As filed with the Securities and Exchange Commission on June 8, 2004
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 20-F/A
                               AMENDMENT NO.1 TO
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 2003

                        Commission file number: 001-14495

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.
             (Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S>                                                           <C>
            Tele Nordeste Cellular Holding Company                   The Federative Republic of Brazil
       (Translation of Registrant's Name into English)        (Jurisdiction of Incorporation or Organization)
</TABLE>

                       Avenida Ayrton Senna da Silva 1633
             54410-240 Piedade, Jaboatao dos Guararapes, PE, Brazil
                    (Address of principal executive offices)


 Securities registered or to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
<S>                                                              <C>
                     Title of each class                          Name of each Exchange on which registered
                     -------------------                          -----------------------------------------
           Preferred Shares, without par value*                            New York Stock Exchange
             American Depositary Shares, each                              New York Stock Exchange
           representing 20,000 Preferred Shares
</TABLE>

      *Not for trading, but only in connection with the listing of American
               Depositary Shares on the New York Stock Exchange.

   Securities registered or to be registered pursuant to Section 12(g) of the
                                   Act: None

 Securities for which there is a reporting obligation pursuant to Section 15(d)
                                of the Act: None

  Indicate the number of outstanding shares of each of the issuer's classes of
      capital or common stock as of the close of the period covered by this
                                 annual report:

                135,324,667,924 Common Shares, without par value

               223,943,821,719 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 the Securities Exchange Act
   of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
                   filing requirements for the past 90 days.

                                  Yes X   No
                                     ---    ---

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

                            Item 17    Item 18 X
                                   ---        ---



<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                            Page
                                                                                                            ----
<S>                                                                                                        <C>


Item 3.    Key Information..................................................................................2
Item 18.   Financial Statements............................................................................15
Item 19.   Exhibits........................................................................................16
</TABLE>


                                       i
<PAGE>

                                EXPLANATORY NOTE

This Form 20-F/A is being filed solely to amend the Annual Report on Form 20-F
for the fiscal year ended December 31, 2003, filed by Tele Nordeste Celular
Participacoes S.A. (the "Registrant") on May 19, 2004 (the "2003 Form 20-F"), to
correct errors therein, as follows:

o    to correct, in the Selected Financial Data section of Item 3 of the 2003
     Form 20-F, (1) the amount of Operating Income under U.S. GAAP, in
     thousands, for the year ended December 31, 2002 to read R$237,639 (rather
     than R$237,638) and for the year ended December 31, 2003 to read R$235,657
     (rather than R$235,112) and (2) the amount of Total Assets, in thousands at
     December 31, 2003, under the Corporate Law Method to read R$1,525,275
     (rather than R$1,561,629) and under U.S. GAAP to read R$1,561,629 (rather
     than R$1,540,348);

o    to add, in the Selected Financial Data, dividends declared per share in
     host country currency;

o    to correct, in note 17(a) of the Registrant's Consolidated Financial
     Statements included in the 2003 20-F in accordance with Item 18 thereof,
     the number of preferred shares in circulation, in thousands as of December
     31, 2003, to read 223,943,822 (rather than 222,529,866) and the total
     number of shares outstanding, in thousands as of December 31, 2003, to read
     359,268,490 (rather than 357,854,534); and

o    to correct the first sentence of the second paragraph of the Report of
     Independent Auditors accompanying the Registrant's Consolidated Financial
     Statements to make reference to the auditing standards of the U.S. Public
     Accounting Oversight Board in place of the prior reference to U.S.
     generally accepted auditing standards.

In addition, this Form 20-F/A corrects Item 19 of the 2003 Form 20-F by
substituting the name of the Registrant in place of an erroneous reference to an
affiliate of the Registrant.

Except for the above amendments, no changes have been made to the 2003 Form
20-F.

This Form 20-F/A consists of a cover page, this explanatory note, Item 3, Item
18 and Item 19 (each as amended) of the 2003 Form 20-F, the Reports of
Independent Auditors described herein, the signature page and the required
certifications of the principal executive officer and principal financial
officer of the Registrant.

Other than as expressly set forth above, this Form 20-F/A does not, and does not
purport to, amend, update or restate the information in the Form 20-F or reflect
any events that have occurred after the Form 20-F was filed.

                                       1

<PAGE>
Item 3. KEY INFORMATION

Selected Financial Data

         The selected financial data presented below should be read in
conjunction with our consolidated financial statements as of December 31, 2002
and 2003 and for the three years ended December 31, 2003 (our "Consolidated
Financial Statements"). Our Consolidated Financial Statements as of and for the
years ended December 31, 2001, 2002 and 2003, have been audited by Ernst & Young
Auditores Independentes S.S. The report of Ernst & Young Auditores
Independentes S.S. on the Consolidated Financial Statements that it audited
appear elsewhere in this annual report. The following paragraphs discuss some
important features of the presentation of the selected financial data and our
Consolidated Financial Statements. These features should be kept in mind in
evaluating the selected financial data and in reading "Item 5. Operating and
Financial Review and Prospects."

     Brazilian Corporate Law Accounting Method, Brazilian GAAP and U.S. GAAP

         Our Consolidated Financial Statements have been prepared in accordance
with the Brazilian Corporate Law accounting method (the "Brazilian Corporate Law
accounting method"), which differs in certain material respects from U.S. GAAP.
For many years prior to 2000, we prepared our financial statements for purposes
of filing reports with the Securities and Exchange Commission (the "Commission")
in accordance with specific guidance published by the Brazilian Institute of
Accountants ("Brazilian GAAP"). The accounting principles embodied in Brazilian
GAAP and the Brazilian Corporate Law accounting method are generally identical,
except that Brazilian GAAP requires historical financial information to be
restated in constant reais as of the end of the period presented, using the
integral restatement method (correcao monetaria integral), except when, by
determination of the Brazilian Institute of Accountants, the rate of inflation
for the period is so low as to render insignificant the effect of any such
restatement. Early in 2001, the Commission announced that Brazilian companies
could present their financial information in accordance with the Brazilian
Corporate Law accounting method, which has excluded monetary restatement of
historical financial information since 1995, following the end of hyperinflation
in Brazil in the early 1990's. In connection with the change in accounting
methods in fiscal year 2000, we restated our financial statements for all prior
periods for consistent presentation. The Brazilian Corporate Law accounting
method differs in certain material respects from U.S. GAAP. See Note 26 to our
Consolidated Financial Statements for a summary of the differences between the
Brazilian Corporate Law accounting method and U.S. GAAP, as well as a
reconciliation to U.S. GAAP of our shareholders' equity as of December 31, 2002
and 2003, and net income for the years ended December 31, 2001, 2002 and 2003.

     Corporate Reorganization to Transfer Goodwill

         On June 30, 2000, through a corporate restructuring, we transferred to
our Subsidiaries the premium ("Goodwill") paid by TIM Brasil S.A. ("TIM
Brasil"), formerly Bitel Participacoes S.A. ("Bitel"), for the acquisition of
control of Tele Nordeste Celular. The Goodwill was recorded as an asset. The
transfer of Goodwill resulted in a potential tax benefit, increasing our ability
to generate free cash flow. Commencing in 1998, the Goodwill was amortized by
TIM Brasil using an amortization rate of 4% per annum. After the transfer of the
Goodwill to our Subsidiaries, they began amortizing the balance of the Goodwill
under the straight-line method over the remaining eight years of the applicable
amortization period. See Note 1(b) to our Consolidated Financial Statements. The
amortization of Goodwill is expected to reduce our consolidated operating income
in future years, and to reduce TIM Nordeste's income and social contribution
taxes payable in those years, not affecting the consolidated net operating
income.

                                       2
<PAGE>


     Minority Interests

         For 2001, 2002 and 2003, minority interests reflect the interest of
shareholders other than Tele Nordeste Celular in each of Telpe Celular, Telpa
Celular, Telern Celular, Teleceara Celular, Telepisa Celular and Telasa Celular.
On December 31, 2003, minority shareholders owned 20.2% of Telpe Celular, 19.6%
of Teleceara Celular, 27.3% of Telpa Celular, 23.1% of Telern Celular, 20.5% of
Telasa Celular and 20.0% of Telepisa Celular. See Note 3(t) to our Consolidated
Financial Statements.





                                       3
<PAGE>

                             Selected Financial Data

         The following selected financial data for the five years ended December
31, 2003 are derived from our consolidated financial statements. In 2003, 2002
and 2001 our consolidated financial statements were audited by Ernst & Young
Auditores Independentes S.S. The data should be read in conjunction with our
Consolidated Financial Statements, related notes and other financial information
included herein.
<TABLE>
<CAPTION>
                                                                       Year ended December 31,
                                              -----------------------------------------------------------------------
                                                  1999           2000           2001           2002           2003
                                                 ------         ------         ------         ------         -------
                                                                       (thousands of reais)(1)
<S>                                          <C>             <C>            <C>             <C>           <C>
Income Statement Data

Corporate Law Method
Net operating revenue                         R$ 674,853      R$ 845,620    R$ 826,250      R$ 921,522     R$ 999,453
Cost of services and goods                      (369,214)       (380,702)     (362,289)       (389,383)      (481,579)
                                              ----------      ----------    ----------      ----------     ----------
Gross profit                                     305,639         464,918       463,961         532,139        517,874

Operating expenses:
   Selling expenses                             (146,945)       (233,850)     (191,650)       (188,626)      (208,887)
   General and administrative expenses           (68,631)        (87,892)      (95,986)        (95,298)       (95,679)
   Other net operating income (expense)            3,381         (15,671)      (24,848)        (33,120)       (17,427)
                                              ----------      ----------    ----------      ----------     ----------

Operating income before financial income          93,444         127,505       151,477         215,095        195,881
   (expense)
Net financial income (expenses)                  (81,127)        (82,317)      (42,158)         (6,452)        62,350
                                              ----------      ----------    ----------      ----------     ----------

Operating income                                  12,317          45,188       109,319         208,643        258,231
Net non-operating income (expense)                (4,646)          2,441        (2,155)         (3,120)        13,819
                                              ----------      ----------    ----------      ----------     ----------

Income before taxes and minority interests         7,671          47,629       107,164         205,523        272,050
Income and social contribution taxes               4,375          (9,915)      (20,123)        (48,402)       (18,870)
                                              ----------      ----------    ----------      ----------     ----------

Income before minority interests                  12,046          37,714        87,041         157,121        253,180
Minority interests                                (2,625)        (11,060)      (21,511)        (38,547)       (45,635)
                                              ----------      ----------    ----------      ----------     ----------

Net income                                         9,421          26,654        65,530         118,574        207,545
                                              ==========      ==========    ==========      ==========     ==========

Net income per 20,000 shares outstanding            0.56            1.59          3.88            6.86          11.55
   (reais)(2)
Dividends per 20,000 shares outstanding             0.59            0.62          1.15            1.63           1.70
   (reais)(3)
Dividends per 20,000 shares outstanding             0.33            0.28          0.50            0.48           0.58
   (U.S. dollars)(4)
Dividends(3)                                       9,882          10,319        19,438          28,161         30,454

U.S. GAAP
Operating income                                  77,080         144,893       164,054         237,639        235,657
Net income                                           355          30,060        61,365         102,466        222,876
Net income per 20,000 Common Shares                 0.02            1.80          3.65            5.99          12.61
    outstanding basic and diluted (reais)
Net income per 20,000 Preferred Shares           R$ 0.02         R$ 1.80       R$ 3.65         R$ 5.99       R$ 12.61
    outstanding basic and diluted (reais)

</TABLE>



                                       4

<PAGE>

<TABLE>
<CAPTION>
                                                                           At December 31,
                                              -----------------------------------------------------------------------
                                                  1999           2000           2001           2002           2003
                                                 ------         ------         ------         ------         -------
                                                                       (thousands of reais)(1)(2)
<S>                                          <C>             <C>            <C>             <C>           <C>
Balance Sheet Data

Corporate Law Method
Property, plant and equipment, net            R$ 644,020      R$ 718,578    R$ 687,747      R$ 580,910     R$ 689,243
Total assets                                     961,569       1,239,253     1,265,935       1,401,353      1,525,275
Loans and financing                              323,864         407,043       348,311         333,689         80,699
Shareholders' equity                             354,091         575,884       621,976         710,145        877,042

U.S. GAAP
Property, plant and equipment, net               684,154         765,410       725,644         612,109        714,583
Total assets                                   1,001,703       1,284,347     1,299,982       1,428,348      1,561,629
Loans and financing                              318,693         395,938       354,995         390,134         96,307
Shareholders' equity                          R$ 364,709      R$ 588,418    R$ 630,345      R$ 702,406     R$ 892,929
</TABLE>

-------------
(1) Information from 1999 to 2003 is presented in nominal reais under both the
    Corporate Law Method and U.S. GAAP.
(2) Net income per share is determined based upon the weighted average number of
    shares outstanding during the period. See Note 26(g) to our Consolidated
    Financial Statements.
(3) Dividends per share have been computed as the sum of dividends and interest
    on shareholders' equity ("juros sobre capital proprio," according to
    Brazilian law), an alternative under Brazilian Corporate Law to the
    distribution of dividends to shareholders. The distribution of dividends and
    interest on shareholders' equity, in each year, proceeded according to the
    terms set forth by our common shareholders, at the relevant annual ordinary
    meeting. Dividends per share have been determined as the sum of declared
    dividends and interest on shareholders' equity, divided by the total number
    of Common Shares and Preferred Shares outstanding as of the common
    shareholders' meeting date. See "Item 10. Additional
    Information--Taxation--Brazilian Tax Considerations--Distribution of
    Interest on Capital."
(4) Amounts expressed in U.S. dollars, calculated at the exchange rate in effect
    on the date of the common shareholders' meeting at which the relevant
    dividend was distributed.

         In 2002, in accordance with a new CVM rule, we began classifying
employees' profit sharing expense as general and administrative expense instead
of as a separate line item below operating income before interest. All years
prior to 2002 were restated for consistent presentation. Employees' profit
sharing expenses amounted to R$2.1 million, R$2.1 million, R$3.8 million, R$3.7
million and R$3.2 million in 1999, 2000, 2001, 2002 and 2003, respectively.

Brazilian Economic Environment

         Our business, prospects, financial condition and results of operations
are dependent on general economic conditions in Brazil.

         Brazil experienced extremely high rates of inflation and devaluation of
the Brazilian currency for years prior to the implementation of the Real Plan in
1994. Inflation and certain governmental measures to combat inflation have
historically contributed to economic uncertainty in Brazil and to significant
volatility in the Brazilian securities markets. The following tables set forth
rates of inflation in Brazil, as measured by the IGP-M, and the depreciation or
appreciation of the real against the dollar during the periods indicated.
<TABLE>
<CAPTION>
                                                               Year ended December 31,
                                            ----------------------------------------------------------
                                              1999        2000         2001         2002         2003
                                             ------      ------       ------       ------       ------
                                                                     (percentages)
<S>                                          <C>          <C>          <C>          <C>           <C>
Inflation (IGP-M)                            20.1%        9.9%         10.3%        25.3%         8.7%
Devaluation (real vs. US$)(1)               (48.0)%       (9.3)%      (18.6)%      (52.3)%       19.2%
</TABLE>




                                       5
<PAGE>




                                                First Quarter of 2004
                                    --------------------------------------------
                                     Jan                Feb                Mar
                                    -----              -----              -----
                                                   (percentages)

Inflation (IGP-M)                    0.9%               0.7%               1.1%
Devaluation (real vs. US$)(1)        1.8%              (0.9)%             (0.2)%

-----------
(1) Source: Central Bank and Fundacao Getulio Vargas.

Exchange Rates

         We pay any cash dividends, interest on shareholders' equity and any
other cash distributions with respect to our Preferred Shares in reais.
Accordingly, exchange rate fluctuations will affect the U.S. dollar amounts
received by the holders of ADSs on conversion by the Depositary of dividends and
other distributions in Brazilian currency on our Preferred Shares represented by
the ADSs. Fluctuations in the exchange rate between Brazilian currency and the
U.S. dollar will affect the U.S. dollar equivalent of the price of our Preferred
Shares on the Brazilian stock exchanges. In addition, exchange rate fluctuations
may also affect our dollar equivalent results of operations. See "Item 5.
Operating and Financial Review and Prospects."

         There are two legal currency exchange markets in Brazil: the commercial
rate currency exchange market ("Commercial Market") and the floating rate
currency exchange market ("Floating Market"). The Commercial Market is reserved
primarily for currency exchange transactions in connection with foreign trade
transactions, and transactions that generally require prior approval from
Brazilian monetary authorities, such as the purchase and sale of foreign
investments registered with the Brazilian Central Bank ("Central Bank").
Commercial Market transactions may be carried out exclusively through a
Brazilian financial institution authorized to operate in this market. As used
herein, the Floating Market applies to currency exchange transactions in
connection with transactions other than the ones conducted through the
Commercial Market.

         Between March 1995 and January 1999, the Central Bank maintained a band
within which the exchange rate between the real and the U.S. dollar fluctuated,
and the Central Bank intervened in the foreign exchange markets from time to
time to keep the currency exchange rate within these limits. In early January
1999, the Central Bank attempted a controlled devaluation of the real by
widening the band within which the real/U.S. dollar rate was permitted to
fluctuate, but subsequent Central Bank intervention failed to keep the exchange
rate within the new band. On January 15, 1999, the Central Bank announced that
the real would be permitted to float freely, with Central Bank intervention to
take place only in times of extreme volatility. Since January 20, 1999, there
has been no exchange rate band between the real and the U.S. dollar, and the
real value of the dollar has been allowed to float. During this time, the
Central Bank has intervened only occasionally to control unstable movements in
foreign exchange rates, and the real-U.S. dollar exchange rate has experienced
considerable fluctuations. From January 20, 1999 to October 31, 2002, the real
depreciated by approximately 131.6% relative to the U.S. dollar. On the other
hand, from October 31, 2002 to May 31, 2003, the real appreciated by
approximately 18.6% relative to the U.S. dollar and has remained relatively
stable since that time.

