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UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________ 

FORM 20-F 

(Mark One) 

> 
[   ]      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES  EXCHANGE ACT OF 1934 OR  [X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31,  2003 OR   [   ]     TRANSITION REPORT PURSUANT TO SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period  from to 

Commission file number 0-29738 

TELESYSTEM INTERNATIONAL WIRELESS INC./ TÉLÉSYSTÈME MOBILES INTERNATIONAL INC. *(Exact name of Registrant as specified in its charter)
(Translation of Registrant's name into English)***CANADA*(Jurisdiction of incorporation or organization)***1250 René-Lévesque Blvd. West, 38th Floor, Montreal, Québec,Canada, H3B 4W8 *(Address of principal executive offices)*
Securities registered or to be registered pursuant to Section12(b) of the Act. 
Title of each className of each      exchange on which registered         NoneNone
 

Securities registered or to be registered pursuant to Section12(g) of the Act. 
**Common Shares without par value (Title of Class) 

Securities for which there is a reporting obligation pursuant to Section15(d) of the Act. 
**Series B 13 1⁄4% Senior Discount Notes due 2007(Title of Class) 

Indicate the number of outstanding shares of each of the issuer's classes ofcapital or common stock as of the close of the period covered by the annualreport. 
**98,035,187 Common Shares without par value 35,000,000 series 1 Preferred Shares without par value**
Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. 

[X] Yes          [ ] No 

Indicate by check mark which financial statement item theregistrant has elected to follow. 

[ ] Item 17        [X] Item 18 

**TABLE OF CONTENTS  
ITEM 1 - IDENTITY OF DIRECTORS, SENIOR    MANAGEMENT AND ADVISERS5ITEM 2 - OFFER STATISTICS AND EXPECTED    TIMETABLE5ITEM 3 - KEY INFORMATION6ITEM 4 - INFORMATION ON THE COMPANY18ITEM 5 - OPERATING AND FINANCIAL REVIEW AND    PROSPECTS40ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND    EMPLOYEES41ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY    TRANSACTIONS54ITEM 8 - FINANCIAL INFORMATION55ITEM 9 - THE OFFER AND LISTING56ITEM 10 - ADDITIONAL INFORMATION58ITEM 11 - QUANTITATIVE AND QUALITATIVE    DISCLOSURES ABOUT MARKET RISK64ITEM 12 - DESCRIPTION OF SECURITIES OTHER    THAN EQUITY SECURITIES66ITEM 13 - DEFAULTS, DIVIDENDS ARREARAGES AND    DELINQUENCIES67ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF    SECURITY HOLDERS AND USE OF PROCEEDS
67ITEM 15 - CONTROLS AND PROCEDURES68ITEM 16A - AUDIT COMMITTEE FINANCIAL EXPERT69ITEM 16B - CODE OF ETHICS69ITEM 16C - PRINCIPAL ACCOUNTANT FEES AND    SERVICES69ITEM 16D - EXEMPTIONS FROM LISTING STANDARDS    FOR AUDIT COMMITTEES69ITEM 16E - PURCHASES OF EQUITY SECURITIES BY    THE ISSUER AND AFFILIATED PURCHASERS69ITEM 17 - FINANCIAL STATEMENTS70ITEM 18 - FINANCIAL STATEMENTS71ITEM 19 - EXHIBITS72 
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**EXPLANATORY NOTES**
    References herein to the "Company", the"Corporation", "we", "us", "our" or "TIW" are references to TelesystemInternational Wireless Inc., a Canadian corporation, and, where the contextrequires, its subsidiaries and operating companies. Unless otherwise indicated,all dollar amounts in this document are expressed in U.S. dollars. The word"dollar" and the symbols "$" or "U.S.$" refer to the U.S. dollar, the symbol "Cdn$"refers to the Canadian dollar, references to "Euro" or "€" refer to the lawfulsingle currency of the European Monetary Union, references to "Leu" and theplural "Lei" refer to the lawful currency of Romania and references to "Koruna"or "Kc" refer to the lawful currency of the Czech Republic. Unless otherwiseindicated, references to CEE are references to the region of Central and EasternEurope including the following countries: Bosnia and Herzegovina, Bulgaria,Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia and Montenegro,the Slovak Republic and Slovenia. Unless otherwise indicated, references to EUare references to the group of countries that were members of the European Unionon December 31, 2003. 

    For reporting purposes, we prepare ourfinancial statements in U.S. dollars and in conformity with Canadian generallyaccepted accounting principles, or Canadian GAAP, which may differ from UnitedStates generally accepted accounting principles, or U.S. GAAP. For a discussionof the principal differences between Canadian GAAP and U.S. GAAP and areconciliation of Canadian GAAP to U.S. GAAP, see note 17 to our ConsolidatedFinancial Statements. 

    Market data and certain industry forecastsused throughout this document and the documents incorporated by reference hereinwere obtained from market research, publicly available information and industrypublications. Industry publications generally state that the informationcontained therein has been obtained from sources believed to be reliable, butthat the accuracy and completeness of such information is not guaranteed.Similarly, industry forecasts and market research, while believed to bereliable, have not been independently verified, and we do not make anyrepresentation as to the accuracy of the information. 

    Unless otherwise indicated, all operating data presentedherein is as of December 31, 2003. 
**EXCHANGE RATE INFORMATION**
    The following table sets forth theexchange rates for one U.S. dollar in effect at the end of the years noted andthe average of the exchange rates on the last day of each month during suchyears. The exchange rates expressed in Canadian dollars and Euro are based onthe noon buying rate as reported by the Federal Reserve Bank of New York; theexchange rates expressed in Leu are based on the daily fixing rate as reportedby the National Bank of Romania; and the exchange rates expressed in CzechKoruna are based on the daily fixing rate as reported by the Czech NationalBank. As of May 10, 2004, such exchange rates were Cdn$ 1.3934 = $1.00; € 0.8450= $1.00; Lei 34,182 = $1.00; Koruna 27.195 = $1.00. 
 **Q1 - 2004 **2003 **2002 **2001**2000**1999 **End****Average****End****Average****End****Average****End****Average****End****Average****End****Average**             Canadian Dollar...1.31001.32571.29231.40131.58001.57041.59251.54871.49951.48551.44401.4858Euro0.81350.80680.79380.88380.95371.05781.12351.11711.06521.08320.99300.9387Leu33,44032,81732,59533,20033,50033,05531,59729,06125,92621,69318,25515,333Koruna26.85926.62325.65428.22730.14132.73636.25938.03837.81338.59035.97934.600 
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**FORWARD-LOOKING STATEMENTS**
    This document and the documentsincorporated herein by reference contain certain forward-looking statementsconcerning our future operations, economic performances, financial conditionsand financing plans, including such things as business strategy and measures toimplement strategy, competitive strengths, goals, expansion and growth of thewireless telecommunications industry and our business and operations andreferences to future success. Forward-looking statements may be identified byuse of forward-looking terminology such as "believe", "intend", "may", "will","should", "expect", "estimate", "anticipate", "continue", or similar terms,variations of those terms or the negative of those terms. These statements arebased on certain assumptions and analyses made by us in light of our experienceand our perception of historical trends, current conditions and expected futuredevelopments as well as other factors we believe are appropriate in thecircumstances. However, whether actual results and developments will conformwith our expectations and predictions is subject to a number of risks anduncertainties, including, among other things, the risk factors discussed herein.Consequently, all of the forward-looking statements made in this document andthe documents incorporated herein by reference are qualified by these cautionarystatements, and there can be no assurance that the results or developmentsanticipated by us will be realized or, even if substantially realized, that theywill have the expected consequences to or effects on us and our subsidiaries ortheir businesses or operations. We undertake no obligation and do not intend toupdate or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as may be required underapplicable law. For all of these forward-looking statements, we claim theprotection of the safe harbour for forward-looking statements contained in theU.S. Private Securities Litigation Reform Act of 1995. 

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**PART I 

ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 

Not applicable. 
**ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE 

Not applicable. 

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**ITEM 3 - KEY INFORMATION
**SELECTED CONSOLIDATED FINANCIAL INFORMATION**
    The following table sets forth certainconsolidated financial information derived from TIW's Consolidated FinancialStatements for the fiscal years ended December 31, 2003, 2002, 2001, 2000 and1999, which have been audited by Ernst & Young LLP. The information set forthbelow should be read in conjunction with the Operating and Financial Review andProspects and TIW's Consolidated Financial Statements, and the notes theretoincorporated by reference in this Form 20-F. TIW's Consolidated FinancialStatements have been prepared in accordance with Canadian GAAP. For a discussionof the principal differences between Canadian GAAP and U.S. GAAP and areconciliation of TIW's consolidated financial statements to U.S. GAAP, see note17 to TIW's Consolidated Financial Statements. 
 **Year Ended December 31,** **2003****2002****2001****2000****1999** **(in thousands of US$, except per share data)**Statement of Income (Loss) Data:**     Revenues967,085694,454526,225354,052251,825Operating income (loss)169,87887,586(441)(85,022)(38,517)Income (loss) from continuing       operations20,69661,959162,389(19,672)(74,641)Net income (loss)(1)11,885(127,174)(253,714)(355,356)(154,802)Basic earnings (loss) per share from       continuing operations0.210.6638.59(14.13)(27.17)Diluted earnings (loss) per share from       continuing operations0.200.6620.21(14.13)(27.17)Basic earnings (loss) per share0.12(1.42)(81.39)(121.89)(54.50)Diluted earnings (loss) per share0.11(1.42)(31.31)(121.89)(54.50)Income (loss) from continuing operations       (U.S. GAAP)61,687344,74354,183(41,770)(84,376)Net income (loss) (U.S. GAAP)(1)52,876113,627(319,937)(377,454)(164,537)Basic earnings (loss) per share from       continuing operations (U.S. GAAP)0.613.8015.60(13.42)(28.77)Diluted earnings (loss) per share from       continuing operations (U.S. GAAP)0.603.8010.45(13.42)(28.77)Basic earnings (loss) per share (U.S.       GAAP)0.521.26(92.30)(121.29)(56.10)Diluted earnings (loss) per share (U.S.       GAAP)0.511.26(35.96)(121.29)(56.10)
 
 **As at December 31,** **2003****2002****2001****2000****1999** **(in thousands    of US$ except share data)****Balance Sheet Data:**     Total Assets1,667,5311,441,6281,906,6663,294,1652,486,892Share Capital and additional Paid-In       Capital1,327,5741,301,470696,954684,639528,151Shareholders' Equity91,77351,537169,05776,38947,431Total Assets (U.S. GAAP)1,663,3791,435,6211,431,4882,665,6201,861,191Share Capital and additional Paid-In       Capital (U.S. GAAP)1,162,2711,136,167775,609763,294606,806Shareholders' Equity/(Deficiency)       U.S. GAAP85,1551,771(570,986)(314,210)(41,826)Common Shares Issued and     Outstanding (2)105,035,187100,434,3703,265,4323,156,1162,933,697-  Includes net loss from discontinued operations for the yearsended December 31, 2003, 2002, 2001, 2000 and 1999 of $8.8 million, $189.1million, $416.1 million, $335.7 million and $80.2 million, respectively underCanadian GAAP, and $8.8 million, $231.1 million, $374.1 million, $335.7 millionand $80.2 million, respectively, under U.S. GAAP.  
-  Adjusted to reflect the February 5, 2002 conversion of allmultiple voting shares issued and outstanding into common shares on a one forone basis, the May 17, 2002 redesignation of all subordinate voting shares ascommon shares, the March 25, 2004, conversion of all issued and outstandingpreferred shares into common shares on a five preferred for one common sharebasis and the June 23, 2003 and June 22, 2001 consolidations of the company'scommon shares, each on the basis of one post-consolidated for fivepre-consolidated shares.  

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**CAPITALIZATION AND INDEBTEDNESS 

Not applicable. 
**REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable. 
**RISK FACTORS 

We have substantial consolidated indebtedness, and we will require asignificant amount of cash to service our indebtedness.**
    As of March 31, 2004, our totalconsolidated indebtedness was $1.1 billion, of which $1.5 million was debt ofTIW, $220.2 million of MobiFon Holdings, $292.5 million of MobiFon and $565.3million of Český Mobil. MobiFon's and Český Mobil's total debt position inaccordance with U.S. GAAP, including long term unrealized losses associated withderivative financial instrument positions was $296.4 million and $594.4 million,respectively. 

    The level and the terms of our indebtedness could haveimportant consequences, including that: 
- the debt service requirements may become so high that we have difficulty  making debt service payments on our outstanding indebtedness or satisfying our  obligations with respect to such indebtedness;    
- our ability to pay dividends will be reduced, assuming we are otherwise  permitted to pay dividends under the restrictive covenants contained in our  debt instruments;    
- our ability to obtain additional debt financing may be limited;    
-  our ability to pay interest on our debt and finance our  activities may be limited by cash sweep provisions requiring us to repay the  principal outstanding on our indebtedness from cash raised from financing  activities, asset sales and certain distributions from our affiliates; and  our flexibility in reacting to changes in our business and market  conditions may be reduced. 

Any failure to pay such indebtedness or other liabilities when due could  have a material adverse effect on us. 

    To date, assets of our operating companieshave secured certain of the debt financing obtained by the operating companies,and it is likely that any debt financing our operating companies obtain in theforeseeable future will also be secured. The pledge of assets to secure debtfinancing may make it substantially more difficult to obtain additionalfinancing from other sources. 
**Despite current indebtedness levels, we may still be able to incursubstantially more debt. This could further exacerbate the risks associated withour substantial leverage.**
    We may be able to incur substantialadditional indebtedness in the future. At the corporate level, we are notcontractually limited or prohibited from incurring indebtedness. Under the termsof their current debt instruments, our subsidiaries and operating companies arenot fully prohibited from incurring additional indebtedness. As of March 31,2004, our operating companies were entitled to draw additional borrowings of$25.6 million under their working capital facilities. If new debt is added toour current debt levels, the related risks that we now face could intensify. 
**We may not be able to obtain the additional financing necessary to fund theoperation of our business, which could require that we delay or modify ourbusiness plans.**
    The business of our operations iscapital-intensive. Our operating companies expect to have significant futurecapital requirements, particularly in relation to the expansion of theirwireless operations, the acquisition of licences and the servicing of theirdebt. Our operating companies intend to finance such future capital requirementsfrom cash flow from operating activities, borrowing under existing creditfacilities, funding from shareholders' contributions and through otherexternally generated funds such as disposition of assets, the sale of debt andequity securities, vendor financing and project financing from commercial banks

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and international financial agencies. The ability to generatesufficient short-term and long-term capital in the future is dependent upon manyfactors, including general economic conditions in the countries where we conductour principal operations, financial market conditions, our and such operatingcompanies' financial and operating performance and prospects and marketperceptions thereof. There can be no assurance that our operating companies willbe able to obtain the financing required to meet debt service requirements, makeplanned capital expenditures, provide working capital or meet other cash needs.Failure to obtain required financing could have a material adverse effect on usand, among other things, could result in the loss or revocation of licenses heldby the operating companies or require that certain planned projects be delayedor abandoned. 
**The terms of our indebtedness require us to meet various covenants and limitour ability to engage in various transactions, which may adversely affect us.**
    Certain of our subsidiaries and operatingcompanies are required to maintain financial ratios and satisfy financialcondition tests pursuant to the terms of their indebtedness. These restrictionscould limit our ability to plan for or react to market conditions or meetextraordinary capital needs or otherwise restrict corporate activities. Inaddition, such indebtedness contains a number of provisions that limit theirability to: 
- incur additional indebtedness;    
- pay dividends or distributions on or repurchase their capital stock;    
- repay intercompany debt;    
- issue preferred stock of subsidiaries;    
- make certain investments;    
- create liens to secure debt;    
- enter into transactions with affiliates;    
- merge or consolidate with another company; and    
- transfer and sell assets. 

    We may not be able to comply with thesecovenants in the future, and we may not be able to obtain waivers if we breach acovenant in the future. A breach under any of the covenants in our debtinstruments may result in a default or a cross-default under other debtinstruments, which may cause our debts to become immediately due at a time whenwe are unable to pay them. 

    In addition, our operating companies haveuncommitted working capital facilities that the lenders may terminate at anytime, and the lenders may refuse any request to draw on these facilities. Ifthese facilities are terminated by the lenders or repayment of outstandingbalances is demanded, we may need to obtain additional short-term financing tomeet our cash flow needs. Insufficient working capital could result in our beingunable to finance the day-to-day operations of our business, which could reduceour revenues and adversely affect the quality of our services. 
**We have a history of operating losses and may lose money in the future.**
    We have sustained significant losses sinceinception. As of March 31, 2004, we had an accumulated deficit of $1.2 billion.Although we generated income from continuing operations before non-controllinginterest and income taxes of $102.7 million and $67.3 million in 2003 and 2002,respectively, these results include non-recurring gains on investments andfinancing activities of $19.4 million and $81.6 million, respectively. Our netincome was $11.9 million versus net losses of $127.2 million and $253.7 millionfor the years ended December 31, 2003, 2002 and 2001. While we have achievedoperating profitability in 2002 and 2003 with respect to our continuingoperations, there can be no assurance that we will be able to sustain or improveoperating profitability in the future. Failure to sustain or improve operatingprofitability would adversely affect our ability to service our indebtedness.

    With the exception of the last three quarters of 2003 andthe first quarter of 2004, our subsidiary Český Mobil has generated substantialoperating losses since inception and may continue to generate operating lossesin the future. In addition, while Český 

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Mobil currently generates positive cash flow from operations,it has generated negative cash flow from operations in the past and continues togenerate net losses. There can be no assurance that our operations can improvetheir profitability or that they will generate net earnings and enough positivecash flow in the future. The growth of these operations will depend on a numberof significant financial, logistical, technical, marketing, legal, competitive,economic and other factors, the outcome of which cannot be predicted. 
**Our holding company structure may make it difficult to access cash flow fromour operating companies.**
    We are a holding company with no materialsources of income or assets of our own other than the equity interests that weown in our subsidiaries and operating companies. We conduct substantially all ofour operations through our indirectly held operating companies, MobiFon and ČeskýMobil. Our cash flow depends upon the ability of our subsidiaries to paydividends or otherwise make distributions to us. Our subsidiaries and operatingcompanies are separate and distinct legal entities and, except for intercompanyloans owed to us, will have no obligation, contingent or otherwise, to pay anydividends or make any other distributions to us. Any right we may have toreceive assets of our subsidiaries or operating companies upon their liquidationor reorganization will be structurally subordinated to the prior claims of suchsubsidiaries' and operating companies' respective creditors, including, withoutlimitation, tax authorities, trade creditors and lenders. 

    We may be unable to access the cash flow, if any, of ouroperating companies because: 
- we may not have the necessary control, by ourselves, to cause such  entities to pay dividends to their equity holders;    
-  certain of such entities are currently or may become  parties to credit or other borrowing agreements that restrict or prohibit the  payment of dividends and distributions, and such entities are likely to  continue to be subject to such restrictions and prohibitions for the  foreseeable future; and  it can be expected that Český Mobil will generally reinvest  all of its free cash flow after debt servicing in its business for the  foreseeable future and that MobiFon may reinvest part of its free cash flow  after debt servicing in its business for the foreseeable future. **Our quarterly revenues and operating results are volatile.**
    Our quarterly revenues and operatingresults are volatile and difficult to predict. It is possible that our futurequarterly operating results will be below the expectations of public marketanalysts or investors. Our quarterly operating results have varied in the pastand are likely to vary significantly from quarter to quarter in the future. As aresult, we believe that period-to-period comparisons of our results ofoperations may not be a good indication of our future performance. Our quarterlyresults may fluctuate as a result of a variety of factors, including: 
- the size of our subscriber base;    
- changes in pricing by us or our competitors;    
- increased competition;    
- the nature and effectiveness of investments made by us;    
- growth or cancellations of service contracts;    
- developments relating to our existing licenses and frequency allocations  or the issuance of new licenses or frequency allocations; and    
- general economic conditions. 
**Our revenues are unpredictable, and our revenue sources are short-term innature.**
    Future revenues from our prepaid and postpaid subscribers,our two primary sources of revenue, are unpredictable. We do not require ourprepaid subscribers and many of our postpaid subscribers to enter into servicecontracts and cannot be certain that they 

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will continue to use our services in the future. Although werequire many of our postpaid subscribers to enter into service contracts, manyof our service contracts can be cancelled by the subscriber with limited advancenotice and without significant penalty. Because we incur costs based on ourexpectations of future revenues, our failure to accurately predict revenuescould have an adverse effect on our results of operations or financialcondition. 
**Any development or growth on our part could increase our indebtedness and ourexpenses.**
    We have grown rapidly since our inceptionin 1992. As part of our development strategy, we consider development andacquisition opportunities in the wireless telecommunications industry on anongoing basis and at any time may be engaged in various stages of discussionsregarding such opportunities or the increase of our equity participation in ourexisting operations. Such growth strategy presents the risks inherent inidentifying and assessing the value, strengths and weaknesses of development andacquisition opportunities, in evaluating the costs and uncertain returns ofbuilding and expanding our networks and to integrating and managing theoperations of additional networks. Our growth strategy will place significantdemands on our operational, financial and marketing resources and will result inour subsidiaries, operating companies, and us incurring substantial additionalindebtedness. In addition to the risks associated with increased leverage, therecan be no assurance that: 
-  we will be able to correctly identify appropriate  investment opportunities, successfully complete any acquisitions or deploy or  improve our networks following the acquisition of new licenses, such as any  UMTS (or universal mobile telecommunications system) licenses, or successfully  manage any businesses we may acquire; or  we will not incur significant unanticipated expenses. 
**We may not be able to sell or transfer our ownership interests in ouroperating companies on commercially acceptable terms.**
    Our ability to sell or transfer our ownership interests inour operating companies is generally subject to: 
-  contractual rights in favor of our co-shareholders  including, in certain cases, co-sale rights, tag-along rights, or rights of  first refusal (see "- Arrangements among shareholders of MobiFon and TIW Czech  could make it harder for us to engage in transactions that could benefit our  shareholders");  provisions in local operating licenses and local governmental regulations  that, in certain cases, may restrict or prohibit the transfer of our ownership  interests in such operating companies; and 
 
change of control provisions in our operating companies' senior credit  facilities may restrict or prohibit the transfer of our ownership interests in  such operating companies. 

    Moreover, we have been required, alongwith our partners, to pledge our equity interests in MobiFon and Český Mobil tosecure credit facilities obtained by those operating companies, and we may beprohibited from or restricted in transferring or otherwise disposing of suchequity interests so long as they are pledged as collateral for those creditfacilities. In addition, our operating companies currently have no publiclytraded securities, and there can be no assurance that there will in the futurebe either a public or private market for the securities of our operatingcompanies. As a result, our ability to liquidate any or all of our investmentsmay be substantially limited. 

    Even if any sales are completed, the prices realized onthose sales could be less than our investment, and there may be substantiallocal taxes, currency exchange controls or other restrictions on repatriation ofmonies imposed on us in the case of any such sales. 
**Arrangements among shareholders of MobiFon and TIW Czech could make it harderfor us to engage in transactions that could benefit our shareholders.**
    Under MobiFon's contract of association,which forms part of its constitutive documents, rights of first refusal ontransfers of shares in MobiFon apply to direct sales of MobiFon shares. Theserights of first refusal also apply to indirect sales of shares of MobiFon, suchas a sale of shares of MobiFon Holdings and of ClearWave, in the event that theshares of MobiFon held by these companies represent more than 25% of the fairmarket value of these companies' assets. These indirect rights of first refusalentitle shareholders of MobiFon to purchase a proportionate number of shares ofMobiFon held by us upon a sale of equity shares of certain of our subsidiariesat comparable value. ClearWave obtained from Vodafone Europe B.V., or Vodafone,a holder of more than 20% 

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of the outstanding shares of MobiFon, a conditional waiver ofits right of first refusal in the case of certain transactions affecting theequity shares of ClearWave. In consideration of the waiver, we agreed withVodafone that, among other things, Vodafone will have the right, in the event ofa change of voting control of ClearWave, to purchase from us that number ofshares in MobiFon necessary to increase Vodafone's equity interest in MobiFon to50.1%. 

    Therefore, the sale of equity shares of MobiFon Holdingsor ClearWave by us may require us, under MobiFon's contract of association aswell as Vodafone's waiver agreement, to sell our shares in MobiFon to minorityshareholders in MobiFon. 

    We and our co-shareholders in TIW Czechhave entered into certain shareholders arrangements pursuant to whichshareholders were granted rights of first refusal and tag-along rights on salesof shares in TIW Czech and, in certain circumstances, tag-along rights to selltheir shares in TIW Czech following a sale of our shares in ClearWave. We alsohave entered into similar arrangements with certain shareholders in MobiFonunder which these shareholders were granted tag-along rights to sell theirshares in MobiFon following a sale of our shares in ClearWave. 

Theses rights of first refusal and tag-along rights may impede our ability todispose of our interests in MobiFon, TIW Czech or ClearWave on commerciallyacceptable terms. 
**We may be required to dispose of our shares of TIW Czech if an offer is madeupon terms more favorable than those pursuant to which we are prepared toacquire the shares of our co-shareholders.

    Under the terms of the unanimousshareholder's agreement for TIW Czech, the shareholders of TIW Czechcontemplated a potential initial public offering, possibly with a secondaryportion, of either TIW Czech or ClearWave to take place prior to December 3,2004 as a liquidity event. We currently expect that it is unlikely any suchoffering will be achieved by that date. In the event the shareholders of TIWCzech have not otherwise achieved liquidity through the exercise of theirtag-along rights or the exercise by us of our drag-along rights, the TIW Czechshareholders shall proceed after December 3, 2004 to an orderly sale process ofTIW Czech, unless shareholders of TIW Czech holding 80% of the equity decideotherwise. In that event, TIW Czech must use its best efforts to seek a buyerfor its assets or shares as a going concern in a timely fashion. We have theexclusive right to make a preemptive offer and acquire all the shares of TIWCzech not already owned by us if a majority of the other shareholders acceptsuch offer or any subsequent third party offer that is on less favourable terms.In the event we do not exercise such preemptive right and a third party presentsan offer which is accepted by the other shareholders, we will be required todispose of our TIW Czech shares under the terms of such offer by the thirdparty. 
**We may issue additional Common Shares as part of our corporate simplificationstrategy which could dilute our share capital.**
    Pursuant to an amended and restated exitagreement dated May 3, 2001, in the event there has not been an initial publicoffering of the shares of MobiFon by October 1, 2004, certain minorityshareholders in MobiFon holding in aggregate approximately 15.5% of theoutstanding shares of MobiFon, may, subject to certain conditions, require TIWCor, at TIWC's option, ClearWave to make an offer to acquire their shares ofMobiFon at a price representing the fair market value of such shares asdetermined by an independent valuation. This price shall be payable, at ouroption, in cash or in our marketable securities. This right terminates upon aninitial public offering of ClearWave shares that meets certain criteria. Theexit agreement states that the sole obligation of the minority investors in theevent that they exercise this right shall be to transfer good title to theirMobiFon shares free from any pledge, lien or other encumbrance. Amounts dueunder MobiFon's senior credit facility are secured by security interests in,among other things, MobiFon's share capital held by all MobiFon's shareholders.See "Description of Existing Indebtedness". 

    In addition, we may elect to issueadditional Common Shares, or securities convertible into our Common Shares, fromtime to time in order to effectuate our strategy of simplifying our corporatestructure through elimination of minority interests in our subsidiaries andoperating companies. See "The Company - Strategy". Any such issuances may bematerial in relation to the number of our currently outstanding Common Shares.Although we would attempt to structure such issuances to minimize dilution tothe then-existing shareholders, we cannot assure that this would be the resultin each case. 
**We account for the rights of the minority shareholders in our operatingsubsidiaries and their lenders when we make management decisions.**
    Although we may have voting control over our operatingsubsidiaries, we may have to take into account the rights of their minorityshareholders when making management decisions. For instance, although we havevoting control over MobiFon and 

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appoint all senior officers other than the chief technologyofficer, we do not have the ability to elect a majority of the members ofMobiFon's board of directors. The rights of MobiFon's shareholders to appointrepresentatives to MobiFon's board of directors are provided in MobiFon'sstatutes, which form part of its constitutive documents. In the case of certainsignificant business and financial decisions, such as a change in dividendpolicy, which currently is to maximize dividends, approval is required byshareholders holding at least 75% of the voting shares of MobiFon. Certain otherdecisions that concern matters set forth in MobiFon's contract of associationrequire unanimous approval. In addition, we have an agreement with Vodafone thatprovides that major business, financial and technical decisions concerningMobiFon, including making distributions to shareholders, require consensusbetween us and Vodafone, with both parties using their best efforts to achieveconsensus. Accordingly, we may need to take into account the views of, orcompromise with, MobiFon's minority shareholders in reaching decisions onfundamental business and strategic matters with respect to MobiFon. If we needto enlist co-investors in the future to help fund acquisition opportunities, wemay need to enter into agreements that grant these co-investors rights toparticipate in the management of MobiFon. 

    In addition, the lenders under MobiFon'sand Český Mobil's senior credit facilities have a number of approval and vetorights over how we operate these businesses. These rights can be usedeffectively to limit our discretion in managing our operations, for example byrequiring us to focus on generating sufficient cash flow to pay principal andinterest on our debt and restricting us from making further investments in ourbusiness. 
**The international nature of our operations may make the outcome oflitigation, bankruptcy proceedings or enforcement of your rights difficult topredict.**
    We are incorporated under the laws ofCanada and our subsidiaries are incorporated under the laws of variousjurisdictions, including Romania, the Czech Republic and The Netherlands, andconduct operations in different countries. Consequently, there can be noassurance that the laws and regulations of Canada, Romania, the Czech Republicand The Netherlands or one or more countries in which our subsidiaries areorganized or operate could apply to litigation or bankruptcy proceedings, whichcould make the outcome of litigation, bankruptcy proceedings or enforcement ofyour rights difficult to predict. 
**Litigation regarding the ownership of our disposed Brazilian operations hasbeen settled but could recommence.**
    On March 26, 2003, we indirectly disposedof our entire interest in Telpart Participaçoes S.A., or Telpart, and settled orterminated all litigation which related to such interest. In July 2000 we andcertain co-investors in our Brazilian operations had initiated legal proceedingsagainst certain affiliates of Banco Opportunity which were co-investors in ormanaged certain funds invested in Telpart. The proceedings sought to enjoin theaffiliates of Banco Opportunity in respect of the control over Telpart.Considerable litigation in various jurisdictions among the partners followed theinstitution of these proceedings. Although all such litigation has now beensettled or terminated as part of the sale of our interest in Telpart, theparties may recommence the litigation should such sale be unwound for anyreason. In addition, we may be subject to investigations or proceedings inrelation to our past equity participation in Telpart. We have received inJanuary 2004 a letter from counsel to certain indirect investors in Telpartrequesting discussions with a view to an amicable settlement of a purportedviolation of a memorandum of understanding that two of our subsidiaries had withthese investors. The investors claim that the violation resulted from ourdisposition of the subsidiary that indirectly owned our Brazilian interests. Wehave agreed to meet with the investors to discuss the matter. 
**We operate in developing countries, which may increase our operating costsand restrict our ability to transfer funds from our operating companies toourselves and expose us to other risks.**
    We currently operate in developingcountries where governments have exercised and continue to exercise influenceover many aspects of the private sector, and we may continue to invest indeveloping countries. In some cases, the government controls companies that areor may in the future become our competitors or companies, such as nationaltelephone companies, upon which our operations may depend for requiredinterconnections to landline telephone networks and other services. We areexposed to greater risks of war, embargoes, expropriation, nationalization withor without compensation, confiscatory taxation, renegotiation or nullificationof existing concessions and contracts, corruption, fluctuating currency values,hard currency shortages and currency controls than companies with operationsconcentrated in North America or countries of Western Europe. For instance,MobiFon, our operating subsidiary from which we derive a substantial part of ourrevenues and operating income, operates in Romania, a country that is in theprocess of transitioning from a centrally planned economy to a free-marketeconomy and, as a result, is subject to significant macroeconomic risks. Thegovernment of Romania is in the process of privatizing selected formerlystate-owned companies, which may lead to significant corporate restructuring,labor dislocation or social unrest. 

