Exhibit 14.5

Telefónica Celular, S. A.Audited Financial Statements
As of December 31, 2003, 2002 (unaudited) and 2001
(unaudited)

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Telefónica Celular, S. A.  Index to the Financial Statements  December 31, 2003, 2002 (unaudited) and 2001 (unaudited)

CONTENTS

|                               |                                               | Page (s)
|------------------------------ | --------------------------------------------- | --------
|Report of independent auditors |                                               | 1       
|Financial statements:          |                                               |         
|                               | Balance sheets                                |         
|                               | Statements of profit and loss                 |         
|                               | Statements of changes in shareholders' equity |         
|                               | Statements of cash flows                      |         
|                               | Notes to the financial statements             |         

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REPORT OF INDEPENDENT AUDITORS

To
the Board of Directors and Shareholders
of Telefónica Celular, S. A.

We
have audited the accompanying balance sheet of Telefónica Celular, S. A., (the Company) as of December 31, 2003 and the related statements of profit and loss,
changes in shareholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We
conducted our audit in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Telefónica Celular, S. A., as of
December 31, 2003 and the results of its operations, changes in shareholders' equity and cash flows for the year then ended in accordance with International Financial Reporting Standards as
published by the International Accounting Standards Board.

International
Financial Reporting Standards vary in certain respect from accounting principles generally accepted in the United States of America. Information relating to the nature and
effect of such differences is presented in Note 16 to the financial statements.

June 4,
2004
PricewaterhouseCoopers
Interamérica, S. de R. L.Tegucigalpa, Honduras

Exh 14.5-1

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Telefónica Celular, S. A.  Balance Sheets  As of December 31, 2003 and 2002 (unaudited)

|                                           |                                                                                                        | 2003 |               | 2002         
|------------------------------------------ | ------------------------------------------------------------------------------------------------------ | ---- | ------------- | -------------
|
|
|Assets                                     |                                                                                                        |      |               |              
|Non-current assets:                        |                                                                                                        |      |               |              
|                                           | Intangible assets, net (Note 3)                                                                        |      | L             | 104,464,496  
|                                           | Property, plant and equipment, net (Note 4)                                                            |      |               | 335,030,859  
|                                           |                                                                                                        |      |               |              
|                                           | Total non-current assets                                                                               |      |               | 439,495,355  
|Current assets:                            |                                                                                                        |      |               |              
|                                           | Cash (Note 5)                                                                                          |      |               | 1,279,893,827
|                                           | Accounts receivable, net (Note 6)                                                                      |      |               | 143,351,358  
|                                           | Amounts due from related parties (Note 7)                                                              |      |               | 270,598,674  
|                                           | Inventories (Note 8)                                                                                   |      |               | 34,546,369   
|                                           | Prepaid expenses                                                                                       |      |               | 3,111,956    
|                                           | Other current assets                                                                                   |      |               | 2,347,269    
|                                           |                                                                                                        |      |               |              
|                                           | Total current assets                                                                                   |      |               | 1,733,849,453
|                                           |                                                                                                        |      |               |              
|Total assets                               |                                                                                                        | L    | 2,173,344,808 |              
|                                           |                                                                                                        |      |               |              
|Liabilities and Shareholders' Equity       |                                                                                                        |      |               |              
|Shareholders' equity:                      |                                                                                                        |      |               |              
|                                           | Authorized 20,000,000 common shares of L10 par value each, subscribed and paid 300,000 shares (Note 1) |      | L             | 3,000,000    
|                                           | Additional paid-in capital (Note 1)                                                                    |      |               | 141,610,125  
|                                           | Legal reserve                                                                                          |      |               | 28,922,025   
|                                           | Retained earnings                                                                                      |      |               | 1,644,967,618
|                                           |                                                                                                        |      |               |              
|                                           | Total shareholders' equity                                                                             |      |               | 1,818,499,768
|                                           |                                                                                                        |      |               |              
|Non-current liabilities:                   |                                                                                                        |      |               |              
|                                           | Long-term loans (Note 9)                                                                               |      |               | 44,585,640   
|                                           |                                                                                                        |      |               |              
|Current liabilities:                       |                                                                                                        |      |               |              
|                                           | Short-term loans (Note 9)                                                                              |      |               | 43,234,560   
|                                           | Trade and other payables (Note 10)                                                                     |      |               | 114,206,060  
|                                           | Amounts due to related parties (Note 7)                                                                |      |               | 49,571,369   
|                                           | Income tax payable                                                                                     |      |               | 103,247,411  
|                                           |                                                                                                        |      |               |              
|                                           | Total current liabilities                                                                              |      |               | 310,259,400  
|                                           |                                                                                                        |      |               |              
|Contingencies and commitments (Note 14)    |                                                                                                        |      |               |              
|Total liabilities and shareholders' equity |                                                                                                        | L    | 2,173,344,808 |              
|                                           |                                                                                                        |      |               |              

The
accompanying notes 1 to 16 form an integral part of these financial statements.