         We cannot predict whether the Central Bank will continue to allow the
real to float or whether real foreign-exchange rates will remain stable. See
"--Risk Factors--Risks Relating to Brazil--Brazilian political and economic
conditions have a direct impact on our business and the market price of the
Preferred Shares and ADSs" and "--devaluation of the real may affect our ability
to meet our foreign currency-denominated obligations and result in a decline in
the market prices of the Preferred Shares and ADSs."


                                       6
<PAGE>
E>


         The following table sets forth the Noon Buying Rate, published by the
Federal Reserve Bank of New York, expressed in reais per U.S. dollar, for the
periods indicated.
<TABLE>
<CAPTION>
                                              Average for
Period                                           Period          High             Low
------                                        -----------        ----             ---
<C>                                              <C>            <C>              <C>
1999(1)                                          1.8640         2.2000           1.2074
2000(1)                                          1.8357         1.9840           1.7230
2001(1)                                          2.3530         2.7850           1.9380
2002(1)                                          2.9570         3.9450           2.3100
2003(1)                                          3.0586         3.6640           2.8230
   October 2003                                  2.8628         2.9060           2.8270
   November 2003                                 2.9150         2.9485           2.8550
   December 2003                                 2.9255         2.9450           2.8700
   January 2004                                  2.8533         2.9450           2.8070
   February 2004                                 2.9342         2.9720           2.9040
   March 2004                                    2.9067         2.9400           2.8680
   April 2004                                    2.9062         2.9590           2.8925
   May 2004 (through May 19, 2004)               3.0664         3.1265           2.9620
</TABLE>

--------
(1) Average of the rates on the last day of each month in the period.

         On May 19, 2004, the Noon Buying Rate, as published by the Federal
Reserve Bank of New York, was R$3.1140 to US$1.00.

         Brazilian law provides that, whenever there is a serious imbalance in
Brazil's balance of payments or serious reasons to foresee such imbalance,
temporary restrictions may be imposed on remittances of foreign capital abroad.
For approximately six months in 1989, and early 1990, for example, the Federal
Government froze all dividend and capital repatriations that were owed to
foreign equity investors. These amounts were subsequently released in accordance
with Federal Government directives. There can be no assurance that similar
measures will not be taken by the Federal Government in the future.



                                       7
<PAGE>

Risk Factors

     Risks Relating to Us

     The conversion of our SMC concessions into PCS authorizations may have a
     significant impact on our business.

         In December 2002, our Subsidiaries converted their respective
concessions to operate under Cellular Mobile Service ("SMC") regulations into
authorizations to operate under Personal Communications Services ("PCS")
regulations, which allowed us to provide local cellular service, and in July
2003 we received Servico Telefonico Fixo Comutado ("STFC") authorizations to
provide national and international long distance telecommunications services.
The SMC regulations differ significantly from the PCS and STFC regulations. We
are currently working to meet our obligations under the PCS and STFC
regulations, but there is no assurance that we will be able to do so. A failure
to comply with the PCS and STFC regulations may have a material adverse effect
on our business, financial condition and results of operations.

     We operate under a new structure that may have uncertain effects on our
     revenues.

         As a result of our conversion to PCS authorizations, we are subject to
the PCS Regulations and a new rate structure for our services. The new rules to
which we are subject also include the Codigo de Selecao de Prestadora ("CSP
Program") promulgated by Anatel as part of the PCS regulations. The CSP Program
allows customers to choose long distance carriers on a per-call basis. We are
now entitled to receive long distance revenues only when telecommunications
service users, including our customers, choose TIM Nordeste to carry their long
distance calls. However, our customers may select carriers other than TIM
Nordeste for their long distance calls.

         A portion of this loss in revenues is expected to be compensated by the
revenues we may receive for providing long distance call services to customers
of other telecommunications companies and, in addition, from charges we may make
under the new VU-M fee, which may be charged by the cellular company
interconnecting a long distance call carried by other telecommunication service
provider. See "Item 4. Information on the Company--Sources of Revenues--Network
Usage Charges and Monthly Subscription Charges" for further discussion of long
distance rates.

         We cannot say how much revenue we will receive from long distance calls
we may carry for clients of other telecommunications companies or from the
application of this new VU-M rate. See "Item 4. Information on the
Company--Sources of Revenue," for further discussion of long distance rates. As
a result of these changes, our revenues from long distance services may decline,
and our business, financial condition and results of operations may be adversely
affected.

     We may not receive as much interconnection revenue as we receive today.

         Under the SMC regulations, we were entitled to receive an
interconnection fee when a customer of another telecommunications service
provider made and connected a call to one of our customers through our network.
Similarly, we had to pay a fee to other telecommunications service providers for
calls originating from our customers that used their networks. These fees were
set by Anatel. Beginning in July 2004, interconnection charges will be freely
negotiated, by telecommunications service providers in Brazil, according to
rules to be issued by Anatel. As a result, we may receive less interconnection
revenue than we presently do, which may have an adverse effect on our business,
financial condition and results of operations.

         Additionally, under the CSP Program, when TIM Nordeste is selected as
the long distance carrier for a specific call, we are entitled to receive
revenues for that long distance call; however, we are not entitled to receive
interconnection fees for the use of our network.


                                       8
<PAGE>


     We may face difficulties responding to new telecommunications technologies.

         The Brazilian wireless telecommunications market is experiencing
significant technological changes, as evidenced by:

              o   the changing regulatory environment, as recently evidenced by
                  Anatel's introduction of the PCS regime, under which
                  telecommunications service providers are allowed to use the
                  advanced global system for mobile communication technology
                  ("GSM");

              o   shorter time periods between the introduction of new
                  telecommunication products and their required enhancements or
                  replacements; and

              o   ongoing improvements in the capacity and quality of digital
                  technology available in Brazil.

         We currently use time-division multiple access technology ("TDMA") to
provide cellular telecommunications services and have begun to offer GSM-based
services as well. We plan to make GSM technology widely available to our
customers in 2004, but there is no guarantee that we will be able to do so. If
we are not able to expand our operations using GSM technology, we may experience
adverse effects on our business, financial condition and results of operations.

     We will no longer offer national and international long distance services
     after 2004.

         Telecom Italia Mobile S.p.A. ("TIM") controls us and several other
companies (collectively the "Authorized Sister Companies") operating in the
Brazilian telecommunications market. One of the Authorized Sister Companies
holds national and international long distance authorizations that overlap
geographically with the authorizations we have received. Anatel granted us our
national and international long distance authorizations subject to a commitment
that this overlap be eliminated within 18 months of July 4, 2003, the date the
authorizations were granted. Accordingly, by January 4, 2005, unless a change in
the regulatory framework occurs, we will relinquish our national and
international long distance authorizations, and the following will occur:

              o   users of our cellular telecommunications services will
                  continue to be able to make national and international long
                  distance calls by selecting any long distance carrier code
                  currently available on a per-call basis;
              o   we will stop providing national and international long
                  distance services and will no longer receive from customers
                  the revenues associated with providing these services;
              o   we will no longer bear the direct costs associated with the
                  provision of national and international long distance services
                  directly to customers; and
              o   we will receive revenue in the form of VU-M fees charged to
                  providers selected as long distance carriers for calls
                  originating on our network.

         We believe that the loss of revenues from long distance services will
be partially offset by an increase in revenue from VU-M fees, and although we
except our overall net revenues to decline, we do not believe that such decline
will have a material adverse effect on our business, results of operations or
financial condition, but we can make no assurances in this regard.

     Our business is dependent on our ability to expand our services and to
     maintain the quality of the services provided.

         Our business, as a cellular telecommunications services provider,
depends on our ability to maintain and expand our cellular telecommunications
services network. We believe our expected growth will require, among other
things:

              o   continuous development of our operational and administrative
                  systems;

              o   increasing marketing activities; and


                                       9
<PAGE>


              o   attracting, training and retaining qualified management,
                  technical and sales personnel.

         These activities are expected to place significant demand on our
managerial, operational and financial resources. Failure to manage successfully
our expected growth could reduce the quality of our services, with adverse
effects to our business, financial condition and results of operations.

     We face increasing competition, which may adversely affect our results of
     operations.

         The opening of the Brazilian market for cellular telecommunications
services to competition in 1998 has adversely affected our results of
operations. Several licenses have been granted for cellular telecommunications
services in our areas of authorization, and the Federal Government auctioned
additional PCS licenses on frequency ranges referred to as Bands C, D and E
during 2001 and 2002. Due to the additional PCS providers that began operations
in 2002, we are facing greater competition. Although we estimate our market
share for the entire authorization area at 54% on December 31, 2003, the cost of
maintaining this market share has increased while margins have decreased. In the
future, we may incur higher advertising and other costs as we attempt to
maintain or expand our presence in the market.

         Competition from other wireless telecommunications services, such as
digital trunking and paging services, may increase with certain changes in
economic conditions, such as increases in unemployment, because these services
are generally less expensive than cellular telecommunications services.

         Technological changes in the telecommunications field, such as the
development of GSM and mobile satellite services, are expected to introduce
additional sources of competition.

         This increasing competition may continue to adversely affect our market
share and margins. Increased competition may also increase the rate of customer
turnover or otherwise adversely affect our business, financial condition and
results of operations. Our ability to compete successfully will depend on the
effectiveness of our marketing and our ability to anticipate and respond to
developments in the industry, including new services that may be introduced,
changes in consumer preferences, demographic trends, economic conditions and
discount pricing strategies by competitors. Additionally, we may face
competitors with greater access to financial resources and capital markets than
ours. We cannot predict which of many possible factors will be important in
maintaining our competitive position or what expenditures will be required to
develop and provide new technologies, products or services.

     We may experience a high rate of customer turnover which could increase our
     costs of operations and reduce our revenue.

         Churn reflects the number of customers who have their service
terminated during a period, expressed as a percentage of the simple average of
customers at the beginning and end of the period. Our rate of customer churn was
26.5% in 2000, 18.4% in 2001, 23.2% in 2002 and 18.3% in 2003. Our high churn
rates are primarily a result of our competitors' aggressive subsidization of
handset sales, adverse macroeconomic conditions in Brazil, and our strict policy
of terminating customers who do not pay their bills. As indicated by our past
rates of customer churn, we may experience a high rate of customer turnover
which could increase our cost of operations and reduce our revenue.

     We are dependent on fourth quarter results.

         We have experienced a trend of generating a significantly higher number
of new clients and handset sales in the fourth quarter of each year as compared
to the other three fiscal quarters. There can be no assurance that strong fourth
quarter results from new clients and handset sales will continue in future
years.





                                       10
<PAGE>



     We may be unable to respond to the recent trend toward consolidation in the
Brazilian wireless telecommunications market.

         We believe there has been a trend of consolidation in the Brazilian
telecommunications market. Additional joint ventures, mergers and acquisitions
among telecommunications service providers are possible in the future. If such
consolidation occurs, it may result in increased competition within our market.
We may be unable to adequately respond to pricing pressures resulting from
consolidation in our market, adversely affecting our business, financial
condition and results of operations.

     Our controlling shareholder may exercise its control in a manner that
     differs from the best interests of other shareholders.

         TIM, a corporation organized under the laws of Italy, indirectly owned
approximately 52.69% of our Common Shares and 22.52% of our total capital on
December 31, 2003. This ownership interest allows TIM to determine our actions
that require shareholder approval, including the election of a majority of our
directors and, subject to Brazilian law, the payment of dividends and other
distributions. TIM may exercise this control in a manner that differs from the
best interests of other shareholders.

     Risks Relating to the Brazilian Telecommunications Industry

     We are subject to various obligations in the performance of our activities
     with which we may be unable to comply.

         In the performance of our telecommunications services, we are subject
to compliance with various legal and regulatory obligations including, but not
limited to, the obligations arising from the following:

         o    the rules set forth by Anatel;

         o    the PCS authorizations under which TIM Nordeste operates its
              cellular telecommunications business;

         o    the STFC authorizations to provide national and international long
              distance telecommunications services; and

         o    the General Telecommunications Law (Lei no. 9,472/97, as amended).

         We believe we are materially in compliance with our obligations arising
out of such laws, regulations and authorizations, but we cannot give any
assurance that we will be able to continue to do so in the future. See "Item 4.
Information on the Company--Regulation of the Brazilian Telecommunications
Industry--Obligations of Telecommunications Companies." Additionally, we may be
unable to comply with future changes in the laws and regulations to which we are
subject, especially changes established in response to technological advances.
These regulatory developments or our failure to comply with them could have a
material adverse effect on our business, financial condition and results of
operations.

     Risks Relating to Brazil

     Brazilian political and economic conditions may have a material adverse
     effect on our business and a direct impact on the market price of the
     Preferred Shares and ADSs.

         The Brazilian economy has been characterized by significant involvement
on the part of the Brazilian government, which often changes monetary, credit
and other policies to influence Brazil's economy. The Brazilian government's
actions to control inflation and effect other policies have often involved,
among other things, high interest rate environments, currency devaluations and
exchange controls, tariff and import quotas, electricity consumption controls,
and other measures, such as the freezing of bank accounts, which occurred in
1990.

         Actions taken by the Brazilian government concerning the economy may
have important effects on Brazilian corporations and other entities, including
us, and on market conditions and prices of Brazilian securities, including our
Preferred Shares and ADSs. Our financial condition and results of operations may
be adversely affected by the following factors and the Brazilian government's
response to these factors:

         o    devaluations and other exchange rate movements;

         o    inflation;


                                       11
<PAGE>

         o    exchange control policies;

         o    social instability;

         o    price instability;

         o    energy shortages;

         o    fluctuations in interest rates;

         o    liquidity of domestic capital and lending markets;

         o    tax policy; and

         o    other political, diplomatic, social and economic developments in
              or affecting Brazil.

         In addition, we cannot predict the effect that the policies of the Lula
administration, which took office in January 2003, may have on Brazilian
economic conditions or on our financial condition or results of operations.

         Since taking office, the Lula administration has obtained approval from
the Brazilian Congress for the implementation of social security and tax
reforms. The administration has also announced plans to reform legislation
affecting other areas such as bankruptcy procedures, regulation of the power
sector, public-private partnerships, infrastructure investment and the credit,
capital and labor markets. Future developments or non-developments in the
Brazilian economy and government policies may reduce demand for our services or
products, adversely affect our financial condition and results of operations,
and impact the market price of the Preferred Shares and ADSs.

     Devaluation of the real may adversely affect Brazilian economic conditions
     and our financial condition.

         Devaluation of the real relative to the U.S. dollar could create
additional inflationary pressures in Brazil by generally increasing the price of
imported products and requiring recessionary governmental policies to curb
inflation. On the other hand, appreciation of the real against the U.S. dollar
may lead to a deterioration of the country's current account and the balance of
payments, as well as dampen export-driven growth. The potential impact of the
floating exchange rate and of measures by the Brazilian government aimed at
stabilizing the real is uncertain.

     A devaluation of the real may affect our ability to meet our foreign
     currency-denominated obligations and result in a decline in the market
     prices of our Preferred Shares and ADSs.

         Brazilian currency historically has suffered frequent devaluations. As
a result of inflationary pressures, the real and its predecessor currencies have
been devalued periodically over the last four decades. During this period, the
Brazilian government has implemented various economic plans and utilized a
number of exchange rate policies, including sudden devaluations, periodic
mini-devaluations, during which the frequency of adjustments has ranged from
daily to monthly, floating exchange rate systems, exchange controls and dual
exchange rate markets. From time to time, there have been significant
fluctuations in the exchange rates between the real and the U.S. dollar and
other currencies. See "--Selected Financial Data--Exchange Rates" for more
information on exchange rates.

         The real fell in value relative to the U.S. dollar by 18.7% and 52.3%
in 2001 and 2002, respectively. During 2001, the real experienced a period of
significant devaluation, due in part to the economic uncertainties in Argentina,
the global economic slowdown and the energy crisis in Brazil. During 2002, the
real experienced further devaluation, due in part to the continued global
economic slowdown and speculation related to the Presidential election in
October 2002. On the other hand, from January 1, 2003 to December 31, 2003, the
real appreciated by approximately 19.2% relative to the U.S. dollar and has
remained relatively stable since May 2003.

         A depreciation of the real could significantly increase the cost in
reais of dollar-denominated expenses, such as those that we may need to incur in
connection with new investments (for example, for the maintenance of our current
TDMA services, and the continuing implementation of GSM technology). Further
devaluations of the real relative to the U.S. dollar would reduce the U.S.
dollar value of distributions and dividends on the ADSs and also may reduce the
U.S. dollar market prices of our Preferred Shares and the ADSs.



                                       12
<PAGE>


     If Brazil experiences substantial inflation in the future, the market
     prices of our Preferred Shares and ADSs may be reduced.

         In the past, Brazil has experienced extremely high rates of inflation.
According to Brazil's general price index ("IGP-M"), the inflation rate was 9.9%
in 2000, 10.4% in 2001, 25.3% in 2002, 8.7% in 2003 and 2.7% for the three
months ended March 31, 2004. Inflation itself and some governmental measures to
combat inflation in the past have had significant negative effects on the
Brazilian economy.

