~advances.............................. 34595,~~611748~~390 ~~50,699,200~~0 ~~27,715,883~~Accrued ~~15,006,114~~litigation ~~93,421,197 ========== ============= ============== =============== ================ Balance at December 31, 1999~~loss......................................... 342,~~611~~409,~~748~~167 ~~Ps 50~~2,~~699~~200,~~383~~000 PsDeferred ~~22,707,682~~Income PsTaxes............................................ ~~18,545,140~~Negative ~~Ps 91,952,205 Net income~~goodwill................................................ (1301,~~849,531)~~555 ~~(1,849,531)~~0 ~~Movement during the period~~Other............................................................ ~~(677~~1,~~476)~~175,063 ~~(677~~2,~~476)~~644,745 ---------- ---~~----------~~ -------------- ~~--------------- ---------------- Balance at March 31, 2000.......... 34,611,748~~ Ps 5012,~~699~~756,~~383~~980 Ps 2014,~~858~~217,~~151~~760 ~~Ps 17,867,664 Ps 89,425,198~~ ========== ===~~==========~~ =============~~= =============== ================~~

(1) Excludes Ps 607,088 which is included in other current liabilities. (2) Excludes Ps 607,088 which is included in other current liabilities. (3) Excludes Ps 668,938 which is included in other current liabilities. Girardot Telephone was sued by TeleTequendama E.S.P., a local telephone operator competitor, for Ps2,200,000 (nominal Pesos) on June 4, 1997 for unfair competition in TeleTequendama's zone of operations. Although the resolution and trial of this lawsuit will not occur during 1999, the Company and Girardot Telephone agreed that Girardot Telephone would record Ps2,200,000 (nominal Pesos), concurrent with the acquisition of Girardot Telephone by the Company on December 31, 1997, as an estimate of the liability that is probable as a result of the litigation. NOTE 6--DIFFERENCES BETWEEN COLOMBIAN GAAP AND U.S. GAAP The Company's financial statements are prepared in accordance with Colombian GAAP. Because these principles differ in certain significant respects from U.S. GAAP, this note presents a reconciliation to U.S. GAAP of net income and shareholders' equity as of and for the three month periods ended June 30, 1999 and 2000. A Registration Statement on Form F-4 was filed with the Securities and Exchange Commission and was declared effective on May 17, 1999 by the Commission. (a) Reconciliation of net income: The following summarizes the principal differences between accounting practices under Colombian and U.S. GAAP and their effects on net income for the three month periods ended June 30, 1999 and 2000: 19 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

~~March~~1999 ~~31,~~2000 ---- ----~~-----------------------~~ ~~1999~~Consolidated ~~2000~~net income under Colombian GAAP Ps 209,628 Ps (5,532,189) (i) Deferred income taxes.................................. 2,852,603 267,219 (ii) Surplus from reappraisal of assets..................... -~~-------------~~ -~~------------~~ ~~Legal~~(iii) ~~reserve~~Depreciation........................................... Ps(5,438,069) ~~686~~(5,~~230~~452,097) Ps(iv) 1Capitalized interest................................... 765,~~142~~325 3,~~932~~677,925 ~~Appropriated~~(v) ~~for~~Deferred ~~future construction~~costs......................................... ~~918~~(187,~~202~~134) 52,~~028~~262,~~507~~970 ~~Appropriated~~(vi) ~~for~~Capital ~~future~~leases......................................... ~~acquisitions~~(60,976) (429,725) (vii) Revenue recognition.................................... 5(11,~~257~~707,~~853~~656) 16247,~~536~~133 (viii) Reversal of deferred monetary correction............... 742,~~243~~471 ~~Unappropriated~~4,409,382 ~~retained~~(ix) ~~earning~~Effect of the above differences on minority interest... 4,409,758 (121,397) (x) Distribution to shareholder............................ 20- - (xi) Depreciation of Cablevision assets..................... (348,~~853,599~~601) (1317,~~849,531~~971) (xii) Inflation adjustment on inventories.................... 183,610 - -------------- ------------- Consolidated net income (loss) under U.S. GAAP Ps 27( 8,~~715~~579,~~884~~041) Ps 20(988,~~858,151~~750) =============== =============