    Due to continued implementation of reforms and changes ingovernment infrastructure, it may be difficult for us to enforce any 

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rights we may have or to know if we are in compliance withall applicable laws, rules and regulations. Changes in laws, regulations orgovernmental policy, or the interpretation thereof affecting our businessactivities, including the imposition of price controls and new taxes, mayincrease our costs or restrict our ability to operate our business. Political,economic, social or other developments in the countries where we operate maycause us to change the way we conduct our business or force us to discontinueour operations altogether. 

    In addition, local corporate or tax laws,foreign exchange controls or other restrictions may effectively prevent orrestrict the payment of dividends, the repatriation of such dividends or othertransfers of funds to us or the exchange of local currency for dollars. Foreignexchange controls also could restrict the ability of our operating companies topay debt. The operating companies may also experience increased credit andcollection difficulties in certain developing countries where creditverification systems are not yet adequately developed. 
**We are subject to currency exchange risks, which may negatively impact ourfinancial results and may increase our costs to repay our debts.**
    Our operations depend, in large part, onthe economics of the markets in which we have interests. Those markets are incountries with economies in various stages of development or structural reform,some of which are subject to rapid fluctuations in terms of consumer prices,employment levels, gross domestic product and interest and foreign exchangerates. Many developing countries, such as Romania, have experienced substantial,and in some periods extremely high, rates of inflation and resulting highinterest rates for many years. Inflation and rapid fluctuations in interestrates have had and may continue to have negative effects on the economies andsecurities markets of certain developing countries which in turn may haveadverse effects on operations in those countries, including the ability toobtain financing, the ability of subscribers to pay for services provided by theoperating companies or the ability to support the growth of such operations. 

    The value of our investment in Český Mobilis partially a function of the currency exchange rate between the U.S. dollarand the Czech Koruna, its functional currency. The devaluation of the functionalcurrency applicable to an operating company will result in a reduction in thecarrying value of our investment in such operating company. Such reduction isaccounted for as a reduction of shareholders' equity until the sale of theinvestee, at which time the cumulative gain or loss is recorded as part of thegain or loss on sale. In addition, Český Mobil reports its results of operationsin the local currency, and accordingly, our results of operations will beaffected by changes in currency exchange rates between the Koruna and the U.S.dollar. 

    We have entered into hedging arrangementsin the Czech Republic to systematically hedge against foreign currency exchangerate risks on long-term debt denominated in Euro. In certain circumstances, wemay decide to accept the inherent currency risk, principally because of therelatively high cost of buying, or the inability to buy, forward cover incurrencies of the countries in which we operate. We do not anticipate anynear-term changes in management's objectives and strategies with respect tomanaging such exposures. 

    Prior to June 30, 2003, Romania wasdefined for accounting purposes as a highly inflationary economy and the U.S.dollar, our functional currency, was used as MobiFon's measurement currency.Subsequent to June 30, 2003, the cumulative inflation in Romania for the lastthree years was below 100% and consequently Romania ceased to be defined foraccounting purposes as a highly inflationary economy. Each fiscal quarter, wemake an assessment as to whether Romania is still defined as a highlyinflationary economy, in order to determine whether a further assessment isneeded as to which currency should be MobiFon's functional currency forsubsequent fiscal quarters. An assessment as to which currency is MobiFon'sfunctional currency was made based on the collective economic factors of theenvironment in which it operates and the U.S. dollar has been determined tocontinue to be MobiFon's functional currency. MobiFon's borrowings are in U.S.dollars and tariffs are set in U.S. dollars. Consequently, exchange fluctuationshave not had a material effect on our consolidated results in the past. However,Romania is currently a second wave European Union accession candidate and it isforeseeable that the Euro will take prominence in Romania in the future.Consequently, depending on the progression of Romania towards the Euro,MobiFon's functional currency may change and exchange rate fluctuations may havea more significant impact on our results of operations in the future. As aresult, we may experience economic loss with respect to our investments andfluctuations in our results of operations solely as a result of currencyexchange rate fluctuations. Many of the currencies of developing countries haveexperienced steady, and at times significant, devaluations relative to the U.S.dollar, and significant exchange rate fluctuations have occurred in the past andmay again occur in the future, all of which could have a material adverse effecton us. 

    Any revenues operating companies generate will generallybe paid to the operating companies in the local currency. By contrast, somesignificant liabilities of the operating companies, such as liabilities for thefinancing of telecommunications equipment, may be 

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payable in U.S. dollars or in currencies other than the local currency. As aresult, any devaluation in the local currency relative to the currencies inwhich such liabilities are payable could have a material adverse effect on us.
**We are subject to governmental regulation and licensing requirements, whichmay increase our operating costs and may dictate where and how we operate.**
    Our operations are subject to governmentalregulation, which may change from time to time. To date, certain operatingcompanies have been subject to service requirements, restrictions oninterconnection of wireless systems to government-owned or private telephonenetworks, subscriber rate-setting and requirements that the operating companiesor development projects complete construction and meet network coverage tests orcommence commercial operation of the networks by specified deadlines and otherrequirements. In addition, licenses may contain restrictions on foreignownership or share transfers. These restrictions or conditions may be difficultto comply with, particularly given demographic, geographic or other issues in aparticular market. Failure to comply with these restrictions or conditions mayresult in penalties or in the loss or revocation of a license. Furthermore,changes in the regulatory framework may limit the ability to add subscribers todeveloping systems. 

    The ability of our operations to retainand exploit their existing telecommunications licenses and to renew them onfavorable terms when they expire is essential to our operations. Thegovernmental agencies responsible for the administration of licenses may,however, unilaterally limit, revoke or otherwise adversely modify the terms ofthese licenses in the future, and we, along with our operating companies, mayhave limited or no legal recourse if these events occur. In certain cases, thegovernmental issuer has explicitly reserved the right to modify certain licenseterms, to terminate the license in the public interest and to take over theoperating company's network and services in the interest of national security.There can be no assurance that our operations will be able to retain or renewtheir licenses or satisfy the conditions of such licenses or that therestrictions imposed upon such licenses will permit the commercial exploitationof such licenses, any of which could have a material adverse effect on us. 

    We believe that the opportunity to acquiresubstantial new wireless telecommunications licenses in our target markets willexist only for a limited time. Although our operating companies have obtainedcertain operating licenses through private negotiations or without having toparticipate in competitive financial bidding processes, governments of developedand developing countries are increasingly requiring financial bidding forlicenses. This requirement has increased the cost of these licenses, and mayrestrict our ability to obtain additional licenses. Furthermore, relevantgovernmental authorities may grant additional licenses with respect to the sameor different technologies and covering the same geographical areas as theoperating companies' licenses and may preclude us from competing for suchadditional licenses. The availability of only limited frequency ranges mayprovide some protection against the issuance of competing licenses. 

    Our operations also are subject to lawsand regulations governing environmental protection, including requirements forthe management, use and disposal of hazardous substances. Such laws andregulations can impose substantial fines and criminal sanctions for violations,and may require us to remediate contaminated soil and groundwater affectingproperty we operate. 
**We are subject to anti-monopoly regulation, which could restrict ourbusiness.**
    Our operating companies in Romania and theCzech Republic are subject to oversight by competition regulatory authorities,which regulate companies deemed to be a dominant force in, or a monopolist of, amarket. Regulatory measures may include the imposition of tariffs orrestrictions on acquisitions or on other activities, such as contractualobligations. Because competition laws in Romania and the Czech Republic do notclearly define "market" in terms of either services provided or geographic areaof activity, it is difficult to determine under what circumstances we could besubject to these or similar measures. We cannot exclude the possibility,however, that our current subscriber market share in the licensed regions couldtrigger close scrutiny by competition regulatory authorities of the pricing andother terms of our services. We could be subject to anti-monopoly regulation inthe future, which could adversely affect our business. 
**Competition in our markets could increase our churn rates and decrease ouraverage revenue per user, which would adversely affect our operating income.**
    An increase in our churn rates may raiseour operating costs, as we seek to add a greater number of new customers tomaintain our subscriber growth. Our aggressive pricing strategy in the CzechRepublic, and the future response to that strategy by our competitors, as wellas any future aggressive pricing strategies of our competitors in Romania, couldlead to increased, or more volatile, churn rates as well as lower averagerevenue per user. The growth of consumer awareness, additional service offeringsfrom competitors and an increased focus on the retail consumer market segmentmay increase churn rates and reduce average revenue per 

    - 1 4-

user. 
**Because we are unable to thoroughly screen the creditworthiness of potentialcustomers, we may incur fraud and bad debt expenses and recognize less revenue.**
    The fraud and bad debt we experience in agiven period will directly reduce our net income and cash flow. Our ability toscreen applicants for creditworthiness may be limited in certain of our targetmarkets where the use of credit reporting agencies is less common. Our screeningprocesses and gradual restrictions on access to our services in the event ofnon-payment may not be effective in limiting our fraud and bad debt exposure.Consequently, we may have a significant number of customers that are unable topay their bills on time, if at all. 
**We may not be able to attract and retain key personnel and adequately staffour operations, which could impair the execution of our business plans.**
    Our success and our growth strategy dependin large part on our ability to attract and retain key management, marketing,finance and operating personnel, both at holding and operating company levels.There can be no assurance that we will continue to attract and retain thequalified personnel needed for our business. In addition, the loss of theservices of one or more members of our senior management team could have amaterial adverse effect on us. 
**We compete with companies that have greater resources than we have.**
    The wireless telecommunications industryis highly competitive. A number of large international telecommunicationscompanies are actively engaged in programs to develop and commercialize wirelesstelecommunications services in both developing and developed countries. In manycases, we will also compete against landline carriers, includinggovernment-owned telephone companies. Most of these companies have substantiallygreater financial and other resources, research and development staffs andtechnical and marketing capabilities than we do. We believe that there isincreasing competition for additional licenses and increased competition to theextent others obtain such licenses. 
**Rapid technological changes or the adoption of incompatible standards couldrender our services obsolete or noncompetitive.**
    We may face competition from newtechnologies and services introduced in the future. The wirelesstelecommunications industry is experiencing significant technological change, asevidenced by the introduction of new standards for mobile communications, suchas enhanced data GSM environment, commonly known as EDGE, and UMTS, ongoingimprovements in the capacity and quality of digital technology, shorterdevelopment cycles for new products and enhancements and changes in end-userrequirements and preferences. Such continuing technological advances make itdifficult to predict the extent of the future competition we may face. As aresult, there can be no assurance that existing, proposed or as yet undevelopedtechnologies will not become dominant in the future and render the technologieswe use less profitable or even obsolete. There can be no assurance that newproducts and services that are more commercially effective than our products andservices will not be developed. Furthermore, there can be no assurance that wewill be successful in responding in a timely and cost-effective way to keep upwith these developments. Changing our products or services in response to marketdemand may require the adoption of new technologies that could render many ofthe technologies that we are currently implementing less competitive orobsolete. To respond successfully to technological advances and emergingindustry standards, we may require substantial capital expenditure and access torelated or enabling technologies in order to integrate the new technology withits existing technology. The government in Romania has announced its intentionto award four third-generation mobile telecommunication licenses, of which atleast one shall be the UMTS standard. If MobiFon acquires such a license, it maynot be successful in modifying its network infrastructure in a timely andcost-effective manner to facilitate the integration of this new technology,which could adversely affect the quality of its services, the results of itsoperations and its business and prospects. 

    Our competitors in the Czech Republicacquired UMTS licenses in December 2001. If Český Mobil decides not to pursue theacquisition of the third UMTS license offered by the Czech government, thedeployment of UMTS networks by its competitors could make the products andservices of Český Mobil less attractive. As a result, Český Mobil's revenues andour results of operations, business and prospects could be adversely affected.
**Our inability to maintain agreements with other telecommunications providersupon which we rely to connect calls originating or terminating outside of ournetworks may result in an interruption of our service and a possible loss of**
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**customers.**
    The success of our wireless systems willin some cases depend upon services provided by other telecommunicationsproviders, some of which are our competitors. For example, the operatingcompanies generally require interconnection agreements with national or regionaltelephone companies in order for their wireless systems to connect with landlinetelephone systems, and may require the use of other microwave or fiber opticnetworks to link their wireless systems. Although our operating companies haveentered into required interconnection agreements or have interconnectionarrangements in place, these agreements and arrangements typically have limitedterms and must be periodically renegotiated or renewed. The revocation, loss ormodification of any of these existing agreements or arrangements or the failureto obtain necessary agreements or arrangements in the future on terms favorableto the operating company could have a material adverse effect on us. 
**Our network equipment and systems may be subject to disruption and failure,which could cause us to lose subscribers and violate our license.**
    Our business depends on providingsubscribers with reliability, capacity and security. As mobile phones increasein technological capacity, they may become increasingly subject to technologicaldisruptions. The services we provide may be subject to disruptions resultingfrom numerous factors, including: 
- human error;    
- physical or electronic security breaches;    
- power loss;    
- hardware and software defects;    
- capacity limitations;    
- fire, earthquake, flood and other natural disasters;    
- sabotage, acts of terrorism and vandalism;    
- computer viruses or other unauthorized use of or alterations to our  network and information technology infrastructure; and    
- unauthorized use by third parties of our network and internet service  provider facilities to conduct fraudulent or other illegal activities. 

    Problems with our switches, base stationcontrollers, network backbone or at one or more of our base stations, whether ornot within our control, could result in service interruptions or significantdamage to our network. Although we have back-up capacity for our networkmanagement operations and maintenance systems, automatic transfer to our back-upcapacity is not seamless, and may cause network service interruptions. Anyinterruption of services could harm our business reputation and reduce theconfidence of our subscribers and consequently impair our ability to obtain andretain subscribers and could lead to a violation of the terms of our licenses,each of which could adversely affect our business. 
**If we do not comply with the U.S. Foreign Corrupt Practices Act, we and ourboard of management may become subject to monetary or criminal penalties.**
    We are subject to the U.S. Foreign CorruptPractices Act and comparable legislation in other jurisdictions, which generallyprohibits companies and their intermediaries from bribing foreign officials forthe purpose of obtaining or keeping business. We have in the past and willcontinue in the future to take precautions to comply with such legislation,including maintenance of formal compliance policies. However, these precautionsmay not protect us against liability under such legislation, particularly as aresult of actions that may be taken in the future by agents and otherintermediaries through whom we may have exposure under such legislation eventhough we may have limited or no ability to control such persons. 
**Concerns about radio frequency emission may lead to increased regulation ordiscourage the use of cellular telephones, which could result in our having tochange our business plan or reduce our subscriber revenues.**
    - 16 -

    There have been allegations that the useof certain portable wireless telecommunications devices may cause serious healthrisks. The Cellular Telecommunications Industry Association in the United Stateshas researched these potential health risks and publicly announced its beliefthat no risk exists. Nonetheless, the actual or perceived health risks ofwireless telecommunications devices could diminish subscriber growth, reducenetwork usage per subscriber, spark product liability lawsuits or limitavailable financing. Each of these possibilities has the potential to causeadverse consequences for us and for the entire wireless telecommunicationsindustry. 

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**ITEM 4 - INFORMATION ON THE COMPANY**
    We provide wireless voice and dataservices in countries of Central and Eastern Europe. Our networks providesubscribers with voice and high-speed packet data services, including mobileaccess to the internet and internet based, time sensitive information such ase-mail, digital image transmission and two-way short messaging service, or SMS.As of December 31, 2003, we had operations in Romania and the Czech Republic,representing approximately five million subscribers. Based on our percentageownership in these operations as of December 31, 2003, this representsapproximately 2.0 million equity subscribers. At March 31, 2004, our operationshad grown to approximately 5.3 million subscribers. Given the increase in ourownership of these operations subsequent to year end, as at March 31, 2004, thisrepresents approximately 2.8 million equity subscribers. These figures excludeour operation in India which we sold in February 2004. 

    We were incorporated under the CanadaBusiness Corporations Act on September 9, 1996 under the name 3293505 CanadaInc. On March 12, 1997, we changed our name from 3293505 Canada Inc. toTelesystem International Wireless Inc. In May 1997, we completed our initialpublic offering. 

    Our head office and principal place ofbusiness are located at 1250 René-Lévesque West, 38th floor, Montreal Québec,H3B 4W8, Canada. Our telephone number is (514) 673-8497. CT Corporation System,111 Eighth Avenue, New York, NY 10011, (212) 894-8500, acts as our agent forservice in the United States. 

    The following table sets forth, bysegment, the progression since 1999 in the number of subscribers and equitysubscribers excluding discontinued operations. The table excludes subscribers ofour India operation in which we held an interest as at December 31, 2003 andwhich we sold subsequent to year end. 
  **Years ended December 31**          **March 31**       **2004****2003****2002****2001****2000****1999****Romania**           Subscribers 3,672,1003,457,0002,635,2002,003,6001,171,800702,100    Equity Ownership 63.4%50.1%53.4%28.9%58.9%54.7%    Equity Subscribers(1) 2,327,1001,731,4001,407,200(3)580,000690,200384,000        **Czech Republic**           Subscribers.1,614,0001,546,8001,179,800858,400301,700     Equity Ownership 27.0%20.2%19.8%10.1%21.6%     Equity Subscribers(1) 436,100312,600233,60086,70065,200         **Total**           Subscribers 5,286,1005,003,7933,815,0002,862,0001,473,500702,100    Equity Subscribers(1) 2,763,2002,044,0001,640,800666,700755,400384,000- Equity subscribers represent our ultimate proportionate ownership insubscribers figures of our operations, based on our equity ownership percentagein such operations as of December 31 of each year and as at March 31, 2004.  
**STRATEGY

    Our goal is to achieve profitable growth, maximize cashflow and thereby generate value for our shareholders. The key elements of ourstrategy to achieve this goal are the following: 
*    Leverage our position for organic growthwithin our markets. Our operations in Romania and the Czech Republic havethe competitive strengths to continue to grow within these markets. We believethat our well-recognized brands, the quality of our networks, our experiencedmanagement teams and our strong financial performance will allow us to maintainand strengthen our subscriber base and therefore increase revenues,profitability and cash flow. 

    - 18 -
*    Simplify our corporate structure. Overthe past three years, we have substantially de-leveraged our balance sheet andsimplified our corporate structure. We believe that there continue to beopportunities for us to generate value for our shareholders by furtherde-leveraging and refinancing our balance sheet and by further simplifying ourcorporate structure, notably by increasing our ownership percentage in ourbusinesses in Romania and the Czech Republic, provided that we do so in a mannerthat is not dilutive to our shareholders' equity or disruptive to the market forour Common Shares. 
*    Capitalize on market opportunities inCentral and Eastern Europe. We are one of the leading mobile operators inCentral and Eastern Europe. We believe that as such, we are well positioned tobenefit from the significant growth opportunities offered by wirelesstelecommunications markets in this region. Since 1996, the wirelesstelecommunications market of our potential target countries in Central andEastern Europe grew at a compound annual growth rate, or CAGR, of 76%, while thecurrent wireless penetration rate of 50% in Central and Eastern Europe is stillrelatively low compared to that of most Western European countries. Furthermore,Central and Eastern Europe remains a relatively fragmented environment forwireless telecommunications operators. Several of the leading mobile operatorsin Western Europe, such as Vodafone, T-Mobile and Orange, are also present inCentral and Eastern Europe, but do not provide services that are integratedacross the region. We believe that as one of the leading independent operatorsin the region, we have the flexibility, resources and experience to pursueacquisition opportunities in Central and Eastern Europe. 
**ORGANIZATIONAL STRUCTURE**
    The following chart summarizes the equityinterests we hold, directly and indirectly, in each of our operating companiesas at December 31, 2003 and May 1, 2004 respectively. Changes in our holdingstructure that occurred between December 31, 2003 and May 1, 2004 are describedunder the section entitled "Significant Changes" in item 8 of this Form 20-F.Percentages in brackets represent the voting interests we hold where they differfrom the equity interests we hold. This chart is a simplification of ourcorporate structure and omits certain intermediate holding companies as well asthe interest we held in our Indian operations at December 31, 2003 and which wesold subsequent to year end. 
**OPERATIONS**
    The following table sets forth ouroperations and interests and certain information related thereto, as of December31, 2003, unless otherwise specified. The table excludes the interest we held inour Indian operations as at December 31, 2003 and which we sold subsequent toyear end. 

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 **Start-up****Licensed**     **date    of****Population****Total****Equity****Equity****Equity** **operations****Coverage****Subscribers(1)****Ownership(2)****persons****Subscribers (3)**  **(in millions)** **(%)****(in millions)**        RomaniaQ2 199721.7    3,457,00050.1    (4)10.9    1,731,400 (4)Czech Republic     (5)Q1 200010.21,546,80020.2    (6)2.1312,600 (6)**Total** 31.95,003,800 13.02,044,000
______________________
-  As of December 31, 2003, unless otherwise specified. Figures include our3,052,300 pre-paid subscribers. 
-  Figures represent the Company's ultimate ownership interests in itsoperations before the exercise of options. 
-  Proportional operational data represent the combination of our ultimateproportionate ownership in each of its subsidiaries and is not intended torepresent any measure of performance in accordance with generally acceptedaccounting principles. 
-  Subsequent to year end we increased our equity ownership in MobiFon S.A. to63.4%. As a result, based on our revised ownership and MobiFon's 3,672,100subscribers as of March 31, 2004, we had as at that date 2,327,100 equitysubscribers in Romania. 
-  Through an intermediate holding company, we have voting control of ČeskýMobil. 
-  Subsequent to year end we increased our equity ownership in Cesky Mobil a.s.to 27.0%. As a result, based on our revised ownership and Cesky Mobil's1,614,000 subscribers as of March 31, 2004, we had as at that date 436,100equity subscribers in the Czech Republic.  

    Romania. MobiFon was the first GSMoperator to launch services in Romania. MobiFon received its 900 MHz nationallicense in November 1996 and launched commercial service in April 1997. MobiFonoperates in Romania under the highly recognized brand name Connex. MobiFonserves its customers on its state-of-the-art network, which covers approximately97% of the population in Romania. During the twelve months ended December 31,2003, MobiFon added 821,834 net subscribers, an increase of 31.2% from December31, 2002. MobiFon grew at an average rate of 68,486 subscribers per month in2003 and had 3,457,042 subscribers at December 31, 2003, up from 2,635,208 atthe end of 2002. Our internal reports as well as publicly released informationof our competitors indicate that this represents a 49% market share. At March31, 2004, MobiFon had 3,672,138 subscribers. Since launching service in April1997, MobiFon has developed a strong track record both in terms of subscribergrowth and financial performance. MobiFon achieved positive operating incomebefore depreciation and amortization, or OIBDA, referred to previously in ourpublic filings as EBITDA and described in our "Operating and Financial Reviewand Prospects" incorporated by reference in this Form 20-F, in June of 1998, 14months after commercial launch of services. It recorded operating income of$170.7 million and OIBDA of $281.2 million in 2003, representing an 18% increasein operating income over the $144.6 million recorded in 2002 and a 21.5%increase in OIBDA over the $231.5 million recorded in 2002. 

    Czech Republic. Český Mobil is the thirdnational GSM operator in the Czech Republic. Český Mobil was awarded a dual band900/1800 MHz national license in October 1999 and launched commercial service inthe Czech Republic in March 2000 under the brand name Oskar. When Český Mobillaunched commercial service in March 2000, its network covered approximately 50%of the Czech Republic's population, including all major Czech cities. Český Mobilachieved 98% population coverage by December 31, 2000, in advance of itsmid-2001 license requirement. With the addition of 366,999 net subscribers in2003, representing a 31.1% increase since the beginning of 2003, Český Mobilcontinues to be one of the fastest growing start-up wireless operators inCentral and Eastern Europe. It reached 1,546,751 subscribers as at December 31,2003 and 1,613,971 as at March 31, 2004. Český Mobil achieved positive OIBDA inFebruary 2002, less than two years after commercial launch of services, comparedto an average of two to three years for other third wireless operators inEurope. It recorded operating income of $9.2 million and OIBDA of $103.3 millionin 2003, an improvement of respectively $56.3 million and $83.1 million comparedto an operating loss of $47.2 million and OIBDA of $20.2 million in 2002. 
**Market Opportunities 
*Central and Eastern Europe***
    Europe represents one of the world's largest wirelesstelecommunications markets, with, according to EMC World Cellular 

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Database, approximately 34% of the 1.45 billion wirelesstelecommunications subscribers worldwide as of December 2003. Since 1996, theEuropean wireless telecommunications market has grown, according to EMC WorldCellular Database, at a CAGR of 43%, from 38 million subscribers in 1996 to 468million in 2003. As a result of this rapid growth, the European market is nowalmost three times larger than the combined wireless telecommunications marketsof the United States and Canada, based on number of subscribers. 

    The universal GSM standard in Europe,established by the European Telecommunications Standards Institute, as well asthe "calling party pays" approach and the early adoption of prepaid packages,have contributed to this significant growth. The creation of a single openstandard and the large market size has fostered significant competition amongnetwork equipment providers, which has driven down the costs associated withnetwork deployment and handsets. The wireless operators have been able to passthese savings directly to consumers through reducing both handset and serviceplan prices. European wireless service providers are also rapidly adding datatransmission, multimedia and Internet applications to their networks, which areexpected to contribute to future growth. 

    While the majority of the growth in Europehas historically occurred in the Western European markets which are now close tosaturation, growth has accelerated in some countries in Central and EasternEurope in recent years. The wireless telecommunications market in Bosnia andHerzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania,Serbia and Montenegro, the Slovak Republic and Slovenia, which are referred tocollectively in this document as CEE, grew at a CAGR of 77.4%, fromapproximately 1.2 million subscribers in 1996 to approximately 66 million in2003. Individually, Romania and the Czech Republic grew at a CAGR of 132% and75% respectively over the same period. During 2003, according to EMC WorldCellular Database, wireless markets in CEE added 13.5 million subscribers,representing an annual growth rate of 25.6%. In comparison, the wireless marketin European Union member countries that are not part of CEE, referred to in thisdocument as countries of Western Europe, grew at a rate of 9% in 2003. Despitethis accelerated growth in subscribers, the penetration rate in Central andEastern European countries wireless markets lags behind that of Western Europeanmarkets with penetration rates as at December 31, 2003 of 11% in Belarus to 93%in Slovenia in Central and Eastern Europe and of 66% in France to 117% inLuxembourg in Western Europe. We believe this further highlights the growthpotential of Central and Eastern Europe. As at December 31, 2003, thepenetration rates in Romania and the Czech Republic were respectively 32% and95%. 

    There is a growing trend in certaincountries for wireless handset users to subscribe to services from more than oneoperator for the same region through the use of a single or multiple handsetswith different subscriber identity module cards, commonly referred to as "SIMcards". This trend suggests that penetration rates could expand beyond the 100%mark since penetration is calculated based on number of subscriptions towireless services rather than number of persons using wireless services. 

    In addition to the growing demand fortraditional voice services, we believe that many markets in CEE will embracedata transmission and internet-based services via technologies such as generalpacket radio service, commonly known as GPRS, and enhanced data GSM environment,commonly known as EDGE. 

    We believe that several other factors make CEE attractivefor wireless telecommunications services, especially as a substitute fortraditional fixed-line services: 
-  the region typically has relatively less developed  fixed-line telecommunications systems than Western Europe countries. For  example, as at December 31, 2003, Romania had fixed-line penetration of  approximately 20% according to the fixed-line operator in Romania, and the  Czech Republic had fixed-line penetration of 35%, compared to a penetration of  59.5% in the United Kingdom;  waiting lists for the installation of fixed-line phones can  be lengthy. In Romania, the estimated waiting time for a domestic-only  fixed-line phone was 2.7 years at the end of 2001, with a longer wait for an  international line. In the Czech Republic, although waiting list periods have  declined over recent years, a negative perception of fixed-line service  persists; and  the cost to consumers of wireless service is becoming  increasingly competitive with fixed-line rates. For example, during peak  hours, MobiFon's price per minute under certain plans for business customers  and other high-end users is less than that of the national fixed-line phone  company for national long-distance calls. ***Romania***
Romania is located in CEE, north of the Balkan Peninsula.Neighboring countries are Hungary, Ukraine, Moldova, Bulgaria and Serbia andMontenegro. Geographically, Romania is the second largest country in the CEEregion and covers an area of approximately 238,000 square kilometers, with apopulation of 21.7 million people. Bucharest, the capital city, has a populationof over two million people. Approximately 55% of Romania's total populationlives in urban areas. Major industries in the country include manufacturing,agriculture, transportation, construction and tourism. The population density ofRomania is approximately 91.2 

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people per square kilometer. 

    Romania had a communist government until1989, and is now governed as a parliamentary republic, with a popularly-electedbicameral parliament and president. Since the collapse of the communist regime,the Romanian government has undertaken steps to privatize former state-runindustries and to institute other economic reforms. The government has alsoliberalized prices, reduced government subsidies, returned agricultural land toformer owners, and modernized the tax system. The contribution of the privatesector to the gross domestic product, or GDP, has gradually increased over time,from 34.8% in 1993 to 66.8% in 2002. The current government, formed by theSocial Democratic Party, has stated its intention to continue to adoptstructural reforms to provide the growth of a market economy, real economicgrowth and declining inflation. 

    Romania has taken a number of steps tointegrate its economy into world trade. The current government has announced itsdesire to accelerate Romania's integration into the European and Euro-Atlanticpolitical, economic and security architecture and to negotiate for entry intothe EU. In 1993, Romania signed an Association Agreement with the EU, with agoal of joining the EU by 2007. Currently Romania has met 22 of the 31"chapters" of the acquis criteria for EU accession, which is the mostchallenging of the three criteria for EU accession. Also in 1993, Romaniaconcluded a free trade agreement with the European Free Trade Association membercountries. In January 1995, the country became a member of the World TradeOrganization, and has undertaken tariff and customs reforms to meet itscommitments in these agreements. Trade with the EU has grown significantly sinceRomania signed the Association Agreement, and the EU is Romania's largest tradepartner. Trade with the EU accounted for approximately 67.7% of Romania'sexports and approximately 57.7% of its imports in 2003. Italy, Germany, Franceand the United Kingdom account for 79.6% of Romania's total exports to the EUand 77.8% of its imports from the EU during this period. 

    An important milestone for Romania wasreached in late March 2003, when accession protocols to the North AtlanticTreaty Organization were signed for seven countries, including Romania.Ratification by the existing member states and Romania's parliament wascompleted in February 2004. Romania's economic progress has also led to upgradesin its credit ratings from Standard & Poor's and Moody's. 

    The following table shows selected information regardingRomania and its economy for the years indicated. 
**Indicator****2003****2002****2001****2000****1999**Population (in millions)21.721.722.422.422.5Nominal GDP (U.S.$ in billions)$57.0$45.7$40.2$37.1$35.6Increase (decrease)inrealGDP4.9%4.9%5.7%2.1%(1.2%)GDP per capita (U.S.$)$2,627$2,106$1,795$1,656$1,522Average annual consumer price   inflation15.3%22.5%34.5%45.7%45.8%Foreign direct investment(U.S.$ in billions)$1.6$1.1$1.2$1.0$1.0
 
**Credit ratings****2003****2002****2001****2000****1999**Standard & Poor's...BBB+BB-B-Moody'sBa3B1B2B3B3*______________Sources: Economist Intelligence Unit, Romanian National Institute ofStatistics (INS) and Bloomberg. 
***Czech Republic***
    The Czech Republic is situated in CEE,sharing borders with Germany, Poland, the Slovak Republic and Austria. The CzechRepublic covers an area of approximately 78,866 square kilometers, with apopulation of 10.2 million people. Prague, the capital city, has a population ofapproximately 1.2 million people. Approximately 75% of the Czech Republic'spopulation lives in urban areas. The population density of the Czech Republic isapproximately 129.3 people per square kilometer. 