Exh 14.5-2

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Telefónica Celular, S. A.  Statements of Profit and Loss  Years ended December 31, 2003, 2002 (unaudited) and 2001 (unaudited)

|                           |                                                                     | 2003 |               | 2002        |   | 2001          |            
|-------------------------- | ------------------------------------------------------------------- | ---- | ------------- | ----------- | - | ------------- | -----------
|
|
|Revenues (Note 12)         |                                                                     | L    | 1,680,730,001 |             | L | 1,610,476,051 |            
|                           |                                                                     |      |               |             |   |               |            
|Cost and expenses:         |                                                                     |      |               |             |   |               |            
|                           | Cost of interconnection and subscription and regulatory supervision |      |               | 243,570,992 |   |               | 220,138,882
|                           | Equipment cost                                                      |      |               | 40,745,434  |   |               | 155,424,556
|                           | Depreciation                                                        |      |               | 181,726,027 |   |               | 198,532,230
|                           | Amortization                                                        |      |               | 21,529,278  |   |               | 16,963,955 
|                           | Personal cost                                                       |      |               | 89,034,216  |   |               | 106,152,732
|                           | Dealer commissions                                                  |      |               | 73,758,232  |   |               | 67,426,709 
|                           | Advertising and promotion                                           |      |               | 56,521,940  |   |               | 37,144,712 
|                           | Fees and services                                                   |      |               | 32,256,745  |   |               | 25,879,691 
|                           | Provision for impairment of accounts receivable                     |      |               | 18,485,850  |   |               | 13,359,464 
|                           | Others                                                              |      |               | 86,533,885  |   |               | 92,547,579 
|                           |                                                                     |      |               |             |   |               |            
|                           |                                                                     |      | 844,162,599   |             |   | 933,570,510   |            
|                           |                                                                     |      |               |             |   |               |            
|                           | Operating profit                                                    |      |               | 836,567,402 |   |               | 676,905,541
|Finance costs (Note 13)    |                                                                     |      | 43,430,954    |             |   | (10,835,328   | )          
|                           |                                                                     |      |               |             |   |               |            
|Profit before taxes        |                                                                     |      | 879,998,356   |             |   | 666,070,213   |            
|Charge for taxes (Note 11) |                                                                     |      | (252,081,966  | )           |   | (166,616,727  | )          
|                           |                                                                     |      |               |             |   |               |            
|Net profit                 |                                                                     | L    | 627,916,390   |             | L | 499,453,486   |            
|                           |                                                                     |      |               |             |   |               |            

The
accompanying notes 1 to 16 form an integral part of these financial statements.

Exh 14.5-3

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Telefónica Celular, S. A.  Statements of Changes in Shareholders' Equity  Years ended December 31, 2003, 2002 (unaudited) and 2001 (unaudited)

|                                            |  | Paid-in
capital |           | Additional
Paid-in
capital |   | Legal
reserve |  | Retained
earnings |            | Total
shareholders'
equity
|------------------------------------------- |  | --------------- | --------- | -------------------------- | - | ------------- |  | ----------------- | ---------- | --------------------------
|
|Balance as of December 31, 2000 (unaudited) |  | L               | 3,000,000 |                            | L | 141,610,125   |  | L                 | 4,311,770  |                           
|Profit for the year                         |  |                 |           |                            |   |               |  |                   |            |                           
|Transfers                                   |  |                 |           |                            |   |               |  |                   | 10,812,415 |                           
|                                            |  |                 |           |                            |   |               |  |                   |            |                           
|Balance as of December 31, 2001 (unaudited) |  | L               | 3,000,000 |                            | L | 141,610,125   |  | L                 | 15,124,185 |                           
|Profit for the year                         |  |                 |           |                            |   |               |  |                   |            |                           
|                                            |  |                 |           |                            |   |               |  |                   |            |                           
|Balance as of December 31, 2002 (unaudited) |  | L               | 3,000,000 |                            | L | 141,610,125   |  | L                 | 15,124,185 |                           
|Profit for the year                         |  |                 |           |                            |   |               |  |                   |            |                           
|Transfers                                   |  |                 |           |                            |   |               |  |                   | 13,797,840 |                           
|                                            |  |                 |           |                            |   |               |  |                   |            |                           
|Balance as of December 31, 2003             |  | L               | 3,000,000 |                            | L | 141,610,125   |  | L                 | 28,922,025 |                           
|                                            |  |                 |           |                            |   |               |  |                   |            |                           