(b) Reconciliation of shareholders' equity: The following summarizes the principal differences between accounting practices under Colombian GAAP and U.S. GAAP and their effects on shareholders' equity at June 30, 1999 and 2000:

~~For the Three Months Ended March 31,~~ 1999 2000 ~~2000~~ ----~~---------~~ ----~~----------~~ ~~--------~~Consolidated ~~(Thousands~~shareholders' ofequity ~~Pesos~~under ofColombian ~~March 31, 2000 (Thousands of Dollars) Sources of working capital: Net income~~GAAP...............~~..............................................~~ Ps 789,~~708~~038,~~522~~655 Ps (191,~~849~~303,~~531)~~357 $ (~~948~~i) Items that do not utilize (provide) working capital: Depreciation........................................................ 1,115,571 1,385,236 710 Amortization........................................................ 3,058,847 5,162,353 2,645 Deferred income taxes..................................~~.............~~ 312,~~426~~924,~~087~~776 ~~Allowance for writedown of properties~~16, ~~plant and equipment.......... 240~~298,~~063~~795 124 Allowance for doubtful accounts..................................... 401,309 Accretion of interest on Senior Discount Notes...................... 1,250,784 1,730,861 887 Minority interest................................................... 7,067,938 3,453,021 1,769 Net inflation adjustment from non-current balance sheet accounts.... (~~7,353,669~~ii) ~~(10,200,877)~~Surplus ~~(5,227)~~from ~~Deferred~~reappraisal ~~monetary~~of ~~correction, net~~assets.....................~~..............~~ (315,~~192~~865,~~916~~902) (119,~~722~~394,~~588~~069) (~~883~~iii) ~~-------------- -------------- -------- Working capital provided by operations~~Depreciation.................................. ~~13,482,473 (1,801,462) (923) -------------- -------------- -------- Financial resources generated otherwise: Senior Notes and Discount Notes~~.........~~............................~~ ~~341,772 175 Accrued pension obligations.........................................~~ (~~457~~16,~~458) (253~~068,~~455~~149) (~~130) Increase (decrease) in other debt................................... (2~~27,~~261~~131,~~852~~503) ~~54,965 29 Capital lease obligations........................................... 3,446,423 12,016,424 6,157 Increase in other liabilities.......................................~~ (~~1,991,594~~iv) ~~111,099~~Capitalized ~~57 Investment by minority~~ interest..................................... (24,~~182~~225,~~708)~~974 ~~(331,136) (170) -------------- -------------- -------- (3,447,189) 11,939,669 6,118 -------------- -------------- -------- Total financial resources generated............................~~ 10,~~035~~558,~~284~~504 ~~10,138,207 5,195 -------------- -------------- -------- Financial resources utilized: Purchases of properties, plant and equipment........................~~ (~~28,385,509~~v) ~~(39,380,141)~~Deferred ~~(20,179) Increase in deferred~~ costs.......................................... (131,~~915~~796,~~063~~336) (~~733) (0) Decrease in long-term investments................................... 214~~22,~~339 (5~~670,~~912,433~~746) (~~3,030~~vi) ~~Decrease~~Capital ~~in other assets~~leases.........................................~~...~~ 1,~~775~~786,~~422~~672 (1,~~802~~286,~~796)~~724 (~~924~~vii) ~~Noncurrent~~Revenue ~~accounts receivable~~recognition...................................... (516,~~551~~918,~~199~~093) (~~320~~34,~~826) (164) -------------- -------------- -------- (33~~056,~~862,010~~308) (~~47,416,930~~viii) ~~(24,297)~~Reversal ~~-------------- -------------- -------- Effect~~ of ~~revaluing~~deferred tomonetary ~~constant pesos~~correction...............~~...................~~ 1,~~029~~724,~~497~~218 ~~13,407,991~~ 6,~~870 -------------- -------------- -------- Increase (decrease) in working capital......................... Ps (22~~155,~~797,229)~~544 Ps (~~23,870,732~~ix) ~~$(12,232)~~Effect ~~==============~~of ~~==============~~the ~~========~~above ~~Changes~~differences inon ~~working~~minority ~~capital components: Cash~~interest...~~................................................................~~ ~~Ps 9~~10,~~275~~321,~~331~~082 ~~227~~14,~~197 116 Short-term and temporary investments................................... (24~~652,~~524,665)~~832 (~~5,976,212~~x) ~~(3,062)~~Distribution ~~Accounts~~to ~~receivable~~shareholder............................~~........................~~ ~~18,206,813 8,038,825 4,119 Inventories............................................................~~ (~~411~~456,~~022~~065) (~~461~~456,~~296~~065) (~~236~~xi) ~~Prepaid~~Depreciation expenses....................................................... (279,333) 42,172 21 Short-term debt........................................................ (10,797,328) (1,394,252) (714) Current portion of ~~other~~Cablevision ~~long-term debt~~assets.....................~~...........~~ (60522,~~130~~042) ~~134,247 69 Current portion of capital lease obligations...........................~~ (1840,~~982,702~~187) ~~1,331,804 682 Accounts payable.......................................................~~ (~~7,590,728~~xii) ~~(28,113,341)~~Inflation ~~(14,406)~~adjustment ~~Tax~~on ~~liabilities~~inventories....................~~....................................~~ (5183,~~974,347)~~610 ~~1,863,407~~- 955 Labor liabilities...................................................... 482,977 775,077 397 Accrued pension obligations............................................ (63,723) (232,397) (119) Other liabilities...................................................... 921,628 (105,963) (54) -------------- -------------- ~~--------~~Consolidated ~~Increase~~shareholders' ~~(decrease)~~equity inunder ~~working capital~~U.S.~~...............................~~ GAAP Ps ~~(22~~38,~~797~~578,~~229)~~400 Ps ~~(23~~35,~~870~~706,~~732)~~878 ~~$(12,232)~~ ============== =============~~= ========~~