    Since the "Velvet" Revolution in 1989, theCzech Republic has transformed itself into a western-oriented market economywith more than 80 percent of enterprises in private hands. GDP is expected togrow at around two to four percent per year. Inflation remains low, at 1.8% in2002 and an estimated 0.1% in 2003 according to the Czech Statistical Office.Unemployment, reflecting accelerated industrial restructuring, hovers at 10%,low by CEE standards. The main threat to continued strong economic growth in themedium- to long-term is the growing overall government budget deficit. Thegovernment would like to adopt the Euro later in this decade, but its ability tomeet the Maastricht criteria will depend largely on its management of thedeficit. With a small, open economy, the Czech Republic is vulnerable to aneconomic downturn in its principal export market, the other EU countries.Continued appreciation of the Koruna due to inflows of foreign investment tendsto cut into the competitiveness of Czech exports, but also accounts for the lowinflation rate. 

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    Foreign investment has played a major rolein the development of the Czech economy by providing both management expertiseand the capital needed to restructure many Czech firms. While foreign capitalflows from countries of Western Europe are considerable, the United Statesremains among the largest investors in the Czech Republic with $3.6 billion ofcumulative direct investment from 1990 through 2002, according to the CzechNational Bank. Plans to privatize government firms in the energy sector, andeventually, the transport and telecommunications sectors, will also bringadditional investment opportunities. The Czech Republic's principal importsinclude telecommunications equipment, specialized metalworking machinery,non-ferrous metals, plastics, chemicals and transport equipment. 

    Integrating the Czech economy into the EUremains a top government priority. After five years of intense negotiations, theCzech Republic and the EU signed the Treaty of Accession in April 2003. TheCzech Republic became a member on May 1, 2004. The Czech Republic benefits fromduty free access to EU markets for most industrial products as a member of theEU. Harmonization of Czech laws and standards with those of the EU continues asthe country integrates into the EU. The Czech Republic's customs union withSlovakia and membership in the Central European Free Trade Association (CEFTA)are now superseded by EU membership. 
**Indicator****2003****2002****2001****2000****1999**Population (in millions)10.210.210.210.310.3Nominal    GDP (U.S.$ in billions)$85.4$69.5$57.2$51.4$55.0Increasein    realGDP2.9%2.0%3.1%3.3%0.5%GDP per    capita (U.S.$)$8,370$6,814$5,608$4,990$5,340Average    annual consumer price0.1%1.8%4.7%3.9%2.1%      inflation     Foreign    direct investment (U.S.$ in     billions)$4.5$8.2$5.5$4.9$6.2
 
**Credit ratings****2003****2002****2001****2000****1999**Standard & Poor's...A-A-A-A-A-Moody'sA1A1BAA1BAA1BAA1*Sources: Economist Intelligence Unit, US Commercial Service, ColumbusWorld Travel Group, Czech Statistical Office, Commerzbank and Bloomberg. 
**Products and Services 
*Basic and Value-added Voice Services***
    We provide basic voice services forwireless telecommunications over GSM networks. As with the rest of Europe, wefollow the "calling party pays" model in billing. We supplement these basicvoice services with a range of value-added services, many of which are standardin each of our service packages. These additional services include voice mail,SMS, international roaming and call management capabilities such as callforwarding, call waiting, call hold, call barring, conference calls and calleridentification. In most cases, we were the first cellular wireless operator tointroduce these value-added services in Romania. 

    In both Romania and the Czech Republic, wedeveloped a wide range of entertainment services based on SMS. We provide, amongother things, the ability to chat, to play games and to send logos, ring tonesand icons. Personalization of handsets through ring tones and logos is alsoavailable. Revenues from, and penetration of, SMS is stimulated by thecontinuous introduction of innovative SMS-based services and promotions. 

    We have also implemented partnerships withthird parties, using a revenue sharing model. These value added servicesmarketed by our partners and including mostly entertainment services nowrepresent a growing source of potential revenue from the Romanian and Czechmarkets. 
***Advanced Wireless Services***
    The ongoing development of wireless datatransmission technologies has led developers of wireless devices, such as phonehandsets and other hand-held devices, to create more sophisticated wirelessdevices with increasingly advanced capabilities, including access to e-mail andother corporate information technology platforms, news, sports, financialinformation and services, shopping services and other functions. We believe thatthe introduction of such new applications will drive the growth for datatransmission services. As a result, we continue to upgrade our existing digitalnetworks to be able to offer the data transmission capabilities required bythese new applications, including wireless application protocol commonlyreferred to as WAP, GPRS, multi-media messaging service, or MMS, and basic dataand fax transmission. 

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    WAP-enabling technologies permit thedeployment of data applications, including the ability to access e-mail and theinternet. WAP allows us to offer utility services as well as games and otherentertainment services. We launched WAP services at MobiFon on August 1, 2000and at Český Mobil on October 30, 2000. GPRS permits the transfer of data and useof data services at much faster speeds than current GSM capabilities andrepresents the next step in the evolution of GSM networks towardthird-generation technologies. Possible service capabilities on GPRS includeremote high-speed internet and local area network, or LAN, access, high qualityaudio clips and still-image capabilities. 

    In Romania, we launched GPRS services atthe end of 2001 and currently provide GPRS and LAN access predominantly for thebusiness segment, which is the market segment where we have identified thehighest level of subscriber interest and the greatest potential for verticalapplications implementation. We offer a flexible selection of GPRS basedpackages in order to address our customers' needs and to remain competitive inthe market. MobiFon currently has more than 4,000 activated GPRS subscribers andoffers GPRS based roaming services with 32 operations in 20 countries. 

    In the Czech Republic, we launched GPRSfor our postpaid customers in February 2002. In January 2003, Český Mobil alsolaunched GPRS for prepaid subscribers. Český Mobil currently has over 135,000activated GPRS subscribers. In February 2003, Český Mobil launched Oskar GPRSConnect which enables our business subscribers to access their corporatenetworks via a secure GPRS connection. 

    With WAP, GPRS and also SMS, we are ableto offer our customers a variety of content services enabling them to gatherinformation such as weather reports, traffic reports, daily horoscopes, lotteryresults and news headlines, as well as providing them with access toentertainment applications, and allowing them to perform banking transactionsfrom a handset. These services are typically offered in partnership with thirdparty content providers on a revenue-sharing basis. We earn revenues on theseservices by charging for access to these services and for the content that theyprovide. 

    In the Czech Republic, Ericsson providesGPRS functionality with dedicated platforms serving the interconnected generalpacket radio service support node, or SGSN, gateway general packet radio servicesupport node, or GGSN, and packet control unit, and Siemens provides our WAPinfrastructure. In Romania, GPRS functionality is provided by Siemens withdedicated SGSN and GGSN platforms, while Ericsson provides the WAP platform. 

    MMS, which enables users to send andreceive digital images, sounds and animations in addition to text, is beingdeployed throughout Europe. MobiFon launched MMS service in the fourth quarterof 2003 and now counts over 13,000 registered subscribers. We introduced MMS inthe Czech Republic in September 2003 and the service has attracted over 86,000registered subscribers. In addition we provide subscribers wireless dataconnectivity for many applications, including wireless enabled PDA, or personaldigital assistant, and pocket computer such as Palm and personal computer memorycard international association, or PCMCIA, card for laptop computers. 
***Internet and Data Access Services***
    In Romania, we offer dial-up Internetaccess nationally and are currently the largest internet service provider inRomania with approximately 200,000 dial-up customers, most of whom have freeaccess to this service through their postpaid wireless plan. In the CzechRepublic, we do not, however, offer wireline internet service. For individualusers, we also offer prepaid dial-up services, domain-name registration, andvarious services delivered and included within our "myX Portal" package. Ourconsumer internet and data offerings are closely integrated with our wirelesstelephony offerings. Through the myX Portal, wireless users can accessup-to-date data on their Connex accounts, and download ringtones, games andother applications. Wireless users earn special promotional rates and otherinternet service offers through continued use of their Connex services. We alsooffer dedicated internet access and data access and transport services tocorporate customers, and we have more than 3,500 dedicated access and virtualprivate network ports. Within our "myX Portal" package, we also offer customersthe ability to access the internet on their portable computer in certain hotelsin Romania using WiFi enabled technologies. WiFi, or Wireless Fidelity, is atechnology used to transmit and receive data over the unlicensed 2.4 GHzwireless spectrum, providing mobile access to a wired LAN or a wirelinebroadband connection in its coverage area. With recent deregulation, we can nowdirectly provide international telecommunications services. We also provide afixed wireless product offering that competes with RomTelecom, the nationalfixed line operator, in the business segment, including high-speed internet,data and voice services. 
***Potential Future Service Offerings***
    Our GSM technology can migrate to provideadvanced wireless data services, either by deploying further enhancements toGPRS, such as faster coding schemes, or introducing EDGE, a technology upgradeto the GSM standard that the European Telecommunications Standards Institute, orETSI, has standardized. EDGE, which is being deployed in North America, Europeand 

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Asia, enables data to travel at the same speed as that of the first phase ofthird- generation technology, and thus could allow GSM operators who do not havethird-generation licenses to better compete with operators that do. 
*    Romania. The Romanian government hasannounced its intention to award four third-generation mobile telecommunicationslicenses to use spectrum that includes UMTS spectrum for a price of $35 millioneach payable over a period of five years. MobiFon may decide to participate inthe bidding process to acquire one of these licenses, which it would financewith cash on hand and cash flow from its operations. If MobiFon receives one ofthese licenses, the deployment of a UMTS network would allow us to provide morevalue-added data services and increase our voice capacity. We expect thelicensing process to take place during 2004. 
*    Czech Republic. In December 2001, theCzech government granted two licenses to use UMTS spectrum to existing GSMoperators in the Czech Republic. One or more additional UMTS licenses may beavailable on terms and conditions which have not been disclosed by the CzechGovernment. Český Mobil is still in the process of evaluating the opportunity toacquire such a license. 
***Handsets***
    We sell a broad selection of high-qualityhandsets. We currently offer multi-mode handsets from many manufacturersincluding Sony-Ericsson, Mitsubishi, Motorola, Nokia, Samsung, Siemens andAlcatel. We offer dual-mode and tri-mode handsets that can operate on the GSM900, GSM 1800 and GSM 1900 networks. These multi-mode handsets allow us to offerour customers roaming across a number of GSM networks in North America, Europeand Asia. The handsets have many advanced features, including colour screens,and are generally enabled for advanced data services to help us introduce newvalue-added services to our subscribers such as access to the internet, enlargedkey pads for ease of use for e-mail access or sending or responding to an SMSand photo imaging. 

    Our historical policy generally has beento limit the extent to which we subsidize the cost of handsets. We believe thatthe lack of significant handset subsidies contributes to reduced churn, byattracting customers who select us for the quality of our service rather thanfor the purpose of obtaining subsidized handsets and then disconnecting from ournetwork. In the telecommunications industry, the term "churn" refers to the rateat which customers leave an operator's network. In addition, the lack of acomplete handset subsidy decreases the cost of subscriber acquisition andthereby accelerates our per subscriber payback period. Over the last threeyears, the cost of subscriber acquisition in both Romania and the Czech Republichas averaged approximately three months of ARPU. Furthermore, we believe thatoffering plans with a non-subsidized handset reduces the likelihood of bad debtbecause, in our experience, users who can cover the full cost of a handset arealso more likely to cover the cost of their plans. 

    We intend to continue where feasible ourpractice of minimally subsidizing handsets. Currently, we do not subsidizehandsets to acquire prepaid consumers. However, we may subsidize handset costsin some of our postpaid service packages as part of our initiative to promotenew technologies and gain market share. Also, in Romania, we may have to matchany future introduction of increased handset subsidies by our three competitorsthere, which could affect our subscriber payback period and increase oursubscriber acquisition cost. Furthermore, as the third GSM market entrant in theCzech Republic, we may subsidize handset costs in some of our service packagesas part of our initiative to gain market share. We have partially offset handsetsubsidies in the Czech Republic through a reduction in distribution costs, madepossible by our direct sales and delivery network. 
**Service Packages and Pricing**
    We tailor our service packages to becompetitive and simple to understand and to allow each subscriber to choose apackage that suits his or her usage requirements. We bill customers for postpaidservice, that is, via monthly bills rendered after the service is provided, onthe basis of either per-second, and in some cases per-minute, rates or apackaged-minute plan. Subscribers can also choose to subscribe to our serviceunder prepaid packages, whereby a customer may purchase an airtime card thatgives him or her calling time equivalent to the amount paid for the card. Ourpricing strategies depend on the competitive environment, the subscriberprofiles and the regulatory requirements in each of our operating markets. 
***Postpaid and Prepaid Service Packages***
    We offer a number of postpaid servicepackages that are targeted to specific types of subscribers and their expectedusage patterns. These packages often include a specified number of minutes aspart of the monthly fee, with an overcall rate charged after such minutes areused. GSM roaming is available to subscribers traveling in other countries wherewe have signed roaming agreements with the local GSM operators. When roaming ona foreign GSM network, the subscriber is charged for the service of relaying thecall internationally and for the actual number of minutes used. The per minutecharges are at the rates charged by the local GSM operator plus a margin chargedby us. 

    We offer prepaid service packages to enable subscriberswho prefer a pre-payment option or whose credit profile do not qualify 

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for postpaid service. Prepaid service requires no contractand no monthly fee. The customer can easily access further airtime by purchasingadditional airtime cards or adding value to a rechargeable card. As of December31, 2003, prepaid subscribers accounted for 63% and 58% of our Romanian andCzech Republic subscriber bases, respectively, as compared to 64% and 64% inboth operations as of December 31, 2002. Prepaid customers accounted for 57% and35% of the net added subscribers in Romania and the Czech Republic,respectively, during the twelve-month period from January 1, 2003 to December31, 2003. We began offering prepaid service in the Czech Republic on April 19,2000 and in Romania on November 7, 1997. 

    In line with our strategy of offeringdiversity and flexibility to our customers, we introduced in 2002 the firstinnovative airtime recharging mechanism for voice and data prepaid customers inRomania. This service is available at point of sale and at automated tellermachines of the largest bank in Romania. Český Mobil also has a recharging systemavailable at numerous automated teller machines in the Czech Republic. The mainbenefits of this system are the wide range of the recharge values, its 24-houravailability and the reduction of the costs associated with production anddistribution of physical recharging cards. 
*    Romania. MobiFon offers ten postpaidpackages, including monthly bundled minutes plans which offer the subscriber thepossibility to choose between a plan of 100, 200, 400 or 800 minutes of usage.Two most commonly used plans are the Connex Cent and Connex 5 plans which offeraffordable prices for the lower-end postpaid subscribers. We also offer specialpackages to our business customers, focused on the offer of integrated services.Finally, we offer two prepaid plans: Connex Go! and Kamarad. These plans giveour subscribers the freedom to communicate on our network without the need for awritten contract or monthly fee. A distinguishing feature of the Kamarad plan isthat it enables the subscriber to choose up to five telephone numbers on eitherthe Connex network or any other national network in Romania for which he or shewill benefit from lower fees. As a result of introducing a new, best-in-classbilling system, in April 2004 MobiFon was able to reorganize the whole postpaidportfolio structure, replacing the old individual packages with a simpler, moreflexible offer, based on four basic bill plan choices, combined with numerousadditional options which allow the customer to select the plan that best fitshis or her lifestyle profile and needs. Existing customers are allowed to remainon the plans that they currently subscribe to and also have the option of movingto a new bill plan. 
*    Czech Republic. Český Mobil currentlyoffers five consumer postpaid plans, two business postpaid plans and one prepaidtariff plan. The consumer postpaid plans are adapted to the general mobile needsand usage profile. The subscriber chooses between bundled packages including 50("Talk"), 150 ("Talk More"), or 300 minutes ("Talk Lots More"). These plansinclude SMS on Oskar's network at one Kc/SMS, roll-over of unused minutes fromone month to another, and voicemail. We also offer the "Write Me" and "BetweenUs" community tariff plans that currently offer the best on-network rates on theCzech market for both voice and SMS. These two plans replace since December 31,2003 the mandatory tariffs imposed by the Czech regulators when Český Mobillaunched its operations in 2000. The business plans offer low monthly fee, nobundled minutes and volume based discounts as a standard fee feature. Theyinclude SMS on the Oskar network at one Kc/SMS, and free voicemail. We alsooffer the "Oskarta" prepaid plan with call rates on Oskar's network beginning atthree Kc/minute and at two Kc/SMS, whether on Oskar's network or any othernational network. There is an automatic threshold discount if the monthly usageexceeds 700 Kc/month. 
***Pricing***
    We believe that our pricing structures compare favorablyto the prices offered both by our Romanian and Czech wireless competitors and bywireless operators in neighboring markets. 
*    Romania. MobiFon's initial launchstrategy emphasized feature-rich service offerings that appealed tocorporations, governmental agencies and other high-end consumer subscribers. Aspart of our strategy to address the Romanian retail consumer market, weintroduced programs that appeal to specific mass-market segments, based ondisposable income research. Consequently, our prepaid portfolio was diversifiedto attract not only customers who preferred to use the service mainly forincoming calls, but also those customers who could not afford a postpaid programbut had a higher propensity to make outgoing calls. For postpaid plans, weintroduced low-end programs, with affordable monthly fees and flexible perminute rates, stimulating usage during non-peak hours, weekends and/or forcertain destinations. Our prepaid and postpaid plans for low minutes of use, orMOU, customers were the major driving force in increasing our acquisition of newsubscribers. Our services are also priced to be competitive with the fixed lineservices of RomTelecom, the national fixed line phone company. For some postpaidprograms, our rates for making in-country long distance calls historically havebeen less expensive than RomTelecom's fixed line rates at certain times of theday, which encourages customers to use wireless instead of fixed line phoneservice. The new postpaid portfolio includes better rates for callingRomtelecom's fixed line network (the price is the same as for in-network calls),thus encouraging the users to make calls to the large customer base of the fixedline operator (over 4 million lines). 
*    Czech Republic. As the third GSMmarket entrant in the Czech Republic, we initially differentiated ourselves fromour competitors by aggressively pricing our service plans. In the CzechRepublic, our prices are generally lower than those of our current 

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competitors, Eurotel and T-Mobile, for comparable plans withvarious usage assumptions. Our Czech competitors have already lowered theirprices in response to our launch. We have designed simplified service packagesto provide our subscribers with everyday low pricing. We offer several servicepackages with per-second billing after the first minute and allow customers tocarry over unused minutes for use in the following month. We have also loweredbarriers to subscribing to our services by eliminating activation fees. Goingforward, our approach will be to differentiate our prices based on value, beingfirst with new pricing concepts, and pricing innovation. 
**Marketing and Distribution 
*Marketing****    Romania. Connex's marketing strategyfocuses on protecting and growing revenue and profitability from the existingcustomer base, strengthening leadership by maintaining market share advantage,strengthening brand image and improving customer satisfaction. In addition, ourmarketing initiatives, brand identity and distribution strategies are carefullytailored to the cultural and economic environment in Romania and to each targetcustomer segment. Taking advantage of the opportunities offered by the newlyderegulated telecom market, Connex has developed a new integrated approach tobusiness customers designed to protect GSM revenues and capture as muchpotential revenue as possible from the telecom needs of our high-endsubscribers. This approach is focused on integrating mobile voice, national andinternational fixed voice and data in a single product offering which we referto as Integrated Service Strategy. The strategy has been successful and ispositioned as a major differentiator in the business market. Connex is currentlythe only provider of wireless services offering this type of integrated servicespackage in Romania. 

    A consumer survey we commissioned in March2004 showed that we had achieved a Connex brand awareness level of 99.2% inRomania. The survey revealed that the top-of-mind brand awareness was 49.7% forConnex, versus 46.9% for Orange, our principal competitor. We accomplished suchbrand recognition through an extensive advertising campaign that focused onbrand visibility through television, billboard and magazine advertisements.Having achieved significant brand awareness in Romania, we are now building onour brand image through various programs and campaigns to ensure brand loyalty.A number of MobiFon's advertising campaigns have won international awards inspecialized forums. In 2002, the GSM Association nominated "Connex Play" for its"Best Marketing Campaign" award; in 2001, at the Portoroz Festival, Connex wasawarded a Golden Drum award for television advertising in the Telecommunicationscategory and in 2002, at the Cannes 3GSM Conference, the advertising campaignfor Connex Play was among the nominees for best marketing campaigns. 

    During the first quarter of 2004, MobiFon implemented aloyalty points program. Postpaid customers are awarded points, based on theirtotal bill, which can be redeemed for handsets or airtime. 
*    Czech Republic. We have establishedbrand recognition through extensive use of our brand icon, Oskar. Our brand isdeveloped around a personality that is friendly, personable, and Czech. Theseattributes are reflected in everything we do, from developing services todesigning the layout of our stores. We believe that our brand strategy clearlydifferentiates us from the other market competitors. In less than four monthsafter launch of operations, we had achieved in-country brand awareness which wason par with, or exceeded that, of the competition, according to independentmarket research. More importantly, Oskar has now achieved brand recognitionlevels in the Czech Republic approaching those of well-known internationalbrands. Over the past two years, we believe Oskar has positioned itself as anagent of innovation and a leading force behind changes in the Czech mobilemarket, leveraging this into one of the strongest brands in the country. Havinglaunched with a mass market brand and tagline of "Everybody, Everyday", Oskarhas since repositioned its brand to appeal to mid and high value subscribers andthe small business market. A consumer survey we commissioned in December 2003showed that we achieved an Oskar unaided brand awareness level of 97% in theCzech Republic compared to 78% for T-Mobile and 98% for Eurotel. Oskar was alsorecognized as "mobile operator of the year" in 2003 by mobilmania.cz, an onlinemobile magazine. 
***Distribution Channels**
    Romania. Connex distributes through 3channels: a direct sales force that serves the top 5,500 business accounts, anetwork of corporate stores in strategic cities for consumers and smallbusinesses and a group of exclusive and non-exclusive independent distributors.Our distribution channels are also differentiated based on our product offerings- postpaid and prepaid. Exclusive independent distributors distribute both postand prepaid products and services with a heavy emphasis on postpaid (handsetsand activations). We have also developed non-exclusive channels with a varietyof specialty retail stores and hypermarkets. In addition, prepaid products aredistributed through high traffic retail locations such as gas stations, lotteryoutlets and kiosks. Recent electronic means of recharging prepaid productsthrough banks' automated teller machines have also resulted in partnerships withfinancial institutions such as Banca Commerciala Romana. At the end of 2003 ourdistribution network included 11 corporate stores, more than 600 exclusivepostpaid locations and more than 3,500 points of sale for prepaid cards. Also, aspecial distribution channel was 

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developed for selling data services. Due to the data servicescharacteristics (such as need for integration in a complete informationtechnology solution, complexity of services, high value of services, and theneed for customized support) we have developed a nonexclusive channel of datapartners. Connex Data Partners are national and regional resellers, includingsystem integrators and service providers, who have the resources, skills andassets to meet the demands of the large enterprise and metro markets forintegrated information technology solutions. 
*    Czech Republic. Český Mobil relies ondirect channels of distribution to target both consumer and business customers.One of Oskar's primary channels of distribution is direct delivery. Through thischannel, customers can order service packages and handsets over the phone from afully dedicated telesales team. Delivery to the customers' offices or homes isfree and is expected within 48 hours. Direct delivery allows us to minimize thenumber of the external parties involved in the sale, build closer customerrelationships and reduce acquisition costs by eliminating costs associated withdealers and dealer commissions. Additionally, eliminating intermediaries helpsus to maintain standardized distribution processes and procedures and allows usto ensure that every contact with our customers is consistent with Český Mobil'sbrand image. 

   Český Mobil also operates a retail channel of distribution through its 42corporate stores, 2 mobile stores and more than 10,000 points of sale forprepaid value cards. Our larger corporate stores are located in the larger urbancenters of the Czech Republic, while the smaller stores focus on providing aphysical presence in regional shopping centers and secondary cities. Ourdistribution strategy in the Czech Republic also includes a team of dedicatedsales representatives for larger business accounts and third-party distributorsof prepaid airtime cards. ***Dealer Commission Structure***
    In Romania, we pay commissions to ourdealers for each postpaid customer acquired. In order to promote carefulselection of customers and avoid bad debt exposure, our dealers are required tocontribute an amount to the subsidies we provide for handsets, and commissionsare paid to dealers in installments over a period of months, with a debit to thedealer's account if customers churn within specified time periods. We believeour commission structure and practice are consistent with market practices inRomania. We pay a specified commission to each dealer for its sale of prepaidSIM cards and a lower commission each time the dealer sells an airtime rechargeon a prepaid SIM card. Oskar does not use dealers for SIM cards or handsets.However, Oskar pays a specified commission to the sellers of Oskarta prepaidairtime cards and a smaller commission for recharging prepaid accounts throughmore than 1,900 bank's automated teller machines. 
***Customer Care***
    We view customer care as an essentialelement of our strategy and seek to promote our customer focus to minimizecustomer churn. With our increasing focus on the retail consumer segments in ourmarkets, we are making increasing use of automated customer service that matchesthe level of revenue generated by the subscriber. Customers who subscribe tomore expensive services receive personalized customer service, while customerswho subscribe to more economical packages are served through our interactivevoice response, or IVR, unit and through the internet, although live customercare is available for all customers, if and when needed. We have establishedtoll-free customer care call center telephone lines staffed by trained employeesto answer inquiries by existing and potential subscribers. We utilizeintegrated, flexible customer care and billing systems to ensure that customerservice representatives are fully equipped to deal with customer concerns on areal-time basis. We closely monitor customer care calls and use informationgathered from these calls to identify and remedy system shortfalls and tocustomize marketing strategies, pricing and promotional plans. 

    As the first GSM entrant in Romania, weestablished the benchmark in quality and service standards for that market. Webelieve that our customer care initiatives in Romania are key in allowing us tomaintain our low churn rates and high levels of customer satisfaction. Throughconstant refining of internal processes, we reach high levels of productivity inthe call center and we make an ongoing effort to control the number of calls percustomer in a market where the need for education regarding wireless service isstill very high. In the Czech Republic, we offer customer care options to oursubscribers including our extensive and user-friendly "self-care" program whichallows us to handle a volume of customers without adding corresponding staff inthe customer service group. 
***Billing***
    Billing is governed by the nature of thesubscriber's service package. Our billing and customer care systems are fullyintegrated in a single system, providing our staff with a comprehensive view ofour subscriber's account. We use an automated collections process, making use ofshort text messaging services, interactive voice response and voice mail. 
*    Romania. We replaced our billing system in September2003. The new system is a best-in-class product that will provide 

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maximum flexibility, will allow for rapid configuration ofnew products and services and will support innovative discounting and packagingconcepts. In addition to its GSM/data convergence which has already beenimplemented, the new billing system will provide over time prepaid/postpaidconvergence, allowing us to offer bundled services and cross-product discountingin a consistent manner across all product lines and payment channels. 
*    Czech Republic. We have chosen anindustry-standard, widely deployed billing system that enables us to maintaincompetitive advantages in the areas of flexibility, speed to market, convergenceand scalability. Its flexibility allows the rapid configuration of new productsand services and supports innovative discounting and packaging concepts.Multi-tiered tariff schemes, bundling of services and cross-product discountsare all integral parts of this convergent billing solution, which also providesroom for expansion into other lines of business. The ability to sort informationin this manner allows us to further customize our pricing and billing plans, andoffer our customers additional value-added services, which we believe will helpus increase market penetration and capture market share. 
***Credit Management and Churn***
    Our exposure to bad debt for our postpaidcustomers is managed through generating customer profiles, giving us the abilityto set credit limits by customer segment and monitor daily usage patterns forcustomers that fit a high risk profile. Each operating company's frauddepartment reviews usage reports to monitor potential fraud or credit abuse.Once customers are deactivated for non-payment, an extended legal collectionprocess is performed in order to recover losses. Romania does not currently havea comprehensive credit bureau or credit-reporting agency, and we do not haveaccess to customers' or prospects' banking and credit records. However, we haveimplemented a detailed credit-scoring model based on demographic factors such asage, occupation and address, which we use to manage our credit exposure and torecommend appropriate service packages to potential customers. In addition, allof the GSM operators in Romania have access to a shared database of subscriberswho have been removed from their network for nonpayment. An individual in thisdatabase who wishes to subscribe to our service must pay a deposit. Actual baddebt expense at MobiFon has historically been fully covered by reserves which,in 2003, amounted to 2.6% of billable service revenues up from 2.0% in 2002. 

    To assist in managing and reducing bothbad debt and churn levels in the Czech Republic, we have implemented an initialmandatory deposit for any postpaid activation and an account spending limit.With the account spending limit, as a customer reaches 50% and 75% of thislimit, he or she is notified that he or she is within the percentage of his orher spending limit. At 100%, the customer is "hotlined", which prevents him orher from making outgoing calls until the account is brought under the spendinglimit. As the subscriber's creditworthiness is proven, we proactively increasethe subscriber's credit limit (similar to credit card companies) to allow forincreased spending and, therefore, higher average revenue per user, or ARPU. Newpostpaid subscribers who do not pay their invoice have their service restricted5 days after the invoice due date. They are removed from our subscriber numbers31 days after the due date of their invoice. Uncollectible account balances arewritten off 180 days after their due date. Actual bad debt expense at Český Mobilamounted to 1.1% of billable service revenues in 2003 down from 1.8% in 2002.

    Churn, or the rate at which customersleave an operator's network, can occur for a number of reasons. In the case ofvoluntary churn, the customer may decide that he or she cannot afford theservice, move out of the coverage area or decide to subscribe to a competingservice. In the case of involuntary churn, postpaid customers who have not paidtheir bill are, after a period of attempted collection, removed from the networkby us. At MobiFon, we include in our churn calculation those prepaid subscriberswhose services we terminated after several months have lapsed since they lastplaced or received a call. MobiFon adjusts the number of months of permittedinactivity based on market practice and currently churns prepaid subscribers whohave been customers for at least 14 months after three months of inactivity. AtČeský Mobil, our prepaid churn policy is based upon the amount of time that haselapsed since the customer replenished his account rather than on activity. Wehave undertaken several initiatives to address opportunities to improve customersatisfaction and thereby reduce voluntary churn including the following: 
- improving our call center and sales processes to focus on problem  resolution and a positive customer experience;    
- implementing specialized customer retention programs to address high ARPU  and long-tenured customers; and    
- developing targeted sale and contract renewal offers that reflect the  value of the customer.  

    MobiFon's average monthly churn rate was 2.12% in 2000,  1.68% in 2001, 1.85% in 2002 and 1.97% in 2003. 

    Český Mobil'saverage monthly churn rate, whose figures include for 2003 subscribers who havehad no activity in their account for more than 6 months, was 1.32% in 2000,1.86% in 2001, 2.4% in 2002 and 2.1% in 2003. ***Spectrum***
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*    Romania. MobiFon holds one of threelicenses issued to provide nationwide GSM-based wireless telecommunicationsservices throughout Romania. MobiFon paid an initial license fee of $50 millionin 1996 and an additional $25 million in 1999 for the extension of the licenseterm to 2011. In addition, MobiFon must pay a recurring annual fee ofapproximately 9.6 million Euro (approximately $12 million) for 12.4 MHz ofspectrum or 62 channels allocated in the 900 MHz range under its frequencylicense. MobiFon also purchased 2.4 MHz of spectrum or 12 additional channelsand has applied for six additional channels in Bucharest in the 1800 MHzfrequency range at an annual price per channel of 23,000 Euro (approximately$29,000). 
*    Czech Republic. Český Mobil holds thethird national GSM license in the Czech Republic. Český Mobil paid an initiallicense fee of one billion Korunas ($28.5 million), and must also pay arecurring annual fee for the right to operate GSM base stations and radiooperating stations, which amounts to approximately 84 million Korunas ($3.3million) now that Český Mobil has reached 98% population coverage. In addition,Český Mobil must pay a recurring annual fee for the right to operate microwavefrequencies to connect GSM base stations to switching centers. In 2003, this feeamounted to approximately 78 million Korunas ($3.1 million). Český Mobil isentitled to 18 MHz of spectrum or 90 additional channels in the 1800 MHz band.In addition, it has the right to use 4 MHz of spectrum or 20 channels in the 900MHz band. In accordance with current regulation, the Czech TelecommunicationOffice can reallocate frequencies with six months' notice. 
***Networks***
    We chose major cellular equipment vendorssuch as Ericsson, Siemens, Hewlett-Packard, Nortel and Cisco to design and buildnetworks that provided us with state-of-the-art service that allowed us to beginoperating quickly and to expand and upgrade our service as we acquired moresubscribers and new technology became available. Flexibility to keep up with newtechnology is essential to comply with license requirements and competeeffectively. We have also invested significantly in advanced operation andmaintenance systems to provide quality service to our existing networksubscribers. We continuously monitor network traffic and measure the real-timetechnical performance of our services against global benchmarks. We monitortraffic-related activities in order to respond quickly to conditions in whichthe traffic load exceeds expected levels. 