The accompanying notes 1 to 16 form an integral part of these financial statements.

Exh 14.5-4

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Telefónica Celular, S. A.  Statements of Cash Flows  Years ended December 31, 2003, 2002 (unaudited) and 2001 (unaudited)

|                                             |                                                              | 2003 |               | 2002        |   | 2001         |             
|-------------------------------------------- | ------------------------------------------------------------ | ---- | ------------- | ----------- | - | ------------ | ------------
|
|
|Cash flows from operating activities         |                                                              |      |               |             |   |              |             
|Net profit                                   |                                                              | L    | 627,916,390   |             | L | 499,453,486  |             
|Adjustments for:                             |                                                              |      |               |             |   |              |             
|                                             | Depreciation                                                 |      |               | 181,726,027 |   |              | 198,532,230 
|                                             | Amortization                                                 |      |               | 21,529,278  |   |              | 16,963,955  
|                                             | Unrealized exchange (gain) loss                              |      |               | (41,380,026 | ) |              | 6,450,506   
|                                             | Income tax charge                                            |      |               | 252,081,966 |   |              | 166,616,727 
|                                             | Interest income                                              |      |               | (13,751,017 | ) |              | (6,526,021  
|                                             | Interest expense                                             |      |               | 6,620,190   |   |              | 21,670,426  
|Adjustment to reconcile working capital:     |                                                              |      |               |             |   |              |             
|                                             | Increase in accounts receivable from related companies       |      |               |             |   |              | (254,234,635
|                                             | Increase (decrease) in accounts payable to related companies |      |               | 21,511,530  |   |              | (83,050,302 
|                                             | Decrease (increase) in accounts receivable                   |      |               | 36,190,477  |   |              | 2,025,301   
|                                             | Decrease (increase) in inventories                           |      |               | (2,634,227  | ) |              | 24,634,419  
|                                             | Decrease (increase) in prepaid and other current assets      |      |               | 432,775     |   |              | 10,613,699  
|                                             | Increase in trade and other payable                          |      |               | 10,019,385  |   |              | 7,464,925   
|                                             |                                                              |      |               |             |   |              |             
|Cash generated from operations               |                                                              |      | 1,100,262,748 |             |   | 610,614,716  |             
|Interest received                            |                                                              |      | 13,748,752    |             |   | 5,855,630    |             
|Interest paid                                |                                                              |      | (6,639,622    | )           |   | (17,314,803  | )           
|Tax paid                                     |                                                              |      | (224,104,481  |             |   | (187,359,330 | )           
|                                             |                                                              |      |               |             |   |              |             
|Net cash generated from operating activities |                                                              |      | 883,267,397   |             |   | 411,796,213  |             
|                                             |                                                              |      |               |             |   |              |             
|Cash flows from investing activities         |                                                              |      |               |             |   |              |             
|Acquisition of intangible assets             |                                                              |      | (24,342,839   | )           |   | (29,403,115  | )           
|Acquisition of property, plant and equipment |                                                              |      | (43,788,760   | )           |   | (98,570,030  | )           
|                                             |                                                              |      |               |             |   |              |             
|Net cash used in investing activities        |                                                              |      | (68,131,149   | )           |   | (127,973,145 | )           
|                                             |                                                              |      |               |             |   |              |             
|Cash flows from financing activities         |                                                              |      |               |             |   |              |             
|Loans obtained                               |                                                              |      |               |             |   | 100,980,000  |             
|Loans paid                                   |                                                              |      | (15,998,842   | )           |   | (118,984,526 | )           
|                                             |                                                              |      |               |             |   |              |             
|Net cash used in financing activities        |                                                              |      | (15,998,842   | )           |   | (18,004,526  | )           
|                                             |                                                              |      |               |             |   |              |             
|Effects of exchange rate changes             |                                                              |      | 31,602,592    |             |   | 938,115      |             
|                                             |                                                              |      |               |             |   |              |             
|Net increase in cash                         |                                                              |      | 830,739,548   |             |   | 266,756,657  |             
|Cash at beginning of the year                |                                                              |      | 449,154,279   |             |   | 182,397,622  |             
|                                             |                                                              |      |               |             |   |              |             
|Cash at end of the year                      |                                                              | L    | 1,279,893,827 |             | L | 449,154,279  |             
|                                             |                                                              |      |               |             |   |              |             