         Since 1994, Brazil's inflation rate has been substantially lower than
in previous periods. However, during this period, there have been inflationary
pressures and actions taken to curb inflation which, together with public
speculation about possible future governmental actions, have contributed to
economic uncertainty in Brazil and to heightened volatility in the Brazilian
securities market. Brazil may experience high levels of inflation in the future.
There can be no assurance that the lower levels of inflation experienced since
1994 will continue. Future governmental actions, including actions to adjust the
value of the real, could trigger increases in inflation.

         If Brazil experiences substantial inflation in the future, our costs
may increase, and our operating and net margins may decrease. In addition, a
substantial increase in inflation may weaken investor confidence in Brazil, and
if investor confidence lags, the prices of our Preferred Shares and ADSs may
fall. Inflationary pressures also could result in our inability to access
foreign financial markets and may lead to further government intervention in the
economy, including the introduction of government policies that may adversely
affect the overall performance of the Brazilian economy. Future inflation could
adversely affect our results of operations and financial condition.

     Adverse changes in Brazilian economic conditions could cause an increase in
     customer defaults on their outstanding obligations to us, which could
     materially reduce our earnings.

         Our operations are significantly dependent on our customers' ability to
make payments on their accounts. If the Brazilian economy worsens because of,
among other factors, the level of economic activity, devaluation of the real,
inflation or an increase in domestic interest rates, a greater portion of our
customers may not be able to make timely payments for services, which would
increase our past due accounts and could materially reduce our net earnings.

     Developments in other emerging market countries may adversely affect the
     Brazilian economy, limit our access to international capital markets and
     negatively impact the market prices of our Common Shares, Preferred Shares
     and ADSs.

         We believe international investors in general consider Brazil to be an
emerging market. The Brazilian economy and the securities of Brazilian companies
always have been, to varying degrees, influenced by economic and market
conditions in other emerging market countries, particularly in Latin America, as
well as investors' responses to those conditions. Although economic conditions
are different in each country, investors' reactions to adverse developments in
one country may affect the market prices of securities of issuers in other
countries, including Brazil. For example, the 1997 Asian economic crisis and the
1998 Russian debt moratorium and the devaluation of the Russian currency
triggered market volatility in Latin America and securities markets in other
emerging market countries. Adverse developments in emerging market countries
could lead to a reduction in demand for, and the market price of, our Preferred
Shares and ADSs.

         As a result of economic and market conditions in other emerging
markets, Brazil in some periods has experienced a significant outflow of U.S.
dollars, and Brazilian companies have faced higher costs for raising funds, both
in Brazil and abroad, and have been impeded from accessing international capital
markets. There can be no assurance that international capital markets will
remain open to Brazilian companies or that prevailing interest rates in these
markets will be advantageous to Brazilian companies.


                                       13
<PAGE>


     Enforcement of rights in Brazil may be difficult.

         Our officers and many of our advisors reside in Brazil, and a
substantial portion of the assets of these persons and our assets are located in
Brazil. We are not aware of any treaty between the United States and Brazil
regarding the reciprocal enforcement of judgments. It may not be possible to
effect service of process upon these persons within the United States or other
jurisdictions outside of Brazil. Similarly, it may not be possible to enforce
judgments of non-Brazilian courts in Brazil, including judgments predicated on
civil liability under the U.S. securities laws against us or our directors and
officers.

     Risks Relating to Our ADSs

     Holders of Preferred Shares have limited voting rights.

         Of our two classes of capital stock outstanding, only our Common Shares
have full voting rights. Except in certain limited circumstances, our Preferred
Shares will be entitled to vote only in the event that we fail to pay the
minimum dividends for a period of three consecutive years. As a result, holders
of our Preferred Shares generally will not be able to influence any corporate
decision requiring a shareholder vote, including the declaration of dividends.

     Holders of ADSs are not entitled to attend shareholders' meetings and may
     only vote through the Depositary.

         Under Brazilian law, only shareholders registered as such in our
corporate books may attend shareholders' meetings. All Preferred Shares
underlying the ADSs are registered in the name of the Depositary. A holder of
ADSs, accordingly, is not entitled to attend shareholders' meetings. A holder of
ADSs is entitled to instruct the Depositary as to how to vote the Preferred
Shares represented by ADSs, in accordance with procedures provided for in the
Deposit Agreement, but a holder of ADSs will not be able to vote the underlying
Preferred Shares directly at a shareholders' meeting or to appoint a proxy to do
so.

     Holders of ADSs or Preferred Shares in the United States may not be
     entitled to participate in future preemptive rights of offerings.

         Under Brazilian law, if we issue new shares for cash as part of a
capital increase, we generally must grant our shareholders the right to purchase
a sufficient number of shares to maintain their existing ownership percentage.
Rights to purchase shares in these circumstances are known as preemptive rights.
We may not legally be permitted to allow holders of ADSs or Preferred Shares in
the United States to exercise any preemptive rights in any future capital
increase unless we file a registration statement with the Commission with
respect to that future issuance of shares or the offering qualifies for an
exemption from the registration requirements of the U.S. Securities Act of 1933,
as amended. At the time of any future capital increase, we will evaluate the
costs and potential liabilities associated with filing a registration statement
with the Commission and any other factors that we consider important to
determine whether to file such a registration statement. We cannot assure the
holders of ADSs or Preferred Shares in the United States that we will file a
registration statement with the Commission to allow them to participate in a
preemptive rights offering. As a result, the equity interest of such holders in
us may be diluted proportionately.

     Restrictions on the movement of capital out of Brazil may hinder ADS
     investors' ability to receive dividends and distributions on, and the
     proceeds of any sale of, our Preferred Shares.

         The Federal Government may impose temporary restrictions on the
conversion of reais into foreign currencies and on the remittance to foreign
investors of proceeds from investments in Brazil. Brazilian law permits the
government to impose these restrictions whenever there is a serious imbalance in
Brazil's balance of payments or reasons to foresee a serious imbalance.

         Any restrictions by the Federal Government on capital outflow may
hinder or prevent investors from converting the proceeds relating to our
Preferred Shares into U.S. dollars and remitting those proceeds abroad.
Investors could be adversely affected by delays in obtaining any required
governmental approval for conversion of reais payments and remittances abroad in
respect of our Preferred Shares underlying the ADSs.


                                       14
<PAGE>

Item 18.   FINANCIAL STATEMENTS

         Reference is made to pages F-1 through F-54. The following financial
statements are filed as part of the Registant's annual report on Form 20-F:

<TABLE>
<CAPTION>
<S>                                                                                                        <C>
Reports of Independent Accountants for the years ended December 31, 2000, 2001, and 2002................    F-3
Consolidated Balance Sheet as of December 31, 2001 and 2002.............................................    F-4
Consolidated Statement of Income for the years ended on December 31, 2000, 2001, and 2002...............    F-5
Consolidated Statement of Changes in Shareholders' Equity for the years ended on December 31, 2000,
   2001, and 2002.......................................................................................    F-6
Consolidated Statements of Changes in Financial Position for the years ended on December 31, 2000, 2001,
   and 2002.............................................................................................    F-7
Notes to our Consolidated Financial Statements..........................................................    F-8 through F-54
</TABLE>

                                       15

<PAGE>

Item 19.  EXHIBITS

           No.                               Description
           ---                               -----------
           1.1     By-laws of the Holding Company as of April 28, 2004, English
                   translation.

           2.1     Deposit Agreement, dated as of June 24, 2002, among the
                   Holding Company, JPMorgan, as Depositary, and Holders of
                   American Depositary Receipts issued thereunder, filed as
                   Exhibit 2.1 to the Holding Company's Annual Report on Form
                   20-F filed with the Commission on July 1, 2002 (File
                   #001-14495), incorporated by reference.

           2.2     Subordinated Debentures Agreement, dated as of November 9,
                   2000, among Telpe Celular, as Issuer, Aporte Distribuidora de
                   Titulos e Valores Mobiliarios Ltda., as Fiduciary Agent, and
                   the Holding Company, as Guarantor (Portuguese), filed as
                   Exhibit 2.2 to the Holding Company's Annual Report on Form
                   20-F filed with the Commission on July 1, 2002 (File
                   #001-14495), incorporated by reference.

           2.3     Subordinated Debentures Agreement, dated as of November 9,
                   2000, among Telpe Celular, as Issuer, Aporte Distribuidora de
                   Titulos e Valores Mobiliarios Ltda., as Fiduciary Agent, and
                   the Holding Company, as Guarantor (English translation),
                   filed as Exhibit 2.3 to the Holding Company's Annual Report
                   on Form 20-F filed with the Commission on July 1, 2002 (File
                   #001-14495), incorporated by reference.

           2.4     Amendment to Subordinated Debentures Agreement, dated as of
                   December 1, 2000, among Telpe Celular, as Issuer, Aporte
                   Distribuidora de Titulos e Valores Mobiliarios Ltda., as
                   Fiduciary Agent, and the Holding Company, as Guarantor
                   (Portuguese), filed as Exhibit 2.4 to the Holding Company's
                   Annual Report on Form 20-F filed with the Commission on July
                   1, 2002 (File #001-14495), incorporated by reference.

           2.5     Amendment to Subordinated Debentures Agreement, dated as of
                   December 1, 2000, among Telpe Celular, as Issuer, Aporte
                   Distribuidora de Titulos e Valores Mobiliarios Ltda., as
                   Fiduciary Agent, and the Holding Company, as Guarantor
                   (English translation), filed as Exhibit 2.5 to the Holding
                   Company's Annual Report on Form 20-F filed with the
                   Commission on July 1, 2002 (File #001-14495), incorporated by
                   reference.

           4.01    Management Assistance Agreement, dated as of October 1, 2000,
                   between the Holding Company and TIM, filed as Exhibit 4.1 to
                   the Holding Company's Annual Report on Form 20-F filed with
                   the Commission on July 2, 2001 (File #001-14495),
                   incorporated by reference.

           4.02    Management Agreement (Contrato de Gestao), dated as of May 2,
                   2001, by and among the Holding Company and the Subsidiaries
                   (Portuguese), filed as Exhibit 4.2 to the Holding Company's
                   Annual Report on Form 20-F filed with the Commission on July
                   2, 2001 (File #001-14495), incorporated by reference.

           4.03    Management Agreement (Contrato de Gestao), dated as of May 2,
                   2001, by and among the Holding Company and the Subsidiaries
                   (English translation), filed as Exhibit 4.3 to the Holding
                   Company's Annual Report on Form 20-F filed with the
                   Commission on June 16, 2003 (File #001-14495), incorporated
                   by reference.

           4.04    Standard Concession Agreement for Mobile Cellular Service, in
                   Portuguese and with a translation into English, filed as
                   Exhibits 10.1 and 10.2 to the Holding Company's Registration
                   Statement on Form 20-F filed with the Commission on September
                   18, 1998 (File #001-14495), incorporated by reference.

           4.05    Authorization Agreement for Mobile Cellular Service for Telpe
                   Celular (English Translation), filed as Exhibit 4.6 to the
                   Holding Company's Annual Report on Form 20-F filed with the
                   Commission on June 16, 2003 (File #001-14495), incorporated
                   by reference.

           4.06    Authorization Agreement for Mobile Cellular Service for
                   Teleceara Celular (English Translation), filed as Exhibit 4.8
                   to the Holding Company's Annual Report on Form 20-F filed
                   with the Commission on June 16, 2003 (File #001-14495),
                   incorporated by reference.

           4.07    Authorization Agreement for Mobile Cellular Service for
                   Telasa Celular (English Translation), filed as Exhibit 4.10
                   to the Holding Company's Annual Report on Form 20-F filed
                   with the Commission on June 16, 2003 (File #001-14495),
                   incorporated by reference.

           4.08    Authorization Agreement for Mobile Cellular Service for Telpa
                   Celular (English Translation), filed as Exhibit 4.12 to the
                   Holding Company's Annual Report on Form 20-F filed with the
                   Commission on June 16, 2003 (File #001-14495), incorporated
                   by reference.

           4.09    Authorization Agreement for Mobile Cellular Service for
                   Telern Celular (English Translation), filed as Exhibit 4.14
                   to the Holding Company's Annual Report on Form 20-F filed
                   with the Commission on June 16, 2003 (File #001-14495),
                   incorporated by reference.

           4.10    Authorization Agreement for Mobile Cellular Service for
                   Telepisa Celular (English Translation), filed as Exhibit 4.16
                   to the Holding Company's Annual Report on Form 20-F filed
                   with the Commission on June 16, 2003 (File #001-14495),
                   incorporated by reference.

           4.11    Authorization Agreement for national long distance services
                   for Telpe Celular (English Translation).

           4.12    Authorization Agreement for national long distance services
                   for Teleceara Celular (English Translation).

           4.13    Authorization Agreement for national long distance services
                   for Telasa Celular (English Translation).

           4.14    Authorization Agreement for national long distance services
                   for Telpa Celular (English Translation).

           4.15    Authorization Agreement for national long distance services
                   for Telern Celular (English Translation).

           4.16    Authorization Agreement for national long distance services
                   for Telepisa Celular (English Translation).

           4.17    Authorization Agreement for international long distance
                   services for Telpe Celular (English Translation).

           4.18    Authorization Agreement for international long distance
                   services for Teleceara Celular (English Translation).

           4.19    Authorization Agreement for international long distance
                   services for Telasa Celular (English Translation).

           4.20    Authorization Agreement for international long distance
                   services for Telpa Celular (English Translation).

           4.21    Authorization Agreement for international long distance
                   services for Telern Celular (English Translation).

           4.22    Authorization Agreement for international long distance
                   services for Telepisa Celular (English Translation).

           4.23    Equipment Supply and Service Agreement relating to the
                   implementation of a GSM network dated as of October 2, 2003,
                   by and among Nokia do Brasil Ltda., the Subsidiaries and TIM
                   Celular S.A. (English translation). Portions of this
                   agreement have been omitted pursuant to a confidential
                   treatment request made under Rule 24b-2 of the Securities
                   Exchange Act of 1934, and "*" has been substituted for the
                   omitted text.

           4.24    Equipment Supply and Service Agreement relating to the
                   implementation of a GSM network dated as of October 2, 2003,
                   by and among Ericsson Telecomunicacoes S.A., Ericsson
                   Servicos de Telecomunicacoes Ltda., the Subsidiaries, TIM
                   Sul S.A., Maxitel S.A. and TIM Celular S.A. (English
                   translation). Portions of this agreement have been omitted
                   pursuant to a confidential treatment request made under Rule
                   24b-2 of the Securities Exchange Act of 1934, and "*" has
                   been substituted for the omitted text.

            8.1    List of Subsidiaries.

           10.1    Certification of Chief Executive Officer and Financial
                   Executive Officer of Tele Nordeste Celular Participacoes
                   S.A., pursuant to Section 302 of the Sarbanes-Oxley Act of
                   2002.

           10.2    Certification of President and Financial Executive Officer
                   of Tele Nordeste Celular Participacoes S.A., pursuant to
                   Section 906 of the Sarbanes-Oxley Act of 2002.


                                       16

<PAGE>

                                   SIGNATURES

      The undersigned registrant hereby amends Item 3, Item 18 and Item 19 of
its Annual Report on Form 20-F for the year ended December 31, 2003 as set forth
in the pages attached hereto. This amendment replaces the existing Item 3, Item
18 and Item 19 reflected in that Form 20-F filing.

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.


      Tele Nordeste Celular Participacoes S.A.

      Date:   June 8, 2004



                                  By: /s/ MARIO CESAR PEREIRA DE ARAUJO
                                      --------------------------------------
                                      Name:  Mario Cesar Pereira de Araujo
                                      Title: President


                                  By: /s/ WALMIR URBANO KESSELI
                                      --------------------------------------
                                      Name:  Walmir Urbano Kesseli
                                      Title: Chief Financial Officer


<PAGE>





                      CONSOLIDATED FINANCIAL STATEMENTS

                      TELE NORDESTE CELULAR
                      PARTICIPACOES S.A.

                      Years ended December 31, 2001, 2002 and 2003

                      with Report of Independent Auditors



                                      F-1
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

                       CONSOLIDATED FINANCIAL STATEMENTS





                                    CONTENTS

<TABLE>
<S>                                                                                               <C>
Report of Independent Auditors .................................................................................F-3

Consolidated Balance Sheets as of December 31, 2002 and 2003....................................................F-4

Consolidated Statements of Income for the Years Ended December 31, 2001, 2002 and 2003..........................F-5

Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31,
2001, 2002 and 2003.............................................................................................F-6

Consolidated Statements of Changes in Financial Position for the Years Ended December 31,
2001, 2002 and 2003 ............................................................................................F-7

Notes to Consolidated Financial Statements.........................................................F-8 through F-54
</TABLE>


                                      F-2
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders of
Tele Nordeste Celular Participacoes S.A.


We have audited the accompanying consolidated balance sheets of Tele Nordeste
Celular Participacoes S.A. ("the Company") as of December 31, 2003 and 2002, and
the related consolidated statements of income, changes in shareholders' equity
and changes in financial position for each of the three years in the period
ended December 31, 2003. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Tele Nordeste
Celular Participacoes S.A. at December 31, 2003 and 2002, and the consolidated
results of its operations and changes in its financial position for each of the
three years in the period ended December 31, 2003, in conformity with accounting
principles generally accepted in Brazil, which differ in certain respects from
accounting principles generally accepted in the United States of America (see
Note 26 to the consolidated financial statements).


Recife, Brazil
January 12, 2004

ERNST & YOUNG
Auditores Independentes S.S.