    We purchase most equipment for ournetworks through competitive tendering. The two key principles guidingprocurement decisions are benchmarking, to the extent available, and quality ofproducts that provide value to the customer. Another principle influencingprocurement decisions is avoidance of conflicts of interest. We and the othershareholders in our operating companies provide experts who review contracts andprices, and then benchmark them against contracts and prices obtained inwireless networks throughout the world. 

    We plan and construct each of our wirelesstelecommunications networks to meet a forecasted level of subscriber density andtraffic demand. Once this level is exceeded, we are normally able to increasenetwork capacity to maintain service standards by using techniques such assectorization and cell splitting. Other wireless telecommunications networkoperators and infrastructure manufacturers have also developed techniques we canuse to ensure service quality at minimal cost, such as microcells. Untiltechnological limitations on network capacity are reached, we can usually addadditional capacity in increments that closely match demand and at less than theproportionate cost of initial capacity. 
*    Romania. MobiFon began the developmentof its GSM-based wireless network, using 900 MHz frequencies, in December 1996.By March 1, 1997, MobiFon's network was operational and covered Bucharest, thecapital of Romania, including access roads and airports, as well as eight othermajor cities. As at December 31, 2003, MobiFon's state-of-the-art networkcovered 97% of the population of Romania. Use of asynchronous transfer modetechnology, or ATM, and voice compression techniques led to significant increasein network efficiency, preserving a high quality level. MobiFon now ensuresdirect international traffic interconnection with five carriers. In Romania, wecarry most of our communications traffic on our owned backbone (microwave andfiber optic cable) assets, rather than relying on RomTelecom, thereby reducingoperating costs. We have also strategically sourced our network backbonecapacity from several sources, including leased capacity from other third partycarriers. We lease two pairs of dark fiber optic strands over high voltage polesand technical space for network capacity expansion and network redundancy. Weare in the process of installing the required equipment to make one of thesefiber pairs fully operational (the "western ring" is already operational and the"eastern ring" is under development). A portion of this usable capacity isleased back to the lessor under the terms of the leasing agreement. The leasingagreement is for a term of 17 years commencing in 2003 or the end of our GSMlicense, whichever is shorter. The lease payments and receipts, whichindividually are estimated to reach $5 million per annum by the end of thecontract, are expected to offset one another such that minimal cash payments, ifany, will be made by either party. 
*    Czech Republic. The design for theCzech network employs both 900 MHz and 1800 MHz frequencies, taking into accountcertain availability restrictions on the 900 MHz band. This design offersbenefits with respect to greater rural coverage and greater capacity in denseurban environments. Český Mobil was using Ericsson and Siemens exclusively toconstruct its network, but now tenders the construction work to the mostcompetitive contractors. While Český Mobil is utilizing Ericsson mobile switchingcenters throughout 

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the network, it uses Ericsson cellsite equipment in theeastern part of the country and Siemens cellsite equipment in the western partof the country. As at December 31, 2003, Český Mobil's network covered 98% of thepopulation. We believe the network addresses current capacity adequately. ČeskýMobil's backbone network is based mostly on leased line infrastructure. ČeskýMobil leases backbone from two major providers, namely Český Telecom and Aliatel.
***Operations and Maintenance***
    We design, in consultation with our vendors,state-of-the-art operation and maintenance systems and efficient networkmanagement structures. Our primary objectives are high customer satisfaction andcompliance with license requirements. 

    We were able to keep our Romanian and Czech networksoperating on average at 99.92% and 99.97% of the time, respectively, in 2003,mainly as a result of the following monitoring and maintenance measures: 
- through standard monitoring and supervision features provided by certain  components of our networks, we continuously monitor the traffic on the  networks, examine the state of the networks in real-time and produce fault  reports and performance reports;    
-  to ensure peak network reliability and service quality, our  maintenance plans feature preventive and corrective maintenance programs. For  instance, we set appropriate alarm threshold levels for detection of equipment  problems such as low batteries, equipment or circuit outages and security  violations and we constantly refine maintenance procedures and documentation  to improve mean-time-to-restoration for problems that directly affect  subscribers. We also establish routine maintenance and testing of all  switching, radio equipment, systems running value added services and  interconnect facilities;  we safeguard our networks against disaster by using, at  various locations, redundant/physically diverse transmission systems,  redundant/physically diverse system components, battery back-ups, generators  and fire suppression systems, a back-up GSM network operations center for  MobiFon. In addition, regional centers maintain replacement parts for critical  components in the event of switching center or other system failures. We have  also defined a Business Continuity Plan at MobiFon and an Operational Recovery  Plan at Český Mobil which covers the main services and includes specific  procedures and guidelines to reduce the impact of various disaster situations.  **Competition**
    Our competitors or their principalcorporate shareholders have been operating for a number of years in our marketsor in other markets for wireless services, are currently serving a substantialsubscriber base and may have significantly greater financial resources thanthose available to us. However, we believe that our brand recognition andpricing strategies will enable us to compete effectively in these markets.Although we currently face competition from other forms of telecommunicationstechnologies, we believe that our GSM-based wireless networks should continue toenjoy cost and accessibility advantages over these other technologies. 
*    Romania. In addition to MobiFon,Romania currently has three other licensed wireless operators holding a total offour separate licenses: (1) Orange S.A., the other digital GSM 900 MHz operator,(2) RomTelecom's subsidiary, Cosmorom, a digital GSM 1800 MHz operator, and (3)Telemobil, a digital CDMA/2000 and analog Nordic mobile telephone protocol, orNMT, operator. 

    Orange, majority owned by France Telecomand operated initially under the name Dialog, acquired its 900 MHz license atthe same time as MobiFon in November 1996 and launched its services in June1997. Dialog re-branded its services under the Orange brand on April 5, 2002.

RomTelecom, the national fixed-line phone company, in whichthe partly-privatized Greek telecommunications company OTE has a 54.0% equityinterest, acquired its 1800 MHz license in connection with its privatization inNovember 1998. It launched its operations under the brand name Cosmorom in 2000.

    Telemobil won its analog NMT license inMarch 1992 and launched operations in May 1993 but did not succeed in reachingsignificant market penetration. In December 2001, Telemobil launched a newservice based on an advanced form of code division multiple access technologyknown as CDMA/2000. Inquam Romania, in which Qualcomm Inc. and Omnia Holdingsare investors, is now the main shareholder of Telemobil. Telemobil is the firstEuropean mobile operator to use CDMA technology and the first to use the 450 MHzband worldwide. Telemobil has titled its new service Zapp and is trying toposition its technology as the first third-generation service in Romania. 

    The following table presents a summary ofthe relevant information for each wireless operator in Romania, includingestimated market share based on publicly released data of the operators as ofDecember 31, 2003: 

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      **Operator****Brand Name****Technology****License Award****Start of Operations****Market Share**1) MobiFonConnexGSM 900/1800November 1996April 199749.2%2) OrangeDialog/OrangeGSM 900/1800November 1996June 199747.2%3) Telemobil...ZappCDMA 2000/NMTMarch 1992May 19932.4%4) RomTelecomCosmoromGSM 1800November 1998June 20001.2%*    Czech Republic. In addition to ČeskýMobil, the Czech Republic currently has two other licensed mobile operatorsholding a total of five licenses: (1) Eurotel, a digital GSM 900/1800 MHz mobiletelephone protocol and NMT (NMT450) operator and a holder of a UMTS license; and(2) Radiomobil, another digital GSM 900/1800 MHz operator and holder of a UMTSlicense. 

    Eurotel acquired its NMT 450 license inNovember 1990 and launched commercial analog service operations in September1991. The entry of GSM services reversed Eurotel's earlier NMT subscribergrowth. Eurotel won its 900 MHz GSM license in March 1996 and launchedcommercial operations in July 1996. Eurotel Praha was allocated 1800 MHzfrequencies in July 2001. Český Telecom, the national fixed line operator, becamethe sole shareholder of Eurotel in November 2003. 

    Radiomobil acquired its 900 MHz license inMarch 1996 and began providing commercial service under the brand name Paegas inSeptember 1996. Radiomobil was allocated 1800 MHz frequencies in July 2001.Radiomobil's majority shareholder is Deutsche Telekom AG. In April 2002Radiomobil rebranded its services to the T-Mobile brand name, and has sincechanged its name to T-Mobile Czech Republic. 

    T-Mobile and Eurotel were granted UMTSlicences in December 2001 in consideration for 3.86 billion Koruna (or $142.9million) and 3.54 billion Koruna (or $131.0 million) respectively. Therecipients were required to pay 1 billion Koruna (or $26 million) immediatelyand the rest over the next ten years and were required, as a unique deploymentcondition, that their commercial UMTS services achieve 90% coverage of Prague byJanuary 1, 2005. However, during the later half of 2003, both operatorssuccessfully renegotiated their UMTS licenses conditions with the Czechgovernment. The re-negotiated terms provide that the balance of the purchaseprice be paid in full, in 2004, in two installments, while the deploymentcondition be postponed by one year, to January 1, 2006. The Ministry ofInformatics has indicated that these were the only changes made to the originallicenses, and that a third UMTS license remains available, at undisclosedconditions. Additional UMTS licenses may be offered in the future. 

    The following table presents a summary of the relevantinformation for each wireless operator in the Czech Republic including estimatedmarket share based on publicly released data of the operators as of December 31,2003: 
**Operator****Brand Name****Technology****License Award****Start of Operations****Market Share**EurotelEurotel/GoGSM 900/1800March 1996July 199643.4% EurotelNMT 450November 1990   -UMTSDecember 2001  T-Mobile/     RadiomobilT-Mobile/Paegas/TwistGSM 900/1800March 1996September 199640.7% -UMTSDecember 2001  Český Mobil...OskarGSM 1800/900 **(1)**October 1999March 200015.9%
__________ (1) Used outside of Prague 
**Regulatory Environment and Licenses***    Romania. The Romanian government hasadopted a policy of harmonizing Romanian telecommunications regulations with EUnorms. In this respect, Romanian telecommunications legislation wassignificantly modified during 2002 to reflect the EU directives, and a newregulatory authority, the Romanian Telecommunication National Agency forRegulation in Communications Sector, known by its Romanian acronym ANRC, wasestablished. Its main purpose is the implementation of a national policy in thetelecommunications sector. The ANRC now exercises a portion of the authorityformally held by the Ministry of Communications and Information Technology, orMCIT. Under the new telecommunications regulations, a communications operatorneeds to obtain three authorizations and licenses: a general authorization fornetwork services issued by the ANRC, a numbering license issued by the ANRC anda frequency spectrum license issued by the MCIT. 
***General Authorization for Network Services (issued by ANRC)***
    The general authorization sets forth therequirements that a potential operator must meet in order to providetelecommunications services. As required by the telecommunications law andANRC's Decision No. 131 dated December 9, 2002, MobiFon filed a notificationwith the ANRC and was issued the certification registered under no. 782/December24, 2002, confirming that MobiFon 

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complies with the requirements of the general authorization and may engage inprovision of telecommunications services. 

    If we fail to comply with theauthorization to provide electronic communications networks, the regulatoryauthority may apply administrative fines up to 2% of revenue. Breaches that aresubject to administrative fines include the following: (1) breach of theobligations regarding the general authorization, (2) using a radio frequencywithout having a license, (3) using numbering resources without having a licenseand (4) not complying with the frequency and numbering licenses' terms andobligations. 
***Numbering License (issued by ANRC)***
    The ANRC is responsible for granting toall fixed line and wireless operators a numbering license for allocation ofnumbers based on the national numbering plan. On July 23, 2003 and December 23,2003, the ANRC issued to MobiFon numbering licenses no. 1.2 and 1.3, valid untilFebruary 14, 2013. These licenses confirmed MobiFon's right to use the numberspreviously allocated under MobiFon's former GSM license and allocated to MobiFonadditional numbers. Although the ANRC may include in the numbering license theobligation of the operators to pay a certain tax for the use of the allocatednumbering resources, MobiFon's numbering license does not include such anobligation. However, MobiFon is subject to a monitoring fee payable to the ANRCand amounting to 0.2% of revenue. 
***Frequency Licenses (issued by MCIT)**
    Romania. The MCIT has retainedauthority over the transmission frequencies used by all wireless operators inRomania, as well as the frequencies used by radio, television and othercommunications media. On June 30, 2003, the MCIT issued the GSM frequencylicense to MobiFon. This license expires on December 31, 2011 and may be renewedby MCIT upon a request by MobiFon made at least six months prior to theaforementioned expiry date. The license gives us the exclusive right to use 62channels in the GSM 900 MHz range and 12 channels in the 1800 MHz range inBucharest. At the request of MobiFon, the MCIT might supplement or reduce theallocated number of channels and radio frequencies allocated in the GSM 900 andGSM 1800 bands. 

    The GSM frequency licenses containprovisions regarding coverage and quality obligations. The coverage requirementsinclude having: (1) at a minimum, one base station installed and maintained inuse in each county capital; (2) coverage area of a minimum of 50% of theterritory; and (3) service availability minimum of 50% population coverage. Interms of quality obligations MobiFon has to provide the service 24 hour per day,7 days per week and the call blocks and call drops over the radio path shall notexceed 2% at peak hours. 

    The MCIT may suspend or withdraw the GSM frequency licensein cases of serious breach by MobiFon of its obligations under the license orunder applicable regulations. 
*    Czech Republic. A resolution of theCzech Republic government dated August 10, 1994 set out the principles of thenational telecommunications policy and maintained Český Telecom's monopoly, untilDecember 31, 2000, on the fixed-line long distance and international telephoneservices market. The same resolution also restricted competition in thefixed-line local telephone services market for the same period. In 1997, theCzech Republic became a signatory to the World Trade Organization ReferencePaper on Telecommunications through its Additional Commitments to the Scheduleon Basic Telecommunications Services, which committed the country toliberalizing its telecommunications market. Following this agreement, in April1999, the Czech government adopted a resolution setting out the principles of anew national telecommunications policy. Among the main goals of this policy wasthe preparation of a Telecommunications Act to open the Czech Republic'stelecommunications market to competition by December 31, 2001. The newTelecommunications Act came into force July 1, 2000. 

    The Czech Telecommunications Office, orthe CTU, constituted under the Act as the national regulatory authority, isresponsible for telecommunications, including licenses, pricing and pricingpolicies and dispute resolution. As of January 1, 2003, responsibilities fortelecommunications industry policies moved from the Ministry of Transport andCommunications to the newly established Ministry of Informatics. TheTelecommunications Act of 2000 is now currently under review by this Ministry,and is scheduled to be replaced, most likely in the second or third quarter of2004, by a new Act on Electronic Communications, so as to harmonize applicablelaws to those of the relevant EU Directives. The new Act, among other things,will redefine the framework for interconnection, co-location and universalservice, and will mandate the terms and conditions of mobile number portability.Český Mobil has actively participated in the drafting process through an industryassociation, by providing comments on the proposed wording of the Act, and willpursue its efforts during the parliamentary process. 

    In 2002, so as to more accurately reflectthe language of the telecommunications Act, Český Mobil's GSM Authorization tooperate its GSM network was replaced by two licenses. The "CTU decision5379/2002-610 on granting of the telecommunications license to establish andoperate public mobile telecommunication networks under the GSM standard" wasissued on June 17, 2002, and the 

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    "CTU decision 8951/2002-610 on granting ofthe telecommunications license to provide the public telephone service throughthe public mobile telecommunication network" was issued on June 20, 2002. Bothof these decisions came into force on November 13, 2002 following an appealprocess, and the licenses are valid for a period of 18 years from the day onwhich the decisions came into force. 

    Pursuant to these licenses, and thecurrent Telecommunications Act, Český Mobil is entitled to provide the servicesthroughout the whole territory of the Czech Republic and to conclude agreementswith foreign entities in order to provide international telecommunicationsservices from other countries to the Czech Republic and from the Czech Republicto other countries. 

    Moreover, Český Mobil is obliged, (1) toadhere to respective legal regulations, measures and price decisions issued bythe CTU, the numbering plan and the Czech National Standards, even those issuedafter the Decisions on the Telecommunication License came into force, (2) toprovide the service in compliance with technical parameters corresponding tointernational recommendations and ETSI standards, and (3) to maintain thecoverage of its public mobile network to 98.1% of the population of the CzechRepublic, and comply with specific parameters of signal quality defined by thelicenses. 

   Český Mobil is required to fulfill all other obligations under theTelecommunication Act, such as to interconnect directly or indirectly with alloperators in the market that request such interconnection, and to contribute, onan annual basis, to the Universal Service Obligation fund. CTU is entitled torestrict, suspend or terminate Český Mobil's licenses for a number of reasons,including in accordance with public interest or a material breach of theprovisions of the licenses or Telecommunication Act. 
    Furthermore, when the initial GSMAuthorization was issued in 1999, Český Mobil had undertaken, under an agreementnot forming part of the GSM Authorization, to construct the technologicalinfrastructure required to provide internet access to schools and librariesthroughout the Czech Republic by October 8, 2002. Český Mobil has submitted acomprehensive proposal to fulfill its obligation within the required deadlineand negotiations were underway with different ministries to discuss thepotential implementation of the proposal. As part of these discussions, ČeskýMobil extended its offer past the October 8, 2002 deadline on two differentoccasions, the last one requesting an answer from government prior to the end ofFebruary 2003, failing which Český Mobil would consider that it fulfilled itsundertaking. Český Mobil has not received any official communication from thegovernment on this subject since then. 
**Roaming Agreements**
    MobiFon and Český Mobil are signatories ofthe GSM Memorandum of Understanding which is now known as the GSM Association.This association establishes common technology standards facilitating worldwideroaming. The roaming agreements allow our subscribers to use their own handsetswherever GSM wireless service is provided, or to roam in such locations with ahandset that is compatible with the local network. 
*    Romania. As of May 1, 2004, MobiFonhad negotiated roaming agreements with 252 operators in 112 countries and iscontinuing to negotiate additional roaming agreements. MobiFon's main objectiveis currently to increase the number of new roaming destinations for itssubscribers, with a special emphasis on remote holiday destinations and LatinAmerican countries. Also, in order to maximize roaming revenues, MobiFon hasentered into arrangements with wireless operators in order to offer prepaidroaming to its subscribers. The prepaid roaming agreements allow MobiFon'sKamarad prepaid subscribers to use their own handsets and prepaid cards whereverthe prepaid roaming service is available. As of May 1, 2004, MobiFon wasoffering its prepaid customers the ability to roam in 29 networks covering 17countries. MobiFon is the first mobile operator in Romania to offer GPRS roamingservices to its subscribers. As of May 1, 2004 MobiFon was offering its postpaidsubscribers GPRS roaming services in 32 networks covering 20 countries. 
*    Czech Republic. As of May 1, 2004,Český Mobil had launched commercial roaming service with 147 operators in 75countries, including all of the operators in its neighbouring countries. Inaddition, as of May 1, 2004, Český Mobil, like MobiFon, offered its prepaidsubscribers the ability to roam in 94 networks covering 46 countries. Český Mobildoes not yet offer GPRS roaming services to its subscribers. 
**Interconnection Agreements***    Romania. In August 1997, MobiFonsigned an initial one-year interconnection agreement with RomTelecom. Theagreement has been successively extended for additional 12-month periods. Theagreement and the addenda subsequently entered into provide, among other things,for the settlement procedure and the exchange of traffic information betweenparties, the procedures for applying the fixed national mobile tariff and forthe settlement method in case of possible differences due to exchange ratefluctuations, the access by users of either RomTelecom's or MobiFon's servicesof the services supplied on either network, subject to certain 

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exceptions, and the settlement of the terms and conditionsapplying to services other than basic interconnection services through separateagreements. MobiFon also leases space in certain RomTelecom facilities where itlocates technical equipment needed for interconnection. Such leasing is notsubject to interconnection conditions but is rather the subject of separateagreements between the parties currently under negotiation. The parties haveagreed that the lease rates shall, in the future, be included in theinterconnection agreement. 

    In 2003, the liberalization of Romaniantelecommunications market ended RomTelecom's monopoly for international trafficto and from Romania, and as a result, MobiFon was no longer required to useRomTelecom as the sole source for carrying international traffic. In November2002, MobiFon and RomTelecom concluded an amendment to the interconnectionagreement whereby they terminated the provisions with respect to routing allinternational traffic through RomTelecom, effective after December 31, 2002. Asa result, effective 2003, MobiFon entered into bilateral internationalinterconnection agreements with international carriers including carriers basedin Germany, Italy, Belgium and Austria. These agreements allow us to send andreceive traffic to and from these carriers' customers, and generally providebetter quality, service and contract terms than our prior agreement withRomTelecom. In October 2003 MobiFon entered into an agreement for providingservices related to international traffic with Romtelecom and RadiocomunicatiiS.A., or SNR. 

    A December 2002 decision of the ANRCdesignated RomTelecom as a significant market power with respect to the accessto public networks of fixed telephony. The decision imposed on RomTelecom anobligation to publish a Reference Interconnection Offer, or RIO, with aninterconnection rate set by the ANRC. In February 2003 RomTelecom published theRIO. 

    Another decision of the ANRC, issued inMarch 2003, designated MobiFon as a significant market power, or SMP, withrespect to call termination into its own network. The decision imposes variousobligations upon MobiFon in order to maintain transparency andnon-discrimination in the interconnection market, including making publiclyavailable the tariffs for all interconnection related services, offering equalinterconnection conditions and related necessary information to all customers,maintaining separate accounts for interconnection related operations, andapplying cost oriented tariffs for interconnection services. The decision alsoestablished the maximum interconnection rates at $0.11/min for 2003 and$0.10/min from January 1, 2004 until implementation of a long-term incrementalcost calculation model later in 2004. 

    Due to the changes in the regulatoryenvironment resulting in the obligations imposed by the ANRC to both operatorsin 2003, MobiFon and RomTelecom are currently negotiating a new interconnectionagreement based on RomTelecom's RIO and MobiFon's published interconnectionrates. 

    In October 2003, given both parties' SMP obligationsregarding the level of the interconnection rate, the parties concluded anaddendum setting new interconnection rates as follows: 
- Connex: U.S.$0.11/min; and    
- RomTelecom: € 0.0214/min for peak time and € 0.0197/min for off peak time.  

    In the same addendum, MobiFon andRomTelecom agreed to extend the duration of the existing agreement untilconclusion of the new interconnection agreement. In October 2003, MobiFon andRomTelecom also entered a bilateral agreement for providing services related tointernational traffic. The parties signed another addendum, effective January 1,2004, setting the termination rate into the Connex network at the level of US $ 0.10/ min. due to MobiFon's SMP obligation with respect to maximum level ofinterconnection rates. 

    On May 5, 1997, MobiFon concluded aninitial "bill and keep" interconnection agreement with Orange which applieduntil May 12, 1999, when MobiFon entered into another interconnection agreementwith an initial term of 12 months, extendable for additional 12 month periods.This interconnection agreement provides for the interconnection of MobiFon'snetwork with that of Orange. Under this agreement, certain fixed charges ortariffs are payable by the parties according to the amount of call traffic thateach party handles for the other. The agreement currently provides proceduresfor settlement and monthly traffic information exchanges and the availability ofSMS between the two networks. 

    In March 2003, Orange was also designatedas a significant market power with respect to call termination in its ownnetwork. The same obligations of transparency, non-discrimination and maximuminterconnections rates as those imposed on MobiFon were imposed on Orange as aresult of the decision. 

    Due to changes in the regulatoryenvironment resulting from the obligations imposed by the ANRC on both operatorsin March 2003, Orange and MobiFon have entered into negotiations for a newinterconnection agreement. The parties have agreed, as an 

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addendum to the existing agreement, that on an interim basis,an interconnection rate of $0.11/min will be used. The new interconnectionagreement will also specify that each party shall charge for the leased lines ithas provided for ensuring interconnection. Based upon a further addendum datedSeptember 15, 2003, MobiFon and Orange agreed to extend the duration of theexisting agreement until completion of negotiations and conclusion of a newinterconnection agreement. Applicable from 1st January 2004, the parties signedanother addendum setting the termination rate at the level of US $ 0.10 / min.due to both parties' SMP obligations regarding the maximum level ofinterconnection rates. 

    MobiFon also entered into aninterconnection agreement with Cosmorom on March 20, 2000, for an initial termof 24 months, extendable for additional 24-month periods. This interconnectionagreement provides for the interconnection of MobiFon's network with that ofCosmorom. Under this agreement, certain fixed charges or tariffs are payable bythe parties according to the amount of call traffic that each party handles forthe other. On April 12, 2001, MobiFon and Cosmorom entered into an addendum tothe interconnection agreement providing for the availability of SMS between thetwo networks. 

    In the context of SMP obligations imposedon MobiFon by the ANRC in March 2003, MobiFon proposed in November 2003 toCosmorom that parties should sign an addendum to the existing interconnectioncontract for setting the interconnection rate into both networks at the level of$0.11/min (from $0.11/min during peak periods and $0.06/min during off peakperiods). As Cosmorom did not accept MobiFon's proposal, MobiFon sent Cosmoromthe required three-month notification letter for contract termination effectiveon March 20, 2004 and requested the start of negotiations for a newinterconnection agreement asking for a bilateral flat rate of US$0.11/min.Applicable from 1st January 2004, the parties signed an addendum to existingagreement setting the termination rate into the Connex network as follows: US$0.10 -peak and US$0.06 - off peak due to MobiFon's SMP obligation regarding maximumlevel of interconnection rate. The parties have now agreed to extend theexisting interconnection agreement to the end of July 2004, using a US$0.10/minrate for all traffic terminating on the Connex network. 

    MobiFon entered into an interconnectionagreement with Telemobil, the NMT operator, on March 20, 2001, with an initialterm of 24 months, extendable for additional 24 month periods, setting theinterconnection rate at $0.12/min. On August 9, 2002, MobiFon and Telemobilentered into an addendum to the interconnection agreement providing for theavailability of SMS between the two networks at the rate of $0.03/SMS. On May26, 2003, in the context of the ANRC March 2003 decision, MobiFon and Telemobilentered into a further addendum setting the interconnection rate at $0.11/min,effective June 1, 2003. On September 15, 2003, MobiFon and Telemobil concludedanother addendum extending the term of the existing agreement until completionof negotiations and conclusion of a new interconnection agreement. The partiessigned another addendum, effective January 1, 2004, setting the termination rateinto Connex network at the level of US$0.10/min due to MobiFon's SMP obligationwith respect to maximum interconnection rates. 

    MobiFon has also recently entered intointerconnection agreements with a number of new local operators at a rate ofUS$0.10/min for calls terminating on the MobiFon network and rates ranging fromUS$0.02 min to US$0.04/min for calls terminating on these parties networks.These local operators include Atlas Telecom, RDS, SNR, NetMasters CommunicationsSRL and Adisam Telecom SA. 
*Czech Republic. Český Mobil is directly or indirectlyinterconnected with all major operators in the Czech telecommunications market.This list of directly interconnected parties includes: Český Telecom, Aliatel,GTS, Contactel, Pragonet, Český Radiokomunikace, Czech On Line, Tele 2 and Etel,each of which provides fixed line services in the Czech markets and Eurotel andT-Mobile, who are the other two mobile operators in the market. Due to thecurrent regulatory requirements, Český Mobil will have to interconnect directlywith other licensed alternative operators that request change from indirect todirect interconnection. 

    Since 2001, Český Mobil has been activelylobbying with the CTU to bring traditionally high interconnection rates closerto the true costs of providing mobile call termination services. On November 27,2001, the CTU issued a price decision establishing a fully allocated cost-basedmethodology for setting interconnection rates for calls terminating in mobilenetworks, as well as establishing a maximum rate of 3.66 Korunas per minute.This represented a 43% decrease compared to the previous rate. As the trafficexchanged between Český Mobil and its two competitors (Eurotel and T-Mobile) hasnot been balanced and works to Český Mobil's disadvantage, such rate reductionhas had a significant positive impact on Český Mobil's net position oninterconnection payments to other mobile networks. Furthermore, on March 18,2004, the CTU issued a new Price decision setting a maximum rate of 3.19 Korunasper minute for calls terminating on mobile networks. 

    On September 3, 2002, the CTU issued a newprice decision setting the interconnection rates for calls terminating intofixed networks based on a version of the long-run incremental cost model, orLRAIC. This resulted in a 22% decrease of the rates compared to the previousblended interconnection rate. Furthermore, on January 8, 2004, the CTU issued anew price decision setting the interconnection rates in the fixed network, whichresulted in a further 20% decrease over the previous rates. Although this newLRAIC methodology has not been implemented as of yet in mobile networks, it isexpected that the CTU will adopt a similar costing method 

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in the near future, which may lead to additional decreases inthe level of mobile interconnection rates, and thus further improve our netposition on interconnection payments. Český Mobil is advocating for the regulatorto mandate the use of a similar methodology to established interconnection ratesfor calls terminating in mobile networks as soon as practicable. 
**Co-shareholders***    Romania. Our partners in MobiFon areVodafone Europe B.V., holding a 20.1% equity interest, Deraso Holding B.V., agroup of financial investors led by J.P. Morgan Partners, LLC, holding a 14.4%equity interest and certain other minority investors, together holding a 2.0%equity interest in MobiFon. 
*    Czech Republic. Our interest in ČeskýMobil is held through TIW Czech. Our partners in TIW Czech are large financialinvestors, including J.P. Morgan Partners, EEIF Czech N.V. and EmergingInfrastructure Fund C.V. Our subsidiary ClearWave holds a 50.8% voting interestand 27.1% equity interest in TIW Czech, with the financial investors holding theremaining 49.2% voting and 72.9% equity interest. TIW Czech holds a 99.87%direct interest in Český Mobil. United Pan-Europe Communications N.V. holds theremaining 0.13% interest. 
**Liquidity Agreements***    ClearWave Liquidity. ClearWave andother members of our group have entered into agreements with our co-shareholdersin TIW Czech, as well as with certain minority shareholders in MobiFon holdingin aggregate approximately 15.5% of the outstanding shares of MobiFon, to allowthese parties to participate in certain transactions that create liquidity forClearWave's shares. Two types of events trigger tag-along rights for theseco-shareholders under the agreements: (1) sales by Telesystem InternationalWireless Corporation N.V., or TIWC, a wholly-owned subsidiary of TIW, of sharesof ClearWave pursuant to a bona fide arms' length transaction for cash or liquidstock; or (2) certain types of public sales of shares of ClearWave or itssuccessor company. 