(c) Analysis of changes in shareholders' equity: The following summarizes the changes in shareholders' equity under U.S. GAAP for the six month periods ended June 30, 1999 and 1999:

~~For the Three Months Ended March 31,~~ 1999 2000 ~~2000~~ ----~~-------~~ ----~~-------~~ ~~--------~~Balance ~~(Thousands~~at ofbeginning ~~Pesos~~ of ~~March 31, 2000) (Thousands of Dollars) Cash flows from operating activities: Net income~~period..................................~~............................~~ Ps 747,~~708~~157,~~522~~442 Ps (136,~~849~~695,~~531)~~628 $Net (~~948~~loss) ~~Adjustments to reconcile net~~ income ~~with net cash Provided by operations: Depreciation~~...............................................~~..........~~ 1,115,571 1,385,236 710 Amortization......................................................... 3,058,847 5,162,353 2,645 Deferred income taxes................................................ 3,426,087 Allowance for writedown of property, plant and equipment............. 240,063 123 Allowance for doubtful accounts...................................... 401,309 Accretion of interest on Senior Discount Notes....................... 1,250,784 1,730,861 887 Minority interest.................................................... 7,067,938 3,784,157 1,939 Net inflation adjustment from balance sheet accounts................. (7,353,669) (10,200,877) (5,227) Deferred monetary correction, net.................................... (3,192,916) (1,722,588) (883) Changes in operating assets and liabilities: Accounts receivable.................................................. (9,011,669 (8,~~359~~579,~~651~~042) (4988,~~284~~750) Inventories.......................................................... 411,022 461,296 236 Prepaid expenses..................................................... 279,333 (42,172) (22) Deferred costs....................................................... (1,915,063) (733) (0.) Other assets......................................................... 1,775,421 (1,802,796) (924) Accounts payable..................................................... 7,590,728 28,113,341 14,406 Labor liabilities.................................................... (482,977) (775,077) (397) Tax liabilities...................................................... 5,974,347 (1,863,407) (955) Accrued pension obligations.......................................... (393,735) (21,059) (11) Other liabilities.................................................... (2,913,222) 217,062 113 ----------- ---~~--------~~ -------- ~~Net cash (used for) provided by operating activities................ 14,796,658 14,456,478 7,408~~ -----~~------~~ ~~-----------~~Balance -------- Cash flows from investing activities: Purchases of properties, plant and equipment............................ (21,015,964) (26,300,056) (13,476) Advances on properties, plant and equipment............................. (14,746,344) (535,740) (275) Purchases of investments................................................ (2,382,727) (2,469,233) (1,265) Proceeds from sale of temporary investments.............................. 2,405,454 1,232 Proceeds from maturity of short-term investments........................ 27,121,731 ----------- -------------- -------- Net cash used by investing activities............................... (11,023,304) (26,899,575) (13,784) ----------- ----------- -------- Cash flows from financing activities: Short term debt......................................................... 13,024,518 994,876 510 Repayments of other debt................................................ (4,428,912) Dividends paid to minority interest..................................... (2,357,802) Repayments of capital lease obligations................................. (1,565,287) (2,395,465) (1,227) ----------- ----------- -------- Net cash provided by financing activities........................... 4,672,517 (1,400,589) (718) ----------- ----------- -------- Effect of revaluing to constant pesos.................................... 1,029,497 14,070,883 7,210 ----------- ----------- -------- Net (decrease) increase in cash......................................... 9,475,368 227,197 116 Cash at ~~beginning of period............................................. 3,876,710 5,455,739 2,796 ----------- ----------- -------- Cash at~~ end of period........................................~~...........~~ Ps 1338,~~352~~578,~~078~~400 Ps 535,~~682~~706,~~936~~878 ~~$ 2,912~~ ================ =============== ======== Supplemental disclosure of cash flows information: Cash paid during the period for: Interest............................................................... Ps 1,518,712 Ps 156,898 $ 80 =============== =============== ======== Income taxes........................................................... Ps 609,938 Ps 377,814 $ 194 ============== =============== ========