/s/ Paulo Sergio Dortas
------------------------
Paulo Sergio Dortas
Partner


                                      F-3


<PAGE>


                    TELE NORDESTE CELULAR PARTICIPACOES S.A.
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2003
                (Expressed in thousands of Brazilian reais -R$)

<TABLE>
<CAPTION>
                                                     Note    2002        2003
                                                           ---------   ---------
<S>                                                  <C>  <C>         <C>
Assets
Current assets
   Cash and cash equivalents                           4     414,413     338,111
   Trade accounts receivable, net                      5     168,494     208,614
   Deferred and recoverable taxes                      6      81,538     159,985
   Other                                               7      12,122      17,445
                                                           ---------   ---------
   Total current assets                                      676,567     724,155
                                                           ---------   ---------
Noncurrent assets
   Deferred and recoverable taxes                      6     129,108     108,486
   Other                                               7       4,589       3,391
                                                           ---------   ---------
   Total noncurrent assets                                   133,697     111,877
                                                           ---------   ---------

   Equity investee                                     8      10,179        --
   Property, plant and equipment, net                  9     580,910     689,243
                                                           ---------   ---------
   Total permanent assets                                    591,089     689,243
                                                           ---------   ---------
Total assets                                               1,401,353   1,525,275
                                                           =========   =========
Liabilities and shareholders' equity
Current liabilities
   Payroll and related accruals                       10       8,117       6,775
   Accounts payable and accrued expenses              11      93,441     248,619
   Taxes other than income taxes                      12      41,949      48,868
   Proposed dividends                                 13      47,217      56,283
   Current portion of long-term debt                  14     256,223      40,899
                                                           ---------   ---------
   Total current liabilities                                 446,947     401,444
                                                           ---------   ---------
Long-term liabilities
   Long-term debt                                     14      77,466      39,800
   Provisions for contingencies                       15      16,058       9,615
                                                           ---------   ---------
   Total long-term liabilities                                93,524      49,415
                                                           ---------   ---------

                                                           ---------   ---------
Minority interests                                           150,737     197,374
                                                           ---------   ---------
Shareholders' equity
   Share capital                                      17     288,443     313,709
   Capital reserve                                    17     169,532     144,352
   Income reserves                                    17     122,196     141,131
   Retained earnings                                         129,974     277,850
                                                           ---------   ---------
   Total shareholders' equity                                710,145     877,042
                                                           ---------   ---------
Total liabilities and shareholders' equity                 1,401,353   1,525,275
                                                           =========   =========
</TABLE>


                                      F-4
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.
                       CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
  (Expressed in thousands of Brazilian reais - R$, except earnings per share)


<TABLE>
<CAPTION>
                                                                             Note       2001            2002            2003
                                                                                     -----------     -----------     -----------
<S>                                                                          <C>    <C>             <C>             <C>
Net operating revenues                                                        18         826,250         921,522         999,453

Cost of services and cellular handsets sold                                   19        (362,289)       (389,383)       (481,579)
                                                                                     -----------     -----------     -----------

Gross profit                                                                             463,961         532,139         517,874

Operating expenses:
  Selling expenses                                                                      (191,650)       (188,626)       (208,887)
  General and administrative                                                             (95,986)        (95,298)        (95,679)
  Other operating expenses, net                                               20         (24,848)        (33,120)        (17,427)
                                                                                     -----------     -----------     -----------

Operating income before interest                                                         151,477         215,095         195,881

  Financial income (expenses) net                                             21         (42,158)         (6,452)         62,350
                                                                                     -----------     -----------     -----------
Operating income                                                                         109,319         208,643         258,231

Nonoperating income (expenses), net                                                       (2,155)         (3,120)         13,819
                                                                                     -----------     -----------     -----------
Income before income taxes                                                               107,164         205,523         272,050

Income and social contribution tax expense                                    22         (20,123)        (48,402)        (18,870)
                                                                                     -----------     -----------     -----------
Income before minority interests                                                          87,041         157,121         253,180

Minority interests                                                                       (21,511)        (38,547)        (45,635)
                                                                                     -----------     -----------     -----------

Net income                                                                                65,530         118,574         207,545
                                                                                     ===========     ===========     ===========

Shares outstanding at the balance sheet date (thousands)                             337,768,636     345,739,620     359,268,490
                                                                                     ===========     ===========     ===========

Earnings per lot of twenty thousand shares outstanding at the
balance sheet date (in Brazilian Reais - R$)                                 3(s)           3.88            6.86           11.55
                                                                                     ===========     ===========     ===========
</TABLE>

See notes to consolidated financial statements.


                                      F-5
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
                 (Expressed in thousands of Brazilian reais -R$)

<TABLE>
<CAPTION>
                                                                   Capital
                                                                   Reserves                     Income reserves
                                                                   --------    ----------------------------------------------------
                                                                                                    Unrealized Realizable
                                                         Share       Share       Legal   Statutory    Income     profit   Dividends
                                                        capital     Premium     reserve   reserve     Reserve    reserve   payable
                                                       --------    --------    --------  ---------  ---------- ---------- ---------
<S>                                                   <C>         <C>         <C>       <C>        <C>        <C>        <C>
Balances at December 31, 2000                           108,843     204,068      13,255     87,154     69,996       --         --
Capitalization of reserves and retained earnings         77,211     (10,985)       --         --         --         --         --
Net income                                                 --          --          --         --         --         --         --
Transfer to and from reserves (Note 17)                    --          --         3,277       --      (69,996)      --       14,825
Dividends                                                  --          --          --         --         --         --         --
                                                       --------    --------    --------   --------   --------   --------   --------
Balances at December 31, 2001                           186,054     193,083      16,532     87,154       --         --       14,825
Capitalization of reserves and retained earnings        102,389     (23,551)       --         --         --         --         --
Realization of a portion of the reserve for
dividends payable                                          --          --          --         --         --         --       (2,244)
Net income                                                 --          --          --         --         --         --         --
Transfer to and from reserves (Note 17)                    --          --         5,929       --         --         --         --
Dividends                                                  --          --          --         --         --         --         --
                                                       --------    --------    --------   --------   --------   --------   --------
Balances at December 31, 2002                           288,443     169,532      22,461     87,154       --         --       12,581
Capitalization of reserves and retained earnings         25,180     (25,180)       --         --         --         --         --
Options exercised                                            86        --          --         --         --         --         --
Realization of a portion of the reserve for
dividends payable                                          --          --          --         --         --         --      (10,280)
Net income                                                 --          --          --         --         --         --         --
Transfer to and from reserves (Note 17)                    --          --        10,377       --         --         --         --
Dividends                                                  --          --          --         --         --         --         --
Establishment of realizable profit reserve (Note 17)       --          --          --         --         --       18,838       --
                                                       --------    --------    --------   --------   --------   --------   --------
Balances at December 31, 2003                           313,709     144,352      32,838     87,154       --       18,838      2,301
                                                       ========    ========    ========   ========   ========   ========   ========

<CAPTION>

                                                       Retained
                                                       earnings      Total
                                                       --------    --------
<S>                                                   <C>         <C>
Balances at December 31, 2000                            92,568     575,884
Capitalization of reserves and retained earnings        (66,226)       --
Net income                                               65,530      65,530
Transfer to and from reserves (Note 17)                  51,894        --
Dividends                                               (19,438)    (19,438)
                                                       --------    --------
Balances at December 31, 2001                           124,328     621,976
Capitalization of reserves and retained earnings        (78,838)       --
Realization of a portion of the reserve for
dividends payable                                          --        (2,244)
Net income                                              118,574     118,574
Transfer to and from reserves (Note 17)                  (5,929)       --
Dividends                                               (28,161)    (28,161)
                                                       --------    --------
Balances at December 31, 2002                           129,974     710,145
Capitalization of reserves and retained earnings           --          --
Options exercised                                          --            86
Realization of a portion of the reserve for
dividends payable                                          --       (10,280)
Net income                                              207,545     207,545
Transfer to and from reserves (Note 17)                 (10,377)       --
Dividends                                               (30,454)    (30,454)
Establishment of realizable profit reserve (Note 17)    (18,838)       --
                                                       --------    --------
Balances at December 31, 2003                           277,850     877,042
                                                       ========    ========
</TABLE>

See notes to consolidated financial statements.


                                      F-6
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.
            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                  YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
                 (Expressed in thousands of Brazilian Reais -R$)

<TABLE>
<CAPTION>
                                                                   2001       2002        2003
                                                                 --------   --------    --------
<S>                                                             <C>        <C>         <C>
Sources of working capital
    From operations
       Net income for the year                                     65,530    118,574     207,545

       Items not affecting working capital
           Depreciation                                           155,367    179,472     184,574
           Residual value of property, plant and equipment
             disposals                                              7,441      2,231       3,259
           Equity in net income of affiliated companies             1,888      4,288       3,250
           Gain on investment disposal                               --         --       (12,570)
           Price-level restatement increments to long term
             liabilities                                           38,716      6,763       3,531
           Minority interests                                      21,511     38,547      45,635
           Provision for contingencies                              1,800     13,355      (6,444)
           Other                                                     --         (755)       --
                                                                 --------   --------    --------
                                                                  292,253    362,475     428,780
    From shareholders
           Capital increase                                          --         --            86

    From third parties
           Investment disposal                                       --         --        19,500
           Transfer from noncurrent assets to current assets       26,618     30,494      77,279
           Other liabilities                                         --         --         1,001
                                                                 --------   --------    --------

                                                                   26,618     30,494      97,780
                                                                 --------   --------    --------
    Total sources                                                 318,871    392,969     526,646
                                                                 --------   --------    --------

Applications of working capital
           Noncurrent assets                                       13,915      6,994      55,460
           Investments                                             11,100       --          --
           Property, plant and equipment                          131,977     74,866     296,165
           Dividends                                               11,438     28,161      30,454
           Interest on own capital                                  8,000       --          --
           Transfer from long term liabilities to current
             liabilities                                           79,637    238,578      41,196
           Minority interests                                       3,974      8,812        --
           Realization of a portion of the special reserve for
             dividend Payable                                        --        2,244      10,280
           Net effect on assets and liabilities for dilution
             of shareholdings in subsidiaries                       2,762       --          --
                                                                 --------   --------    --------

           Total applications                                     262,803    359,655     433,555
                                                                 --------   --------    --------

    Increase in net working capital                                56,068     33,314      93,091

    Changes in working capital
               Beginning of year                                  140,238    196,306     229,620
               End of year                                        196,306    229,620     322,711
                                                                 --------   --------    --------

    Increase in net working capital
                                                                   56,068     33,314      93,091
                                                                 ========   ========    ========
</TABLE>

See notes to consolidated financial statement


                                      F-7
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 (Amounts expressed in thousands of Brazilian reais unless otherwise indicated)


1.    The Company and its principal operations

a.    Formation of the Company and its subsidiaries and nature of business

      Beginning in 1995, the federal government of Brazil ("the Federal
      Government") undertook a comprehensive reform of the Brazilian regulation
      of the telecommunications industry. In July 1997 the Federal Congress
      adopted a General Telecommunications Law providing for the privatization
      of Telecomunicacoes Brasileiras S.A. ("Telebras") which, through its 28
      operating subsidiaries, was the primary supplier of public
      telecommunications services in Brazil.

      As part of the privatization of the Telebras system, the operating
      companies were divided into twelve separate groups: (a) three regional
      fixed line groups, (b) eight regional cellular operators and (c) one
      national long-distance operator. The cellular telecommunications
      businesses were separated from the operating subsidiaries and
      subsequently, the fixed line businesses, the new cellular businesses and
      the long-distance operator were combined into the twelve separate groups
      (the "New Holding Companies"). Both the separation of the cellular
      businesses and the subsequent grouping of the former Telebras subsidiaries
      were performed using a procedure under Brazilian corporate law called
      cisao or "spin-off". As part of this process Tele Nordeste Celular
      Participacoes S.A. ("Tele Nordeste Celular" or the "Holding Company") was
      formed on May 22, 1998.

      Tele Nordeste Celular was formed through the spin-off of certain
      assets and liabilities of Telebras, including 78.5%, 79.3%, 75.4%,
      77.2%, 77.6% and 71.5% of the share capital of Telepisa Celular S.A.
      ("Telepisa Celular"), Teleceara Celular S.A. ("Teleceara Celular"),
      Telern Celular S.A. ("Telern Celular"), Telpe Celular S.A. ("Telpe
      Celular"), Telasa Celular S.A. ("Telasa Celular") and Telpa Celular
      S.A. ("Telpa Celular" and, collectively with Telepisa Celular,
      Teleceara Celular, Telern Celular, Telpe Celular and Telasa Celular,
      the "Subsidiaries" or the "Company's Subsidiaries"), respectively.
      Until August 4, 1998, the Company was controlled by the Federal
      Government. On July 29, 1998, the Federal Government sold to twelve
      buyers (the "New Controlling Shareholders") its rights to receive
      shares of the twelve New Holding Companies upon the distribution of
      such shares. In connection with this sale, the Federal Government
      assigned to the New Controlling Shareholders substantially all its
      economic and voting rights with respect to the New Holding Companies
      and, as a consequence, effective August 4, 1998 the New Controlling
      Shareholders control the New Holding Companies.

      The Company's Subsidiaries were formed on January 5, 1998 and
      subsequently received on January 30, 1998 from Telecomunicacoes do Piaui
      S.A. ("Telepisa"), Telecomunicacoes do Ceara S.A. ("Teleceara"),
      Telecomunicacoes do Rio Grande do Norte S.A. ("Telern"), Telecomunicacoes
      de Pernambuco S.A. ("Telpe"), Telecomunicacoes de Alagoas S.A. ("Telasa")
      and Telecomunicacoes da Paraiba S.A. ("Telpa") the assets and liabilities
      comprising their respective cellular telecommunications business.


                                      F-8
<PAGE>


      The subsidiaries of Tele Nordeste Celular Participacoes S.A. were
      concessionaires rendering mobile cellular telephone services ("SMC") and
      other activities necessary or useful for such services. Due to the
      authorization agreement entered into by these subsidiaries and ANATEL
      (National Telecommunications Agency) on December 10, 2002, they were
      allowed to render personal mobile services ("SMP") in the geographic area
      of operation attributed to the subsidiaries for an indefinite term. Said
      authorization agreements replaced the previous concession contracts.

      The Company's Subsidiaries are the primary suppliers of cellular
      telecommunications services in the states of Piaui, Ceara, Rio Grande
      do Norte, Pernambuco, Alagoas and Paraiba under the terms of
      concessions granted by the Federal Government (the "Concessions"). The
      Concessions will expire as follows:

          Company                                      Expire date

          Telepisa Celular S.A............             March 27, 2009
          Teleceara Celular S.A...........             November 28, 2008
          Telern Celular S.A..............             December 31, 2008
          Telpa Celular S.A...............             December 31, 2008
          Telpe Celular S.A...............             May 15, 2009
          Telasa Celular S.A..............             December 15, 2008

      The concessions may be subsequently renewed for an additional period
      of 15 years by the granting authority, after the payment of a new
      concession fee which amount will be determined by the authorities at
      that date.

      The Subsidiaries' businesses, including the services they may provide and
      the rates they may charge, are regulated by Agencia Nacional de
      Telecomunicacoes ("Anatel"), the regulatory authority for the Brazilian
      telecommunications industry pursuant to Law No. 9,472 of July 16, 1997 and
      related regulations, decrees, orders and plans.

      In December 1998, the Company started selling cellular handsets in
      connection with its cellular telecommunications service, both directly and
      through its dealer network.

      On June 13, 2000, the Company participated in the establishment of Blah!
      (formerly TIMNET.com S.A. ("TIMNET.com")), an internet services company.
      The business purpose of TIMNET.com is to establish a common platform for
      the technological and commercial development of value-added services and
      Wireless Application Protocol for cellular telephone service providers. As
      mentioned in Note 8, the investment in TIMNET.com S.A. was sold on
      December 18, 2003.


                                      F-9
<PAGE>


      The Company holds the following interests in operating subsidiaries and
investee:

                                                           Participation %
                                                         -----------------
                                                          2002       2003
                                                         ------     ------
      Consolidated subsidiares:
         Telasa Celular ............................       78.8       79.5
         Teleceara Celular .........................       80.0       80.4
         Telepisa Cecular ..........................       79.4       80.0
         Telern Celular ............................       76.2       76.9
         Telpa Celular .............................       71.9       72.7
         Telpe Celular .............................       78.7       79.8

      Equity investee:
         TIMNET.com ................................       20.0       --

b.    Corporate reorganization

      Of the Company's two classes of capital stock outstanding, only its common
      shares (the "Common Shares") have full voting rights. In June 1998, the
      UGB/Bitel consortium acquired 51.8% of the Common Shares. On December 15,
      1998, UGB exercised a put option under the Shareholders Agreement entered
      into by UGB and Bitel on July 24, 1998 pursuant to which it had the right
      to sell its entire shareholding in the Company to Bitel, subject to the
      approval of Anatel and the Conselho Administrativo de Defesa Economica -
      CADE, Brazil's federal competition law enforcement agency. On October 6,
      1999 the sale was approved, and Bitel became the controlling shareholder
      of Tele Nordeste Celular Participacoes S.A. with 51.8% of the ordinary
      shares.

      When UGB/Bitel purchased a majority of the Holding Company's common shares
      in connection with the privatization of Telebras, it paid a premium or
      "goodwill" over the book value of the Common Shares. In the first quarter
      of 2000, the Company and Bitel initiated a corporate reorganization to
      transfer the goodwill to certain of the subsidiaries in order that the
      amortization of the goodwill could be available as a deduction against
      income for purposes of calculating income taxes and social contribution
      tax on profits of the subsidiaries.

      As part of the reorganization process, the Holding Company spun-off to the
      subsidiaries their respective shares of the goodwill. This second step was
      approved by the Board of Directors of the Holding Company on May 30, 2000
      and by the Extraordinary Shareholders General Meeting of each subsidiary
      on June 30, 2000. The amortization of this premium for local statutory
      purposes results in tax benefits for the subsidiaries by reducing its
      taxes. The resulting tax benefit reverts to the benefit of the controlling
      shareholder that originated the Goodwill without, however, causing any
      effect on the profit or the flow of dividends to its minority
      shareholders.