The
accompanying notes 1 to 16 form an integral part of these financial statements.

Exh 14.5-5

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Telefónica Celular, S. A.  Notes to the Financial Statements  December 31, 2003, 2002 (unaudited) and 2001 (unaudited)

1.     General Information

The Company was incorporated in Honduras through public deed registered under No 48 dated November 3, 1987, under the name of Inversiones
Rocafuerte, S. A., with a capital stock of L25,000. Through public document No 23 dated November 11, 1991, the minimum capital stock was set at L3,000,000 and the maximum at
L10,000,000. Through public deed No 29 dated December 23, 1995, the resolution of the Shareholders' Meeting held October 25, 1995 in which it was agreed to amend the name
of the company to Telefónica Celular, S. A. (CELTEL) for the purpose of exploiting and commercializing all activities related to communications and telecommunications systems,
especially those related to mobile cellular telephone service, was made official. The average number of permanent employees on a proportional basis during 2003 was 264 (295 at December 31,
2002).

The
Company's shares are not traded in a public market and do not have any publicity trade debt. The Company is controlled by foreign companies Millicom Cellular International, S. A.,
Motorola, Inc., and Proempres, S. A.

In
the Shareholder's Meeting held on September 30, 1999, it was agreed that the Company would change from a fixed capital to a variable capital corporation, and the minimum
capital was set at L3,000,000 and the maximum capital at L200,000,000. As of December 31, 2003 and 2002, the minimum capital is completely subscribed and paid, represented by 300,000 common
shares of L10 par value each. This amendment is permitted by the commercial code of Honduras in order to increase or decrease the capital without additional legal formalities.

In
1996 and 1999, the shareholders contributed additional capital in the amount of L141,610,125, which were provided in cash and by the capitalization of accounts payable to the
shareholders.

The
Board of Directors approved these financial statements on February 16, 2004 for issuance.

2.     Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all
the years presented, unless otherwise stated. Amounts presented for 2002 and 2001 are unaudited.



The financial statements of Telefónica Celular, S. A. have been prepared in accordance with International Financial Reporting Standards (IFRS). The
financial statements have been prepared under the historical cost convention.

The
preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on
management's best knowledge of current events and actions, actual results ultimately may differ from those estimates.



The carrying value of licenses for the right to provide mobile cellular, wireless and other telephone services in Honduras is disclosed in Note 3.

Exh 14.5-6

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The
Company operates in a industry that is subject to changes in competition, regulation, technology and subscriber base evolution. In addition, the terms of the licenses, which have
been awarded for
various periods, are subject to periodic review for, amongst other things, rate making, frequency allocation and technical standards. Licenses are initially measured at cost and are amortized using
the straight-line basis over 25 years according with term of the license and the concession contract. Licenses held, subject to certain conditions, are renewable and are generally
non-exclusive. The company does not currently expect to be required to cease due to license reviews and renewals.



The Company capitalizes the cost of software purchased. It includes licenses and installation costs and internal expenses directly associated with the
installations as travel expenses, materials and services. Purchased software is amortized when the software is ready for use on a straight-line basis over 5 years with a periodic
evaluation for impairments as its ultimate use. Subsequent costs are expensed.



Property, plant and equipment is stated at cost and depreciated over the estimated useful life of the asset using the straight-line method. All
repairs and maintenance expenditures are expensed as they occur. Maximum estimated useful lives are:

Networks equipment

5 yearsLease hold improvements

5 yearsOther fixes asset

5 years


The
property, plant and equipment acquired under finance leases are depreciate over the shorter of the useful life of the asset or the lease term.

Network
equipment includes cost directly associated with the establishment of new networks primarily related to engineering and design work for the installation of the network and the
systems integral to its operation.