The Company has no items of other comprehensive income. 20 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (d) Summary of significant differences between Colombian and U.S. GAAP disclosures (i) Deferred Income taxes Under Colombian GAAP, income taxes for interim financial statements are calculated as if those financial statements were annual financial statements. Under Colombian GAAP, deferred income taxes are generally recognized for timing differences in a manner similar to Accounting Principles Board Opinion No. 11. Under U.S. GAAP, income taxes for interim financial statements are calculated using the estimated effective tax rate for the year. Under U.S. GAAP Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes" requires that deferred tax assets or liabilities be recorded for the tax effects of temporary differences between the financial and tax bases for assets and liabilities. A valuation allowance is provided for deferred tax assets when it is considered more likely than not that they will not be realized. (ii) Surplus from reappraisal of assets In accordance with Colombian GAAP, reappraisals of properties, plant and equipment and long-term investments are made periodically and recorded in offsetting accounts which are shown under the asset caption "Reappraisal of assets" and the shareholders' equity caption "Surplus from reappraisals of assets." Under U.S. GAAP, reappraisals of assets are not permitted. (iii) Depreciation The Company uses the reverse sum of the year's method of depreciation for Colombian GAAP purposes. The straight-line method is used for U.S. GAAP. (iv) Capitalized interest Under Colombian GAAP, the Company does not capitalize certain interest costs on projects during construction which is required under U.S. GAAP. Under U.S. GAAP, adjustments to expenses are required for interest capitalized net of additional depreciation on interest amounts capitalized. (v) Deferred costs Subsidiaries of the Company have deferred certain expenses which are expensed as incurred under U.S. GAAP. Under U.S. GAAP, an adjustment is required for the expensing of amounts net of any amortization taken. Statement of Position No. 98-5, "Reporting on the Costs of Start-Up Activities", which is effective for fiscal years beginning after December 15, 1998, required the Company to change its accounting under U.S. GAAP for organization costs. (vi) Capital leases Certain of the Company's operating leases for Colombian GAAP purposes qualify as capital leases under U.S. GAAP. In addition to the amounts shown as capital leases in the balance sheet, the following assets and liabilities are recorded under U.S. GAAP: 21 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