                                      F-10
<PAGE>

      In accordance with Brazilian Corporate Law, the subsidiaries issue shares
      (pro-rata both common and preferred) up to the amount of the tax benefits
      realized on an annual basis. At the time of the issuance of shares, the
      non-controlling shareholders are given the right to purchase their
      pro-rata share of the corresponding share capital increase in order to
      prevent dilution. In case they do not accept the offer, shares are issued
      only to the controlling shareholder. The increase in the Holding Company's
      ownership percentage in each consolidated subsidiary, occurred in 2003,
      was a consequence of the issuance of new shares to the Holding Company,
      due to the above mentioned tax benefit realized in 2002, and for which the
      minority shareholders purchase rights were not exercised.

      The effect of the reorganization on the balance sheet and income statement
      accounts as at December 31, 2002 and 2003 and for the years then ended is
      shown below:

      Balance sheet effects:

                                                             2002      2003
                                                           --------   -------

      Unamortized balance of goodwill .....                 413,506    339,445
      Provision for maintenance of
        shareholders' equity ..............                (272,914)  (224,033)
                                                          ---------   --------
      Tax credit balance ..................                 140,592    115,412
                                                          =========   ========

      Income statement effects:

                                                   2001      2002       2003
                                                 --------  --------   --------

      Goodwill amortization ...............       (74,060)  (74,060)   (74,060)
      Provision reversal ..................        48,880    48,880     48,880
      Tax credit balance ..................        25,180    25,180     25,180
                                                 --------  --------   --------
      Net income effect ...................          --        --         --
                                                 ========  ========   ========

      As of December 31, 2003 the remaining value of the resulting tax credit in
      relation to both income taxes and social contribution tax on profits of
      the Subsidiaries was R$115,412 (R$140,592 in 2002). This is shown in the
      balance sheet as part of deferred and recoverable income and social
      contribution taxes (R$25,180 as current and R$90,232 as noncurrent assets
      on December 31, 2003 and R$25,180 and 115,412 on December 31, 2002,
      respectively).

      For statutory and tax purposes, the goodwill is being amortized over 10
      years starting in August, 1998, at a rate of 4% p.a. in the first two
      years with the balance being amortized straight line over the remaining
      eight years. A provision was established at an amount sufficient to reduce
      the unamortized balance of the goodwill to the estimated value of the
      future tax benefits. The reversal of this allowance is also the amount
      necessary to ensure no reduction in the earnings and dividends.


                                      F-11
<PAGE>

2.    Basis of presentation

      The accounts of the Company and its subsidiaries are maintained in
      Brazilian reais and its consolidated financial statements are prepared in
      accordance with the accounting principles established under Brazilian
      Corporation Law, which differ in certain respects from the accounting
      principles generally accepted in the United States of America-- "US GAAP".
      The reconciliation between Company's statutory consolidated financial
      statements as filed with the Brazilian Security Commission - Comissao de
      Valores Mobiliarios - CVM and the application of the accounting principles
      generally accepted in the United States is presented in Note 26 to
      financial statements.

      US GAAP disclosure requirements also differ from those required by
      Brazilian Corporate Law. The level of disclosure in the financial
      statements was adjusted and expanded and certain reclassifications were
      made to comply with US GAAP.

      Certain prior years amounts were reclassified to conform to current year's
      presentation.

3.    Summary of principal accounting practices

a)    Basis of consolidation

      The consolidated financial statements include the accounts of Tele
      Nordeste Celular Participacoes S.A. and those of its majority owned
      subsidiaries as listed in Note 1. All significant intercompany accounts
      and transactions have been eliminated in consolidation.

b)    Use of estimates

      The preparation of financial statements in conformity with accounting
      principles generally accepted in Brazil and in the United States of
      America requires management to make estimates and assumptions that affect
      the amounts reported in the financial statements and accompanying notes.
      Actual results could differ from those estimates.

c)    Revenue recognition

      Revenues for all services are recognized when the services are provided or
      when the equipment is sold. Revenues from cellular telecommunication
      services consist of subscription charges, usage charges, network usage
      charges, long distance charges and charges for maintenance and other
      customer services. Unbilled revenues from the billing date to the month
      end are measured and recognized during the month in which the service was
      provided.

      Revenues from pre-paid telecommunication services are recognized on
      the accrual basis in the period in which they are utilized, based on
      the actual usage recorded for each period. Revenue and related
      expenses associated with the sale of wireless handsets and accessories
      are recognized when the products are delivered and accepted by the
      customer.

d)    Cash and cash equivalents

      The Company considers all highly liquid temporary cash investments with
      original maturity dates of three months or less when purchased to be cash
      equivalents.


                                      F-12
<PAGE>

e)    Trade accounts receivable

      Accounts receivable from mobile telephone subscribers are calculated at
      the tariff rate on the date the services were rendered. Trade accounts
      receivable also include services provided to customers up to the balance
      sheet date but not yet invoiced and receivables from sales of handsets.

f)    Allowance for doubtful accounts

      The allowance for doubtful accounts is recorded based on an analysis
      prepared by management which considers the historical experience of
      write-offs. Management believes the provision is sufficient to cover
      estimated losses of the receivables.

g)    Foreign currency transactions

      Transactions in foreign currency are recorded at the prevailing exchange
      rate at the time of the relevant transactions. Foreign currency
      denominated assets and liabilities are adjusted using the exchange rate at
      the balance sheet date. Exchange differences are recognized in the
      statement of income as they occur.

h)    Inventories

      Inventories, comprising mainly handsets for resale, are valued at average
      cost, which is not in excess of market value.

i)    Property, plant and equipment

      Property, plant and equipment is stated at acquisition and/or
      construction cost, less accumulated depreciation calculated based on
      the straight-line method at the rates shown in Note 9, based on the
      estimated useful lives of the assets. Expenditures for repairs and
      maintenance of existing property, plant and equipment, which extend
      the useful lives of the related assets, as well as the interest
      computed on debts that finance the construction of property, plant and
      equipment, are capitalized and amortized over the remaining estimated
      useful life. Other routine costs are charged to results of operations.

      The Company's management reviews property, plant and equipment for
      possible impairment whenever events or changes in circumstances indicate
      that the carrying value of an asset or group of assets may not be
      recoverable on the basis of undiscounted future cash flows. The reviews
      are carried out at the lowest level of asset groups to which management is
      able to attribute identifiable future cash flows. The Company analyzes the
      net book value of the underlying assets and adjusts it if the sum of the
      expected future cash flows is less than the net book value. These reviews
      have not indicated the need to recognize any impairment losses during the
      years ended December 31, 2001, 2002 and 2003.


                                      F-13
<PAGE>

j)    Vacation pay accrual

      Cumulative vacation pay due to employees is accrued as earned.

k)    Income and social contribution taxes

      Income taxes are accounted for under the asset and liability method.
      Deferred taxes are recognized for the future tax consequences
      attributable to differences between the financial statement carrying
      amounts of existing assets and liabilities and their respective tax
      bases and operating loss and tax credit carry-forwards. Deferred tax
      assets are measured using enacted tax rates expected to apply to
      taxable income in the years in which those timing differences are
      expected to be recovered or settled. Deferred taxes related to
      temporary differences and tax losses are recorded, based on expected
      realization thereof, which is reviewed every year.

      The Company recorded in 2000 the tax credit related to the benefit arising
      from the future amortization of the goodwill as described in Note 1(b).

l)    Loans and financing

      Loans and financing include accrued interest to the balance sheet date. As
      discussed in Note 14, the Company is a party to certain derivative
      instruments - swaps, related to its US dollar denominated liabilities with
      the objective of hedging itself against risks associated with unexpected
      real/US dollar exchange rates. The foreign currency and interest rate swap
      agreements are recognized on the balance sheet at the spot rates at
      December 31, 2003 and 2002 plus the coupon rate as stated in the
      agreements and adjustments to contract value were recorded through income.

m) Pension and post-retirement benefits

      The Company's operating subsidiaries participated in a multi-employer plan
      that provided pension and other post-retirement benefits for some of its
      employees. At the beginning of 2000 the Company agreed on a basis for
      transferring its active employees from the multi-employer pension and life
      insurance plans into an individual defined benefit plan for the Company
      and its operating subsidiaries. In 2002 the Company started to take
      actions to form a new defined contribution plan permitting employees
      participating in the individual defined benefit plan to migrate to this
      new plan. The Brazilian Secretary of Complementary Pension approved this
      new plan on November 13, 2002. The migration to the new plan was optional
      and could be made with bonus incentives through January 29, 2003.

      Until December 31, 2001, current costs have been determined as the amount
      of required contribution for the period and recorded on the accrual basis.


                                      F-14
<PAGE>

      On December 13, 2000 Regulatory Instruction CVM 371 was enacted,
      establishing new rules for accounting for pension plans and defining rules
      for the calculation of actuarial obligations, mandatory as from January 1,
      2002. The Company elected to recognize adjustments to its actuarial assets
      and liabilities directly in income for the year as from January 1, 2002
      over a 5-year period or the remaining expected service life of employees
      if these are less.

n)    Provisions for contingencies

      The provision for contingencies is recorded based on estimates made by
      management taking into consideration the opinion of its in-house and
      external legal counsel, and is considered sufficient to cover losses
      and risks classified as probable.

o)    Interest expense

      Interest expense represents interest incurred.

p)    Advertising and marketing expenses

      Advertising and marketing costs are expensed as incurred and were
      R$20,164, R$19,522 and R$ 17,491 for the years ended December 31,
      2001, 2002 and 2003, respectively, which are reflected in the
      consolidated statements of income under "selling expenses".

q)    Research and development

      Research and development costs are charged to expense as incurred and were
      R$707, R$89 and R$95 for 2001, 2002 and 2003, respectively.

r)    Employee's profit sharing

      Accruals are made for granting employees the right to a share of profits.

s)    Earnings per share

      Basic earnings per share are calculated for each class of shares. The
      calculation takes into account that the preferred shares are entitled to a
      preferential, noncumulative dividend equal to the greater of (i) 6% of
      nominal capital value or (ii) 3% of net equity per share as per the latest
      approved balance sheet. The computation has been made as if the net income
      for each year will be fully distributed. Earnings may be used to increase
      capital or otherwise appropriated, consequently such earnings would no
      longer be available as dividends. In accordance with the Company's By
      Laws, distribution of a minimum annual dividend per share to preferred
      shareholders is compulsory. In the United States, the Preferred Shares
      trade in the form of ADSs, each representing twenty thousand shares. For
      2001, 2002 and 2003, earnings per share is thus disclosed per lot of
      twenty thousand shares.


                                      F-15
<PAGE>

t)    Minority interests

      In the consolidated balance sheets at December 31, 2002 and 2003 and the
      consolidated statements of income for the years ended December 31, 2001,
      2002 and 2003, minority interests relate to the interests of shareholders
      other than Tele Nordeste Celular Participacoes S.A. in Telepisa Celular,
      Teleceara Celular, Telern Celular, Telpa Celular, Telpe Celular and Telasa
      Celular.

u)    Segment information

      The Subsidiaries operate solely in the segment of local and regional
      cellular telecommunications. All revenues are generated in relation to
      services provided in an area in the Northeast of Brazil comprising the
      states of Piaui, Ceara, Rio Grande do Norte, Pernambuco, Alagoas and
      Paraiba or in relation to the sales of cellular handsets in the same
      region.

4.    Cash and cash equivalents

                                                     2002           2003
                                                    -------        -------
      Cash on hand .........................             43             44
      Cash and bank balances ...............         13,668         16,948
      Short-term deposits ..................        400,702        321,119
                                                    -------        -------
                                                    414,413        338,111
                                                    =======        =======

5.    Trade accounts receivable, net

                                                       2002        2003
                                                     --------    --------
      Accrued amounts ............................     33,599      36,303
      Billed amounts .............................    124,370     148,810
      Amounts receivable under interconnection
        agreements ...............................     39,497      59,034
      Allowance for doubtful accounts ............    (28,972)    (35,533)
                                                     --------    --------
                                                      168,494     208,614
                                                     ========    ========

      The changes in the allowance for doubtful accounts were as follows:

                                                    2001       2002       2003
                                                  -------    -------    -------

      Beginning balance ......................     22,002     17,799     28,972
      Provision charged to selling expense ...     44,578     46,729     57,410
      Write-offs .............................    (48,781)   (35,556)   (50,849)
                                                  -------    -------    -------
      Ending balance .........................     17,799     28,972     35,533
                                                  =======    =======    =======


                                      F-16
<PAGE>

6.    Deferred and recoverable taxes

                                                               2002      2003
                                                              -------   -------

      Income and social contribution tax ..................     2,122    65,202
      Deferred income and social contribution tax assets ..   172,420   145,364
      Withholding taxes ...................................    18,434    23,402
      Value added taxes ...................................    17,670    34,503
                                                              -------   -------
                                                              210,646   268,471
                                                              =======   =======

      Current .............................................    81,538   159,985
      Noncurrent ..........................................   129,108   108,486

7.    Other assets

                                                             2002     2003
                                                           ------   ------

      Inventories ......................................    8,774   12,380
      Judicial deposits ................................    2,697    3,065
      Pre-paid expenses ................................    1,035    1,617
      Other ............................................    4,205    3,774
                                                           ------   ------
      Total ............................................   16,711   20,836
                                                           ======   ======

      Current ..........................................   12,122   17,445
      Noncurrent .......................................    4,589    3,391

8.    Equity investement

      At December 18, 2003 the Company sold its 20% interest in Blah! (formerly
      TIMNET.com) to TIM International N.V., a related party, for R$19,500,
      generating a gain of R$12,570 that was recorded as "Non-operating
      results".

9.    Property, plant and equipment, net

<TABLE>
<CAPTION>
                                                     Annual
                                                  depreciation
                                                    rates %        2002          2003
                                                  ------------  ----------    ----------
<S>                                                <C>         <C>           <C>
      Automatic switching equipment ...........         14.3       221,659       241,986
      Transmission equipment ..................         14.3       706,308       686,134
      Administrative hardware and software ....         20.0       171,775       198,473
      Buildings ...............................          4.0         5,957         6,418
      Usage license ...........................         20.0          --          23,211

      Other ...................................     5.0-20.0        73,990        79,629
                                                                ----------    ----------
      Total cost ..............................                  1,179,689     1,235,851
      Accumulated depreciation and
        amortization ..........................                   (628,486)     (787,371)
                                                                ----------    ----------
                                                                   551,203       448,480
      Land ....................................                      1,318         1,318
      Construction-in-progress ................                     28,389       239,445
                                                                ----------    ----------
      Property, plant and equipment ...........                    580,910       689,243
                                                                ==========    ==========
</TABLE>


                                      F-17
<PAGE>

a)    Construction in progress

      Construction in progress comprises equipment in the process of being
      implemented and/or installed for TDMA and GSM technologies at the
      Company's subsidiaries.

b)    New technology implementation

      In the second half of 2003, the Company's subsidiaries started
      implementing GSM technology in their service networks, to supplement the
      current TDMA technology. Both technologies will be maintained in operation
      by the subsidiaries. At December 31, 2003, no adjustment to property,
      plant and equipment account was deemed necessary due to introduction of
      the new GSM technology.

c)    Usage License

      In July 2003, the Company's subsidiaries (Telepisa Celular S.A., Teleceara
      Celular S.A., Telern Celular S.A., Telpa Celular S.A., Telpe Celular S.A.
      and Telasa Celular S.A.) acquired a license for radio frequency use in
      connection with the General Licensing Plan (PGO) and the license for
      rendering Personal Mobile Services (SMP).

      The Company's Subsidiaries agreed to pay the amount of R$23,211 for
      this license, which was recorded as "Usage license" in the property,
      plant & equipment and is being amortizing in five years ending in
      2008, which is the period of the concession. There is no specific
      commitment assumed by the Company other than those related to the
      compliance with ANATEL rules.

      From the total due amount, R$2,311 (or 10%) was paid during 2003 and
      the remaining balance, plus interest of 1% per month will be paid in a
      single installment due on July 2004. At December 31, 2002, the Company
      recorded the amount of R$22,080 as Accounts payable and accrued
      expenses, as demonstrated in Note 11.

10.   Payroll and related accruals

                                                            2002    2003
                                                           -----   -----

      Accrued social security charges ..................   5,673   4,423
      Accrued benefits .................................   2,444   2,352
                                                           -----   -----
                                                           8,117   6,775
                                                           =====   =====

      The Company is subject to annual collective-bargaining agreement with
      its labor union in which 100% (in 2001), 92% (in 2002) and 84% (in
      2003) of the employees were covered.


                                      F-18
<PAGE>

11.   Accounts payable and accrued expenses

                                                         2002      2003
                                                        -------   -------

      Suppliers .....................................    47,920   186,212
      Interconnection charges .......................    14,948     8,820
      Consignments of third parties .................     8,259    19,008
      Employees' profit sharing .....................     3,784     3,246
      Advances from customers related to pre-paid
        telecommunication services ..................    14,721     8,892
      Usage license payable .........................      --      22,080
      Others ........................................     3,809       361
                                                        -------   -------
                                                         93,441   248,619
                                                        =======   =======

12.   Taxes other than income taxes

                                                               2002     2003
                                                              ------   ------

      Value-added taxes ...................................   22,580   31,462
      Withholding tax related to dividends characterized
        as distribution of interest on capital ............    9,440    9,783
      Other taxes on operating revenues ...................    9,929    7,623
                                                              ------   ------
                                                              41,949   48,868
                                                              ======   ======

      Dividends characterized as distribution of interest on capital are subject
to 15% withholding tax.