Property,
plant, and equipment do not include borrowing costs.



Inventories consist of cellular telephone equipment and related accessories, which are classified as trading inventory, and network equipment spares, which are
classified as non-trading inventory. Inventory is stated at the lower of cost and net realizable value, with cost determined on a first-in, first-out basis.



The accounting records of the company are maintained in lempiras, the official currency of Honduras, represented by the symbol "L" in the financial
statements.

As
of December 31, 2003, monetary assets and liabilities denominated in foreign currencies, have been translated using the exchange rates prevailing at year end. The exchange rate
in the interbank market was L17.74 to US$1.00 as of December 31, 2003 (L16.92 to US$1.00 as of December 31, 2002).

Any
gain or loss arising from a variance in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the statements of profit and loss.

Exh 14.5-7

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The Company's revenue sources in the statements of profit and loss comprise the following:



These recurring revenues consist of monthly subscription fees, airtime usage fees, interconnection fees, roaming fees, and short message services. Recurring
revenues are recognized on an accrual basis, i. e. as the related services are rendered. Unbilled revenues for airtime usage and subscriptions fees resulting from services provided from the billing
cycle date to the end of each month are recorded an actual basis.



Connection fees are recognized when charged, i. e. upon initial signing of the contract with customers.



These revenues consist of the sale of handsets and accessories. Revenues from these sales are recognized at the time that the item is delivered to the customers.



Prepaid cards allow the forward purchase of a specified amount of airtime by customers. Revenues are recognized as credit is used. Unutilized airtime is carried
in the balance sheet and is included under deferred revenue within other payables.



The primary cost of sales incurred by the company in relation to the provision of telecommunication services relate to interconnection costs, roaming costs,
frequencies cost, costs of handsets and other accessories sold, and regulators fees. Costs of sales are recorded on an accrual basis.



Specific customers acquisition costs, including handset subsidies and free phone promotions, are charged to sales and marketing expenses when the subscriber is
activated. Advertising costs are charged to expenses when incurred and amount to L80,773,203 for the year ended December 31, 2003 (2002: L81,556,434).



Operating lease rentals are charged to the statements of profit and loss on a straight-line basis over the life of the lease.



Corporate tax is applied at the applicable current rates on taxable profits. There are no temporary differences between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. Consequently, the Company has not recognized any deferred income tax.

Exh 14.5-8

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A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another
enterprise.

Fair
value is defined as the amount at which the instruments could be exchanged in a current transaction between knowledgeable willing parties in an arm's length transaction, other than
in a forced or liquidation sale. The carrying value of the Company's financial instruments approximate their fair value at December 31, 2003 and 2002.



Borrowings are initially recognized at the amount of proceeds received. Borrowings consist primarily of bank loans bearing market rates of interest that vary on a
regular basis. Borrowing costs are expensed as incurred.



Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of trade receivables
is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the
difference between the carrying amount and the recoverable amount, being the present value of expected cash flows, discounted at the market rate of interest for similar borrowers.



The carrying value of other financial instruments such as cash and cash equivalents, accounts receivable and accounts payable including related parties,
approximate their fair value at December 31, 2003 and 2002 due their short-term nature.



The Company's activities expose it to a variety of financial risks including foreign currency exchange rate, interest rate and credit risk. The Company's policy
is not to enter into derivatives instruments, neither for speculative purposes nor to hedge a financial position.



The current assets of the Company exceeds its present current and non-current obligations on an ongoing basis. Based on these evaluations, the Company
devises strategies to manage its liquidity risk.



The Company has no significant interest bearing assets and liabilities.



Financial instruments that potentially subject the company to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. The
counter-parties to the agreements relating to the Company's cash and cash equivalents are significant financial institutions. Management does not believe there is a significant risk of
non-performance by these counter-parties. Accounts receivable are derived from the provision of telecom services to a large number of customers, including businesses and individuals. The
concentration of credit risk related to accounts receivable is therefore limited.

Exh 14.5-9

---



The
Company has a concentration of credit risk for accounts receivable from the local Government telecommunication company and with certain related parties (see Notes 6 and 7). The
company maintains a provision for impairment of trade receivables based upon the expected collectability of all trade accounts receivable.



The Company seeks to reduce its foreign currency exposure through a policy of matching, as far as possible, assets and liabilities denominated in foreign
currencies.



Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use.



Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources
will be required to settle the obligation, and a reliable estimate of the amount can be made. Estimates are based on the best judgments of management at the date of the financial statements.



According to the Code of Commerce, a legal reserve is established by transferring an amount not less than 5% of the company's net profit for the year, until that
reserve represents 20% of the paid in and additional capital.



During 2003 and to the date of approval of these financial statements, the International Accounting Standards Board ("IASB") released 15 revised standards,
including revised IAS 32, IAS 39 and 13 other standards in its "Improvements to International Accounting Standards" publication as well as International Financial Reporting Standard 2 "Share based
payments". The Company is currently assessing the impact of these new and revised standards, which will come into force on January 1, 2005.



Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand
and deposits held at call with banks.

Exh 14.5-10

---



3.     Intangible Assets

Intangible assets at December 31, 2003 and 2002, are as follows:

Licenses
(Note 14)

Software
Purchased

TotalAt December 31, 2003CostBalance as of December 31,2002

L
68,197,604

L
85,760,391

L
153,957,995Additions





24,342,839


24,342,839Balance as of December 31,2003


68,197,604


110,103,230


178,300,834AmotizationBalance as of December 31,2002


25,804,599


26,502,461


52,307,060Additions


2,291,514


19,237,764


21,529,278Balance as of December 31,2003


28,096,113


45,740,225


73,836,338Net book value

L
40,101,491

L
64,363,005

L
104,464,496At December 31, 2002 (Unaudited)CostBalance as of December 31,2001

L
68,197,604

L
56,357,276

L
124,554,880Additions





29,403,115


29,403,115Balance as of December 31,2002


68,197,604


85,760,391


153,957,995AmotizationBalance as of December 31,2001


23,513,085


11,830,020


35,343,105Additions


2,291,514


14,672,441


16,963,955Balance as of December 31,2002


25,804,599


26,502,461


52,307,060Net book value

L
42,393,005

L
59,257,930

L
101,650,935


Exh 14.5-11

---



4.     Property, Plant, and Equipment

Property, plant and equipment as of December 31, 2003 and 2002, are as follows:

Networks
equipment

Land and
leasehold
improvements

Others
fixes asset

Works in
progress

TotalAt December 31, 2003CostBalance as of December 31, 2002

L
931,925,815

L
34,739,158

L
127,819,504

L
3,613,209

L
1,098,097,686Additions


11,302,289


1,974,377


6,706,041


23,806,053


43,788,760Disposals








(1,015,261
)




(1,015,261
)Transfer


9,996,932








(9,996,932
)Balance as of December 31, 2003


953,225,036


36,713,535


133,510,284


17,422,330


1,140,871,185Accumulated depreciationBalance as of December 31, 2002


522,651,247


18,893,613


83,584,700





625,129,560Additions


154,369,214


6,115,946


21,240,867





181,726,027Disposals








(1,015,261
)




(1,015,261
)Balance as of December 31, 2003


677,020,461


25,009,559


103,810,306


.


805,840,326Net book value

L
276,204,575

L
11,703,976

L
29,699,978

L
17,422,330

L
335,030,859At December 31, 2002 (Unaudited)CostBalance as of December 31, 2001

L
849,890,376

L
33,679,131

L
111,785,714

L
11,164,485

L
1,006,519,706Additions


11,752,269


1,060,027


18,927,906


66,829,828


98,570,030Disposals


(4,097,934
)




(2,894,116
)




(6,992,050
)Transfer


74,381,104








(74,381,104
)Balance as of December 31, 2002


931,925,815


34,739,158


127,819,504


3,613,209


1,098,097,686Accumulated depreciationBalance as of December 31, 2001


365,206,289


11,610,845


56,772,246





433,589,380Additions


162,144,692


7,282,768


29,104,770





198,532,230Disposals


(4,097,934
)




(2,894,116
)




(6,992,050
)Balance as of December 31,2002


523,253,047


18,893,613


82,982,900





625,129,560Net book value

L
408,702,768

L
15,845,545

L
44,836,604

L
3,613,209

L
472,968,126


The
Company performs its commercial activities in leased buildings. (Note 14).