    Accordingly, such co-shareholders wouldhave the right to participate in the particular transaction on terms as close aspossible to those applicable to TIWC or ClearWave by selling all or part oftheir shares in TIW Czech and MobiFon. ClearWave and TIWC also have drag-alongrights, under certain conditions, to require such co-shareholders to participatein a transaction that creates liquidity for ClearWave's shares. 
*    MobiFon Liquidity. Pursuant to anamended and restated exit agreement dated May 3, 2001, in the event there hasnot been an initial public offering of the shares of MobiFon by October 1, 2004,certain minority shareholders in MobiFon holding in aggregate approximately15.5% of the outstanding shares of MobiFon, may require TIWC or, at TIWC'soption, ClearWave to make an offer to acquire their shares of MobiFon at a pricerepresenting the fair market value of such shares as determined by anindependent valuation and shall be payable, at our option, in cash or in ourmarketable securities. This right terminates upon an initial public offering ofClearWave shares that meets certain criteria. The exit agreement states that thesole obligation of the minority investors in the event that they exercise thisright shall be to transfer good title to their MobiFon shares free from anypledge, lien or other encumbrance. Amounts due under MobiFon's senior creditfacility are secured by security interests in, among other things, MobiFon'sshare capital held by all MobiFon's shareholders. See "Description of ExistingIndebtedness". 
*    TIW Czech Liquidity. Under the termsof the unanimous shareholders' agreement for TIW Czech, the shareholders of thatcompany set a horizon of five years from their initial investment to seekliquidity. Accordingly, the contractual arrangements contemplated a potentialinitial public offering, possibly with a secondary portion, of either TIW Czechor ClearWave within five years. If such an offering cannot be achieved withinthat time frame and shareholders of TIW Czech have not otherwise achievedliquidity through the exercise of their tag-along rights or the exercise by usof our drag-along rights in the context of a ClearWave liquidity event aspreviously mentioned, then, at any time after December 3, 2004, the TIW Czechshareholders shall initiate an orderly sale process of TIW Czech, unlessshareholders of TIW Czech holding 80% of the equity decide otherwise. In thatevent, TIW Czech must use its best efforts to seek a buyer for its assets orshares as a going concern in a timely fashion. We have the exclusive right tomake a preemptive offer and acquire all the shares of TIW Czech not alreadyowned by us if a majority of the other shareholders accept such offer or anysubsequent third party offer that is on less favourable terms. 
**Environment**
    We are subject to certain local, regional,national and foreign laws and regulations governing environmental protection.Such laws and regulations impose strict requirements for the use, management anddisposal of hazardous substances. We believe that we are in substantialcompliance with existing environmental laws and regulations and do not expectthe costs of complying with environmental laws to have a material impact on ourcapital expenditures, earnings or competitive position in the foreseeablefuture. As requirements in the countries in which we operate become morestringent, however, we may become subject to increasingly rigorous requirements

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governing fuel storage for our back-up power supply, investigation andcleanup of contaminated properties on which our towers are located, andemissions of, and human exposure to, radio frequency emissions. 
**Employees***    Romania. As of December 31, 2003,MobiFon had a total of 1,856 employees, of whom 780 were employed in customerservice, 373 were in our engineering department, 185 were employed ininformation systems, 311 were in our sales and marketing department and 207 wereemployed in general administration. None of MobiFon's employees are subject tocollective bargaining agreements. MobiFon believes that it enjoys good relationswith its employees. 
*    Czech Republic. As of December 31,2003, Český Mobil had a total of 1,453 employees, of whom 490 were employed incustomer service, 235 were in our engineering department, 140 were employed ininformation systems, 423 were in our sales and marketing department and 165 wereemployed in general administration. None of Český Mobil's employees are subjectto collective bargaining agreements. Český Mobil believes that it enjoys goodrelations with its employees. 
**Property***    Head Office. We sublease approximately 810 squaremeters of office space in Montreal from Telesystem Ltd. for an annual rent ofapproximately Cdn$385,000, including furniture. 
*    Romania. MobiFon leases approximately9,500 square meters of office space for its head office in Bucharest forapproximately $3.3 million annually, including operating expenses. MobiFon alsocurrently leases various properties for the operation of its network and otherpurposes related to its business for approximately $29.3 million per year. 
*    Czech Republic. Český Mobil leasesapproximately 15,192 square meters of office space for its head office in Praguefor approximately $3.1 million including operating expenses, cleaning andsecurity. Český Mobil also currently leases various properties for the operationof its network and other purposes related to its business for approximately$34.5 million per year. 
**INDIAN OPERATIONS**
    As at December 31, 2003, we also held,indirectly, an interest in Hexacom India Limited, a cellular operator in Indiain the State of Rajasthan. We disposed of this interest subsequent to year end.At December 31, 2003, Hexacom India Limited had 203,200 subscribers. 

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**ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS**
    Incorporated by reference in this Form20-F is our "Operating and Financial Review and Prospects" filed with the UnitedStates Securities and Exchange Commission as Exhibit 99.1 to our Form 6-K datedMarch 5, 2004 and with securities commissions and other similar authorities inCanada. 

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**ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES DIRECTORS AND SENIORMANAGEMENT TIW 
*Board of Directors***
    The following table and notes thereto set out as at May19, 2004: 
-  the name of each individual serving as adirector until the next annual meeting or until the office is otherwise vacated;  
-  all other positions and offices with usnow held by each such individual, if any;  
-  the principal occupation or employment ofeach director; and  
-  their respective periods of service as adirector.  

    Allof the directors listed below were elected at our annual and special meeting ofshareholders held on May 4, 2004 with the exception of Thierry Baudon who wasappointed on May 6, 2004 by the Board of Directors subsequent to the meeting inaccordance with our by-laws and François Laurin appointed in replacement ofDaniel Cyr on May 6, 2004. We have no service contracts with the directors.Certain members of our Board of Directors were appointed pursuant to aninvestors rights agreement that we describe in more details under the caption"Related Party Transactions" of Item 7 of this Form 20-F.    **Name and Position or Office with    TIW****Principal Occupation or Employment****Director Since**CHARLES SIROIS (2)Chairman of the Board and Chief    ExecutiveMarch 1997Director and Chairman    of the BoardOfficer, Telesystem    Ltd. (a privately owned  holding company)    THIERRY BAUDON. Chief Executive    Officer of Emerging MarketsMay 2004DirectorPartnership (Europe)    Ltd. and Managing  Director of Emerging    Markets Partnership (an  international private    equity firm)    JACQUES A. DROUIN     (2)Managing Director,    Lazard Brothers & Co.March 1997DirectorLimited (an investment    bank) and Canada  Country Head based in    London, England    MICHAEL R. HANNON     (1)Partner J. P. Morgan    Partners, LLCMarch 2002 (3)Director(a private equity    organization)    C. KENT JESPERSEN     (1)Chairman of the Board,    La Jolla ResourcesMarch 1999DirectorInternational Ltd. (an    international advisory  and investment    company)    FRANCOIS LAURIN     (1)Vice-President,    Investments, CDP CapitalMay 2004 (4)DirectorCommunications (a fund    manager)    JONATHAN CHARLES C.    MEGGS (2)Partner J. P. Morgan    Partners Europe Ltd.March 2002Director(a private equity    organization)    CHRISTIAN SALBAING    (2)Managing Director,    EuropeanDecember 2003DirectorTelecommunications for    Hutchison Europe  Telecommunications 
__________ 
- Member of our audit committee. 
- Member of our human resources and compensation committee. 

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-  Mr. Hannon had been a member of our Board of Directorsfrom May 2000 until his resignation on August 13, 2001. He was reappointed adirector in March 2002.  
-  Mr. Laurin had been a member of our Board of Directors fromMay 2003 toSeptember 2003. He was re-appointed in May 2004.  
*    Thierry Baudon is Chief ExecutiveOfficer of Emerging Markets Partnership (Europe) Ltd. and Managing Director ofEmerging Markets Partnership (an international private equity firm) since 1999.Prior to joining Emerging Markets Partnership, Mr. Baudon was the Director ofthe International Finance Division in the Suez-Lyonnaise des Eaux Group,responsible for structuring large-scale transactions involving project financeand private equity in emerging market countries. Prior to joining Suez-Lyonnaisedes Eaux in 1995, Mr. Baudon was Deputy Vice President and a Member of theOperations Committee of the European Bank for Reconstruction and Development ("EBRD").Prior to joining EBRD in 1991, Mr. Baudon spent ten years in the World BankGroup, holding various senior positions. 
*    Jacques A. Drouin is Managing Directorof Lazard & Co., Limited and Country Head for Canada in London, United Kingdom.Prior to joining Lazard in 2000, Mr. Drouin was Director and Country Head forCanada of J. Henry Schroder & Co. Limited from 1994 to 2000, Chairman and ChiefExecutive Officer of The Laurentian Group Corporation from 1989 to 1994 andPresident and Chief Executive Officer of The Laurentian General InsuranceCorporation Inc. from 1983 to 1989. Mr. Drouin is a director of SNC LavalinGroup Inc., a member of the international Advisory Board of McGill UniversitySchool of Business, and a member of the Order of Engineers of Quebec, and aFellow of the Institute of Management Consultants. Mr. Drouin holds a Bachelor'sdegree of Applied Science in Engineering from the University of Montreal and aMaster of Business Administration degree from McGill University. 
*    Michael R. Hannon is a Partner of J.P.Morgan Partners LLC, the private equity affiliate of J.P. Morgan Chase & Co.Prior to joining J.P. Morgan Partners in 1988, Mr. Hannon was with MorganStanley & Co. Mr. Hannon is the co-head of the technology, media, andtelecommunications investment area at J.P. Morgan Partners, has led investmentsin many firms in this sector, and currently serves on the boards of severalprivately held companies. He holds a B.A. from Yale University and a Master ofBusiness Administration degree from Columbia Business School. 
*    C. Kent Jespersen is Chairman of LaJolla Resources International Ltd. From 1997 to 1998, Mr. Jespersen wasPresident and Chief Executive Officer Elect of Nova Energy Services. From 1994to 1997, Mr. Jespersen served as President of NOVA Gas International Ltd. andSenior Vice-President of NOVA Corporation. From 1993 to 1994, Mr. Jespersen wasPresident of NOVA Gas Services Ltd. and from 1992 to 1993, he served as SeniorVice-President, Corporate Development of NOVA Corporation. From 1984 to 1992,Mr. Jespersen was President and Director of Foothills Pipe Lines Ltd. Mr.Jespersen also serves on the boards of directors of Axia Net Media Corporation,Bow Valley Energy, Trans Alta Corporation and Matrikon Ltd. and he is Chairmanof the Board of CCR Technologies Ltd., Vista Midstream Solutions and GeacComputer Corporation Limited. 
*    Francois Laurin, CA, CFA, isVice-President Investments at Capital Communication CDPQ Inc., thetelecommunications private equity arm of Caisse de dépôt et placement du Québec.Mr. Laurin has extensive financial expertise as a senior executive in thetelecommunications, broadcasting and transportation industries. He has beeninvolved in the reporting, financing, planning, acquisitions and divestituresaspects of corporate finance as well as the various financial operations of bothservice and manufacturing businesses. Prior to joining Capital CommunicationCDPQ in April 2003, he was vice-president controller of BombardierTransportation since 2001 and from 2000 to 2001 he was Vice-President, Financeand administration at Microcell i5, a start-up operation in Internet solutionsfor mobile handsets. Prior to that, Mr. Laurin held positions at Teleglobe Inc.as corporate controller from 1992 to 1995 and as Vice-President, Finance andController from 1995 to 2000. Mr Laurin earned a Bachelor of Commerce degree inAccounting and Finance and a graduate diploma in accounting at McGillUniversity. He is a member of the Ordre des Comptables Agréés du Québec, theCanadian Institute of Chartered Accountants and the Association for InvestmentManagement and Research. 
*    Jonathan Charles Carter Meggs is aPartner of J.P. Morgan Partners LLC, the private equity affiliate of J.P. MorganChase & Co. Mr. Meggs is based in London and Group Head of the business inEurope. Prior to joining J.P. Morgan Partners in 1996, Mr. Meggs was a Directorof the Chase Manhattan Bank, N.A. responsible for mezzanine and equityinvestments. Mr. Meggs has held many board seats and directorships in companieson behalf of J.P. Morgan Partners in a variety of industries includingtelecommunications and financial services. Mr. Meggs has a BSc (Hons) in Physicsfrom Bristol University in the UK. 
*    Christian Salbaing is ManagingDirector - European Telecommunications, for Hutchison Europe Telecommunications,Luxembourg, Hutchison Whampoa's main holding company for its 3G ventures inEurope. Mr. Salbaing is also Executive Vice-Chairman of H3G S.p.A (Italy) and amember of the board of directors of Hutchison's 3G holding and operatingcompanies in the United Kingdom, Italy, Sweden, Denmark, Norway and Austria, aswell as a director of Vidiator Technology Inc., a Seattle-based provider ofmultimedia trans-coding and streaming solutions. Mr. Salbaing is a member of theBars of the Province of Québec, California and the U.S. District Court forNorthern California, as well as France. Prior to 2001, Mr. Salbaing practiced asan 

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international mergers and acquisitions lawyer with major international lawfirms. 
*    Charles Sirois is Chairman of theBoard, Chief Executive Officer and controlling shareholder of Telesystem Ltd.From 1992 to February 2000, Mr. Sirois was Chairman and Chief Executive Officerof Teleglobe Inc. From 1988 to 1990, Mr. Sirois was Chairman of the Board andChief Executive Officer of BCE Mobile Communications Inc., and prior to that hewas Chief Executive Officer of two of the companies that formed BCE Mobile,National Pagette Ltd. and National Mobile Radio Communications Inc. He iscurrently a director of the Canadian Imperial Bank of Commerce and the CGI GroupInc. Mr. Sirois is also a member of the Business Council on National Issues, andis a founding member of the Washington-based Global Information InfrastructureCommission. Mr. Sirois received the Order of Canada in 1994 and was made aknight of the *Ordre national du Québec* in April 1998. Mr. Sirois holds aBachelor's degree in Finance from the University of Sherbrooke and a Master'sdegree in Finance from Laval University. 
***Board Practices***
    Reproduced below is the section entitled"Statement of Corporate Governance Practices" included in our Notice of Annualand Special Meeting and Management Proxy Circular dated March 26, 2004 filedwith the United States Securities and Exchange Commission on Form 6-K on April1, 2004 and incorporated by reference as Exhibit 14.2 hereto and filed withsecurities commissions and other similar authorities in Canada. 
**Background**
    The Board of Directors considers goodcorporate governance to be important to the effective operations of theCorporation. In 1997, the Board of Directors formed the Nominating and CorporateGovernance Committee responsible for, among other things, monitoring theCorporation's corporate governance practices in relation to the Guidelinesadopted by the TSX (the "Guidelines") and overseeing disclosure obligationsrelated thereto. In 2002, following the implementation of the Corporation'sequity recapitalization plan, the functions of the Nominating and CorporateGovernance Committee were divided between the Audit Committee and the HumanResources and Governance Committee. 

    Since November 2002, the Corporation hasconducted a significant review of its corporate governance policies andpractices. The Board of Directors and Management reviewed the Corporation'scorporate governance policies in light of existing and proposed corporategovernance requirements and best practices standards in Canada and the UnitedStates. In addition to the corporate governance guidelines set out in theGuidelines, the Corporation is subject to many of the provisions of theSarbanes-Oxley Act of 2002 ("SOX") and related rules of the U.S. Securities andExchange Commission, proposed rules of the Canadian Securities Administratorsregarding both audit committees and the certification of certain annual andinterim filings and the new governance standards of the NASDAQ Stock Market. TheTSX has also proposed revised corporate governance guidelines, which however,will likely be replaced by a new policy of the securities commissions in Canada.Although certain of these governance initiatives are not yet in force, or, inthe case of the SOX, may not be completely applicable to non-U.S. corporations,the Corporation is, to the extent possible, working towards compliance with allof the applicable final standards. In this regard, since November 2002, theBoard of Directors took the following actions: 
- Reviewed and updated the charter of the  Audit Committee; 
- Reviewed and updated the charter of the  Human Resources and Governance Committee; 
- Implemented a disclosure policy in  conformity with the requirement of SOX; 
- Adopted a Code of Business Conduct which  includes updated versions of the Corporation's:       - Foreign Corrupt Practices Act    Compliance Guidelines;
  - Confidentiality, Loyalty,    Non-Solicitation and Non-Compete Agreement; 
  - Information Systems/Information    Technology Securities Policies, Procedures and Guidelines; 
  - Policy Concerning the Use of Inside    Information; 
  - Delegation of Authority; and  
  - Conflict of Interest Report; and     Adopted a whistle-blower memorandum  allowing direct anonymous access to the Board of Directors for employees of  the Corporation. 

    All employees are required to sign astatement of compliance with respect to the Code of Business Conduct of theCorporation. Furthermore, given the ongoing developments and trends in corporategovernance in Canada and the United States, the Corporation continues to reviewon a regular basis its various internal policies and procedures to ensurecompliance with all applicable final standards and best practices. 

    The corporate governance framework of the Corporation alsofeatures an investor rights agreement among the Corporation's major 

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shareholders (the "MajorShareholders") which provides for proportionate representation rights, includingin favour of minority shareholders, on the Board of Directors and setting outcertain principles of corporate governance (the "Investor Rights Agreement"). Itis expected that Caisse de dépôt et placement du Québec will, directly orthrough its affiliate, become a party to the Investor Rights Agreement on orbefore June 30, 2004 as a result of the exchange of the debenture it holds inTelesystem for Common Shares. Pursuant to the Investor Rights Agreement, theCorporation agreed to maintain the size of its Board of Directors at eightmembers and allow Major Shareholders to present for appointment between one andtwo nominees on the Board of Directors, depending on their level of equityinterest in the Corporation. Any candidate, other than those nominees of theMajor Shareholders, is required by the Investor Rights Agreement to beindependent not only of the management of the Corporation but also of the MajorShareholders. In addition, the Investor Rights Agreement requires that certainmajor decisions be approved by no less than two-thirds or, in certain cases,three-quarters of the votes cast by the directors present and eligible to castvotes at a duly constituted meeting of the Board of Directors. The decisionsrequiring the approval of two-thirds of the votes include, among other things, (i)security issuances, (ii) debt incurrence or pledging of assets, (iii) creationof subsidiaries and (iv) execution of any contract with a related party for anamount in excess of Cdn$200,000. The decisions requiring the approval ofthree-quarters of the votes include, among other things, (i) business planapproval or amendment, (ii) repurchase of debt, (iii) investment, acquisition,capital expenditure or development projects and (iv) termination of employmentor hiring of executive officers. 

    Under the Investor Rights Agreement, eachMajor Shareholder agreed to vote in favor of the nominees put forward forelection on the Board of Directors by the other Major Shareholders. The nomineesof the Major Shareholders on the Board of Directors are: Thierry Baudon,François Laurin, Michael R. Hannon, Christian Salbaing, Jonathan Charles Carter-Meggsand Charles Sirois. The following disclosure sets out the Corporation'scorporate governance practices which conform with the Guidelines unlessspecifically noted otherwise. 
**Role and Responsibilities of the Board**
    The Board of Directors oversees theconduct and supervises the management of the business and affairs of theCorporation pursuant to the powers vested in it by the *Canada BusinessCorporations Act*and in accordance with the requirements of the *CanadaBusiness Corporations Act*. The Board of Directors holds regular meetings toconsider particular issues or conduct specific reviews whenever deemedappropriate. 

    Before the start of every financial year, the Board ofDirectors receives and approves an annual budget and business and strategicobjectives submitted by the President and Chief Executive Officer. 

    In addition to those matters requiring the Board ofDirectors' approval pursuant to law or the Corporation's articles and by-laws,the Board of Directors decides on significant matters such as those provided forin the Investor Rights Agreement. 
**Composition of the Board**
    The Board of Directors is currentlycomprised of eight directors and believes that its size enables it to conductits meetings and take decisions effectively and efficiently. All directors areindependent of Management and all directors are "unrelated directors", definedin the Guidelines as directors who are independent of Management and free fromany interest and any business or other relationship, other than interests andrelationships arising from shareholding, which would, or could reasonably, beperceived to materially interfere with the director's ability to act in view ofthe Corporation's best interest. Although the Board of Directors considers allof its members to be unrelated directors, as defined in the Guidelines, it notesthat Jonathan Charles Carter-Meggs and Michael R. Hannon are Partners andemployees of J.P. Morgan Partners, LLC, which entity, through certain of itsaffiliates, holds an equity interest in one of the Corporation's co-shareholderin MobiFon S.A. J.P. Morgan Partners, LLC is also a co-shareholder, throughcertain of its affiliates, in TIW Czech N.V., which entity holds theCorporation's interest in Český Mobil a.s., as well as a lender under ČeskýMobil's senior credit facility. Such relationships do not, in the normal courseof business, interfere with these directors' abilities to act in view of thebest interests of the Corporation. However, if a conflict of interest were toarise from these relationships under particular circumstances, measures would betaken as required by the Corporation's governing law to ensure that the bestinterest of the Corporation are adequately represented. The Corporation has noshareholder with the ability to exercise a majority of the votes for theelection of the directors. 
**Committees**
    The Audit Committee reviews theCorporation's annual and interim financial statements before they are approvedby the Board of Directors, oversees Management reporting on internal audits andcontrols and reviews the Corporation's accounting systems and external auditplan. Also in 2002, the Audit Committee began monitoring the Corporation'scorporate governance practices and more

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specifically its compliance with stock exchange andsecurities commissions disclosure requirements. The Audit Committee also hasdirect communication channels with internal and external auditors to discuss andreview specific issues as required. The Audit Committee is comprised of threeoutside directors, all of whom are unrelated. Members of the Audit Committee arecurrently François Laurin, Michael R. Hannon and C. Kent Jespersen (Chair). 

    The principal mandate of the HumanResources and Governance Committee is to review and make recommendations to theBoard of Directors in connection with the appointment and remuneration ofofficers of the Corporation and of its subsidiaries, including the ChiefExecutive Officer. In addition, the Committee makes recommendations to the Boardof Directors with respect to grant under the Employees Stock Option Plan andunder the Restricted Share Unit Plan. The Committee also reviews and approvesthe design and competitiveness of the Corporation's total compensation policy,architecture and plans, including the mix between cash and incentivecompensation. It is responsible for reviewing and making recommendations withrespect to all human resources matters relating to the officers and employees ofthe Corporation. The responsibilities of the Human Resources and GovernanceCommittee that deal with matters of corporate governance include to assist theAudit Committee in monitoring the Corporation's approach to corporategovernance, to annually recommend the members proposed for election to the Boardof Directors as well as the membership and chairs of the Committees of the Boardof Directors, to develop a process to periodically review the functioning of theBoard of Directors and conduct a periodic review of the powers, mandates andperformance of committees of the Board of Directors. The Human Resources andGovernance Committee is also in charge of periodically reviewing theeffectiveness of the Corporation's policies, guidelines and manuals in relationto governance matters, other than those pertaining to disclosure requirements,which are the responsibility of the Audit Committee, and make recommendations tothe Board of Directors to ensure compliance with best practices on such matters.The Human Resources and Governance Committee is composed of four outsidedirectors, all of whom are unrelated. Members of the Human Resources andGovernance Committee are currently Jacques A. Drouin (Chair), Christian Salbaing,Jonathan Charles Carter-Meggs and Charles Sirois. Composition of the Committeeis subject to modification following the Meeting. 
**Measures for Receiving Shareholders' Feedback and Dealing with their Concerns**
    In addition to its required publicfilings, the Corporation regularly communicates with its shareholders and theinvestment community by means of its quarterly and annual reports as well aspress releases issued as appropriate from time to time. Annual meetings allowshareholders to ask questions directly to the President and Chief ExecutiveOfficer as well as to other senior executive officers. 
**The Board of Directors' Expectations of Management**
    The Board of Directors expects Managementto meet the following basic objectives: (i) report in a comprehensive, accurateand timely fashion on the business and affairs of the Corporation generally, andon any specific matters that it considers of significant material consequencefor the Corporation and its shareholders; (ii) take timely action and make allappropriate decisions required by the Corporation's activities in accordancewith all applicable requirements or obligations and within the framework of thecorporate policies in effect, with a view to enhancing shareholder value; (iii)conduct a comprehensive annual budget process and monitor closely theCorporation's financial performance in conjunction with the annual budgetapproved by the Board of Directors; and (iv) review on an on-going basis theCorporation's strategies and their implementation taking into account changes tothe Corporation's business environment. 
***Executive Officers***
    The following table sets out information concerning ourcorporate officers, including name and position with us. 
**Name****Position**Bruno DucharmePresident and Chief      Executive OfficerAndré GauthierVice-President and      Chief Financial OfficerJacques P. LangevinSenior Human      Resources OfficerMargriet ZwartsGeneral Counsel and      Secretary*    Bruno Ducharme is our President and Chief ExecutiveOfficer, and is a co-founder of TIW. Prior to May 1997, Mr. Ducharme wasPresident and Chief Executive Officer of Telesystem International WirelessServices Inc. since 1994. Mr. Ducharme holds a Bachelor's degree in Civil Lawfrom McGill University, a Master of Business Administration degree from theWharton School of Business of the University of Pennsylvania and a Master'sdegree in International Relations from the University of Pennsylvania. 
*    André Gauthier is our Vice-President and ChiefFinancial Officer. Prior to June 2001, Mr. Gauthier was our Vice-President,Finance, and Treasurer. Prior to May 1999, Mr. Gauthier was our Vice-Presidentand Controller, and, prior to May 1997, was 

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    Controller of Telesystem InternationalWireless Services since 1994. From 1988 to 1994, Mr. Gauthier held successivepositions, including Director, Finance and Administration, at Cosmair CanadaInc., a cosmetics manufacturer. Prior to 1988, Mr. Gauthier was a Senior Managerat Ernst & Young in Montreal. Mr. Gauthier holds a Bachelor's degree in BusinessAdministration from the École des Hautes Études Commerciales in Montreal and isa member of the Canadian Institute of Chartered Accountants. 
*    Jacques Langevin is our Senior HumanResources Officer. Prior to joining TIW in February 1999, Mr. Langevin wasVice-President, Human Resources, with Tricon Restaurants International in Asiaform 1997 to 1999. From 1992 to 1995, he was Area Director, Human Resources(Asia-Pacific) and, in 1996, Regional General Manager (Central and NorthernChina) with Avon Products Inc. Previously, Mr. Langevin was with Avon CanadaInc., first as Director, Legal Affairs, and then as Vice-President, HumanResources and Corporate Affairs. Mr. Langevin's earlier career was in a privatepractice with Lavery O'Brien & Associates, in Montreal. Mr. Langevin holds aBachelor of Civil Law degree (L.L.L.) from the University of Sherbrooke andholds a Bachelor of Arts degree with Honors in Political Science from ConcordiaUniversity. Mr. Langevin left his position with TIW in February 2004 andreturned in May 2004.*    Margriet Zwarts is our General Counseland Secretary. Prior to her appointment in March 1998, she was in privatepractice, initially with the law firm Martineau Walker and from 1989 with thelaw firm Ogilvy Renault, where she was a partner from 1991. She holds Bachelorsdegrees in Civil Law and in Common Law from McGill University. Mrs. Zwarts is amember of the board of directors of Export Development Canada and she is amember of the Quebec Bar and the Law Society of Upper Canada. 
**COMPENSATION OF DIRECTORS AND OFFICERS**
    Reproduced in this section, withapplicable adjustments to reflect certain resolutions passed by our shareholdersin May 2004, are extracts taken from our Notice of Annual and Special Meeting ofShareholders and Management Proxy Circular dated March 26, 2004 furnished to theUnited States Securities and Exchange Commission on Form 6-K on April 1, 2004and incorporated by reference as Exhibit 14.2 hereto and filed with securitiescommissions and other similar authorities in Canada. 

    For the year ended December 31, 2003, anaggregate amount of Cdn$9,964,142 was paid to the members of the Board ofDirectors of the Corporation and to the executive officers of the Corporationand its subsidiaries, including compensation for salary, bonuses and benefits.In 2003, 5,589,190 options were granted to executive officers of the Corporationand 86,441 options to directors of the Corporation under the Corporation'sEmployees Stock Option Plan (the "Employees Stock Option Plan"), including theNovember 2002 Option Grants, as defined, and the December 2003 Option Grants, asdefined. See "Compensation of Directors and Executive Officers - Option and UnitGrants in Last Financial Year". As of December 31, 2003, no amounts had been setaside for pension and retirement benefits for directors and executive officers.
**Compensation of Directors**
    The compensation policy for directorsprovides that directors who are neither employees nor consultants of theCorporation or of the four principal shareholders of the Corporation shallreceive US$20,000 per year as a retainer fee and a fee of US$1,500 for eachmeeting of the Board of Directors or of a Committee attended by them in personand a fee of US$750 if such participation is made by telephone. Where a Board ofDirectors meeting and a Committee meeting are held on the same day and in thesame location, a director attending both meetings shall receive a fee ofUS$1,500. If a second Committee meeting is held on the same day and in the samelocation, a director attending such meeting shall receive an additional fee ofUS$1,500. The Chairman of the Board of Directors shall receive a fee ofCdn$20,000 per month and the Chairman of any Committee of the Board of Directorsshall receive a fee of US$3,500 per year. In addition, directors who are notemployees or consultants of the Corporation or of the four principalshareholders shall receive on an annual basis an option grant having a targetcompensation value of US$25,000. They shall also receive a travel fee ofUS$1,500 if they have to travel more than three hours to attend a meeting inperson. 
**Compensation of Named Executive Officers**
    The table below shows certain compensationinformation for Mr. Bruno Ducharme, the President and Chief Executive Officer ofthe Corporation, and the four other most highly compensated executive officersof the Corporation and its subsidiaries during the financial year ended December31, 2003 (collectively, the "Named Executive Officers"). This informationincludes the dollar value of base salaries, bonus awards and long-term incentiveplan payments, the number of options granted, and certain other compensation, ifany, whether paid or deferred. 

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 **Summary Compensation Table**  **Annual Cash Compensation****Long-Term Compensation**      **Other**  **Long-Term**     **Annual** **Restricted****Incentive**     **Compen-** **Shares or****Program****All Other****Name and Principal** **Salary****Bonus**(1)**sation****Securities Under****Share Units****Payouts****Compensation****Position****Year****(Cdn$)****(Cdn$)****(Cdn$)**(2)**Options/Units (#)****(#)****(Cdn$)****(Cdn$)****Bruno****Ducharme**2003500,000584,375**-**1,803,388 (3)500,000 (7)3,956,138 (8)**-**President and Chief2002500,000350,000**-**1,620,000 (4) / 810,000    (5) **-****-**Executive Officer2001500,000100,000**-****-**-**-**          **Mario Bertrand**(2)2003279,173201,005202,461357,959 (3)-1,649,395 (8) President,2002279,173134,226305,089500,537 (4) / 250,000     (5)**-****-****-**Telesystem (Antilles)2001279,17363,652256,7751,475**-****-****-**Corporation N.V.        **James J. Jackson**(6)2003269,184120,290191,700411,133 (3)7,492 (7)1,027,909 (8) Chief Financial2002202,20981,136332,113335,000 (4) / 167,500     (5)**-****-****-**Officer, MobiFon2001115,17068,756238,477**-****-****-****-**S.A.        **Karla Stephens**(9)2003246,179112,512169,933370,776 (3)6,743 (7)921,070 (8) Chief Operating2002184,927102,773324,815300,000 (4) / 150,000     (5)**-****-****-**Officer, Český Mobil2001173,63686,384346,602**-****-****-****-**a.s.        **Alexander Tolstoy**(9)2003416,314250,652327,3401,126,817 (3)68,000 (7)3,178,743 (8) Chief Executive        Officer of Cesky2002312,736170,629579,037780,000 (4) / 390,000     (5)--**-**Mobil a.s. and2001298,555222,125709,913---**-**MobiFon S.A.        -  Bonus awards are paid in cash in the year following thefinancial year for which they are awarded.  
-  Represents primarily premiums for services rendered outsideof Canada, including foreign currency conversions from Canadian to U.S. dollars.  
-  Indicates the number of options granted under theCorporation's Employees Stock Option Plan in 2003, including the November 2002Option Grants, as defined, and the conditional and subsequently confirmed optiongrants of December 2003, as defined. See "Compensation of Directors andExecutive Officers - Option and Unit Grants in Last Financial Year". NoPerformance Units were granted in 2003 and those granted in 2002 were cancelledin 2003 (see note (5) below).  
-  Indicates the number of options granted under theCorporation's Employees Stock Option Plan in 2002, excluding the November 2002Option Grants, as defined but including the conditional and subsequentlyconfirmed option grants of November 2001. See "Compensation of Directors andExecutive Officers - Option and Unit Grants in Last Financial Year". Out ofthese options grants, the following number of options were forfeited in 2003 inthe case of each of the following individuals: Mr. Ducharme, 840,000 optionsforfeited; Mr. Bertrand, 260,000 options forfeited; Mr. Jackson, 175,000 optionsforfeited; Mr. Tolstoy, 400,000 options forfeited; Ms. Stephens, 160,000 optionsforfeited.  
-  Indicates the number of units granted under theCorporation's Performance Unit Plan in 2002, including the November 2001 UnitGrants, as defined. These units were all cancelled when the November 2002 andDecember 2003 Option Grants, as defined, were completed. See "Compensation ofDirectors and Executive Officers - Option and Unit Grants in Last Financial Year".  
-  Mr. Jackson left the Corporation on February 1, 2001 andreturned on July 1, 2001.  
-  Restricted Share Units conditionally granted under aRestricted Share Unit Plan and subsequently approved by the Shareholders at theAnnual and Special Meeting in May 2004.  
-  Includes the value realized on the exercise of options underthe Corporation's Employees Stock Option Plan and cash payouts made under theCorporation's Special Cash Incentive Plan (see Report on Executive Compensationby the Human Resources and Governance Committee).  
-  Mr. Tolstoy and Mrs. Stephens are married to each other.  
**Stock Option Plans for Directors, Senior Executives and Key Employees**
    On April 30, 1997, the Corporationestablished the Employees Stock Option Plan. All of the options granted underthe Employees Stock Option Plan to acquire Common Shares may be exercised withina maximum period of five years following the date of grant. Options may beexercised as follows: (i) options granted under the plan to employees andofficers are exercisable after the first anniversary of the date of grant as toone-third of the optioned shares, after the second anniversary as to anadditional one-third and after the third anniversary as to the remainingone-third of the optioned shares and are exercisable as to 100% upon a change ofcontrol of the Corporation; (ii) options granted under the plan to directors areexercisable after the first anniversary of the date of grant as to 100% of theoptioned shares. All options are granted at a price not lower than the marketprice of the Common Shares on the day preceding the date of grant. Any optiongranted pursuant to the Employees Stock Option Plan will lapse 30 days after theholder thereof ceases to be a director, officer or employee of the Corporation(or within 90 days if the holder is dismissed without cause). In 

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the event of death, retirement or disability, any option heldby the optionee lapses twelve months after the date of any such death,retirement or disability. If an option holder's employment or office with theCorporation is terminated within 18 months of a change of control of theCorporation, his or her options will be exercisable during a period of 12 monthsfollowing such termination. The maximum number of Common Shares that arecurrently issuable under the Employees Stock Option Plan is 10,000,000 CommonShares. The maximum number of Common Shares that may be optioned in favor of anyindividual is 3% of the issued and outstanding shares from time to time. 