13.   Proposed dividends

                                                                  2002     2003
                                                                 ------   ------

      Tele Nordeste Celular Participacoes S.A. shareholders
         Common shares .......................................   11,498   15,343
         Preferred shares ....................................   18,907   25,391
      Minority shareholders ..................................   11,374   10,907
      Prior year dividends ...................................    5,438    4,642
                                                                 ------   ------
                                                                 47,217   56,283
                                                                 ======   ======


                                      F-19
<PAGE>

14.   Loans and financing

                                                        2002      2003
                                                      -------   -------

      Debentures ..................................   208,225      --
      Equipment financing .........................     9,218      --
      Working capital loans - US dollars ..........   116,246    80,699
                                                      -------   -------
                                                      333,689    80,699
                                                      =======   =======

      Current portion .............................   256,223    40,899
      Long term ...................................    77,466    39,800

      The year end balances include accrued interest calculated in accordance
      with the terms of the agreements.

a.    Debentures

      On October 2, 2000 Telpe Celular S.A. issued 20,000 three year non
      convertible debentures of R$10 each, totaling R$200,000. The debentures
      were guaranteed by Tele Nordeste Celular and accrued interest at 103% of
      the Interbank Deposit Certificate ("CDI") rate. The notes matured and were
      repaid, including accrued interest, in October 2003.

b.    Working capital loans - US dollars

                                                              2002       2003
                                                            --------   --------

      US$50 million loan at 3 month Libor, plus 1.775%
        p.a. (0.15% p.a. in 2003) ........................   176,665     96,306
      Provision for swap contract gains ..................   (62,254)   (16,424)
      Accrued interest ...................................     1,835        817
                                                            --------   --------
                                                             116,246     80,699
                                                            ========   ========

      Current portion ....................................    38,780     40,899
      Long term ..........................................    77,466     39,800

      The Company has complied with applicable financial covenants at December
      31, 2003, specifically those covering the relationship between the
      consolidated EBITDA and net financial expenses and net indebtedness. Non
      compliance with these covenants may cause the due date of the working
      capital loans to be accelerated.

      As of December 31, 2002 and 2003 the Company had exchange rate
      agreements with an aggregate notional principal amount of R$176,665
      and R$96,306 respectively, designed to protect its principal payment
      obligations on its working capital loans in US dollars from an
      unexpected fall in the real-US dollar exchange rate. These agreements
      establish a fixed rate at which the Company agrees to purchase U.S.
      dollars with Brazilian reais at a future date to pay its U.S. dollars
      denominated principal payment obligations with respect to its working
      capital loans. This reduces the Company's risk of incurring exchange
      losses in periods of volatility in the exchange markets.

c.    Repayment schedule

      Noncurrent loans are scheduled to be repaid as follows:


      2005                                                          39,800
      ----                                                          ------
      Total ........................................                39,800
                                                                    ======


                                      F-20
<PAGE>

d.    Currency analysis

      The total debt is denominated in the following currencies:

<TABLE>
<CAPTION>
                                             Exchange  rate at
                                             December 31, 2003
                                             -----------------
                                              (Units of one
                                              Brazilian real)       2002        2003
                                             -----------------    --------    --------
<S>                                                <C>           <C>         <C>
      Reais ...............................         1.0000         208,225        --
      US dollars ..........................         2.8892         192,083      97,123
      Unrealized gain on swap contracts ...                        (66,619)    (16,424)
                                                                  --------    --------
                                                                   333,689      80,699
                                                                  ========    ========
</TABLE>

15.   Commitments and contingencies

      Provisions for contingent liabilities were as follows:

                                                   2002     2003
                                                  ------   ------

      Labor claims ............................    2,080    1,152
      Tax claims ..............................    4,180    3,484
      Civil and other claims ..................    9,798    4,979
                                                  ------   ------

                                                  16,058    9,615
                                                  ======   ======

      Labor claims

      The provision for claims represents management's estimate of probable
      losses in relation to the various suits filed by former employees. The
      Company maintains judicial deposits of R$1,191 related to these claims.

      Tax claims

      The provision for tax claims represents estimate of probable losses in
      relation, basically, to ICMS (Imposto sobre Circulacao de Mercadorias e
      Servicos), a state value-added tax.

      Civil

      The provision for civil claims represents, basically, suits filed by
      former customers in connection with billing disputes. The Company
      maintains judicial deposit R$1,874.


                                      F-21
<PAGE>

      Other claims

      The Company is party to certain legal proceedings arising in the normal
      course of business. Based on legal advice, the Company has provided for
      its estimated losses due to adverse legal judgments. In the opinion of the
      Company's management, such actions, if decided adversely to the Company,
      would not have a material adverse effect on the Company's business,
      financial condition or results of operations.

Potential litigation

      Litigation Related to the Use of Premium Arising Out of the Breakup of
      Telebras

      On April 4, 2002, a Congressman filed a lawsuit in federal court in
      Brasilia, Federal District, against a number of governmental
      telecommunication entities and the New Holding Companies. The purpose of
      the lawsuit is to prevent the New Holding Companies from using the
      amortization of the goodwill paid by the New Holding Companies to the
      Brazilian government in the Breakup of Telebras to generate tax benefits.
      We contested this claim before the relevant federal court, and no decision
      had been made on this lawsuit prior to the time of filing.

      Even though we are unable to predict the final outcome of this lawsuit, we
      believe that a ruling favorable to the plaintiff is unlikely. Accordingly,
      we have not created a reserve in connection with this litigation. If an
      unfavorable ruling is issued against us, we will lose the tax benefit
      derived from the premiums paid, and our tax liability will increase. We
      believe that an unfavorable decision would have a material adverse effect
      on our business, results of operations, financial condition or prospects.


      Litigation Arising Out of Events Prior to the Breakup of Telebras

      Telebras and the Predecessor Companies, the legal predecessors of the
      Holding Company and the Subsidiaries, respectively, are defendants in a
      number of legal proceedings and subject to certain other claims and
      contingencies. Liability for any claims arising out of acts committed by
      the Predecessor Companies prior to the effective date of the spin-off of
      the cellular assets and liabilities of the Predecessor Companies to the
      Subsidiaries remains with the Predecessor Companies, except for those
      liabilities for which specific accounting provisions were assigned to the
      Subsidiaries. Any claims against the Predecessor Companies that are not
      satisfied by the Predecessor Companies could result in claims against the
      Subsidiaries, to the extent that the Subsidiaries have received assets
      that might have been used to settle such claims had such assets not been
      spun off from the Predecessor Companies.

      Under the terms of the Breakup of the Telebras system, liability for any
      claims arising out of acts committed by Telebras prior to the effective
      date of the Breakup remains with Telebras, except for labor and tax claims
      (for which Telebras and the New Holding Companies are jointly and
      severally liable by operation of law) and any liability for which specific
      accounting provisions were assigned to the Holding Company or one of the
      other New Holding Companies. Our management believes that the chances of
      claims of this nature materializing and having a material adverse
      financial effect on us are remote.


      ICMS taxes on activation fees and other services

      On June 19, 1998 the secretaries of treasury of the individual Brazilian
      states approved an agreement to interpret existing Brazilian tax law to
      broaden the application of the ICMS (Imposto sobre Circulacao de
      Mercadorias e Servicos), a state value-added tax, to cover not only
      telecommunications services but also other services, including cellular
      activation, which had not been previously subject to such tax. Pursuant to
      this new interpretation of tax law, the ICMS tax may be applied
      retroactively for such services rendered during the five years prior to
      1998.

      The Company believes that the attempt by the state treasury secretaries to
      extend the scope of ICMS tax to services which are supplementary to basic
      telecommunications services is unlawful because: (i) the state secretaries
      acted beyond the scope of their authority; (ii) their interpretation would
      subject to taxation certain services which are not considered
      telecommunications services; and (iii) new taxes may not be applied
      retroactively. No provision for such taxes has been made in the
      accompanying consolidated financial statements as the Company does not
      believe it is probable that such taxes will be payable for services
      rendered during the last five years.

      There can be no assurance that the Company will prevail in its position
      that the new interpretation by the state treasury secretaries is unlawful.
      If the ICMS tax were to be applied retroactively to activation fees earned
      during the past five years, management does not believe that would give
      rise to material impact on the Company's subsidiaries results, considering
      that the charging of activation fees were suspended since November 1998.


      Rentals

      The Company rents equipment and premises through a number of agreements
      that expire at different dates. Total annual rent expense under these
      agreements which are operating leases was as follows:

                                                          2001    2002    2003
                                                         -----   -----   ------

      Rent expense ...................................   4,912   4,398   11,896

      Rental commitments relating to facilities where the future minimum rental
      payments under leases with remaining terms in excess of one year that are
      non-cancelable without payment of a penalty are:

      Year ending December 31, 2003

      2004                                                           12,913
      2005                                                           10,374
      2006                                                            9,394
      2007                                                            8,514
                                                                     ------
      2008 and thereafter                                             7,921
                                                                     ------

      Total minimum payments                                         49,116
                                                                     ======


                                      F-22
<PAGE>

16.   Pension Plan

      The Company and its subsidiaries, together with substantially all of the
      other companies in the former Telebras group, participate in a
      multi-employer defined benefit and medical other post-retirement defined
      benefit plans administrated by the Fundacao Sistel de Seguridade Social -
      SISTEL. Until December 1999, all sponsors of plans administrated by Sistel
      were joint and several with regard to all plans then existent. On December
      28, 1999 the sponsors of plans administrated by Sistel negotiated
      conditions for the creation of individualized retirement plans for each
      sponsor, maintaining the joint and several aspect only for the
      participants already assisted under such condition at January 31, 2000,
      resulting in the proposal for restructuring Sistel's by-laws and
      regulations, which was approved by the Complementary Pension Plan Office,
      on January 13, 2000. With the discontinuation of the solidarity (i.e.
      multi-employer) concept in January 2000, Tele Nordeste Celular and its
      subsidiaries commenced sponsoring a defined benefit plan (Tele Nordeste
      Celular PBS Plan).

      The Company created a separate defined contribution plan TIMPREV -
      NORDESTE on November 13, 2002, through Notification 1,917 CGAJ/SPC. The
      Company encouraged the transfer of the existing employees in Tele Nordeste
      Celular PBS Plan to the new plan through the use of bonus incentives. The
      migration to the new plan was optional however, the bonus incentives
      offered by the Company expired on January 29, 2003. The decision to change
      to the TIMPREV plan if made by employees is irreversible and thus
      extinguishes rights linked to the PBS benefit plan (defined benefit) and
      to the PAMA. As of January 12, 2004, 92.46% of participants of the PBS
      Plan migrated to TIMPREV - NORDESTE. For the year ended December 31, 2003,
      the contributions of the Company and its subsidiaries to TIMPREV totaled
      R$140 thousand.

      In addition to this, the Company also offers a medical health plan (PAMA)
      to employees and retirees and their dependents, at a shared cost.
      Contributions to the plans PBS Tele Nordeste Celular and PAMA are
      determined based on actuarial studies prepared by independent actuaries,
      in accordance with current regulations in Brazil.

17.   Shareholders' equity

 a.   Share capital

      The capital stock of Tele Nordeste Celular Participacoes S.A. is comprised
      of common and preferred shares, all without par value, as shown in the
      table below:

<TABLE>
<CAPTION>
                                                   Common in   Preferred in      Total
                                                  circulation  circulation    Outstanding
                                                  -----------  ------------   -----------
<S>                                              <C>           <C>           <C>
      In thousands of shares:
           As of December 31, 2002 ............   130,753,136   214,986,484   345,739,620
           As of December 31, 2003 ............   135,324,668   223,943,822   359,268,490
</TABLE>


                                      F-23
<PAGE>

                                                            -----   -------
                                                             2002     2003
                                                            -----   -------

      Shareholders' equity per twenty thousand shares
        (Brazilian reais) ...............................   41.08     48.82

      The capital may be increased only by a decision taken at a shareholders'
      meeting or by the Board of Directors in connection with the capitalization
      of profits or reserves previously allocated to capital increases at a
      shareholders' meeting.

      The preferred shares are non-voting except under limited circumstances and
      to priority over the common shares in the case of liquidation. The
      preferred shares are also entitled to preferential, noncumulative
      dividends calculated as the greater of (i) 6% of their nominal capital
      value or (ii) 3% of net equity per share as per the latest approved
      balance sheet. Under the Brazilian Corporation Law, the number of
      non-voting shares or shares with limited voting rights, such as the
      preferred shares, may not exceed two-thirds of the total number of shares.

      If the dividend to be paid to the holders of Preferred Shares is not paid
      for a period of three years, holders of Preferred Shares will be entitled
      to full voting rights until such time as that dividend is paid in full for
      any year.

b.    Income reserves

      Legal reserve

      Brazilian companies are required to appropriate 5% of their annual net
      income to a legal reserve until that reserve equals 20% of paid-up share
      capital, or 30% of nominal paid-up share capital plus capital reserves;
      thereafter, appropriations to this reserve are not compulsory. This
      reserve can only be used to increase capital or offset accumulated losses.

      Statutory reserve

      This reserve represents the balance of net profit not allocated to minimum
      compulsory dividends (or interest on capital) or to preferred dividends.
      The reserve is limited to 80% of share capital.

      Realizable profit reserve

      In conformity with Law No. 10303/01, the amount of the reserve R$18,838,
      was established for the amount of compulsory dividends, that exceeded the
      realized portion of net income for the year. The portion of the net income
      not realized is related to the tax incentives granted to the Company's
      Subsidiaries, which were accounted for as capital reserve in the
      Subsidiaries' books and though income at Company's level.

      Unrealized income reserve

      This reserve was received on the split-up of Telebras and represents
      unrealized income derived from indexation gains through 1995. The
      realization of this reserve will occur, substantially, as the investments
      in subsidiaries that gave rise to the indexation gains are realized
      through the receipt of dividends or on disposal. Future realizations of
      this reserve will be transferred to retained earnings.


                                      F-24
<PAGE>

      In 2000, a shareholders' meeting approved the transfer to retained
      earnings of part of this reserve. In 2001, a shareholders' meeting
      approved the transfer to retained earnings of the remaining balance of
      this reserve and its inclusion in the basis of computation of dividends.

      Capital reserve - share premium

      This account arose out of the corporate reorganization described in Note
      1(b) and represents the value of the tax credits which will be generated
      by the future amortization of the goodwill. Each year an amount of reserve
      corresponding to the realized benefit may be capitalized, to the benefit
      of the controlling shareholder, by the issue of new shares. Minority
      shareholders are ensured the right to preference, in proportion to their
      respective holdings in type and class of shares, and the consideration for
      such acquisitions as they choose to make, will be paid to the controlling
      shareholder in accordance with the terms of CVM instruction 319/99.

      On April 30, 2001, April 4, 2002 and March 14, 2003 shareholders meetings
      approved capital increases of R$10,985 (3,369,607,000 shares), R$23,551
      (7,970,985,000 shares) and R$25,180 (12,088,116,000 shares) respectively,
      corresponding to the 2000, 2001 and 2002 realized portion of the tax
      benefit as mentioned above.

c.    Dividends and dividends reserve

      Pursuant to its By-laws and in accordance with the minimum requirement by
      Brazilian Corporate Law, Tele Nordeste Celular Participacoes S.A. is
      required to distribute as dividends in respect of each fiscal year ending
      on December 31, to the extent amounts are available for distribution, an
      aggregate amount equal to at least 25% of Adjusted Net Income (as defined
      below) on such date. The annual dividend distributed to holders of
      preferred shares (the "Preferred Dividend") has priority in the allocation
      of Adjusted Net Income. Remaining amounts to be distributed are allocated
      first to the payment of a dividend to holders of common shares in an
      amount equal to the Preferred Dividend and the remainder is distributed
      equally among holders of preferred shares and common shares.

      For the purposes of the Brazilian Corporation Law, and in accordance with
      Tele Nordeste Celular Participacoes S.A.'s By-Laws, "Adjusted Net Income"
      is an amount equal to Tele Nordeste Celular Participacoes S.A.'s net
      profits adjusted to reflect allocations to or from (i) the statutory and
      legal reserves, (ii) a contingency reserve for anticipated losses, if any,
      and (iii) an unrealized income reserve, if any.

      Dividends were calculated as follows :

                                                           2002       2003
                                                         --------    --------
       Net income for the year .......................    118,574     207,545
       (-) Legal reserve .............................     (5,929)    (10,377)
                                                         --------    --------
       Adjusted net income ...........................    112,645     197,168
       Portion excluded from net income for the year..         --     (75,350)
                                                         --------    --------
       Dividends calculation basis ...................    112,645     121,818
                                                         --------    --------
       Minimum compulsory dividends ..................     28,161      30,454
                                                         ========    ========


       Proposed dividends:
        Common shares - R$2.27 (R$1.75 in 2002) per
            20,000 shares ............................     11,498      15,343
        Preferred shares - R$2.27 (R$1.75 in 2002) per
            20,000 shares ............................     18,907      25,391
                                                         --------    --------
                                                           30,405      40,734
        Realization of special dividends reserve .....     (2,244)    (10,280)
                                                         --------    --------
                                                           28,161      30,454
                                                         ========    ========




                                      F-25
<PAGE>

           TELE NORDESTE CELULAR PARTICIPACOES S.A. AND SUBSIDIARIES

                    NOTES TO FINANCIAL STATEMENTS--Continued
                           December 31, 2003 and 2002
                            (In thousands of reais)


      Unrealized profit was calculated as follows:

      Net income for the year .........................                207,545

      (-) Unrealized profit:
         Equity pickup ................................   (217,825)
         Interest on own capital and dividends
           received or declared by subsidiaries .......     40,734    (177,091)
                                                          --------    --------

       Realized profit ................................                 30,454
                                                                      ========

      Minimum compulsory dividends (R$197,168 x 25%) ..                 49,292
      (-) Realized profit .............................                 30,454
                                                                      --------
      Deferred dividends ..............................                 18,838
                                                                         1/25%
                                                                      --------
      Portion excluded from net income for the year ...                 75,350
                                                                      ========

                                      F-26
<PAGE>

           TELE NORDESTE CELULAR PARTICIPACOES S.A. AND SUBSIDIARIES

                    NOTES TO FINANCIAL STATEMENTS-Continued
                           December 31, 2003 and 2002
                            (In thousands of reais)


      The amounts of R$ 10,280 and R$ 30,454 will be restated by the Referential
      Rate (TR) variation from, from January 1, 2004 up to the date of their
      effective payment.