~~Date~~1999 ~~Date~~2000 ~~commercial Percent Primary Incorporated operations Owned by Subsidiary Area served by Transtel began Transtel~~ ----~~------------------------------------------------------~~ ----~~--------~~ ~~----------------~~External ~~---------~~telephony ~~----------------- Empresa de Telefonos de Jamundi S~~networks.A.,E.S.P. ~~("TeleJamundi")~~..................................~~.....~~ ~~Jamundi~~Ps ~~9/29/93~~5,027,360 ~~6/1/97~~Ps ~~99.8%~~4,992,759 ~~Unitel~~Computer Sequipment.A. E.S.P. ~~("Unitel")~~........................... ~~Yumbo 3/11/94 6/1/97 95 Empresa de Telefonos de Palmira S~~.A.~~, E~~.S.P. ~~Palmira and (''TelePalmira'')~~...........~~..........................~~ ~~Candelaria~~399,220 ~~5/31/95~~339,757 ~~9/1/95~~Transport 60fleet ~~Telefonos~~and ~~de Cartago S~~equipment.A.~~, E~~.S.P. ~~("TeleCartago")~~................................~~.......~~ ~~Cartago~~2,245,252 1~~/3/97~~,910,011 ~~4/1/97 65 Caucatel S~~Generator.A.~~, E~~.S.P. ~~("Caucatel")~~...................... ~~Popayan 4/30/97 5/1/97 51 Bugatel S~~.A.~~, E~~.S.P. ~~("Bugatel")~~......................... ~~Buga~~99,458 ~~6/16/97~~94,387 ~~7/1/97~~------------- 60-------------- ~~Empresa de Telecomunicaciones de Girardot S~~Total.A.~~, E~~.S.P. ~~("TeleGirardot")~~............................... ~~Girardot 12/31/97 1/1/98 60 Suscripciones Audiovisuales S~~.A....................~~....~~ ~~Cali~~7,771,290 ~~1/31/98~~7,336,914 ~~100~~Less--Accumulated ~~Cablevision S~~depreciation.A. ..................................~~.....~~ ~~Cali~~(2,948,311) ~~1/31/98~~(3,612,305) ~~100~~------------- -------------- Ps 4,822,979 Ps 3,724,609 ============= ==============

The above amounts include cumulative net inflation adjustments of.Ps 2,037,846 and Ps 1,885,887 at June 30, 1999 and 1999, respectively. Total minimum lease payments...................................... Ps 5,128,390 Ps 3,351,539 Less-Imputed interest............................................. (2,351,869) (1,130,467) ------------- -------------- Present value of minimum lease payments........................... 2,776,521 2,221,072 Less--Current portion............................................. (567,357) (1,552,626) ------------- -------------- Long-term portion................................................. 2,209,164 668,446 ============= ============== Deferred income from sale lease back.............................. Ps 259,784 Ps 248,668 ============= ==============

The additional total minimum lease payments as follows under U.S.GAAP:

~~1999~~Payable ~~2000~~in twelve months --------- --------------- ~~Payable~~ended toJune ~~Siemens~~30, AG-------------- ~~for Transtel Siemens Purchase Agreement~~2000....................................................... ~~Ps 3,544,103 Ps 3,877,020 (1) Payable to Siemens AG for TeleGirardot Siemens Purchase Agreement~~....~~...................................................~~ ~~3,504,192~~Ps 41,~~469~~552,~~657~~626 ~~(2) Payable to IBM~~2001....................................................... ~~1,176,138 698,658 (3) Unearned interest income~~....~~.........................................~~ 81,~~855~~716,917 ~~Cable television fees paid advances~~2002.................................. ~~667,293 Accrued litigation loss~~.........................~~.....................~~ 281,~~386,164~~996 ~~2,200,000~~------------- ~~Negative~~Total ~~goodwill....................................................~~minimum ~~315,269~~lease ~~173,833 Other~~payments......................................~~..........................~~ ~~2,323,791 647,290 ------------- -------------~~ Ps 133,~~925~~351,~~805~~539 ~~Ps 12,066,458~~ ============= ~~=============~~

The following income statement effects are recorded under U.S. GAAP for the above capital leases:

1999 2000 ----~~---~~ ----~~---~~ ~~Consolidated~~Increase ~~net~~in ~~income~~interest ~~under Colombian GAAP Ps 7,708,522 Ps (1,849,531) (i) Deferred income taxes~~expense............................ ~~1,457,327 518,090 (ii) Surplus from reappraisal of assets~~..........~~.....~~ -Ps -294,408 ~~(iii)~~Ps ~~Depreciation~~713,431 Increase in depreciation expense..................................~~...~~ (2587,~~802~~622 369,~~423)~~808 (2Amortization of gain from sale of Properties,~~632,241)~~ ~~(iv)~~plant ~~Capitalized~~and ~~interest~~equipment on leaseback..................... (7,872) (7,181) Increase in inflation adjustment income on capital lease obligations........ ~~136,751 1,366,356 (v) Deferred costs~~........................................ (1225,~~720,087~~196) 277,~~090,669~~251 ~~(vi)~~------------- ~~Capital~~-------------- ~~leases~~Total................................... ~~32,175 (283,384) (vii) Revenue recognition~~.....................~~.........~~ (8648,~~361,638)~~962 ~~(201~~1,~~183)~~153,309 ~~(viii)~~------------- ~~Reversal~~-------------- ofRent ~~deferred~~expense ~~monetary~~Decrease ~~correction~~in rent expense recorded under Colombian GAAP......... ~~3,172,495 2,402,657 (ix) Effect of the above differences on minority interest~~................................................. ~~2,922,902~~ (95587,~~905~~986) (x723,584) ~~Distribution~~Decrease toin ~~shareholder~~rent recorded as deferred costs under Colombian GAAP and reversed for U.S. GAAP Purposes.................... ~~- - (xi) Depreciation of Cablevision assets~~............... ~~(168,570) (153,944) (xii) Inflation adjustment on inventories~~................... ~~149,378~~- 0 -------------- -------------- ~~Consolidated~~Net ~~net~~decrease ~~income~~in ~~(loss) under U~~expenses.S. ~~GAAP~~........................................ Ps 260,~~526,832~~976 Ps 1429,~~161,584~~725 ============== ==============

Under U.S. GAAP, there are no operating lease commitments at June 30, 2000. If the equipment under Global Leases, the IBM Arrangement and the related DIAN Financing of the value-added tax and duty had been installed and accepted (and thus the lease terms commenced) at June 30, 2000, the following additional lease and tax obligations on a pro forma U.S. GAAP basis would have been outstanding: 22 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

~~1999~~IBM ~~2000~~DIAN Global Leases Arrangement Financing Total --------------- ------------- ~~Consolidated~~-------------- ~~shareholders'~~--------------- ~~equity~~Total ~~under~~minimum ~~Colombian~~lease ~~GAAP........~~or Pstax ~~93,421,197~~and PsDuty ~~89,425,198 (i) Deferred income taxes~~payments....................~~......~~ ~~11,217,993~~Ps 18191,~~167~~902,~~758~~529 ~~(ii)~~Ps ~~Surplus from reappraisal of assets............. (15~~1,~~006~~039,~~114)~~928 ~~(17~~Ps 28,~~867~~636,~~664)~~266 ~~(iii)~~Ps ~~Depreciation................................... (13~~221,~~103~~578,~~744)~~723 ~~(23,641,233)~~Less--Imputed ~~(iv) Capitalized~~ interest..............~~.............~~ 3(55,~~490~~541,~~371 8,034,160 (v~~435) ~~Deferred costs.................................~~ (3276,~~351,696~~366) (2255,~~071~~617,~~997~~801) ~~(vi)~~--------------- ~~Capital~~------------- ~~leases.................................~~-------------- ~~1,822,681~~--------------- ~~1,379,985~~Present ~~(vii)~~value ~~Revenue~~of ~~recognition~~minimum lease Payments.........................~~...~~ ~~(13~~136,~~410~~361,~~929)~~094 ~~(33~~963,~~443,824)~~562 ~~(viii) Reversal of deferred monetary correction....... 4~~28,~~123~~636,~~878~~266 3165,~~620~~960,~~581~~922 ~~(ix)~~Less--Current ~~Effect of the above differences on minority interest~~portion...............~~........................~~ 8(31,~~651~~056,~~403 14,221,846 (x~~105) ~~Distribution to shareholder....................~~ (~~441~~126,~~960~~606) (~~441~~3,~~962) (xi) Depreciation of Cablevision assets............. (336~~511,~~649~~782) (~~660~~34,~~011~~694,493) ~~(xii)~~--------------- ~~Inflation~~------------- ~~adjustment on inventories............ 149,378 0~~ -------------- --------------- ~~Consolidated~~Long--term ~~shareholders'~~portion.................. ~~equity~~Ps ~~under~~105,304,989 ~~U.S.~~Ps ~~GAAP~~836,956 Ps 4825,~~225~~124,~~809~~484 Ps 36131,~~722~~266,~~837~~429 =============== ============= ============== ===============