Exh 14.5-12

---



5.     Cash

A detail of cash is presented are as follows:

2003

2002UnauditedLocal currency:Cash in banks

L
53,561,349

L
48,104,113Foreign currency:Local bankscash


29,288,678


36,829,237Foreign bankscash


1,197,043,800


364,220,9291,226,332,478


401,050,166L
1,279,893,827

L
449,154,279


The
cash in foreign bank includes L753,060,000 (US$42,000,000) correspond to cash reserves to cover short-term dividend payments (Note 15). These funds are deposited
in the Banque Invik, a related party.

6.     Accounts Receivable

The accounts receivable as of December 31, 2003 and 2002 are shown as follows:

2003

2002UnauditedCustomers

L
57,934,375

L
113,258,100Empresa Hondureña de Telecomunicaciones (HONDUTEL)


96,913,030


80,443,213Officers and employees


76,063


42,948Dealers


7,630,605


7,999,830Other


5,865,950


448,217168,420,023


202,192,308Lessprovision for impairment of accounts receivable


(25,068,665
)

(25,168,714
)L
143,351,358

L
177,023,594


Accounts
receivable from customers are invoiced in dollars and normally collected at an equivalent amount in lempiras.

The
movement in the provision for impairment of accounts receivable at December 31, 2003 and 2002 are detailed as follows:

2003

2002UnauditedOpening balance

L
25,168,714

L
24,508,336Impairment charge


18,485,850


13,359,464Exchange rate movement


1,160,004


1,524,726Write offs


(19,745,903
)

(14,223,812
)Closing year

L
25,068,665

L
25,168,714


Exh 14.5-13

---



7.     Related Party Transactions

The Company considers related parties to be its shareholders, directors and companies with which it has shareholders in common and complementary transactions.
Balances with related parties as of December 31, 2003 and December 31, 2002 are as follows:

2003

2002UnauditedAccounts receivable:Millicom International Cellular, S. A.

L
161,510,405
(a)
L
153,429,100Motorola, Inc.


26,622,300
(a)

25,384,950Proempres, S. A.


79,918,085
(a)

76,203,645Telemóvil (El Salvador)


1,634,321


1,486,743COMCEL (Guatemala)


913,563


1,188,146L
270,598,674

L
257,692,584Accounts payable:Motorola, Inc.

L
48,571,286

L
25,384,950Telemóvil (El Salvador)


723,014


1,486,743COMCEL (Guatemala)


277,069


1,188,146L
49,571,369
(b)
L
28,059,839


---

The
principal transactions with related parties, for the years ended December 31, 2003 and 2002, are as follows:

2003

2002

2001Unaudited

UnauditedPurchase of network equipment

L
54,891,809

L
55,431,295

L
136,355,938Charges for services received

L
15,803,211

L
11,442,040

L
111,110,141


Exh 14.5-14

---



8.     Inventories

Inventories at December 31, 2003 and 2002 are as follows:

2003

2002UnauditedTrading inventories

L
10,808,221

L
13,095,770Non trading inventories


23,738,148


18,816,372Total inventories

L
34,546,369

L
31,912,142


9.     Borrowings

Borrowings comprise:



2003

2002UnauditedBanco Atlántida, S. A. at 6.375%

L
60,798,600

L
73,432,102Lessportion payable within one year


16,212,960


15,459,390Long-term

L
44,585,640

L
57,972,712


Payable
in U. S. dollars in 20 quarterly installments of US$225,000 each, and final due date on August 27, 2007.



2003

2002UnauditedBanco Financiera Centroamericana, S. A., at 6%

L
27,021,600
(a)
L
25,765,650Portion of long-term loans payable within one year


16,212,960


15,459,390L
43,234,560

L
41,225,040






December 312005

L16,212,9602006

16,212,9602007

12,159,720L44,585,640




Exh 14.5-15

---





10.   Trade and Other Payables

Trade and other payables at December 31, 2003 and 2002 are as follows:

2003

2002UnauditedComisión Nacional de Telecomunicaciones (CONATEL)

L
17,316,967

L
26,216,274Empresa Hondureña de Telecomunicaciones (HONDUTEL)


13,407,647


11,431,653Deferred revenue (Pre-paid cards)


12,889,516


7,725,822Trade


15,974,223


8,831,993Sales tax


13,011,744


10,081,751Interest payable


429,011


448,443Ericsson Telecom, S. A.