      Accordingly, the distribution of dividends for the year ended December 31,
      2003 will be as follows:

      c1) From the operating results for the year, R$ 30,454 to shareholders'
      owning shares at the date of the Shareholders' General Meeting approving
      the operating results for the year.

                                                  2003      2002
                                                 ------    ------

      Common shares ..........................   11,471    10,650
      Preferred shares .......................   18,983    17,511
                                                 ------    ------

                                                 30,454    28,161
                                                 ======    ======


      Dividends per 20,000 shares (reais)
      Common shares ..........................   1.6960    1.6290
      Preferred shares .......................   1.6960    1.6290


                                      F-27
<PAGE>

           TELE NORDESTE CELULAR PARTICIPACOES S.A. AND SUBSIDIARIES

                    NOTES TO FINANCIAL STATEMENTS--Continued
                           December 31, 2003 and 2002
                            (In thousands of reais)


      c2) From the realization of the portion of the special reserve for
      dividends payable to shareholders owing shares at April 5, 2002, as
      follows.

                                                        2002          2003
                                                     -----------   -----------
      Common shares ..............................           849         3,872
      Preferred shares ...........................         1,395         6,408
                                                     -----------   -----------
                                                           2,244        10,280
                                                     ===========   ===========

      Dividends per 20,000 thousand shares (reais)
         Common shares ...........................        0.1298        0.5723
         Preferred shares ........................        0.1298        0.5723

18.   Net operating revenue

<TABLE>
<CAPTION>
                                                               2001          2002          2003
                                                            ----------    ----------    ----------
<S>                                                        <C>           <C>           <C>
      Usage charges .....................................      439,197       557,598       599,813
      Long distance charges .............................         --            --          39,947
      Monthly subscription charge .......................      183,669       157,963       134,170
      Interconnection charges ...........................      376,225       394,451       386,872
      Cellular handset sales ............................       47,976        68,834       123,545
      Other .............................................        7,486        19,630        30,929
                                                            ----------    ----------    ----------
      Total gross operating revenue .....................    1,054,553     1,198,476     1,315,276
      Value added and other indirect taxes ..............     (228,303)     (276,954)     (315,823)
                                                            ----------    ----------    ----------
      Net operating revenue from cellular
         Telecommunication services and handset sales ...      826,250       921,522       999,453
                                                            ==========    ==========    ==========
</TABLE>

      Tele Norte Leste Participacoes S.A. contributed approximately 27% of total
      gross operating revenues in 2001, 22% in 2002 and 19% in 2003. No other
      customer contributed more than 5% of total gross operating revenues of the
      Company.

      The Company is now entitled to receive long distance revenues only when
      telecommunications service users, including its customers, choose TIM Sul
      S.A. to carry their long distance calls.

      Beginning in July 2004, the interconnection charges will be freely
      negotiated, by telecommunications service providers in Brazil, according
      to rules to be passed by Anatel.

      Considering Telecom Italia Mobile S.pA. (TIM) controls the Company and
      several other companies (collectively the "Authorized Sister Companies)
      operating in the telecommunications market in Brazil, the Company expects
      that in December 31, 2004 only one of the Authorized Sister Companies will
      be permitted by ANATEL to maintain its respective national and
      international long distance authorizations.


                                      F-28
<PAGE>

19.   Cost of services and cellular handsets sold

                                                   2001      2002      2003
                                                  -------   -------   -------

      Depreciation ............................   127,660   142,051   141,519
      Personnel ...............................     9,585     9,174     8,759
      Materials and services ..................   134,892   147,816   187,145
      Circuit leasing and related expenses ....    29,952    23,176    40,611
      Leases and insurance ....................    11,762    11,470     7,306
      Cellular handsets .......................    47,323    54,684    94,974
      Fistel tax and other ....................     1,115     1,012     1,265
                                                  -------   -------   -------
                                                  362,289   389,383   481,579
                                                  =======   =======   =======

20.   Other operating expense, net

                                                   2001       2002       2003
                                                  -------    -------    -------

      Contingencies ...........................    (2,411)   (12,657)      (974)
      Fines and expenses recovered ............    15,769     15,041     26,744
      Goodwill amortization net (Note 1(b)) ...   (25,183)   (25,180)   (25,180)
      Equity in investee ......................    (1,888)    (4,288)    (3,250)
      PIS / COFINS over other revenues ........    (2,626)    (7,033)    (9,089)
      Employees' profit sharing ...............    (3,832)    (3,700)    (3,246)
      Other ...................................    (4,677)     4,697     (2,432)
                                                  -------    -------    -------
                                                  (24,848)   (33,120)   (17,427)
                                                  =======    =======    =======

21.   Financial expenses, net

                                                     2001       2002       2003
                                                  -------    -------    -------
      Financial income
           Interest income ....................    21,962     56,008     96,426
      Financial expenses
           Interest expense ...................   (55,999)   (44,958)   (33,204)
           Foreign exchange losses ............    (4,131)   (12,996)    (3,356)
           Others .............................    (6,177)    (5,358)      (650)

      Less capitalized interest ...............     2,187        852      3,134
                                                  -------    -------    -------
      Net financial expenses ..................   (42,158)    (6,452)    62,350
                                                  =======    =======    =======


                                      F-29
<PAGE>

22.   Income and social contribution taxes

      Under Brazilian Tax Law, the Company and its subsidiaries are required to
      file individual tax returns. Brazilian income taxes comprise federal
      income tax and social contribution tax which is an additional Federal
      Income Tax.

      The statutory rates applicable in each period were as follows (in
      percentages):

                                                 2001  2002  2003
                                                 ----  ----  ----
      Federal income tax ......................   25%   25%   25%
      Social contribution .....................    9%    9%    9%
                                                  --    --    --
      Composite Federal income tax ............   34%   34%   34%
                                                  ==    ==    ==

     The operating companies, on March 31, 2003 by approval of the Agency
     for Development of the Northeast Region of Brazil - ADENE, became
     beneficiaries of the following tax incentives: (i) 75% reduction in
     income tax and non-refundable surtaxes, for 10 (ten) years, from 2002
     to 2011, calculated on profit from tax incentive activities ("lucro da
     exploracao") resulting from implementation of their installed capacity
     to render digital mobile telephony services; and (ii) reduction by
     37.5%, 25% and 12.5% in income tax and refundable surtaxes, for fiscal
     years 2003, 2004 to 2008 and 2009 to 2013, respectively, calculated on
     profit from tax incentive activities resulting from the installed
     capacity for rendering analogical mobile telephony services. These tax
     incentives are recorded when earned. The tax benefit related to 2002
     was recorded in 2003, the period in which the tax benefit was first
     granted.

      The composition of the income tax expense in 2001, 2002 and 2003 is:

                                             2001       2002       2003
                                            -------    -------    -------
      Current
      -------
      Income tax charge .................   (18,280)   (42,341)   (48,703)
      Social contribution tax charge ....    (6,693)   (15,304)   (17,641)
      Deferred tax benefit (expense) ....     4,850      9,243     (3,046)
      Income tax reduction - ADENE
        related to 2003..................      --         --       30,064
        related to 2002..................      --         --       20,456
                                            -------    -------    -------
      Total tax charge ..................   (20,123)   (48,402)   (18,870)
                                            =======    =======    =======


                                      F-30
<PAGE>

      The amount reported as income tax expense in the accompanying consolidated
      statements at income is reconciled to the statutory rate as follows:

<TABLE>
<CAPTION>
                                                                            2001         2002         2003
                                                                          --------     --------     --------
<S>                                                                      <C>          <C>          <C>
      Income before taxes as reported in the accompanying
         Financial statements .........................................    107,164      205,523      272,050
                                                                          ========     ========     ========

      Tax charge at the combined statutory rate .......................    (36,436)     (69,878)     (92,497)
      Permanent additions (exclusions):
             Dividends characterized as distribution of interest ......      3,700        2,037        2,940
            Non taxable reversal of the provision for
                Maintenance of shareholders' equity (Note 1(b)) .......     16,618       16,618       16,618

      Income tax reduction - ADENE ....................................       --           --         50,520
      Other ...........................................................     (4,005)       2,821        3,549
                                                                          --------     --------     --------
      Income tax charge as reported ...................................    (20,123)     (48,402)     (18,870)
                                                                          ========     ========     ========

      Effective rate ..................................................       18.8%        23.6%       6.94%

      Income tax reduction - ADENE per 20,000 shares (Reais):
        Common shares                                                          --            --        2.86
        Preferred shares                                                       --            --        2.86


</TABLE>



      At December 31, 2001, 2002 and 2003, the Company's subsidiaries
      characterized part of its dividends proposed for payment as interest on
      shareholders' funds. As a result, under Brazilian tax law, it was entitled
      to treat this part of the dividend as a deduction for income tax purposes.

      The composition of the deferred tax asset is as follows:

                                                         2002      2003
                                                        -------   -------

      Unamortized balance of goodwill (Note 1(b)) ...   140,592   115,412
      Allowance for doubtful accounts ...............     9,851    12,081
      Tax loss carryforwards ........................     7,620     3,220
      Non deductible provisions .....................    14,357    14,651
                                                        -------   -------
                                                        172,420   145,364
                                                        =======   =======

      Current Portion ...............................    51,244    52,409
      Noncurrent ....................................   121,176    92,955

      According to the projections prepared by the Company's management, the
      long-term deferred income and social contribution taxes existing at
      December 31, 2003 will be realized over the following years:

      2005 ....................................   25,180
      2006 ....................................   25,180
      2007 ....................................   25,180
      2008 ....................................   17,415
                                                  ------
                                                  92,955
                                                  ======


                                      F-31
<PAGE>

      Brazilian tax law allows tax losses to be carried forward indefinitely to
      be utilized to offset future taxable income. Tax legislation enacted in
      1995 limits the utilization of tax loss carryforwards in a given year to
      30% of taxable income. At December 31, 2003, the Company and its
      subsidiaries had tax loss carryforwards of approximately R$9,500.

23.   Transactions with related parties

      The main transactions between the Company and subsidiaries, which have
      been eliminated in these consolidated financial statements, are
      represented by network use services and loans, and were carried out under
      agreed upon terms.

      The Company has also entered into two contracts with its controlling
      shareholder Telecom Italia Mobile S.p.A., a "Management Assistance
      Agreement" and a "Technical Assistance Services Agreement". The
      "Management Assistance Agreement" encompasses marketing services and
      business development advice. This contract was approved by the General
      Shareholders' Meeting that took place in November/2000 and basically
      establishes quarterly remuneration as of 1% of net consolidated operating
      revenues and expired in September/2003.

      The "Technical Assistance Services Agreement" covers the services provided
      by the parent Company's employees to the Company. This contract was
      approved by the Brazilian Central Bank for the first time in June/1999 and
      basically established quarterly remuneration according to specific hourly
      rates and expired in September/2001.

      A summary of the transactions with this related party is as follows:

                                                                2002    2003
                                                                -----   -----

      Cost, selling and general and administrative expense ..   9,416   7,524
      Accounts payable and accrued expenses .................   2,507    --

      The Company entered into various financial transactions with Latin Invest
      Holdings, a minority shareholder. All such transactions are made under
      agreed upon terms. Quotations are obtained from other financial
      institutions on equal conditions. Investments with Latin Invest Holdings
      were R$27,432 in 2001 and R$31,127 in 2002. In 2003, these investments
      were transferred out of Latin Invest Holdings.

24.   Insurance (Unaudited)

      At December 31, 2003, in the opinion of management, all significant and
      high risk assets and obligations were insured.


25.   Financial instruments

      The Company carries out operations involving financial instruments with
      the aim of reducing risks relating to market, foreign exchange and
      interest rates. Such risks are controlled through specific policies, the
      establishment of operating strategies and limits, and other techniques for
      monitoring the positions.


                                      F-32
<PAGE>

      The estimated market value of the financial instruments, primarily cash
      and cash equivalents, trade accounts receivable, and short-term financing
      instruments, approximates their book values because of the short maturity
      of those instruments.

      On December 31, 2002 and 2003, the Company and its subsidiaries invested
      their financial resources mainly in investments backed by Certificados de
      Deposito Interbancario (CDIs - Interbank Deposit Certificates). There are
      no financial assets indexed to foreign currencies.

      The Company and its subsidiaries appropriated to income the full net
      effect (substantially foreign exchange losses) of the significant real
      devaluation in 2001, and did not defer the effect as permitted by CVM
      Instruction 404/01.

      The estimated fair value of long-term loans and financings are based on
      interest rates as of December 31, 2002 and 2003 for transactions with
      similar characteristics, as below.

                                          2002                2003
                                   ------------------   -----------------
                                   Carrying    Fair     Carrying    Fair
      Description                    Value     Value      Value     Value
                                   ---------  -------   --------   ------
      Loans and financing:
         In foreign currency ....   123,735   146,762    80,699    75,844

      Loans and financing

      The fair values of loans and financing, presented above were determined by
      means of future cash flows, and by using interest rates applicable to
      instruments of a similar nature involving similar terms and risks or based
      on market quotations for these securities.

      Limitations

      The fair values were estimated at a specific time, based on relevant
      market information. Changes in assumptions could significantly affect the
      estimates presented.

      Risk Factors

      The risk factors affecting the Company's financial instruments are the
      following:

      (i)   Exchange rate and interest rate risks

      Exchange rate and interest rate risks relate to the possibility of the
      Company computing losses derived from foreign exchange rate and interest
      rate fluctuations, increasing the debt balances of loans obtained in the
      market and the corresponding financial expenses. In order to reduce these
      type of risks, the Company enters into hedge contracts with financial
      institutions.

      At December 31, 2003, part of the Company's loans and financing were
      denominated in U.S. dollars and 100% of such loans and financing were
      covered by hedge contracts. The gains or losses resulting from these hedge
      contracts are recorded in the statement of income. The Company is also
      party to agreements that effectively allow the Company to pay interest at
      fixed rate on some of its variable rate debt.


                                      F-33
<PAGE>

      (ii)  Operating credit risk

      The risk relates to the possibility of the Company computing losses
      derived from difficulties in collecting the amounts billed to customers,
      represented by cellular equipment dealers and distributors of prepaid
      telephone cards. In order to reduce this type of risk, the Company
      performs credit analyses supporting the risk management over collection
      problems and monitors the accounts receivable from subscribers, blocking
      the calling capacity in case customers fail to pay their debts. With
      respect to distributors, the Company maintains individual credit limits
      based on the analysis of sales potential, risk history and collection
      problem risks.

      Credit risk linked to rendering of services

      Concentration of credit risk with respect to accounts receivable is
      limited to Tele Norte Leste Participacoes S.A., which contributed with
      approximately 58% and 44% of amounts receivable under interconnection
      agreements in 2002 and 2003, respectively and 27%, 22% and 19% in 2001,
      2002 and 2003 of total gross operating revenue, respectively. Usually the
      Company does not require collateral for its trade receivables.

      Credit risk linked to the sale of equipment

      The Company's policy for selling equipment and distributing prepaid
      telephone cards is closely related to the credit risk levels accepted
      during the normal course of business. The selection of partners, the
      diversification of receivables portfolio, the monitoring of loan terms,
      position and request limits established for dealers, constitution of
      actual guarantees are procedures adopted by the Company in order to
      minimize possible collection problems with its trading partners.

      (iii) Financial credit risk

      The risk relates to the possibility of the Company computing losses
      derived from difficulties in the realization of short-term investments and
      hedge contracts. The Company and subsidiaries minimize the risks
      associated with these financial instruments by investing with reputable
      financial institutions.

      There is no concentration on available sources of labor, services,
      concessions or rights other than those mentioned above that could, if
      suddenly eliminated, severely impact the Companies' operations.

26.   Summary of the differences between Brazilian Corporate Law and US GAAP

      The Company's accounting policies comply with accounting principles
      established under Brazilian Corporate Law. In July 1997, the three-year
      cumulative inflation rate for Brazil fell below 100%. Thus, at that time,
      Brazil was not considered to be a highly inflationary economy for United
      States reporting purposes. For generally accepted accounting principles in
      the United States ("US GAAP") purposes only, the constant currency method
      (Brazilian GAAP) continued to be applied through December 31, 1997.
      Brazilian Corporate Law did not require the use of monetary correction for
      accounting periods after December 31, 1995, which gives rise to a
      different basis for fixed assets.