    On April 30, 1997, the Corporation alsoestablished the Directors Stock Option Plan. Since March 5, 2002, directors arenow eligible participants under the Employees Stock Option Plan. Therefore, itis not expected that options will continue to be granted under the DirectorsStock Option Plan. 
**Performance Unit Plan

    On November 15, 2001, the Board ofDirectors, on the recommendation of the Human Resources and GovernanceCommittee, approved a Performance Unit Plan. Under the Performance Unit Plan,units were issuable to certain holders of options granted under the EmployeesStock Option Plan. Units gave right, upon a change of control of theCorporation, to the payment in cash of the difference between the then marketprice of the Common Shares of the Corporation and the threshold price of theunits. Unless a change of control occurs before such dates, units were to expireon the earlier of November 15, 2006 and the participant's date of termination ofemployment. 

    On November 15, 2001, an aggregate of3,086,000 units were issued to option holders at an average threshold price ofUS$7.50 or Cdn$11.90 per unit. For every two options granted to key employeesunder the Employees Stock Option Plan on November 15, 2001, one performance unitwas granted. For each option granted in the future under the Employees StockOption Plan to a holder of unit, one unit held by such holder was to becancelled. No units were granted since November 2001. 

    Following the November 2002 and December2003 Option Grants, as defined, all units were cancelled as provided under thePerformance Unit Plan and the plan was therefore terminated. It should be notedthat no payments were made under the Performance Unit Plan as no change ofcontrol occurred between its inception and termination. 
**Restricted Share Unit Plan

    On February 24, 2004, the Board ofDirectors of the Corporation, on the recommendation of the Human Resources andGovernance Committee and in the best interest of the shareholders, authorized,subject to regulatory and shareholders' approvals, the creation of a restrictedshare unit plan (the "Restricted Share Unit Plan"). Under the Corporation'sRestricted Share Unit Plan, restricted share units ("RSU") are granted todesignated directors (other than those who are employees or consultants of thefour principal shareholders of the Corporation), officers and employees. The RSUare "phantom" shares that rise and fall in value based on the value of theCorporation's Common Shares and are redeemed for actual Common Shares on thevesting dates. The RSU typically vest after the first anniversary of the date ofgrant as to one-third, after the second anniversary as to an additionalone-third and after the third anniversary as to the remaining one-third butbecome 100% vested upon a change of control of the Corporation. Where deemedappropriate, the Board of Directors has the discretion to use a differentvesting schedule. On January 9, 2004 and February 24, 2004, the Board ofDirectors of the Corporation approved the grant of 638,652 RSU uponrecommendation of the Human Resources and Governance Committee subject toregulatory and shareholders' approvals. These grants were conditional on theapproval of the Restricted Share Unit Plan by the TSX, regulatory authoritiesand shareholders of the Corporation subsequently obtained in May 2004. The totalnumber of RSU issuable under the proposed plan is 6,250,000. 
**Option and RSU Grants in Last Financial Year**
    Taking into consideration options grantedon November 12, 2002 subject to the approval by shareholders of certainamendments to the Employees Stock Option Plan presented at the annualshareholders' meeting in May 2003, such approval having been obtained at thesaid meeting, (the "November 2002 Option Grants") and the options granted onDecember 18, 2003 subject to the review and approval by the Corporation's threemajor shareholders, such approval having been obtained on February 29, 2004 (the"December 2003 Option Grants") a total of 6,410,400 options were granted todirectors, officers, employees and consultants, 2,566,585 options were exercisedand 3,280,359 options were forfeited or cancelled under the Employees StockOption Plan in the last financial year. 

    The table below shows informationregarding the stock option grants made to the Named Executive Officers under theEmployees Stock Option Plan during the financial year ended December 31, 2003,taking into consideration the November 2002 and December 2003 Option Grants, andregarding the RSU grants approved by the Board in January and February 2004. 

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        **Percentage of Net** **Market Value of**  **Securities Under****Total of Options/RSU** **Securities**  **Options (1)/RSU (1)****Granted in****Exercise Price of****Underlying Options** **Name of Executive****Granted****Financial Year****Options****on the Date of Grant (2)****Expiration Date****Officers****(#)****(%)****(#/US$)****(#/US$)****of Options**      Bruno Ducharme1,803,388 / 500,00028.1%/78.3%803,388 / $2.15803,388 / $2.00Nov. 11, 2007   1,000,000 / $8.131,000,000 / $8.13Jan. 17, 2007            Mario Bertrand357,959 / 05.6%/0.0%247,959 / $2.15247,959 / $2.00Nov. 11, 2007   110,000 / $8.13110,000 / $8.13Jan. 17, 2007      James J. Jackson411,133 / 7,4926.4%/1.2%166,133 / $2.15166,133 / $2.00Nov. 11, 2007   245,000 / $8.13245,000 / $8.13Jan. 17, 2007      Alexander Tolstoy1,126,817 / 68,00017.6%/10.6%446,817 / $2.15446,817 / $2.00Nov. 11, 2007   680,000 / $8.13680,000 / $8.13Jan. 17, 2007      Karla Stephens370,776 / 6,7435.8%/1.1%148,776 / $2.15148,776 / $2.00Nov. 11, 2007   222,000 / $8.13222,000 / $8.13Jan. 17, 2007-  Underlying securities:Common Shares. 
-  The closing price of theCommon Shares on the Nasdaq on the last trading day preceding the grant datewas, in the case of options granted on November 12, 2002, US$2.00, and in thecase of options granted on December 18, 2003, US$8.13.  **Aggregated Options and Units Exercised in Last Financial Year and FinancialYear End Option and RSU Values**
    The following table summarizes, for eachof the Named Executive Officers, the number of stock options exercised and thenumber of RSU redeemed for Common Shares, if any, during the financial yearended December 31, 2003, the aggregate value realized upon exercise orredemption, as applicable, and the total number of unexercised options andunvested RSU held at December 31, 2003. Value realized upon exercise/redemptionis the difference between the market value of the underlying Common Shares onthe exercise date and the exercise price in the case of options, and the marketvalue of the underlying Common Shares on the redemption date in the case of RSU.The value of unexercised "in-the-money" options at financial year-end is thedifference between the exercise price and the market value of the underlyingCommon Shares on December 31, 2003, which was Cdn$10.85 per share, the closingprice on the TSX. The value of unvested RSU at financial year-end is the marketvalue of the underlying Common Shares on December 31, 2003, which was Cdn$10.85.These values, unlike the amounts set forth in the column "Aggregate ValueRealized," have not been, and may never be, realized. The options and RSU maynever be exercised or redeemed, and actual gains, if any, on exercise orredemption will depend on the value of the Common Shares on the date of exerciseor redemption, as applicable. There can be no assurance that these values willbe realized. Unexercisable options and unvested RSU are those which have beenheld for less than the time required for vesting. 

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   **Unexercised Options****Value of Unexercised "In-the-** **Securities** **/Unvested RSU****Money"(1) Options /    Unvested RSU** **Acquired****Aggregate****as at December 31, 2003****at December 31, 2003(2)** **on Exercise****Value****Exercisable****Unexercisable****Exercisable****Unexercisable****Name of Executive****/ Redemption****Realized****/ Vested****/ Unvested****/ Vested****/ Unvested****Officers****(#)****(Cdn$)****(#)****(#)****(Cdn$)****(Cdn$)**Bruno Ducharme462,796 / 02,793,127921,694 / 01,198,898 / 500,0006,753,671 / 01,794,307 / 5,425,000Mario Bertrand242,838 / 01,401,90573,333 / 0282,525 / 024,933 / 01,806,368 / 0James J. Jackson133,712 / 0870,29228,333 / 0409,087 / 7,492162,351 / 01,281,938 / 81,288Alexander Tolstoy402,273 / 02,646,2760 / 01,104,543 / 68,0000 / 03,358,857 / 737,800Karla Stephens142,926 / 0921,0690 / 0367,849 / 6,7430 / 01,142,615 / 73,162- "In-the-money" options are options for which the market value of theunderlying securities is higher than their exercise price.    
- The value of unexercised "in-the-money" options and unvested RSU iscalculated using the closing price of the Common Shares on the TSX on December31, 2003, i.e. Cdn$10.85. 
**Retention Incentive**
    The Named Executive Officers are coveredby the Corporation's retention incentive which, based on independent advice, isin line with industry standards. The retention incentive provides for a payment,upon an involuntary termination of employment for any reason other thanperformance or cause, of an amount equal to between three months and 36 monthsof base salary, depending on certain factors including seniority and functionsfilled, plus a portion of target bonus for the same period. In the case of theNamed Executive Officers, the amounts payable under the retention incentivesrange from 18 to 36 months. 
**Executive Compensation Policy**
    A revised total compensation policy was introduced in 1999to recognize and reward individual contributions to the short-term and long-termsuccess of the Corporation and also ensure that the Corporation offerscompetitive compensation. 

    In accordance with such policy, executivecompensation is based on three major components: base salary, benefits andincentive compensation. The Corporation aims to provide base salaries andbenefits targeted at a selected market median level as well as incentiveprograms designed to bring executive total compensation in the third quartileupon the achievement of superior results. Incentive compensation is awardedthrough plans and criteria approved by the HR Committee. 

    The benefits consist of insurance coverage and flexibleperquisites such as car allowance, club memberships and professional counseling.The Corporation does not provide retirement or savings benefits to itsexecutives. 

    Incentive compensation, which includesdistinct short, medium and long-term components, is based on North Americanpractices. It makes up a significant portion of the total compensation ofexecutives and is designed to link executive remuneration and corporateperformance, with a generally higher emphasis on the long-term component. Forthe Named Executive Officers, the short-term incentive opportunity ranges from10% to 13% of total compensation and the long-term incentive opportunity rangesfrom 50% to 70% of total compensation. Therefore, the "at risk" or incentiveportion of their total compensation ranges from 63% to 80%. 

    The Corporation's compensation policy usesdifferent scales for its employees who are local residents than for employees ofits operating subsidiaries who are foreign residents ("Expatriates"). The keybenefits currently being provided to Expatriates consist mainly of relocationbenefits, living conditions benefits such as housing allowance, group insurance,home leave and tax planning. Incentive compensation for Expatriates, whichincludes distinct short-term and long-term components, is based on NorthAmerican practices. It makes up a significant portion of the total compensationof Expatriates and is designed to link remuneration and corporate performance,with a generally higher emphasis on the long-term component. 
**Short-Term Incentive Compensation**
    The short-term incentive plan offersbonuses tied to the achievement of pre-determined corporate strategic objectives(e.g. financing plan), quantitative operational objectives (e.g. number ofsubscribers, operating income before depreciation and amortization, 

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and revenues) and individual performance objectivessupporting these business objectives. The objectives, and the bonus payoutscorresponding to their level of achievement, are established on a yearly basis.The strategic and operational objectives are presented to and approved by theBoard of Directors. 

    For the Named Executive Officers, bonusesrange from 30% to 50% of base salary when the strategic, operational andindividual objectives are achieved. When such objectives are exceeded, bonusesare higher but cannot exceed twice the target bonuses. When objectives are notmet, bonuses are lower and not paid at all when they are met at less thancertain specified thresholds. 

    For the financial year ended December 31,2003, the HR Committee reviewed and recommended to the Board of Directorsapproval of bonuses under the short-term incentive plan that were in line withthe level of achievement of the strategic and operational objectives. 
**Long-Term Incentive Compensation**
    The long-term incentive compensation is made up of theEmployees Stock Option Plan and the Restricted Share Unit Plan. 

    The Employees Stock Option Plan,introduced in 1997, and the Restricted Share Unit Plan, introduced in February2004, are designed to motivate directors, officers, employees and consultants,align their interests with the Corporation's shareholders over the long-term andcreate an ownership mentality. They are of limited duration and are subject tothe HR Committee review to ensure maintenance of their market competitiveness.

    The current Employees Stock Option Planprovides for the issuance of options to directors, officers, employees andconsultants to purchase Common Shares. The number of options granted todirectors, officers and employees is determined so as to deliver an intendedtarget annual compensation value, which, for officers and employees, isexpressed as a multiple of their base salary. Under the current policy, themultiples range from 17.5% to 337.5% (95% to 337.5% for the Named ExecutiveOfficers) of the annual base salary. The Restricted Share Unit Plan provides forthe issuance of RSU to designated directors, officers, employees andconsultants. 

    Pursuant to the Employees Stock OptionPlan and Restricted Share Unit Plan, the option and RSU grants are reviewed andrecommended by the HR Committee for approval by the Board of Directors. Theexercise price of the options is determined by the Board of Directors at thetime of granting the options, subject to compliance with the rules of all stockexchanges on which the Common Shares are listed and with all relevant securitieslegislation. 

    Introduced in 2001 in the context of theCorporation's equity recapitalization plan, the Performance Unit Plan wasdesigned, as a supplement to the Employees Stock Option Plan, to provide anadditional incentive to employees in various divestiture scenarios. ThePerformance Unit Plan was terminated in 2003. 
**Special Cash Incentive Compensation**
    On November 12, 2002, the Board of Directors, on therecommendation of the HR Committee, approved a mid-term incentive plan calledthe Special Cash Incentive Plan. 

    The Special Cash Incentive Plan rewarded the achievementof pre-determined corporate strategic objectives or milestones, includingcertain asset sales, aimed at maximizing the Corporation's value in the mediumterm. 

    The Special Cash Incentive Plan was effective fromNovember 12, 2002 to December 31, 2003 and only employees of the Corporationholding managerial positions were eligible to participate in the Plan. 

    Each of the pre-determined corporatestrategic objectives had a pre-defined incentive "pool", whose size reflectedits impact on the Corporation's value. Each participant's share of the "pool"was also pre-defined based on his or her level and degree of influence/impact onthe achievement of the said objective. 

    The actual cash payouts under the Planwere determined on a "pass or fail" basis and there were no grading schedulesand no stretches. If the objective was achieved, the pre-defined payoutscorresponding to the said objective were made. If it was not achieved, therewere no payouts in respect of such objective. The achievement of the objectivewas determined by the acceptance of the corresponding transaction by the Boardof Directors or by the completion of the corresponding transaction as per thebusiness plan approved by the same board, as applicable. 

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    Two corporate strategic objectives wereachieved during the financial year ended December 31, 2003 and the correspondingcash payouts under the Special Cash Incentive Plan for the said objectives weremade for an aggregate payout by the Corporation of Cdn$3,387,937. The cashpayouts for the Named Executive Officers are included in the SummaryCompensation Table under the header "Long-Term Incentive Program Payouts". 
**Compensation Plan Control and Review**
    The HR Committee is responsible forensuring that executive compensation conforms to the Corporation's totalcompensation policy. The Corporation's relative position in terms ofcompensation levels, including the proper balance between cash and incentivecompensation, is determined, as needed, through studies performed by independentconsulting firms using a selected reference market of comparable companies.Internal pay equity studies are a key factor to complete the process and providenecessary adjustments where required. 
***Indemnification of Directors and Officers and Limitation of Liability***
    Pursuant to our by-laws, subject to thelimitations provided by law, we will indemnify our present or former directorsand officers or any persons who act or acted at our request as directors orofficers of a body corporate of which we are or were a shareholder or creditor,and for all costs, losses, charges and expenses that arose or may arise byreason of their status as directors or officers of TIW or such body corporate.

    The Corporation maintains insuranceprotection against liability incurred by its officers and directors as well asthose of its subsidiaries in the performance of their duties. The payment of theannual premium, amounting to approximately US$1.6 million in 2003, is sharedbetween the Corporation and its subsidiaries. The aggregate limit of liabilityin respect of any and all claims was US$30 million for the insured period ofApril 30, 2003 to April 30, 2004. For the period from April 30, 2004 to April30, 2005 the premium still amounts to approximately US$1.6 million and is stillshared by the Corporation and its subsidiaries but the coverage has beenincreased to US$50 million. The policy provides for the indemnification ofdirectors and officers in the case of claims for which the Corporation has notindemnified or is not permitted by law to indemnify them, and for thereimbursement of the Corporation, subject to a deductible of US$500,000, in thecase of claims for which it has indemnified or was permitted to indemnify thedirectors or officers involved. 
***Indebtedness of Directors and Executive Officers***
    We made no loans to our directors and officers during thefinancial year ended December 31, 2003 and no loan was outstanding as of thatdate. 
**SHARE OWNERSHIP OF DIRECTORS AND OFFICERS 
*Ownership of Securities by Directors and Senior Officers***
    The table below sets forth as of May 1, 2004 the commonshares and stock options to acquire common shares held by each of our directorsand executive officers. 
**Common    Shares** **Options(1)**     **#** **#****Directors       Thierry Baudon--    Jacques A. Drouin48016,264    Michael R. Hannon--C.    Kent Jespersen44937,699    Jonathan Meggs--    François Laurin--    Christian Salbaing--    Charles Sirois(2)9,907,246-**Officers   Bruno    Ducharme84,7051,265,848 
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     **Common    Shares **Options(1)**     **#** **#**André Gauthier-     383,133Margriet Zwarts4     412,087Jacques Langevin-     215,643 (3)        - These options vest and expire on pre-determined dates and are exercisableat prices ranging between Cdn$2.35 and Cdn$662.50.    
- Mr. Sirois exercises control over 4,164 common shares personally and over9,903,082 common shares through Telesystem and certain of its subsidiaries.    
- As of May 16, 2004. 
**EMPLOYEES**
    As of March 31, 2004, we had 25 employeesat the corporate level excluding expatriate employees assigned to foreignoperations. As at December 31, 2003, we had approximately 3,334 employees,including employees of our continuing operations, compared to approximately3,100 and 2,970 as at December 31, 2002 and December 31, 2001 respectively.These numbers include for 2003, 2002 and 2001, respectively, 1,856, 1,700 and1,560 employees of MobiFon and 1,453, 1,350 and 1,350 employees of Český Mobil.Those numbers do not include employees of our discontinued or disposed ofoperations. None of these employees are members of labor unions. We believe thatour subsidiaries and us enjoy good relationships with our respective employees.

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**ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 

TIW 
*Major Shareholders***
    The following table and notes thereto set forth as at May14, 2004 and certain information regarding ownership of our common shares beingour only class of voting securities, for the following persons: 
-  each person who is known by us to be the beneficial owner of5% or more of our outstanding common shares, being our only class of votingsecurities; and  
-  all other stakeholders as a group.  
**Name of Beneficial Owner
 **Common Shares
 **% Ownership (1)J.P. Morgan    Partners, LLC(5)     18,807,274     13.4%UFI (4)     12,372,653     8.8%EEIF (6)     11,659,681     8.3%CDPQ (3)     10,633,002     7.6%Telesystem(2)     9,903,082     7.1%Other Holders     76,496,486     54.7%Total     139,872,178     100%       -  Based on a total of 139,872,178common shares outstanding.
-  Includessecurities held by subsidiaries of Telesystem, ultimately controlled by CharlesSirois.
-  10,633,002 commonshares representing 7.6% of our currently issued and outstanding common shareswere held by Telesystem Ltd. and certain of its subsidiaries prior to May 6,2004 but have been exchanged pursuant to certain debentures and otherarrangements in favour of Caisse de dépôt et placement du Québec.
-  U.F. Investments(Barbados) Ltd., an affiliate of Hutchison Whampoa Ltd.
-  Representssecurities held by affiliates of J.P. Morgan Partners, LLC.
-  Represents shares held by affiliates  of Emerging Europe Infrastructure Funds. ***Related Party Transactions
    Since January 1, 2003, neither we nor oursubsidiaries entered into any transaction with an insider or associate of ours,with any proposed nominee as a director or any associate or affiliate of anysuch insider or proposed nominee, that has or would materially affect us or anyof our subsidiaries, except for transactions entered into under the followingagreements: 
-  An amended and restated credit  agreement dated as of February 4, 2002, among us, Telesystem (Antilles)  Corporation N.V. and Telesystem International Wireless Corporation N.V. as  borrowers and Canadian Imperial Bank of Commerce, Caisse de dépôt et placement  du Québec, Chase Securities Inc., (an affiliate of J.P. Morgan Partners, LLC),  Deutsche Bank of Canada and National Bank of Canada as lenders for our senior  credit facility as amended on August 15, 2002 and December 6, 2002. In March  2003, we repaid in full the amount outstanding under the facility and the  facility was terminated.  
-  An underwriting agreement dated  September 11, 2003 among us, Capital Communications CDPQ Inc., which, at the  time the agreement was signed, was an insider of the Corporation, and BMO  Nesbitt Burns Inc. pursuant to which Capital Communications CDPQ Inc. agreed  to sell and BMO Nesbitt Burns Inc. agreed to purchase 12,960,128 common shares  held by Capital Communications CDPQ Inc. and certain of its affiliates by way  of a short form prospectus in all Provinces of Canada.  
-  A commitment letter dated as of  October 24, 2003 between us and our co-shareholders in TIW Asia N.V.,  including certain affiliates of J.P. Morgan Partners, LLC, for the acquisition  of shares of TIW Asia N.V. we did not already own in exchange for newly issued  common shares.  

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 -  We entered into  binding share purchase agreements with EEIF  Melville B.V. and certain of its affiliates, together referred to as EEIF, on February 10, 2004,  relating to the issuance of 14,621,714 common shares in exchange for  approximately 5.9% equity interest in MobiFon and 2.9% equity interest in TIW  Czech held by EEIF and certain of its affiliates. As a result of this  transaction, EEIF became a party to an amended and restated investor rights  agreement dated March 17, 2004 entered into among us and certain of our major  shareholders, pursuant to which such major shareholders agreed to vote in  favour of one nominee of EEIF on our Board of Directors. In addition, EEIF  entered into an amended and restated registration rights agreements dated  March 17, 2004 among us and certain of our major shareholders.  
-  Underwriting Agreement between us, BMO Nesbitt Burns Inc., JP Morgan  Securities Inc., Lazard Frères & Co. LLC, UBS Securities Canada Inc., TD  Securities Inc., Telesystem Ltd., 9111-1369 Québec Inc., U.F. Investments  (Barbados) Ltd., JPMP TIW EH, LP, J.P. Morgan Partners (BHCA), L.P., AOF  Investment N.V., CAIP Investment N.V., CEA Investment N.V., EEIF Melville B.V.,  EEIF Czech N.V., and Emerging Europe Infrastructure Fund C.V. providing for  the sale of 21 million common shares of TIW at a price of US$9.50 per share.  
-  American Home Assurance Company is the underwriter of our director and officer  liability insurance policy having underwritten the primary $20 million layer  of coverage for a premium of $930,000. American Home Assurance Company is  affiliated through the AIG group of companies to Emerging Europe  Infrastructure Fund and its affiliates who hold 8.7% of our outstanding shares  and have a representative elected on our board of directors.  
-  Affiliates of J.P. Morgan Partners LLC which are significant  shareholders of TIW and TIW Czech N.V. are affiliated with a counter party to  certain of Český Mobil's interest rate and Euro to Koruna cross currency swap  arrangements having nominal principal amounts of 2 billion Koruna ($78  million) and 58.1 million Euro ($73.5 million) for the interest rate and cross  currency arrangements, respectively. Such agreements were amended during 2003,  to extend their maturity from November, 2005 to September, 2007 on an  amortizing basis to match the principal repayments on the hedged  Euro-denominated debt and to reduce the fixed interest rate payable. In  consideration for such amendment, a payment of 1 million Euro ($1.3 million)  was made by Český Mobil. Additionally, interest payments totalling  approximately $1.5 million was made during 2003 on the previous and amended  arrangements.
**ITEM 8 - FINANCIAL INFORMATION 

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
    Our audited comparative annualConsolidated Financial Statements of the Company, including the Notes thereto,as at December 31, 2003 and 2002 and for each of the years in the three-yearperiod ended December 31, 2003, together with the auditors' report thereonsigned by Ernst & Young LLP are presented at Item 18 of this report. 
**LEGAL PROCEEDINGS**
    We are involved in litigation, along withour subsidiaries and operating companies, from time to time in the ordinarycourse of our businesses. In management's opinion, the litigation in which we orour subsidiaries or operating companies are currently involved is not materialto our financial condition, results of operations or cash flow. 
**SIGNIFICANT CHANGES*    The EEIF Transaction**.**On March 17, 2004, weacquired 5.9% of the outstanding shares of MobiFon from EEIF Melville B.V., anaffiliate of the AIG Emerging Europe Infrastructure Fund L.P. and EmergingEurope Infrastructure Fund C.V., or the EEIF Funds, and 2.9% of TIW Czech, fromEEIF Czech N.V., an affiliate of the EEIF Funds and Emerging Infrastructure FundC.V. (EEIF Czech N.V. and Emerging Infrastructure Fund C.V. being referred tocollectively with EEIF Melville B.V. as EEIF) in exchange for an aggregate of14,621,714 common shares. The acquisitions were accounted for using the purchasemethod. In regards to the acquisition of the MobiFon shares, the preliminaryallocation of the excess of the aggregate purchase price of $138.7 million overthe net assets acquired resulted in the creation of $122.1 million of goodwill.In regards to the acquisition of the TIW Czech shares, the preliminaryallocation of the excess of the consideration given of $17.7 million over thenet assets acquired resulted in the creation of goodwill of $14.1 million. As aresult, our equity interests in MobiFon and TIW Czech have increased to 63.4%and 27.0%, respectively, taking into account the closing of the ClearWavetransaction described below. The exchange ratio of common shares for eachMobiFon share under the EEIF Transaction is subject to an adjustment provisionin the event that, within a specified period, we acquire MobiFon shares fromother minority shareholders at a more favourable exchange ratio or price thanthat agreed to with EEIF. 
    The number of common shares issued inexchange for the MobiFon and TIW Czech shares was established on the basis ofthe market value of the common shares, without the application of a premium, andwas therefore non-dilutive to our existing shareholders. EEIF has agreed, for aperiod of six months from March 17, 2004, not to sell the common shares theyacquired under the EEIF Transaction, other than under certain circumstances,including pursuant to its rights under an amended and restated registrationrights agreement entered into between us and our major shareholders, to whichEEIF became a party as a result of this transaction. EEIF also became a party toan amended and restated investor rights agreement, entered into between us andour other major shareholders, pursuant to which our major shareholders haveagreed to vote in favour of one nominee of EEIF on our board of directors. 
*    Treasury Issue and Secondary Offering.On March 25, 2004, we and certain of our shareholders completed a treasury issueand secondary offering of 21 million of our common shares at US$ 9.50 per share.On April 5, 2004, the underwriters of the offering  

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acquired an additional 3.15 million common shares pursuant toan over-allotment option. As part of the offering, we issued 8.05 million commonshares from treasury for gross proceeds of US$ 72.2 million and 16.1 millioncommon shares were sold by the selling shareholders as part of the secondaryoffering. The Company did not receive any proceeds from the secondary offering.
*    The ClearWave Transaction.On April 5, 2004, we completed the acquisition of 10,653,486 Class A subordinatevoting shares of ClearWave, or the ClearWave Shares, from two institutionalholders of ClearWave shares, referred to as the ClearWave Holders, inconsideration for a combination of 10.9 million common shares of TIW and US$35.7 million in cash. As a result, our equity interest in ClearWave increased to99.8%. The acquisition was accounted for using the purchase method whereby thepreliminary allocation of the excess of the aggregate consideration over the netassets acquired resulted in the creation of $130.2 million of goodwill of which$115.6 million and $14.6 million was allocated to MobiFon and Český Mobil,respectively 
    The cash price paid per ClearWave sharewas equal to 1.362, multiplied by the net proceeds per share received by theselling shareholders under the secondary offering launched on March 5, 2004. TheClearWave Shares purchased in exchange for common shares were purchased on thebasis of one ClearWave Share for 1.362 common shares. The ClearWave Holdersunder the ClearWave Transaction have agreed not to sell the acquired commonshares during the 12 months following their purchase, other than with respect toa maximum of 25% of the acquired common shares after the sixth month, a further25% after the ninth month and the balance only after the twelfth month. However,the ClearWave Holders will benefit from piggy-back registration rights similarto those granted to our major shareholders under the Registration RightsAgreement, which will allow them, during the 12-month period following theclosing of the ClearWave Transaction, to sell their common shares under aprospectus or registration statement prepared by us. The exchange ratio of 1.362common shares for each ClearWave Shares was also used in an exchange transactionconcluded between TIW and another minority holder in ClearWave in November 2003,whereby we acquired an additional 1.2% equity interest in ClearWave. 
**ITEM 9 - THE OFFER AND LISTING 

OFFER AND LISTING DETAILS**
Not applicable. 
**PLAN OF DISTRIBUTION**
Not applicable. 
**MARKETS 
*Common Shares***
    Our common shares are listed for tradingon the TSX under the symbol "TIW" and on the Nasdaq National Market under thesymbol "TIWI". Our subordinate voting shares began trading on the TSX on May 9,1997, prior to which there was no public market for such shares, and on theNasdaq on June 8, 1998. On June 23, 2001, we consolidated the subordinate votingshares on a 5 for 1 basis. On June 27, 2001, the subordinate voting sharesstarted trading on the TSX and Nasdaq on a consolidated basis. On May 17, 2002,contemporaneously with the elimination of multiple voting shares from our sharecapital, we redesignated the subordinate voting shares as common shares.Following shareholders' approval of a share consolidation at our May 2, 2003shareholders' meeting, our share capital was consolidated for a second time onthe basis of a one-for-five (1:5) ratio on June 23, 2003 and started trading ona consolidated basis on June 30, 2003. The CUSIP for the common shares is879946-60-6. The following tables set forth, for the years, calendar quartersand months indicated, the range of high and low closing sale prices for thecommon shares as reported on the TSX and the Nasdaq. All data has been adjustedto give effect to the 5 for 1 consolidations: 

 
 **Toronto Stock Exchange    Price Range **Nasdaq    Price Range **(Cdn$)****(Cdn$)****(000s)****($)****($)****(000s)** **High****Low****Volume** **High****Low****Volume****2002**       First    quarter9.404.903,314 5.803.10700    Second quarter...5.752.601,893 3.701.80570Third    quarter3.601.155,727 2.550.801,600    Fourth quarter3.901.338,969 2.550.8010,600**2003**       First    quarter3.101.208,150 2.050.805,860    Second quarter...5.301.7816,970 4.181.2028,500 
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Third quarter7.334.8510,960 5.403.4112,660Fourth quarter11.955.8528,320 9.224.3138,100                 **Toronto Stock Exchange    Price Range **Nasdaq    Price Range   **(Cdn$)****(Cdn$)****(000s)** **($)****($)****(000s)** **High****Low****Volume** **High****Low****Volume**        **1999**1346.25481.251,053 932.75320.25168**2000**1762.50141.253,003 1200.0093.75474**2001**216.252.109,152 147.001.251,583**2002**9.401.1519,902 5.800.8013,493**2003**11.951.2064,400 9.220.8085,120         **Toronto Stock Exchange    Price Range **Nasdaq    Price Range       **($) **(Cdn$)****(Cdn$)****(000s)** **($)****($)****(000s)** **High****Low****Volume** **High****Low****Volume**        November 200311.049.019,320 8.376.7916,100December 200311.959.506,300 9.227.2510,600January 200417.5011.2513,300 13.258.7013,500February 200420.1016.157,630 15.1512.0114,200March 200416.8012.6914,800 12.539.4824,400April 200416.8513.516,560 12.809.8011,400**Senior Notes**
    Our only senior notes outstanding atDecember 31, 2003 were 13 1⁄4% senior discount notes with a nominal value of$530,000. The 13 1⁄4% notes are unsecured and are due June 30, 2007 with cashinterest payable semi-annually on December 31 and June 30 of each year. The 131⁄4% notes have been registered under the United States Securities Act of 1933, asamended (the "Securities Act"). Pursuant to an exchange offer completed onSeptember 19, 2001, the 13 1⁄4% notes were amended to remove certain covenantscontained in the indenture governing such notes. 