The additional total minimum lease or tax and duty payments would have been as follows under U.S. GAAP: Payable in twelve months ending June 30, ---------------------------------------- 2000........................... Ps 22,408,181 2001........................... 21,702,146 2002........................... 23,120,992 2003........................... 19,768,715 Thereafter..................... 134,578,689 --------------- Ps 221,578,723 =============== (vii) Revenue recognition Under Colombian GAAP, revenues for connection fees for telephone lines are recognized upon payment in cash or the execution of a promissory note (with a 10% down payment) by the customer and the Company's assignment of a telephone number which is transferable to others by the customer. Under U.S. GAAP the Company changed prospectively as of January 1, 1999 its method of accounting for connection fee income from an "installation date basis", which historically has been consistent with industry practice, to a "deferred basis". Under the former policy, connection fees were recognized as income at the date of installation with a dial tone. Under the new policy, connection fee income less direct installation costs and direct selling costs is deferred and amortized into income over five years using the straight- line method. This change was made to reflect income in excess of direct costs over an estimated service period. This change does not have a cumulative effect. (viii) Deferred monetary correction The deferred monetary correction asset and liability are reversed for U.S. GAAP purposes. (ix) Minority interest The minority interests' share of the differences between Colombian GAAP and U.S. GAAP are presented separately. (x) Distribution to shareholder Transtel purchased land and building from a major shareholder at appraised value in August 1996. For U.S. GAAP, the difference between the amount paid and the shareholder's historical basis is treated as a distribution to the shareholder. 23 TRANSTEL S.A. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (xi) Depreciation of Cablevision Assets Under Colombian GAAP, goodwill or negative goodwill in an acquisition accounted for as a purchase is determined as the purchase price paid in excess of the acquiree's net worth, including reappraisal of assets. The assets of the acquiree are recorded at book value adjusted for inflation and the amount of asset reappraisals is shown as a separate caption in the balance sheet and not depreciated. Such goodwill or negative goodwill is amortized over five years. Under U.S. GAAP, goodwill is the excess of the purchase price paid over the fair value of the assets and liabilities acquired. The assets and liabilities are recorded at fair value and assets are depreciated over their useful lives. The Company amortizes goodwill over five years for U.S. GAAP. (xii) Inflation adjustment on inventories Under Colombian GAAP, effective January 1, 1999 a decree issued by the Colombian Congress eliminated the inflation adjustment relating to inventories. Under U.S. GAAP, an adjustment is required for the inflation effects on inventories so that a comprehensive basis of accounting for inflation is maintained. (xiii) Fiduciary Guarantee Trust and other reclassifications Under Colombian GAAP, fiduciary guarantee trusts are formed to secure debts by transferring the title of fixed assets to the trust. The net book value of the trust is recorded as other assets and is amortized in the same way in which the related fixed assets would be depreciated. Under U.S. GAAP, the fixed assets used to form the fiduciary guarantee trust remain in natural fixed assets classifications and are depreciated. The amounts reclassified as fixed assets for U.S. GAAP purposes from the fiduciary guarantee trust are as follows at June 30, 2000 (none at June 30, 1999): Land................................... Ps 227,696 Building............................... 910,778 ------------ 1,138,474 Accumulated depreciation............... (56,076) ------------ Net.................................... Ps 1,082,398 ============ Certain other reclassifications have been made to the Colombian GAAP balance sheet to conform to the U.S. GAAP presentation, primarily the reclassification of certain receivables to advances to suppliers, prepaid expenses and noncurrent other assets. In addition, because of the decree issued by the Colombian Congress effective January 1, 1999 inflation adjustments are no longer applied to the various revenue and expense accounts. While this change has no effect on net income for Colombian or U.S. GAAP, for U.S. GAAP each item of revenue and expense for the six months ended June 30, 2000 should be multiplied by the average inflation factor of 1.0374 and "Net monetary inflation adjustment" income decreased by the net effect. (xiiii) Earnings per share Under Colombian GAAP, earnings per share are computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding for each period presented. Under U.S. GAAP, earnings per share are calculated on the basis of the weighted average number of common shares outstanding, adjusted for stock dividends issued by the Company which are considered outstanding since the beginning of the earliest period presented. For U.S. GAAP, the weighted average number of shares was 34,611,747,976 during the six-month periods ended June 30, 1999 and 1999. These shares are different than 24 Colombian GAAP since the capitalization in December 1998 of premium on shares issued in July 1997 is treated as a stock issued under U.S. GAAP as of January 1, 1998. Basic and diluted income (loss) per share under U.S. GAAP are the same and were 0.01 single (0.23) Pesos and single Pesos for the six months ended June 30, 1999 and 1999, respectively. 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Transtel S.A. ----------------------------- (Registrant) Date: September 19, 2000 By: /s/ Guillermo O. Lopez -------------------------- Name: Guillermo O. Lopez Title: President 26