2,118,234Subscriber deposits


11,504,904


9,868,522Accrued expenses


18,352,746


15,887,251Other accounts payable


11,319,302


10,572,822L
114,206,060

L
103,182,765


At
December 31, 2003, accounts payable include balances payable in U.S. dollars for L29,302,193 (equivalent to US$1,626,598) (L70,061,457 equivalent to US$4,078,771 in 2002).

11.   Taxes

Income tax at December 31, 2003 and 2002 and 2001 was calculated as follows:

2003

2002

2001Unaudited

UnauditedProfit before tax

L
879,998,356

L
666,070,213

L
478,472,781Tax calculated at a tax rate of 25%


219,999,589


166,517,553


119,618,195Expenses not deductible for tax purposes


(11,911,314
)

(144,142
)

1,808,508Temporary contribution to Government


43,949,918
(a)Tax on capital gains


43,773


243,316Credit for generation of new employment








(240,931
)Tax charge

L
252,081,966

L
166,616,727

L
121,185,772


---

12.   Revenues

Revenues are summarized as follows for the year ended December 31:

2003

2002

2001Unaudited

UnauditedProvision of telecom services

L
1,603,349,388

L
1,422,429,695

L
1,177,600,078Equipment revenues


46,759,400


157,898,942


191,725,742Connections and reconnections revenues


18,007,942


15,179,095


1,071,933Other revenues


12,613,271


14,968,319


34,998,494L
1,680,730,001

L
1,610,476,051

L
1,405,396,247


Exh 14.5-16

---



13.   Finance Cost

Finance cost are summarized as follows for the year ended December 31:

2003

2002

2001Unaudited

UnauditedInterest income

L
13,751,017

L
6,526,021

L
2,232,940Interest expense


(6,620,190
)

(21,670,426
)

(35,212,824
)Foreign exchange gains, net


36,300,127


4,309,077


(1,159,685
)L
43,430,954

L
(10,835,328
)
L
(34,139,569
)


14.   Contingencies and Commitments









Exh 14.5-17

---







2003

2002Non later than 1 year

L
13,307,211

L
745,328Later than 1 year and not later than 5 years


77,352,958


76,103,003Later than 5 years


314,143,200


315,509,040L
404,803,369

L
392,357,371


15.   Subsequent Events



On January 20, 2004, the Company signed a contract with Ericsson AB and Ericsson de Honduras, S. A. for the implementation of a cellular telephony GSM
network. This contract amounts to US$9,753,678,
broken down into software with a value of US$4,008,406 and equipment and civil works for US$5,745,272.



At the Annual General Meeting on January 16, 2004 dividends of L1,633,180,223 (US$91,886,947) were approved. These dividends were paid in cash and
compensating the accounts receivable from related parties (Note 7) and they are exempt of taxes according to the Honduran current fiscal laws.

16.   Reconciliation to US GAAP

The financial statements of the Company have been prepared in accordance with IFRS. If the financial statements had been prepared under accounting principles
generally accepted in the United States of America ("US GAAP") the following principal differences would arise:

Under
IFRS, the Company recognizes revenues for initial connection and reconnection fees when the customer is connected and able to use the service.

Exh 14.5-18

---



Under
US GAAP, the Company applies the guidance in Staff Accounting Bulletin No. 101 (SAB 101),Revenue recognition in Financial
Statements, and Staff Accounting Bulletin No. 104 (SAB 104),Revenue recognition. Under this guidance, the Company
evaluates each element of a customer arrangement to determine the appropriate period for recognition of revenues. Revenues on connection and reconnection fees are deferred and recognized as revenues
on a pro rata basis over the estimated life of the customer relationship. In 2003 management changed its estimate of the life of such relationship from 1 to 2 years and applied this change
prospectively. The effect on net income of this change in 2003 is a loss of L(563,000).

The
above item gives rise to the following difference in net profit and shareholder's equity recorded under U.S. GAAP (amounts in thousands of Lempiras):



2003

2002

2001Unaudited

UnauditedNet profit for the year reported under IFRS

L
627,916

L
499,453

L
357,287Items (decreasing) increasing reported profit:Recognition of connection fees


(281
)

(838
)

660Net profit under US GAAP

L
627,635

L
498,615

L
357,947




2003

2002UnauditedShareholders' equity under IFRS

L
1,818,500

L
1,190,583Items (decreasing) increasing reported equity:Recognition of connection fees


(459
)

(178
)Shareholders' equity under US GAAP

L
1,818,041

L
1,190,405


Exh 14.5-19

---



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