    There is currently no established tradingmarket for the 131⁄4% Notes. There can be no assurance as to (1) the liquidity ofany such market that may develop, (2) the ability of the holders of suchsecurities to sell them or (3) the prices at which any such sales may be made.We do not presently intend to apply for a listing of the 131⁄4% Notes on anynational securities exchange or to quote them on a quotation system. The recordholder of the 131⁄4% Notes is a nominee of The Depository Trust Company in NewYork, New York. 
***7.00% Equity Subordinated Debentures***
    As at December 31, 2003, we hadoutstanding Cdn$1,236,500 of 7.00% equity subordinated debentures due December30, 2006. These 7.00% debentures were part of an original issue of Cdn$150,000of 7.00% equity subordinated debentures due February 15, 2002. 

    On February 5, 2002, we repurchasedCdn$145,056,000 of 7.00% debentures in exchange for a combination of cash,subordinate voting shares and warrants. On February 5, 2002, we also amended theterms of the indenture to, among other things, postpone the maturity to December30, 2006 and reduce the principal amount at maturity of each Cdn$1000 of 7.00%debenture to Cdn$250. Following the amendments the 7.00% coupon is now payableon the revised principal and is payable semi-annually beginning on June 30,2002. Each outstanding 7.00% debenture will be convertible on maturity, at theoption of the holder, into our common shares. The amended 7.00% debentures arelisted on the TSX under the symbol "TIW.db.a". The pre-amendment 7.00%debentures were listed on the TSX under the symbol "TIW.db". The current CUSIPfor the 7.00% debenture is 879946-AJ-O. Despite their continued listing on theTSX, since the amendment of the debentures and the repurchase of 97% of theoutstanding debentures, there has been no regular trading activity on thedebentures. 

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**ITEM 10 - ADDITIONAL INFORMATION 

SHARE CAPITAL
    Our authorized share capital consists ofan unlimited number of common shares without par value and an unlimited numberof preferred shares without par value, issuable in series. Our common shares arelisted for trading on the TSX under the symbol TIW and on the Nasdaq under thesymbol TIWI. Our common shares began trading on the TSX on May 9, 1997, prior towhich there was no public market for such shares and on the Nasdaq on June 8,1998. On June 22, 2001, our shareholders approved a one-for-five (1:5)consolidation of our share capital and the common shares started trading on aconsolidated basis on June 27, 2001. On February 5, 2002, all multiple votingshares outstanding were converted into subordinate voting shares nowredesignated as a single class of common shares since May 17, 2002. Followingshareholders' approval of a share consolidation at our May 2, 2003 shareholders'meeting, our share capital was consolidated for a second time on the basis of aone-for-five (1:5) ratio on June 23, 2003 and started trading on a consolidatedbasis on June 30, 2003. 

    The following is a brief description of the attributes ofour relevant convertible securities and share capital. 
***Common Shares***
    The Common Shares may rank junior to thepreferred shares with respect to the payment of dividends, return of capital anddistribution of assets in the event of liquidation, dissolution or anydistribution of our assets for the purpose of winding up our affairs. Theholders of Common Shares are entitled to receive dividends on a share-for-sharebasis out of the assets legally available therefor at such times and in suchamounts as our board of directors may determine. 

    The Common Shares carry one vote pershare. The holders of Common Shares are entitled to receive notice of anymeeting of our shareholders and to attend and vote thereat as a single class onall matters to be voted on by our shareholders, except at meetings where theholders of shares of one class or of a particular series of shares are entitledto vote separately pursuant to the Canada Business Corporations Act or ourarticles. 

    The Common Shares are not redeemable orretractable. Upon our liquidation, dissolution or any distribution of our assetsfor the purpose of winding up our affairs, the holders of Common Shares shall beentitled to participate equally, on a share-for-share basis, in our remainingproperty and assets available for distribution to such holders. 

    As at December 31, 2003 we had 98,035,187 Common Sharesoutstanding. As at May 14, 2004, we had 139,872,178 Common Shares outstanding.
***Preferred Shares***
    The preferred shares are issuable, fromtime to time, in one or more series, as determined by our board of directors andcarry rights and privileges fixed by our board of directors. Any series ofpreferred shares, if issued, may rank prior to Common Shares with respect to thepayment of dividends and the distribution of assets. In such a case, in theevent of our dissolution, the distribution of our assets upon our liquidation orthe distribution of all or part of our assets among our shareholders, holders ofpreferred shares would be entitled to receive, in cash or in property, an amountequal to the value of the consideration paid in respect of such outstandingshares, as credited to our issued and paid-up capital account, plus such amountequal to accrued and unpaid dividends, or declared and unpaid dividends and, ifany, any amount specified in our articles. 
***Non-Voting Preferred Shares***
    On March 6, 2002, we created a firstseries of non-voting preferred shares. This series of non-voting preferredshares ranks pari passu on a share for share basis with the Common Shares butdoes not carry any voting rights. 55,000,000 non-voting preferred shares havebeen authorized for issuance. On March 13, 2002, we issued 35,000,000 non-votingpreferred shares. Non-voting preferred shares may be converted into CommonShares on the basis of one Common Share for each five non-voting preferredshares provided that the issuance of Common Shares upon the conversion, whencombined with the acquisition or continuing ownership or any other of oursecurities by our Major Shareholders mentioned below, would not result (i) insuch Major Shareholders being considered a "group" within the meaning ofSections 13(d) and 14(d)(2) of the United States Securities Exchange Act of 1934such that certain provisions of our debt instruments pertaining to a change ofcontrol may be triggered or (ii) in Capital Communications CDPQ Inc. increasingits voting position in us as of November 28, 2001 by more than 10%. 

    On March 25, 2004, JPMP TIW EH, LP, the sole holder of allof the outstanding non-voting preferred shares, converted all of the 

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35,000,000 non-voting preferred shares into 7,000,000 Common Shares inaccordance with their terms. There are currently no preferred sharesoutstanding. 
***7.00% Equity Subordinated Debentures due 2002***
    We issued on February 15, 1999,Cdn$150,000,000 principal amount of 7.00% equity subordinated debenturespursuant to an indenture entered into between Montreal Trust Company of Canada,as trustee, and us. On November 29, 2001, we launched the 7.00% equitysubordinated debentures purchase offer with the intent of repurchasing the 7.00%equity subordinated debentures and amending the terms of the indenture governingthem. On February 5, 2002, we repurchased an aggregate of Cdn$145,054,000 inprincipal amount of 7.00% equity subordinated debentures and executed asupplemental indenture pursuant to the 7.00% equity subordinated debenturespurchase offer. The following is a description of some of the terms of theindenture governing the 7.00% equity subordinated debentures, as amended by thesupplemental indenture we entered into on February 5, 2002. We refer to theindenture, as amended, as the amended 7.00% equity subordinated debentureindenture. 

    Pursuant to the amended 7.00% equitysubordinated debenture indenture, the 7.00% equity subordinated debenturesmature on December 31, 2006 and have a principal amount at maturity of Cdn$250each, rather than Cdn$1,000 as per the original 7.00% equity subordinateddebenture indenture. The 7.00% equity subordinated debentures bear interest atthe rate of 7.00% per annum, calculated on the basis of a principal amount ofCdn$250, payable semi-annually in arrears on June 30 and December 31 in eachyear commencing June 30, 2002, with the first interest coupon under the amended7.00% equity subordinated debenture indenture being calculated from February 5,2002. We have the option, in lieu of paying the principal amount of the 7.00%equity subordinated debentures in cash at maturity, to deliver that number offreely tradable common shares obtained by dividing the principal amount of the7.00% equity subordinated debentures by the greater of Cdn$1.00 or 95% of thethen current market price of the common shares, provided no event of default, asdefined in the amended 7.00% equity subordinated debenture indenture, shall haveoccurred and be continuing. Each 7.00% equity subordinated debenture isconvertible at maturity at the option of the holder into that number of commonshares equal to the conversion number, as defined in the amended 7.00% equitysubordinated debenture indenture. The conversion number will be calculated as ofthe date of conversion as: 
- the conversion value, as defined in the supplemental 7.00% equity  subordinated debenture indenture, as of such date, being the subordinate  voting share value, divided by   
- 95% of the then current market price of the common shares. 

    The subordinate voting share value will beequal to 11.363636 (subject to applicable adjustments) - the subordinate votingshare rate - multiplied by the current market price of the common shares on thedate of conversion. We have the option, in lieu of delivering common shares onconversion, to pay the conversion value in cash for 7.00% equity subordinateddebentures tendered for conversion. The conversion number is subject toadjustment upon the occurrence of certain events. The 7.00% equity subordinateddebentures will be convertible at the option of the holder prior to maturityupon the occurrence of an offer, as defined in the amended 7.00% equitysubordinated debenture indenture, or an event of default. 
**MEMORANDUM AND ARTICLES OF ASSOCIATION
    We were incorporated in Canada onSeptember 9, 1996 under the name 3293505 Canada Inc. On March 11, 1997 weamended our articles of incorporation to, among other things, change our name toTelesystem International Wireless Inc. On May 1, 1997, we again amended ourarticles of incorporation to, among other things, effect certain changes to ourshare capital. Our articles of association were again amended on June 22, 2001to effect a share consolidation on a five-for-one basis and on March 6, 2002 tocreate a series of non-voting preferred shares. On May 17, 2002, the articleswere amended to delete multiple voting shares from our share capital and toredesignate subordinate shares to common shares. On June 23, 2003, our articleswere again amended to effect a second share consolidation on a five-for-onebasis. A description of certain rights and limitations attached to our sharesand certain procedures applicable at our meetings of shareholders as well asother pertinent information may be found under captions "ITEM 10 - AdditionalInformation - Share Capital". 
**MATERIAL CONTRACTS**
    The following is a list of each material contract, otherthan contracts entered into in the ordinary course of business, to which we orour subsidiaries are a party, for the two years preceding publication of thisdocument: 
-  Amended  and Restated Investors Rights Agreement dated January 24, 2002 among the  Corporation, Telesystem, CDPQ, certain affiliates of JP Morgan and certain  affiliates of Hutchison providing for minority and majority representation  rights on  

 

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the Board of Directors of the Corporation and setting out certain  principles of corporate governance which amends and supplements a certain  Investors Rights Agreement dated November 29, 2001; 
-  Mutual  Release dated March 26, 2003 by and among TIW and certain of its subsidiaries,  Highlake International Business Company Ltd., Opportunity Fund and CVC/Opportunity  Equity Partners L.P. providing for the settlement of certain outstanding  litigation and certain potential claims between the parties.  
-  Exit Deed dated March  19, 2003 among EMP, TIW, TIWC and us providing for certain exit rights granted  to Emerging Market Partnerships in connection with their investment in MobiFon;  
-  License awarded to  Český Mobil to establish and operate a public mobile telecommunication network  according to the GSM standard dated June 17, 2002;  
-  License awarded to  Český Mobil to establish and operate a public mobile telecommunication network  according to the VmTS standard dated June 20, 2002;  
-  Loan Agreement between  MobiFon S.A. and European Bank for Reconstruction and Development dated August  27, 2002;  
-  Loan Agreement between  MobiFon S.A. and Nordic Investment Bank dated August 27, 2002;  
-  Loan Agreement between  MobiFon S.A. and Export Development Bank Canada dated August 27, 2002;  
-  Share  Retention and Subordination Deed between MobiFon S.A., certain of its direct  and indirect shareholders, Export Development Canada, Nordic Investment Bank  and European Bank for Reconstruction and Development dated August 27, 2002;  
-  Amended and Restated Investors  Rights Agreement, dated as of March 17, 2004;  
-  An underwriting agreement dated  September 11, 2003 among the Corporation, Capital Communications CDPQ Inc.,  which, at the time the agreement was signed, was an insider of the  Corporation, and BMO Nesbitt Burns Inc. pursuant to which Capital  Communications CDPQ Inc. agreed to sell and BMO Nesbitt Burns Inc. agreed to  purchase 12,960,128 Common Shares held by Capital Communications CDPQ Inc. and  certain of its affiliates by way of a short form prospectus in all Provinces  of Canada;  
-  Underwriting Agreement  between the Company, BMO Nesbitt Burns Inc., JP Morgan Securities Inc., Lazard  Frères & Co. LLC, UBS Securities Canada Inc., TD Securities Inc., TelesystemLtd., 9111-1369 Québec Inc., U.F. Investments (Barbados) Ltd., JPMP TIW EH, LP,J.P. Morgan Partners (BHCA), L.P., AOF Investment N.V., CAIP Investment N.V.,CEA Investment N.V., EEIF Melville B.V., EEIF Czech N.V., and Emerging EuropeInfrastructure Fund C.V.;  
-  The Share Exchange Agreement, datedOctober 20, 2003, between the Company and Amaranth L.L.C.;  
-  The Share Transfer Agreement, datedFebruary 10, 2004, between the Company, EEIF Melville B.V. and MobiFon Holdings B.V.;  
-  Share Sale and Purchase Agreement,dated February 10, 2004, between the Company, ClearWave N.V., EEIF Czech N.V.and Emerging Europe Infrastructure Fund C.V.;  
-  Amended and Restated RegistrationRights Agreement, dated as of March 17, 2004;  
-  Share Exchange Agreement, dated as ofMarch 4, 2004 between Highfields Capital I LP, Highfields Capital II LP and Highfields Capital Ltd., Perry Partners L.P., Perry Partners International  Inc. and the Company together with an amendment thereto dated March 18, 2004.  
**EXCHANGE CONTROLS
    There are currently no laws, decrees,regulations or other legislation in Canada that restricts the export or importof capital, or affects the remittance of dividends, interest or other paymentsto non-resident holders of the Company's securities, other than withholding taxrequirements. 

    There is no limitation imposed by Canadianlaw or by the Articles of Incorporation or other charter documents of theCompany on the right of a non-resident to hold voting shares of the Company,other than as provided by the*Investment Canada Act,*as amended (the "Act"), as amended by the *North American Free Trade AgreementImplementation Act*(Canada), and the *World TradeOrganization (WTO) Agreement Implementation Act*.The Act requires notification and, in certain cases, advance review and approvalby the Government of Canada of the acquisition by a "non-Canadian" of "controlof a Canadian business," all as defined in the Act. Generally, the threshold forreview will be higher in monetary terms for a member of the WTO or NAFTA. 
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**CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS**
    The following is a summary of certain Canadian federalincome tax considerations relating to an investment in common shares (alsoreferred to as the TIW Securities). 

    The summary is only applicable to a holderof TIW Securities who, for the purposes of the *Income Tax Act*(Canada) (also referred to as theIncome Tax Act) and the *Canada-United States Tax Convention*(also referred to as the Convention), is resident in the United States and notresident in Canada, deals at arm's length with TIW, holds TIW Securities ascapital property and does not use or hold and is not deemed to use or hold TIWSecurities in carrying on business in Canada (also referred to as the U.S.Holder). 
    The summary is for general informationonly and does not take into account the individual circumstances of anyparticular investor. Therefore, investors are urged to consult their own taxadvisors with respect to the tax consequences of an investment in the TIWSecurities based on their specific circumstances, including any consequences ofan investment in the TIW Securities arising under state, local or provincial taxlaws of other jurisdictions, including the United States. 

    This summary is based on the currentprovisions of the Convention and accompanying protocols, the Income Tax Act, theregulations under the Income Tax Act, specific proposals to amend the Income TaxAct or the regulations thereunder announced by the Canadian Minister of Financeprior to the date of this report and counsel's understanding of the currentadministrative and assessing practices of the Canada Customs and Revenue Agency(or CCRA). This summary does not otherwise take into account or anticipate anychanges in law, whether by legislative, governmental or judicial action, nordoes it take into account income tax laws or considerations of any province orterritory of Canada or any jurisdiction other than Canada. 

    Special rules, which are not discussed in this summary,may apply to financial institutions (as defined by the Income Tax Act) and tonon-resident insurers carrying on an insurance business in Canada and elsewhere.
***The Common Shares***
    Assuming that the common shares willcontinue to be listed on the the TSX and the NASDAQ, capital gains realized onthe disposition of common shares by a U.S. Holder will not be subject to taxunder the Income Tax Act unless such common shares constitute taxable Canadianproperty. 

    Common shares will generally not betaxable Canadian property of a U.S. Holder unless, at any time during thefive-year period immediately preceding a disposition, the U.S. Holder, personswith whom the U.S. Holder did not deal at arm's length or the U.S. Holder andpersons with whom the U.S. Holder did not deal at arm's length owned 25% or moreof the issued shares of any class or series of shares of the capital stock ofthe Company. Even if common shares constitute taxable Canadian property to aparticular U.S. Holder, an exemption from tax under the Income Tax Act may beavailable under the provisions of the Convention. 

    Dividends, including deemed dividends andstock dividends, paid or credited to a U.S. Holder on common shares are subjectto Canadian withholding tax under the Income Tax Act. The Convention generallyreduces the rate of withholding tax to 15% of the gross amount of the dividendwhere the beneficial owner is not a company that owns at least 10% of the votingstock of TIW. Moreover, under the Convention, dividends paid to certainreligious, scientific, literary, educational or charitable organizations andcertain pension organizations that are resident in, and generally exempt fromtax in, the United States, are exempt from Canadian nonresident withholding tax.Provided that certain administrative procedures are observed by such anorganization, the Company would not be required to withhold such tax fromdividends paid or credited to such organization. It should be noted that thissummary does not address the tax treatment of U.S. Holders that are corporationsowning 10% or more of the voting stock of the Company. 
**CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
    The following is a summary of the principalU.S. federal income tax considerations applicable to an investment in commonshares by U.S. holders who hold common shares as capital assets within themeaning of the U.S. Internal Revenue Code of 1986, as amended. For purposes ofthis discussion, the term "U.S. holder" means a beneficial owner of commonshares that is, for U.S. federal income tax purposes, (i) an individual who is acitizen or resident of the United States, (ii) a corporation, or other entitytreated as a corporation for U.S. federal income tax purposes, created ororganized in or under the laws of the United States, any State or the Districtof Columbia, (iii) an estate the income of which is includable in gross incomefor U.S. federal income tax purposes regardless of its source, or (iv) a trustthe administration of which is subject to the primary supervision of a court inthe United States and for which one or more U.S. persons have the authority tocontrol all substantial decisions. If a partnership holds common shares, theU.S. federal income tax treatment of a partner generally will depend upon thestatus of the partner and the activities of the partnership. We based thissummary on the Internal Revenue Code, Treasury Regulations promulgatedthereunder, and judicial and administrative interpretations thereof, all 

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as in effect on the date hereof and all of which are subject to change, whichchange may be retroactive and may affect the tax consequences described herein.
**    This summary is for general informationonly and does not take into account the individual circumstances of anyparticular investor. Therefore, investors who are U.S. holders are stronglyurged to consult their own tax advisors with respect to the tax consequences ofan investment in common shares based on their particular circumstances,including any consequences of an investment in common shares arising under stateor local tax law or foreign tax laws of jurisdictions outside of the UnitedStates. 
*The Common Shares***
    Distributions paid to U.S. holders inrespect of common shares, inclusive of any withholding taxes paid by theCompany, will be taxable as ordinary dividend income to the extent paid out ofthe Company's current or accumulated earnings and profits as determined for U.S.federal income tax purposes, and as tax-free return of capital or capital gainto the extent of any excess. Notwithstanding the foregoing, the Company does notintend to maintain calculations of its earnings and profits as determined forU.S. federal income tax purposes, and, consequently, any distributions generallymust be reported as dividend income for U.S. information reporting purposes. See"Backup Withholding and Information Reporting" below. Dividends received by aU.S. holder will be treated as foreign-source income for U.S. federal income taxpurposes and, subject to complex limitations, a U.S. holder may be eligible fora foreign tax credit or deduction for withholding taxes paid in respect of thedividends. 

    For taxable years beginning before January1, 2009, dividends received from a "qualified foreign corporation" by anindividual U.S. holder are eligible for preferential U.S. federal income taxrates, subject to certain minimum holding period requirements and otherlimitations. The Company must make a determination as to whether a dividend iseligible for the preferential rates at the time the dividend is paid and reportto you the amount of dividends, if any, that so qualify. 

    Distributions paid in Canadian dollars,inclusive of any Canadian withholding taxes, will be included in the grossincome of a U.S. holder in a U.S. dollar amount calculated by reference to theexchange rate in effect on the day the distributions are received by a U.S.holder, regardless of whether the Canadian dollars are converted into U.S.dollars at that time. If Canadian dollars are converted into U.S. dollars on theday they are received, a U.S. holder generally should not be required torecognize foreign currency exchange gain or loss. 

    Upon the sale or other taxable dispositionof common shares to a person other than the Company, a U.S. holder willrecognize capital gain or loss equal to the difference between the amountrealized and the U.S. holder's adjusted tax basis in such common shares. Suchgain or loss generally will be long-term capital gain or loss if the commonshares have been held for more than one year. Generally, for individual U.S.holders, long-term capital gains are subject to U.S. federal income tax atpreferential rates. For foreign tax credit purposes, such gain or loss willgenerally be U.S.-source. The deductibility of capital losses is subject tolimitations. 
***Passive Foreign Investment Company Considerations***
    The Internal Revenue Code provides specialanti-deferral rules regarding certain distributions received by U.S. personswith respect to, and sales and other dispositions (including pledges) of stockof, a passive foreign investment company. A foreign corporation, such as theCompany, will be treated as a passive foreign investment company if 75% or moreof its gross income is passive income for a taxable year or if the averagepercentage of its assets (by value) that produce, or are held for the productionof, passive income is at least 50% for a taxable year. The Company believes thatit was not a passive foreign investment company for the taxable year endedDecember 31, 2003 and, furthermore, expects to conduct its affairs in such amanner so that it will not meet the criteria to be considered passive foreigninvestment company in the foreseeable future.***Backup Withholding and Information Reporting***
    A U.S. holder generally is subject toinformation reporting requirements with respect to payments on common sharesmade in the United States and to the proceeds from the sale or other dispositionof common shares unless such holder is a corporation or comes within certainother exempt categories and, when required, demonstrates this fact. In generalif a non-corporate U.S. holder subject to information reporting fails to furnisha correct taxpayer identification number or otherwise fails to comply withapplicable backup withholding requirements, a 28% federal backup withholding taxmay apply to amounts paid to such holder. The backup withholding tax is not anadditional tax and may be credited against a U.S. holder's regular U.S. federalincome tax liability or refunded by the Internal Revenue Service, as applicable.

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**DOCUMENTS ON DISPLAY
    Any documents referred to in this AnnualReport may be inspected at our corporate offices which are located at 1250René-Lévesque West, 38th floor, Montreal, Québec, Canada, H3B 4W8.You may read and copy annual reports, current reports and other information wefile with the SEC at the SEC's public reference room at 450 Fifth Street, NW,Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for furtherinformation concerning the public reference room. We file our annual reports,current reports and other information electronically with the SEC. You mayaccess information about us on the SEC's website at **www.sec.gov** or on the Canadian System for Electronic DocumentAnalysis and Retrieval at www.sedar.com. 

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**ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK 

Quantitative and Qualitative Disclosures about Market Risk**
    We have used shares, senior notes, bank andvendor credit facilities to finance our operations. These on-balance sheetfinancial instruments expose us to interest rate risk, foreign currency exchangerate risk and market price risk. Additionally, we have interest swaps, interestcaps and currency swaps. These off-balance sheet items also create foreigncurrency exchange rate risk and market price risk exposure. 

    The carrying amounts of cash and cashequivalents, short-term investments, trade debtors, amounts receivable andpayable from non-controlling interests, accounts payable, accrued liabilities,taxes recoverable and payable approximate their fair values due to theshort-term nature of these instruments. Cash equivalents and short-terminvestments consist of term deposits and highly liquid debt instrumentspurchased with maturity of six months or less. The fair value of the Company's12.5% senior notes was approximately $258.8 million. The fair value of theportion of the MobiFon's secured senior credit facility for which the interestrate has been fixed approximates $100.9 million. The fair value of the sale andlease back financing in MobiFon is not determinable because of the rarity ofsimilar transaction in Romania. The carrying amounts of other long-term debtapproximate their fair values because their interest rates fluctuate with marketinterest rates or are similar to interest rates currently available to theCompany. 

    As at December 31, 2003, most of ouroutstanding financial obligations, other than those referred to above, inmonetary terms, were of a variable-rate nature. However, MobiFon and Český Mobiluse interest swap agreements to hedge some interest rate exposure associatedwith variable-rate on-balance sheet financial instruments. We have not enteredinto any such arrangements for the purposes of trading or speculation. We haveentered into hedging arrangements in the Czech Republic to systematically hedgeagainst foreign currency exchange rate risks on portions of long-term debtdenominated in Euro. In certain circumstances, we may decide to accept theinherent currency risk, principally because of the relatively high cost ofbuying, or the inability to buy, forward cover in currencies of the countries inwhich we operate. We do not anticipate any near-term changes in the nature ofour market risk exposures or in management's objectives and strategies withrespect to managing such exposures. 

    Romania had a highly inflationary economyuntil June 30, 2003 and accordingly, the financial statements of MobiFon forperiods prior to June 30, 2003 were re-measured using the U.S. dollar as thefunctional currency. U.S. dollar transactions are shown at their historicalvalue. As of June 30, 2003, the cumulative inflation in Romania for the lastthree years was below 100% and consequently, Romania ceased to be defined foraccounting purposes as a highly inflationary economy. An assessment as to whichcurrency is MobiFon's functional currency was made based on the collectiveeconomic factors of the environment in which it operates and the U.S. dollar hasbeen determined to continue to be its functional currency. However, Romania iscurrently a second wave European Union accession candidate and it is foreseeablethat the Euro will take prominence in Romania in the future. Consequently,depending on the result of our future re-assessments of MobiFon's functionalcurrency and the progression of Romania towards the Euro, exchange ratefluctuations may have a more significant impact on our results of operations inthe future. For the year ended December 31, 2003, our subsidiary in Romaniarecorded net foreign exchange gains of $2.1 million. 

    The following table provides informationabout our market risk exposure associated with fluctuations in interest ratesand foreign currency exchange rates. The information in the table pertains tocorporate and all fully consolidated subsidiaries. The table presents principalcash flows and related interest rates by year of maturity for our bank andvendor credit facilities in effect as at December 31, 2003. The table excludesamounts related to facilities that had not been drawn upon as at December 31,2003. For the currency and interest rates swap agreements, the table presentsnotional amounts and the related reference interest rates by year of maturity.Fair values included herein, as at December 31, 2003, have been determined basedon: 
-  quoted market prices for 12.5% senior notes  the carrying value for variable rate portions of bank credit  facilities  estimates obtained from dealers to settle interest rate and  cross currency swap agreements 
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Expected Maturities (in thousands    of dollars)               Total        There-of allFair    Value 200420052006200720082009Aftermaturities12/31/03Interest Rate    Exposure                   Long-Term Debt:         Fixed rate principal            repayment9,93714,90520,82625,37229,810-225,000325,850361,183Average interest rate    on loans               outstanding10.82%11.03%11.35%11.81%12.50%12.50%---Variable rate    principal            repayment39,040105,517139,878191,269224,59587,503-787,802787,802Average interest rate    on loans               outstanding3.71%3.70%3.69%3.66%3.47%3.65%---Swaps and Options:         Variable    to Fixed Interest Rate Swaps:        Notional principal               outstanding232,82797,50071,50039,000----(12,740)Notional principal    amount               maturing13,000135,32726,00032,50039,000--245,827(12,740)Average pay rate6.42%3.62%3.62%3.62%3.62%----Average receive    rate2.57%1.15%1.15%1.15%1.15%----          EURIBOR to    PRIBOR Cross-Currency Swap and Caps:       Notional principal               outstanding90,691-------(556)Notional principal    amount               maturing-90,691-----90,691(556)Average pay rate    (based            on    current PRIBOR)3.74%3.74%-------Average receive    rate            (based    on current               EURIBOR)3.90%3.90%-------Cap on pay rate9.84%9.84%-------Fixed Euro to    Koruna               Exchange Rate33.9533.95-------          Cross    Currency and Interest Rate Swaps:        Notional principal               outstanding235,414184,862115,14318,957----(25,286)Notional principal    amount               maturing 50,55269,71996,18618,957--235,414(25,286)Average pay rate5.23%5.88%5.52%3.74%3.74%----Average receive    rate2.15%2.15%2.15%2.15%2.15%----Fixed Euro to    Koruna               Exchange Rate33.6234.1233.8732.97-----          Koruna-denominated Interest Rate Swaps and Caps:       Notional principal               outstanding of swaps55,84623,90317,8239,223----(176)Notional principal    amount               maturing1,15631,9436,0808,6009,223--57,002(176)Average pay rate3.87%3.67%3.67%3.67%3.67%----Average receive    rate2.94%2.08%2.08%2.08%2.08%----Notional principal    subject to caps               outstanding38,564--------Notional principal    amount               maturing 38,564-----38,564-Interest rate cap9.59%9.59%-------          Capital Leases:                  NotPrincipal repayment12,700------12,700determinableAverage fixed rate of    interest32.33%--------Foreign    Currency Exchange Rate Exposure (Euro)       Long-Term Debt:               Variable rate13,26452,71469,71998,627110,13529,218-373,677373,677      Average interest rate3.42%3.42%3.43%3.44%3.46%3.65%-  Czech Koruna               Variable rate5,71322,70730,03242,48454,27158,285-213,492213,492      Average interest rate3.41%3.41%3.42%3.44%3.48%3.58%---          
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**Forward Exchange    Contract:**         Principal amount         *Fixed Euro to    Koruna*75,828------75,8282,197*Exchange Rate*31.45--------**ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 

Not applicable. 

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**PART II 

ITEM 13 - DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES**
None. 
**ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OFPROCEEDS 

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS**
    On June 23, 2003, we amend our articles of incorporationto give effect to a consolidation of our common shares on the basis of onepost-consolidation share for every five pre-consolidation shares. 