1999 2000 --------- --------- Balance at beginning of period...................................... Ps 45,698,978 Ps 35,560,853 Net (loss) income................................................... 2,526,831 1,161,984 -------------- --------------- Balance at end of period............................................ Ps 48,225,809 Ps 36,722,837 ============== ===============

1999 2000 ------------- -------------- External telephony networks............................................. Ps 4,759,316 Ps 4,590,878 Computer equipment...................................................... 386,875 362,233 Transport fleet and equipment........................................... 2,424,928 1,987,725 Generator............................................................... 96,383 91,688 ------------- -------------- Total................................................................ 7,667,502 7,032,524 Less--Accumulated depreciation.......................................... (2,708,643) (2,912,197) ------------- -------------- Ps 4,958,859 Ps 4,120,327 ============= ==============

Payable in twelve months ------------------------ ended March 31, -------------- 2000............................................................. Ps 1,557,210 2001............................................................. 1,648,435 2002............................................................. 78,546 -------------- Total minimum lease payments........................................ Ps 3,284,191 ==============

1999 2000 -------------- -------------- Increase in interest expense........................................ Ps 173,213 Ps 442,997 Increase in depreciation expense.................................... 418,061 174,043 Amortization of gain from sale of Properties, plant and equipment on leaseback...................... (3,813) (3,479) Increase in inflation adjustment income on capital lease obligations......................................... (307,785) 40,557 ------------ ------------ Total............................................................ 279,676 654,118 ------------ ------------ Rent expense Decrease in rent expense recorded under Colombian GAAP....................................................... (311,851) (370,734) Decrease in rent recorded as deferred costs under Colombian GAAP and reversed for U.S. GAAP Purposes......... ------------ ------------ Net decrease in expenses............................................ Ps (32,175) Ps 283,384 ============ ============

IBM DIAN Global Leases Arrangement Financing Total ------------------- ---------------- ----------------- ------------------- Total minimum lease or tax and Duty payments.............. Ps 175,077,158 Ps 948,751 Ps 26,125,534 Ps 202,151,443 Less--Imputed interest........... (50,671,748) (69,671) - (50,741,419) --------------- ------------- -------------- --------------- Present value of minimum lease Payments....................... 124,405,410 879,080 26,125,534 151,410,024 Less--Current portion............ (31,056,105) (126,606) (3,511,782) (34,694,493) --------------- ------------- -------------- --------------- Long--term portion............... Ps 93,349,305 Ps 752,474 Ps 22,613,752 Ps 116,715,531 =============== ============= ============== ===============

Payable in twelve months ending March 31, ------------------------------------------ 2001............................. Ps 22,408,181 2002............................. 21,702,146 2003............................. 23,120,992 2004............................. 19,768,715 Thereafter....................... 115,151,409 --------------- Ps 202,151,443 ===============

Land..................................................... Ps 220,654 Building................................................. 882,614 ------------ 1,103,268 Accumulated depreciation................................. (34,678) ------------ Net...................................................... Ps 1,068,590 ============

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