    On March 25, 2004, all 35,000,000 non-voting convertiblepreferred shares outstanding were converted into 7,000,000 common shares. 

 

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**ITEM 15 - CONTROLS AND PROCEDURES**
    As of the end of the period covered bythis Annual Report on Form 20-F, we conducted an evaluation (under thesupervision and with the participation of our management, including the chiefexecutive officer and chief financial officer), pursuant to Rule 13a-15promulgated under the Exchange Act, of the effectiveness of the design andoperation of our disclosure controls and procedures. Based on this evaluation,our chief executive officer and chief financial officer concluded that as of theevaluation date, such disclosure controls and procedures were effective inensuring that the information required to be disclosed by us in reports we fileor submit under the Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in the rules and forms of the Securities andExchange Commission. 

    There have not been any changes in ourinternal control over financial reporting during the period covered by thisAnnual Report on Form 20-F that have materially affected, or are reasonablylikely to materially affect, our internal control over financial reporting. 

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**ITEM 16A - AUDIT COMMITTEE FINANCIAL EXPERT**
    Our Board of Directors has determined that Francois Laurin,member of the audit committee of our Board of Directors, is an audit committeefinancial expert as defined by the SEC for purposes of this Item 16A. 
**ITEM 16B - CODE OF ETHICS**
    We have adopted a code of ethics thatapplies to all of our employees, including our Chief Executive Officer, ourChief Financial Officer and our Controller. The full text of our code of ethicshas been filed with the SEC on Form 6-K on May 3, 2004 and as Exhibit 11.1 tothis Form 20-F. As of the date hereof, there has not been any amendment orwaiver of any provision of the code of ethics. 
**ITEM 16C - PRINCIPAL ACCOUNTANT FEES AND SERVICES**
    On a consolidated basis, aggregate audit fees,audit-related fees, tax fees and the aggregate of all other fees, includingexpenses, paid to Ernst & Yound LLP and affiliate offices in 2003 amounted tothe following: 
 $Audit Fees    748,000Audit-Related    Fees    463,400Tax Fees    1,070,500Other Fees212,700 2,494,600
    Audit-related fees primarily relate toservices rendered in connection with the Company's various securities exchangeand commission filings, such as our and our subsidiaries Form 20Fs and oursubsidiaries' Form F4, the Company's quarterly review, our subsidiaries' privatedebt placement and various consultations regarding the accounting treatment ofnon-recurring transactions and financial systems implementation reviews. 

    Tax fees relate primarily to tax compliance services, taxplanning and various tax advisory services. 

    Other fees primarily relate to advisory services renderedin connection with the Sarbanes-Oxley 404 certification process and translationservices. 
**ITEM 16D - EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES**
    Not applicable. 
**ITEM 16E - PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATEDPURCHASERS**
    Not applicable. 

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**PART III 

ITEM 17 - FINANCIAL STATEMENTS**
Not applicable. 

    - 69 -
**ITEM 18 - FINANCIAL STATEMENTS 

Financial Statements**
    The audited comparative annualConsolidated Financial Statements of TIW, including the notes thereto, as ofDecember 31, 2003 and 2002 and for the three year period ended December 31,2003, together with the auditors' report thereon, filed with the United StatesSecurities and Exchange Commission as Exhibit 99.2 to our Form 6-K dated March5, 2004 and attached hereto as Exhibit 14.3 and with the securities commissionsand other similar authorities in Canada, are incorporated herein by referenceand are an integral part of this Form 20-F. 
**Schedules to Financial Statements**
See attached schedules to this Form 20-F: 
- Schedule I - Condensed  Financial Information of TIW 
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**ITEM 19 - EXHIBITS 

EXHIBITS**
The following documents are filed as exhibits to this Form 20-F: 
**Exhibit      Number **Description**1.1 Certificate of Incorporation      and Restated Articles of Incorporation of Telesystem International  Wireless Inc.    (Incorporated by reference to Exhibit 3.1 to Form F-4, filed on March 4,    2002 and  Exhibit 3.1 to    Form 8-A, filed on January 17, 2003).   1.2 Code of General    By-Laws of Telesystem International Wireless Inc. (Incorporated by reference  to Exhibit 3.2    to Form F-4, dated February 5, 1998, File No. 333-8294).   3.1 An Amended and    Restated Investors Rights Agreement dated January 24, 2002, among  Telesystem    International Wireless Inc., U.F. Investments (Barbados) Ltd., J.P. Morgan    Partners  (BHCA), L.P.,    Asia Opportunity Fund, L.P., CAIP Co-Investment Fund Parallel Fund (I), C.V.  and CAIP    Co-Investment Fund Parallel Fund (II), C.V., J.P. Morgan Asia Investment    Partners,  L.P., Telesystem    Ltd., and Capital Communications CDPQ Inc. (Incorporated by reference to  Exhibit 6 to    Schedule 13D/A (Amendment No. 2), filed January 28, 2002, File No.    005-50538).   3.2 Amended and    Restated Investors Rights Agreement, dated as of March 17, 2004.    (Incorporated  by reference to    Exhibit 4.10 to the Registrant's Registration Statement on Form F-10/A filed  with the    Commission on March 18, 2004).   4.1 Mutual Release    dated March 26, 2003 by and among Telesystem International Wireless Inc. and  certain of its    subsidiaries, Opportunity Fund, CVC/Opportunity Equity Partners L.P. and  Highlake    International Business Company. (Incorporated by reference to exhibit 4.1 to    our Form  20-F filed May    21, 2003).   4.2 Exit Deed dated    March 19, 2003 among an affiliate of Emerging Market Partnership,  ClearWave N.V.,    Telesystem International Wireless Corporation N.V. and Telesystem  International    Wireless Inc. (Incorporated by reference to Exhibit 4.2 to Form 20-F of    ClearWave  N.V. filed May    20, 2003).   4.3 English    translation summary of License awarded to Český Mobil to establish and    operate a  public mobile    telecommunication network according to the GSM standard dated June 17, 2002.  (Incorporated by    reference to Exhibit 4.3 to Form 20-F of ClearWave N.V. filed May 20, 2003).   4.4 English    translation summary of License awarded to Český Mobil to establish and    operate a  public mobile    telecommunication network according to the VmTS standard dated June 20,    2002.  (Incorporated by    reference to Exhibit 4.4 to Form 20-F of ClearWave N.V. filed May 20, 2003).   4.5 Loan Agreement    between MobiFon S.A. and European Bank for Reconstruction and  Development    dated August 27, 2002 (Incorporated by reference to Form 6-K of ClearWave  N.V., filed    November 13, 2002).   4.6 Loan Agreement    between MobiFon S.A. and Nordic Investment Bank dated August 27, 2002  (Incorporated by    reference to Form 6-K of ClearWave N.V., filed November 13, 2002).   4.7 Loan Agreement    between MobiFon S.A. and Export Development Bank Canada dated August  27, 2002    (Incorporated by reference to Form 6-K of ClearWave N.V., filed November 13,  2002).   4.8 Share Retention    and Subordination Deed between MobiFon S.A., certain of its direct and  indirect    shareholders, Export Development Canada, Nordic Investment Bank and European  Bank for    Reconstruction and Development dated August 27, 2002. (Incorporated by    reference to  Exhibit 4.8 to    Form 20-F of ClearWave N.V. filed May 20, 2003). 
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4.9 English    translation summary of an underwriting    agreement dated September 11, 2003 among the Corporation, Capital  Communications    CDPQ Inc., which, at the time the agreement was signed, was an insider of    the  Corporation, and    BMO Nesbitt Burns Inc. pursuant to which Capital Communications CDPQ  Inc. agreed to    sell and BMO Nesbitt Burns Inc. agreed to purchase 12,960,128 Common Shares  held by Capital    Communications CDPQ Inc. and certain of its affiliates by way of a short    form  prospectus in    all Provinces of Canada.   4.10 Underwriting    Agreement between the Company, BMO Nesbitt Burns Inc., JP Morgan Securities  Inc., Lazard    Frères & Co. LLC, UBS Securities Canada Inc., TD Securities Inc., Telesystem  Ltd., 9111-1369    Québec Inc., U.F. Investments (Barbados) Ltd., JPMP TIW EH, LP, J.P.  Morgan Partners    (BHCA), L.P., AOF Investment N.V., CAIP Investment N.V., CEA  Investment N.V.,    EEIF Melville B.V., EEIF Czech N.V., and Emerging Europe Infrastructure  Fund C.V.    (Incorporated by reference to Exhibit 99.1 to the Registrant's Current    Report on  Form 6-K, filed    with the Commission on March 19, 2004).   4.11 The Share    Exchange Agreement, dated October 20, 2003, between the Company and Amaranth  L.L.C.    (Incorporated by reference to Exhibit 4.5 to the Registrant's Registration    Statement filed  with the    Commission on Form F-10 on March 5, 2004).   4.12 The Share    Transfer Agreement, dated February 10, 2004, between the Company, EEIF    Melville  B.V. and MobiFon    Holdings B.V. (Incorporated by reference to Exhibit 4.6 to the Registrant's  Registration    Statement on Form F-10 filed with the Commission on March 5, 2004).   4.13 Share Sale and    Purchase Agreement, dated February 10, 2004, between the Company,  ClearWave N.V.,    EEIF Czech N.V. and Emerging Europe Infrastructure Fund C.V.  (Incorporated by    reference to Exhibit 4.7 to the Registrant's Registration Statement filed on  Form F-10 with    the Commission on March 5, 2004).   4.14 Amended and    Restated Registration Rights Agreement, dated as of March 17, 2004.  (Incorporated by    reference to Exhibit 4.8 to the Registrant's Registration Statement on Form    F-  10/A filed with    the Commission on March 18, 2004).   4.15 Share Exchange    Agreement, dated as of March 4, 2004 between Highfields Capital I LP,  Highfields    Capital II LP and Highfields Capital Ltd., Perry Partners L.P., Perry    Partners  International    Inc. and the Company together with an amendment thereto dated March 18,    2004.  (Incorporated by    reference to Exhibit 4.9 to the Registrant's Registration Statement on Form    F-  10/A filed with    the Commission on March 18, 2004).   8 Subsidiaries of    the Registrant.   11.1 Code of Business    Conduct of the Registrant (Incorporated by reference to Exhibit 99.1 to Form  6-K of the    Registrant filed May 3, 2004)   12.1 Certification of    the Chief Executive Officer pursuant to Rule 13a-14(a) (17 CFR    240.13a-14(a))   12.2 Certification of    the Chief Financial Officer pursuant to Rule 13a-14(a) (17CFR 240.13a-14(a))   13.1 Certification    pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the  Sarbanes Oxley    Act of 2002.   14.1 Operating and    Financial Review and Prospects of the Registrants at December 31, 2003 and  2002 and for    each of the years in the three-year period ended December 31, 2003    (incorporated  by reference to    exhibit 99.1 to our Form 6-K filed March 5, 2004).   14.2 Notice of Annual    Meeting of Shareholders and Management Proxy Circular of Telesystem  International    Wireless Inc. dated March 26, 2004. (Incorporated by reference to Form 6-K,    filed  on April 1,    2004).   14.3 Audited    Comparative Annual Consolidated Financial Statements of the Registrant,    including the  Notes thereto,    as at December 31, 2003 and 2002 and for each of the years in the three-year  period ended    December 31, 2003, together with the auditors' reports thereon (incorporated    by  reference to    exhibit 99.2 to our Form 6-K filed March 5, 2004).** 
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SCHEDULE 1     

CONDENSED FINANCIAL INFORMATION OF REGISTRANT 

TELESYSTEM INTERNATIONAL WIRELESS INC. 

December 31, 2003 and 2002 

 

**AUDITORS' REPORT**
To the Board of Directors of 
**Telesystem International Wireless Inc.**
We have audited the consolidated financial statements of **Telesystem International Wireless Inc.** as of December 31, 2003 and 2002 andfor each of the years in the three-year period ended December 31, 2003, and haveissued our report thereon dated February 24, 2004, (except for Note 7, which isas of March 4, 2004). Our audits also included Schedule I of item 18 of theCompany's Form 20-F to be filed with the Securities and Exchange Commission forthe year ended December 31, 2003. This schedule is the responsibility of theCompany's management. Our responsibility is to express an opinion based on ouraudits. 

In our opinion, this schedule referred to above, whenconsidered in relation to the basic consolidated financial statements taken as awhole, presents fairly, in all material respects, the information set forththerein. 

Chartered Accountants Montréal, Canada February 24, 2004 *(Except for Note 7, which is as of March 4, 2004)*
**TELESYSTEM INTERNATIONAL WIRELESS INC.**Schedule 1 - Condensed Financial Information of Registrant **CONDENSED BALANCE SHEETS *(in thousands of U.S. dollars)*
 
Years ended December 31,**2003****2002** $$   **ASSETS**  **Current assets**  Cash and cash equivalents**1,806**2,093Receivables from subsidiaries and investees**1,622**19,976    Other current assets**112**1,239**Total current assets****3,540**23,308Investments in subsidiaries at equity, loans    and other assets**90,911**304,768Property, plant and equipment**135**453    Deferred financing and other costs-3,240 **94,586**331,769   **LIABILITIES AND SHAREHOLDERS' EQUITY**  Short-term loan *[Note 2]*-47,407Accounts payable and accrued liabilities**1,077**7,372Payable to subsidiaries**253**253    Current portion of long-term debt *[Note 2]*     223,868**Total current liabilities****1,330**278,900Long-term debt *[Note 2]***1,483**1,332   **Shareholders' equity [Note 6]**  Share capital**1,081,077**1,056,595Additional paid-in capital**246,497**244,875Warrants-1,314Deficit**(1,243,564)**(1,255,449)    Cumulative translation adjustment**7,763**4,202**Total shareholders' equity****91,773**51,537 **94,586**331,769   *See accompanying notes

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**TELESYSTEM INTERNATIONAL WIRELESS INC.**Schedule 1 - Condensed Financial Information of Registrant 
**CONDENSED STATEMENTS OF INCOME (LOSS)** *(in thousands of U.S. dollars)*
 
Years ended December 31,**2003****2002****2001** $$$    **Revenues**   Service and interest revenue from    subsidiaries      and investees *[Note 3]***21,791**22,39314,120    Other interest revenue**95**159752 **21,886**22,55214,872        Operating expenses**15,118**13,18429,936Income (loss) from continuing operations    before      undernoted items**6,768**9,368(15,064)Depreciation and amortization**(67)**(162)(173)Earnings of subsidiaries from continuing    operations**35,167**10,5121,505Interest expense**(17,691)**(48,816)(63,909)Foreign exchange gain (loss)**(177)**(70)1,090Gain on forgiveness of debt--238,940Gain (loss) on reorganization, Units exchange    and         expiry and on sale of investments**(454)**91,127-**Income before taxes from continuing**   **   operations****23,546**61,959162,389    Income taxes *[Note 4]***2,850**--**Income from continuing operations****20,696**61,959162,389Loss    from discontinued operations**(8,811)**(189,133)(416,103)**Net income (loss)****11,885**(127,174)(253,714)*See accompanying notes*
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**TELESYSTEM INTERNATIONAL WIRELESS INC.**Schedule 1 - Condensed Financial Information of Registrant 
**CONDENSED STATEMENTS OF CASH FLOWS** *(in thousands of U.S. dollars)*
 
Years ended December 31,**2003****2002****2001** $$$    **OPERATING ACTIVITIES**   Income from continuing operations**20,696**61,959162,389Reconciling items:      Depreciation and amortization**67**162173   Amortization of deferred    financing costs**3,083**2,9621,766   Non cash financial expenses    (recovery)**(3,266)**20,48148,184   Earnings of subsidiaries from    continuing operations**(35,167)**(10,512)(1,505)   Gain (loss) on reorganization,    Units exchange and         expiry and on    sale of investments**454**(91,127)-   Gain on forgiveness of debt--(238,940)    Changes in operating assets and liabilities**(9,736)**(14,663)(7,293)**Cash used in operating activities****(23,869)**(30,738)(35,226)    **INVESTING ACTIVITIES**   Investments in subsidiaries, loans and other    assets, net**163,208**7,724(31,924)Company's share of dividends received from a      subsidiary**54,153**--    Acquisitions of property, plant and equipment     (62)(88)**Cash provided by (used in) investing activities****217,361**7,662(32,012)    **FINANCING ACTIVITIES**   Decrease in short-term loan**(47,407)**(36,093)(29,500)Proceeds from issuance of common shares**9,499**--Proceeds from units issued, net of issue cost -248,591Payments made in notes exchange, including    fees and      costs--(55,838)Proceeds from Recapitalization, shares and    warrants      issued, net of issue costs-41,20215,191    Repayment of long-term debt**(220,602)**-(7,774)**Cash provided by (used in) financing activities****(258,510)**5,109170,670**Cash provided by (used in) continuing    operations****(65,018)**(17,967)103,432**Cash provided by (used for) discontinued**   **   operations****64,731**(7,063)(79,397)**Increase (decrease) in cash and cash    equivalents**   **      for the year****(287)**(25,030)24,035Cash    and cash equivalents, beginning of year**2,093**27,1233,088**Cash and cash equivalents, end of year****1,806**2,09327,123*See accompanying notes*
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**TELESYSTEM INTERNATIONAL WIRELESS INC.** 
**NOTES TO CONDENSED FINANCIAL INFORMATION** December 31, 2003 and 2002*(All tabular amounts are in thousands of U.S. dollars unless otherwise    indicated)***1.** BASIS OF PRESENTATION**
This Condensed Financial Information has been prepared bymanagement on the basis of accounting principles generally accepted in Canada inconnection with the Company's Form 20-F to be filed with the Securities andExchange Commission. Investments over which the Company has control areaccounted for using the equity method. These condensed financial statementsshould be read in conjunction with the Company's consolidated financialstatements. 

Significant differences between Canadian and United Statesgenerally accepted accounting principles affecting the determination ofshareholders' equity at December 31, 2003 and 2002, and the determination ofincome ( loss) and cash flows for each of the years in the three-year periodended December 31, 2003 are summarized in Note 17 of the consolidated financialstatements of the Company. 
**2.** FINANCING ARRANGEMENTS 
Corporate Credit Facility The Company's corporate credit facility, which amounted to $47.4 million as atDecember 31, 2002, has been fully reimbursed during 2003. The lending syndicateincluded affiliates of several of the Company's then significant shareholders.**14% Senior Guaranteed Notes Prior to June 30, 2003, the Company redeemed an aggregate of $72.4 millionin principal plus accrued interest of $3.8 million of 14% Senior GuaranteedNotes due December 30, 2003 (''14% Notes''). Accordingly, the Company did notproceed with the issuance of $10 million in additional 14% Notes which it wouldhave otherwise been required to issue on June 30, 2003 pursuant to theprovisions of this indenture. This resulted in the reversal of $7 million ofcontingent payments which was accrued as additional interest throughout the termof the 14% Notes. Furthermore, as a result of the distribution of proceeds fromthe issuance of the Notes by MobiFon Holdings, described in Notes 4 and 6 of theCompany's consolidated financial statements, the Company redeemed the remaining$148.2 million in principal plus accrued interest of 14% Notes in August of2003. 

Long-term debt consists of the following: 
As at December 31,**2003****2002**14% Senior Guaranteed Notes-223,868Series B 131⁄4% - Senior Discount    Notes**530**530Series C 101⁄2% - Senior Discount    Notes-20Amended ESD's 2006**953**782**1,483**225,200Less current maturities-223,868**1,483**1,332**3.  **RELATED PARTY TRANSACTIONS**
In addition to the related party transactions describedelsewhere in these financial statements, the Company entered into severaltransactions with its subsidiaries and investees. These transactions wereaccounted for at their exchange value and consisted of the following for theyears ended December 31, 
 **2003****2002****2001** $$$    Service charges to subsidiaries and investees**21,791**22,33513,403Interest revenue from subsidiaries and investees     58717 **21,791**22,39314,120 
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**TELESYSTEM INTERNATIONAL WIRELESS INC.** 
**NOTES TO CONDENSED FINANCIAL INFORMATION** December 31, 2003 and 2002*(All tabular amounts are in thousands of U.S. dollars unless otherwise    indicated)***4.  **CASH DIVIDENDS AND OTHER LOANS ANDADVANCES**
During 2003, the Company received a dividend of $57.0 millionfrom a subsidiary and is reflected in the financial statements as a reduction ininvestment in subsidiaries. In connection with the dividend, the Company paid atax of $2.9 million during the year and is reflected as income tax expense inthe financial statements. Furthermore, as a result of the sale of a 5.9%interest in MobiFon and the issuance of the Notes by MobiFon Holdings describedin Notes 4 and 6 to the consolidated financial statements respectively, anadditional $163.2 million was received by the Company by way of loan repayments.In addition, the Company received $70 million from the disposition of itsBrazilian cellular operations described in Note 16 to the consolidated financialstatements. 
**5.  **COMMITMENTS**

The future minimum lease payments for the next 5 years and thereafter ofoperating leases are as follows: 
 $200440320053962006652007 and thereafter     Total864**6.  RECAPITALIZATION, CONVERTIBLE DEBENTURES AND UNITS**
Between December 15, 2001 and March 13, 2002, the Companycompleted several transactions contemplated by an agreement between TelesystemLtd., then the Company's largest shareholder and certain of the Company's otherstakeholders (the "Recapitalization"). 
**Special**Warrants**On December 14, 2001, the Company issued 4.9 million warrants at a negotiatedprice of approximately $3.05 each, exercisable for one Common Share or onenon-voting preferred share convertible into common equity of the Company at noadditional cost ("Special Warrants") for cash consideration of $14.5 million netof issuance costs of $0.5 million. 
**7%**Equity Subordinate Debentures**On February 5, 2002, the Company completed an issuer bid and amendment ofsubstantially all of the 7.00% Equity Subordinate Debentures ["ESD"]. 

A total of Cdn$150.0 million [$98.6 million] of ESD dueFebruary 15, 2002 were originally issued on February 15, 1999 for net cashproceeds of $95.8 million. The debentures bore interest at the rate of 7% perannum payable semiannually, in August and February. Each debenture wasconvertible on maturity into Common Shares of the Company. 

Pursuant to a purchase offer and consent request, the Companypaid Cdn$6.8 million, issued 0.5 million warrants, each entitling the holder topurchase one Common Share at a price of Cdn$8.05 at any time before March 31,2003, issued approximately 7.5 million Common Shares and approximately 0.7million warrants, each entitling the holder to purchase one Common Share at aprice of Cdn$8.05 at any time before September 30, 2002, which expiredunexercised, in exchange for substantially all of the EDSs. The difference inthe carrying value of the ESDs acquired of $97.8 million and the fair value ofthe Common Shares [$30.2 million], Warrants [$0.4 million], and cash [$5.7million] given totaling $36.3 million including expenses of $1.4 million, hasbeen proportionately reflected as additional paid-in capital of $60.0 millionand as a $1.5 million gain on redemption. 

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**TELESYSTEM INTERNATIONAL WIRELESS INC.** 
**NOTES TO CONDENSED FINANCIAL INFORMATION** December 31, 2003 and 2002*(All tabular amounts are in thousands of U.S. dollars unless otherwise    indicated)***6. RECAPITALIZATION, CONVERTIBLE DEBENTURES AND UNITS [CONT'D]**
The Company amended the ESDs to, among other things, extendthe maturity of the ESDs to December 2006, reduce the principal amount of eachESD to Cdn$250, provide for the right of the Company to convert the ESDs atmaturity into Common Shares at a price equal to the greater of Cdn$5.00 and thethen current market price of the Common Shares and provide for the optionalconversion at maturity by holders of the ESDs into Common Shares at a price ofCdn$22.0. Consequently, the Company has amended and reduced the remainingoutstanding principal of an aggregate of approximately Cdn$5.0 million inprincipal amount of ESDs to an aggregate of approximately Cdn$1.24 million [$1.0million] in principal amount. 
**7.75% Convertible Debentures**
On March 8, 2000, the Company issued $300.0 million of 7.75%Convertible Debentures ("CDs") for net cash proceeds of $291.0 million. The CD'sbore interest at the rate of 7.75% per annum payable semi-annually, commencingon September 9, 2000, at the option of the Company, in cash or securitiesincluding the repayment of principal at maturity. 

On February 5, 2002, the Company converted all of the CDs andthe accrued and unpaid interest of $11.6 million due September 2001, for 30.9million Common Shares. The Company has also issued warrants to certain holdersto purchase up to a total of 3 million Common Shares at $5.00 per share on orbefore September 30, 2002 which expired unexercised. The difference in valueassigned to both the share issuance of $123.8 million and the fair value ofwarrants issued of $0.7 million and the carrying value of the CDs as at February5, 2002, of $309.9 million, was recognized as additional paid-in-capital of$183.9 million, net of expenses of $2.5 million. 

On February 14, 2001, the Company issued 43.8 million Units,including 23.6 million to Telesystem Ltd, for proceeds of Cdn$396.5 million[$260.4 million] before issue costs of Cdn$18.2 million [$11.9 million] pursuantto an offer for sale under a rights issue to holders of the Company's MultipleVoting and Common Shares. Each Unit consisted of one class A Subordinate VotingShare of ClearWave, and twenty-five Units entitled the holder to acquire oneCommon Share of the Company for no additional consideration by tendering twentyUnits back to the Company at anytime on or prior to June 30, 2002 [the exchangeoption]. Holders of the Units were to be deemed to have exercised their exchangeoption if less than $100 million of the Units, based on the issuance price, hadnot been exercised. On February 15, 2001, the Company issued 2.1 millionadditional Units in connection with the acquisition of shares of MobiFon, heldby minority shareholders as mentioned in Note 4 [b] of the consolidatedfinancial statements of the Company. 

In connection with the Company's exchange offer to theholders of its outstanding Units and the financing commitments under theRecapitalization, the Company acquired 33.7 million Units and raised $51.7million in gross proceeds. This new financing is in addition to the December 14,2001 issuance of 4.9 million Special Warrants. In consideration for this newfinancing and the payments of Units tendered under the exchange offer, theCompany has issued (a) an additional 53.8 million in aggregate of Common Sharesand Special Warrants (b) 0.9 million warrants, each allowing the holder topurchase one Common Share at a price $5.00 on or before March 31, 2003 and (c)1.7 million warrants, each allowing the holder to purchase one Common Share at aprice Cdn$7.95 on or before March 31, 2003, which expired unexercised. 
**Units and Equity Financing

On March 13, 2002, the Company converted all outstanding Special Warrantsissued in connection with the Recapitalization into 35 million Series 1Preferred Shares for no additional consideration. 

As a result of the above transactions, the Company realized again on exchange of Units, having a carrying value of $191.8 million, of $46.1million net of expenses of $5.3 million and issued Common Shares, PreferredShares and Warrants having a carrying value of $184.3 million, $21.4 million and$1.1 million, respectively. This Unit exchange has resulted in an increase inthe Company's equity interest and voting rights in ClearWave from 45.5% and80.7% respectively, to 85.6% and 94.9% respectively. 

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**TELESYSTEM INTERNATIONAL WIRELESS INC.** 
**NOTES TO CONDENSED FINANCIAL INFORMATION** December 31, 2003 and 2002*(All tabular amounts are in thousands of U.S. dollars unless otherwise    indicated)***6.  RECAPITALIZATION, CONVERTIBLE DEBENTURES AND UNITS [CONT'D] 

Units and Equity Financing
In addition, since the Units are no longer subject to thedeemed conversion feature in accordance with a court judgment, rendered onFebruary 4, 2002, the remaining Units were presented within current liabilitiesfor accounting purposes until their expiry on June 30, 2002 at which date theywere accounted for as non-controlling interest and a gain on disposal of theClearWave shares contained in the expired Units of $44.0 million was recognizedbeing the difference between the carrying value of the Units and the relatedClearWave shares. 
**7.  SUBSEQUENT EVENTS 

Sale of Hexacom
As announced on December 12, 2003, the Company accepted abinding offer to sell the 27.5% direct interest it holds in Hexacom for proceedsof $22.5 million. The Company provided its co-shareholders in Hexacom with therequired notices to trigger certain rights of first refusal provided for in theHexacom Shareholders' Agreement. In 2004, the Company's co-shareholdersexercised their right of first refusal and paid the $22.5 million purchase priceas stipulated in the December 12, 2003 binding offer. 
**Acquisition of Shares in MobiFon and TIW Czech**
On February 10, 2004, the Company entered into a definitiveagreement to acquire from a minority shareholder 5.9% of MobiFon previously soldin March 2003 [See *Note 4 of the consolidated financial statements*] inexchange for the issuance of 12,971,119 common shares of the Company's treasurystock. Upon the closing of the transaction, the Company will increase itsultimate equity interest in MobiFon from 50.1% to 55.9%. The transaction issubject to other MobiFon shareholders' pro rata rights of first refusal which,if exercised, will reduce the actual number of shares to be acquired by theCompany. At a minimum, the Company will acquire a 3.6% interest in MobiFon inexchange for 7,947,820 common shares of the Company. As part of the transaction,the selling minority shareholder of MobiFon who also has a minority position inTIW Czech agreed to sell to the Company some of its shares in TIW Czech. 

The number of TIW Czech shares that the Company will acquiredepends on the extent to which other MobiFon and TIW Czech shareholders exercisetheir respective rights of first refusal. If none of those rights of firstrefusal are exercised, the Company will acquire a 2.9% equity interest in TIWCzech for a cash consideration that the selling shareholder has agreed toreinvest into 1,650,595 additional common shares of the Company. The Companywould therefore increase its equity interest in TIW Czech from 21.0% to 23.9%upon the closing of the transaction. These transactions will be accounted forusing the purchase method. 

The closing of the transaction remains subject to certain conditionsincluding regulatory approval and is expected to take place during the firstquarter of 2004. 
**Acquisition of shares in ClearWave

On March 4, 2004, the Company entered into a privatetransaction to acquire an aggregate of 10,942,625 Class A subordinate votingshares of ClearWave from two institutional shareholders, in consideration for acombination of Common Shares and cash. The Class A subordinate voting shares ofClearWave to be acquired represent a 13.0% equity interest and a 4.6% votinginterest in ClearWave. As a result of these transactions, the Company's directand indirect equity voting interest in ClearWave will increase to 99.8% and99.9%, respectively. This transaction is conditional on the closing of an equityoffering which includes a secondary and a primary portion, in which the Companyraise sufficient funds to satisfy the cash components of the transaction. 

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**TELESYSTEM INTERNATIONAL WIRELESS INC.** 
**NOTES TO CONDENSED FINANCIAL INFORMATION** December 31, 2003 and 2002*(All tabular amounts are in thousands of U.S. dollars unless otherwise    indicated)***7.  SUBSEQUENT EVENTS [CONT'D]**
The cash consideration portion of the transaction will beequal to 1.362 multiplied by the net proceeds per Common Share received by theselling shareholders under the secondary offering and will be paid on thatnumber of Class A subordinate voting shares of ClearWave held by the ClearWaveshareholders, or the pro rata share number, equal to approximately 13.77% of thenumber of shares sold by selling shareholders under the offering. The balance ofthe Class A subordinate voting shares of ClearWave held by the ClearWaveshareholders will be purchased in exchange for the Company's Common Shares, onthe basis of Class A subordinate voting shares for 1.362 Common Shares, unlessthe ClearWave shareholders exercise their option to exchange a maximum of 1.3million Class A subordinate voting shares for a cash amount equal to 1.362multiplied by the net proceeds per Common Share received by the sellingshareholders under the equity offering, after deducting a discount of 10%. Thistransaction would be accounted for using the purchase method. 

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**SIGNATURE**
    Telesystem International Wireless Inc. hereby certifiesthat it meets all of the requirements for filing on Form 20-F and that it hasduly caused and authorized the undersigned to sign this annual report on itsbehalf. 

 
     TELESYSTEM INTERNATIONAL WIRELESS INC.             By*:**(signed)* Name:André Gauthier Title:Vice-President    and Chief Financial Officer   Dated: May 19,    2004  *******************************************************************************************************************************************************************************