                                      F-34
<PAGE>

      Accounting policies which differ significantly from US GAAP are described
      below:

a.    Different criteria for capitalizing and amortizing capitalized interest

      Until December 31, 1993, the capitalization interest was not permitted for
      individual property, plant and equipment. Under US GAAP, capitalized
      interest is added to the value of the individual assets and amortized over
      their useful lives. Also, according to the accounting principles under the
      Brazilian Corporate Law, and until December 31, 1998, applicable to the
      telecommunications companies, the interest attributable to construction in
      progress was calculated at 12% per year on the balance of the account of
      construction in progress, and the part related to interest on third-party
      loans was credited to financial expenses, on the basis of actual financial
      costs, and the balance concerning own capital was credited to
      shareholders' equity. During 1999, the Company and its subsidiaries
      started to capitalize interest on specific loans based on the respective
      interest rates, related to financing for construction in progress.
      Further, under Brazilian Corporate Law mentioned, starting in the year
      ended December 31, 2000 the amount of capitalized interest is based on the
      interest incurred on loans specificity identified with a construction
      project.

<TABLE>
<CAPTION>
                                                                                2001      2002      2003
                                                                               ------    ------    ------
<S>                                                                           <C>       <C>       <C>
        Capitalized interest difference:
      US GAAP capitalized interest:
        Interest which would have been capitalized and credited to income
           (interest incurred on loans, computed up to the
           amount of construction in progress), net of disposals ...........    4,400     1,442     4,373

      Less Brazilian Corporate Law capitalized interest:
        Interest capitalized and credited to income (up to the limit
        of interest incurred on loans obtained for financing capital
        investments) .......................................................   (2,187)     (852)   (3,134)
                                                                               ------    ------    ------

        US GAAP difference .................................................    2,213       590     1,239
                                                                               ======    ======    ======

      Amortization of capitalized interest difference
        Amortization under Brazilian Corporate Law .........................    3,404     3,863     3,731
        Less amortization under US GAAP net of disposals ...................   (7,587)   (8,354)   (8,168)
                                                                               ------    ------    ------
        US GAAP difference .................................................   (4,183)   (4,491)   (4,437)
                                                                               ======    ======    ======
</TABLE>


                                      F-35
<PAGE>

b.    Pension and other post-retirement benefits

      For the purposes of the financial statements under the accounting
      practices established by Brazilian Corporate Law and for US GAAP purposes,
      the Companies recognized the expenses for the contributions to the
      multi-employer defined plans on the accrual basis and disclose their
      annual contributions.

      For US GAAP purposes, since the sponsors decided to split-off the total
      assets and related actuarial obligations for the multi-employer plan prior
      to December 31, 1999 the Companies recognized a contingent liability,
      which was probable and estimable, for the accrued pension cost as of such
      date. The funded status of those plans was recognized as of December 31,
      1999, in shareholders' equity and in net income for the year, as required
      by SFAS 87 "Employer's Accounting for Pensions" and SFAS 106 "Employer's
      Accounting for Postretirement Benefits and Than Pensions". The provisions
      of SFAS N(0). 87 concerning the calculation of the funded status were
      applied with effect from January 1, 1992, since it was impossible to apply
      them from the effective date specified in the standard. As the majority of
      participants migrated to a defined contribution pension plan, TIMPREV, in
      2003, an amount of R$16,251 was reversed for US GAAP. See details at the
      US GAAP adjustment in Note 27(c).

      On November 13, 2002, the Company adopted a defined contribution plan,
      TIMPREV NORDESTE. See details in Note 27 (c).


c.    Interest expense

      Brazilian Corporate Law requires interest and foreign exchanges losses
      (gains) to be shown as part of operating income. Under US GAAP interest
      expense would be shown after operating income, and accrued interest would
      be excluded from loans and financing and included in accounts payable and
      accrued expenses.

d.    Permanent assets

      Brazilian Corporate Law has a class of assets called permanent assets.
      This is the collective name for all assets on which indexation adjustments
      were calculated in the Corporate Law accounts of Brazilian companies until
      December 31, 1995. Under US GAAP the assets in this classification would
      be noncurrent assets.

e.    Price-level adjustments and US GAAP presentation in respect of accounting
      periods through December 31, 1997

      Until December 31, 1995, publicly traded companies in Brazil were required
      to prepare their financial statements according to two sets of accounting
      principles: (a) the Brazilian Corporate Law, which was and remains in full
      force and is valid for all legal purposes, including the basis for
      calculating the income tax and mandatory minimum dividends; and (b)
      generally accepted accounting principles in Brazil (Brazilian GAAP), which
      require the application of the constant currency method of accounting to
      reflect the effect of inflation in the preparation of supplementary
      financial statements, in accordance to the standards recommended by the
      Comissao de Valores Mobiliarios (CVM), the Brazilian securities
      commission. The accounting principles under the Brazilian Corporate Law
      and the Brazilian GAAP differ mainly in the method of recognizing the
      effect of inflation in the financial statements.


                                      F-36
<PAGE>

      Brazilian Corporate Law

      Under the Brazilian Corporate Law, until December 31, 1995 a simplified
      method was used to recognize the effects of inflation, which consisted in
      indexing permanent assets (investments, property, plant and equipment and
      deferred charges) and shareholders' equity accounts using indices set
      forth by the Federal Government, based on the variation of the Unidade
      Fiscal de Referencia (UFIR). The net effect of the indexation was stated
      in the statement of income under a single account. The Brazilian corporate
      law, however, does not recognize the effect of inflation in certain
      balance sheet accounts, such as inventories and customer advances; this
      method also does not require the indexation of information from the
      preceding years when presenting comparative financial information. In the
      highly inflationary environment prevailing in Brazil until July 1, 1994,
      the financial statements prepared according to accounting principles set
      forth in the Brazilian Corporate Law did not allow a consistent comparison
      of financial information concerning two different periods.

      Under the Brazilian Corporate Law and the CVM rules, the application of
      the method to account for the effects of inflation described above was
      prohibited, beginning January 1, 1996 and, therefore, the financial
      statements prepared according to the Brazilian Corporate Law do not
      include the recognition of the effects of inflation since then.

      Constant currency method (Brazilian GAAP)

      Under the constant currency method required by the Brazilian GAAP, all
      amounts stated in Reais are stated in constant purchasing power currency
      on the date of the latest balance sheet presented, pursuant to the CVM
      rules for publicly traded companies. Brazilian GAAP requires application
      of the constant currency method also after January 1, 1996.

      The constant currency method requires the recognition of the following
      effects of inflation in the financial statements:

      O     Adjustment of the opening balances, non-monetary assets additions
            and depreciation by applying a general inflation index, recognizing
            the gain by means of a credit to the income.

      O     Adjustment of the shareholders' equity opening balances and
            movements for the period by applying a general inflation index,
            recognizing the loss by means of a debit to income.

      O     Allocation of inflationary gains and losses of other non-monetary
            items to the corresponding income and expenses. Gains and losses for
            which the corresponding income and expenses were not identified are
            allocated to a specific account under "Other net operating income
            (expenses), net".

      US GAAP adjustment presented in the reconciliations of the differences
      between Brazilian Corporate Law and US GAAP

      The effects of price-level adjustments from January 1, 1996 through
      December 31, 1997 has been presented in the reconciliation to US GAAP
      because the application of inflation restatement as measured by the UFIR
      and the IGP-M represents a comprehensive measure of the effects of price
      level changes in Brazilian economy and, as such, is considered a more
      meaningful presentation than historical cost-based financial reporting for
      both Brazilian and US accounting purposes.


                                      F-37
<PAGE>

f.    Income and social contribution taxes

      In 2001, 2002 and 2003 the Company has fully accrued for deferred income
      taxes on temporary differences between tax and accounting records. The
      policy for providing for deferred taxes is in accordance with SFAS 109,
      "Accounting for Income Taxes".

      The net goodwill amortization of R$25,180 in 2001, 2002 and 2003, which
      originated from the corporate reorganization mentioned in Note 1(b), has
      been recorded in other net operating expense in the consolidated statement
      of income for the years ended December 31, 2001, 2002 and 2003, according
      to Brazilian Corporate Law. For US GAAP purposes, this amount would be
      presented as a deferred income tax charge in the accompanying consolidated
      statement of income, because it represents the realization of the deferred
      tax asset. Accordingly, for US GAAP purposes the "operating income before
      interest", the "operating income" and the "income before tax" amounts in
      the consolidated statement of income of 2001, 2002 and 2003 would be
      increased by R$25,180 and the "income and social contribution taxes"
      amount would be increased by the same amounts. However, there is no effect
      on US GAAP net income from these adjustments.

g.    Earnings per share

      Earnings per share under Brazilian Corporate Law is calculated on the
      number of shares outstanding at the balance sheet date. Under US GAAP
      earnings per share is calculated on a weighted average basis as
      demonstrated in Note 27.f.

h.    Valuation of Long-Lived Assets

     SFAS No. 144 provides a single accounting model for long-lived assets to be
     disposed of. SFAS No. 144 also changes the criteria for classifying an
     asset as held for sale; and broadens the scope of businesses to be disposed
     of that qualify for reporting as discontinued operations and changes the
     timing of recognizing losses on such operations. The Company adopted SFAS
     No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not affect the
     Company's financial statements.

      In accordance with SFAS No. 144, long-lived assets, such as property,
      plant, and equipment, and purchased intangibles subject to amortization,
      are reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of an asset may not be recoverable.
      Recoverability of assets to be held and used is measured by a comparison
      of the carrying amount of an asset to estimated undiscounted future cash
      flows expected to be generated by the asset. If the carrying amount of an
      asset exceeds its estimated future cash flows, an impairment charge is
      recognized by the amount by which the carrying amount of the asset exceeds
      the fair value of the asset. Assets to be disposed of would be separately
      presented in the balance sheet and reported at the lower of the carrying
      amount or fair value less costs to sell, and are no longer depreciated.
      The assets and liabilities of a disposed group classified as held for sale
      would be presented separately in the appropriate asset and liability
      sections of the balance sheet.

     Goodwill and intangible assets not subject to amortization are tested
     annually for impairment, and are tested for impairment more frequently if
     events and circumstances indicate that the asset might be impaired. An
     impairment loss is recognized to the extent that the carrying amount
     exceeds the asset's fair value.

     Prior to the adoption of SFAS No. 144, the Company accounted for long-lived
     assets in accordance with SFAS No. 121, Accounting for Impairment of
     Long-Lived Assets and for Long-Lived Assets to be Disposed Of.


                                      F-38
<PAGE>

i.    Stock Compensation

      Offer made by the Company in 2001

      On May 4 2001, the Company shareholders approved an employee stock option
      plan, with the following objectives:

      i)    to retain the services and advice of key employees, upon whose
            judgment, initiative and efforts the Company depends;
      ii)   to make available to key employees certain compensatory arrangements
            based on market value increase; and
      iii)  to align generally the interests of key employees and the interests
            of shareholders.

      The Board of Executive Officers may authorize future capital increases,
      within the limit of the authorized capital, with the issuance of preferred
      shares for the benefit of the directors and key officers. The amount of
      shares that may be issued under the stock option plan is limited to 1.5%
      of the Company's capital stock on May 4, 2001.

      The option exercise price per 1,000 Preferred Shares was set at R$3.21,
      the closing price of 1,000 Preferred Shares at the Sao Paulo Stock
      Exchange ("Bovespa"), on May 4, 2001. At December 31, 2003, 2,134 thousand
      shares were made available under the plan.

      The options may not be exercised before one year from the date they are
      granted. The exercise of the option may occur in the end of the fourth
      year after the granted date, but can be accelerated depending upon the
      achievement of certain results, which are based on certain EBIT (earnings
      before interest and taxes). The expected EBIT has been achieved in every
      year since the issuing of the options.

      The Company applies APB Opinion No. 25 in accounting for this variable
      Plan. No compensation cost has been recognized for its stock options
      in the financial statements since the options were issued. In 2001 and
      2003, the year end market price was slightly above the exercise price,
      resulting in an amount of compensation cost that was not significant.
      In 2002, the year end market price was below the exercise price.

      Had the Company determined compensation cost based on the fair value at
      the grant date for its stock options under SFAS No. 123, the per share
      weighted-average fair value of stock options granted would have been $1.91
      on the date of first grant in 2001 using the Black Scholes option-pricing
      model with the following weighted-average assumptions: expected dividends
      of R$20,655 in 2002, R$20,029 in 2003, R$26,112 in 2004 and R$36,452 in
      2005, a risk-free interest rate of 19.0%, expected life of 5 years,
      and expected volatility of 38%.

      For the second granting of shares in 2003, the per share weighted-average
      fair value of stock options granted would have been $1.91 on the date of
      first grant in 2001 using the Black Scholes option-pricing model with the
      following weighted-average assumptions: expected dividends of all stock
      options of R$30,454 in 2004, R$45,039 in 2005, R$46,176 in 2006 and
      R$50,411 in 2007, a risk-free interest rate of 19.0%, expected life of
      5 years, and expected volatility of 26%.


                                      F-39
<PAGE>

      The Company's net income also would have been reduced to the pro forma
      amounts indicated below for the respective years:

<TABLE>
<CAPTION>
                                                                       2001         2002         2003
                                                                    ---------    ---------    ---------
<S>                                                                <C>          <C>          <C>
      Net income

      Net income as reported ....................................   $  61,365    $ 102,466    $ 222,876
      Deduct: Total stock-based employee compensation
       expense determined under fair value based  net of
       related tax effects ......................................   $    (716)   $  (1,075)   $  (1,649)
      Pro forma net income ......................................   $  60,649    $ 101,391    $ 221,227

      Earnings per share
      Basic and diluted earnings (losses), in Reais
       per 20 thousand preferred and common shares as reported ..   $    3.65    $    5.99    $   12.52
      Proforma Basic and diluted earnings (losses), in Reais
       per 20 thousand preferred and common shares as reported ..   $    3.61    $    5.93    $   12.61
</TABLE>

      Stock option activity during the periods indicated is as follows:

                                                     Number of      Weighted-
                                                      shares         average
                                                    (thousands)   exercise price
                                                    -----------   --------------
      Balance at December 31, 2000 ..............       --              --
      Granted ...................................      2,627            3.21
      Exercised .................................       --              --
      Forfeited .................................       --              --
      Expired ...................................       --              --
      Balance at December 31, 2001 ..............      2,627            3.21
      Granted ...................................
      Exercised .................................       --              --
      Forfeited .................................       (140)           3.21
      Expired ...................................       --              --
      Balance at December 31, 2002 ..............      2,487            3.21
      Granted ...................................        242            3.21
      Exercised .................................        (27)           3.21
      Forfeited .................................       (568)           3.21
      Expired ...................................
      Balance at December 31, 2003 ..............      2,134            3.21

      Under Brazilian GAAP, stock options are recorded as an increase in
      share capital equal to the proceeds received. During 2003, 27,000
      preferred shares were issued upon the exercise of 27,000 0ptions for
      proceeds of R$86.


                                      F-40
<PAGE>

j.    Accounting for derivative instruments and hedging activities

      As of January 1, 2001, the Company adopted Financial Accounting Standards
      Board Statement No. 133, "Accounting for Derivative Instruments and for
      Hedging Activities ("SFAS 133"), which was issued in June, 1998 and its
      amendments Statements 137, "Accounting for Derivative Instruments and
      Hedging Activities - Deferral of the Effective Date of FASB Statement No.
      133" and 138, "Accounting for Derivative Instruments and Certain Hedging
      Activities" issued in June 1999 and June 2000, respectively (collectively
      referred to as Statement 133). Under Brazilian Corporate Law, the Company
      has been recording its hedging activities in the balance sheet as either
      an asset or liability measured at the spot rates at year end plus
      the coupon rate as stated in the agreements and adjustments to contract
      value were recorded through income.

      As a result of adoption of Statement 133, the Company recognizes its
      foreign currency and interest rate swap agreements at fair value and
      adjustments to fair value are recorded through income as presented on the
      net income and shareholders' equity reconciliation. The Company accounted
      for the accounting change as a cumulative effect of a change in an
      accounting principle. The adoption of Statement 133 as of January 1,
      2001, resulted in an effect of accounting change of R$1,199, net of
      applicable tax expense of R$541.

      Swaps

      At December 31, 2002 and 2003 the Company had entered into swaps whereby
      the Company earns the exchange variation between the United States
      dollar and the Brazilian Real plus 10.00% to 13.05% and pays interest
      based on a short-term interbank rate. At December 31, 2002 and 2003
      these agreements have total notional amounts of R$220,134 and
      R$96,306, and expire on various dates through 2005. For Brazilian GAAP
      purposes, as of December 31, 2003, the Company recorded receivables
      related to these interest rate swap transactions of R$16,424 (R$62,254
      in 2002) which was recorded as a reduction of the loans. For US GAAP
      purposes such receivables were reclassified to assets. The fair values
      adjustments of the Company's foreign currency and interest rate swap
      contracts were estimated based on quoted market prices of comparable
      contracts, and generated a positive effect of R$6,108 in 2001, a
      negative effect of R$29,135 and a positive effect of R$27,883 during
      2003, before tax.


k.    Enterprises in the pre-operating stage and reversal of gain on sale of
      Blah!

      Under Brazilian Corporate Law all costs of an enterprise in the
      pre-operating stage besides costs normally capitalized as fixed assets are
      capitalized as pre-operating expenses and amortized over a period on the
      start-up date and extending over a minimum of 5 and a maximum of 10 years.
      US GAAP requires that companies in the development stage follow generally
      accepted accounting principles applicable to established operating
      enterprises. When the affiliate TIMNET.com S.A. was in a pre-operating
      stage its pre-operating costs were capitalized as non-current assets under
      Brazilian Corporate Law. For US GAAP purposes these costs were charged to
      income of the year in 2001.

      In December 2003, the Company sold its interest in Blah! S.A.
      (formerly TIMNet.com S.A.), to a related party, TIM International N.V.
      (see note 8 for further details). The sale resulted in a gain of
      R$12,571 which was recorded in the income statement for Brazilian GAAP
      purposes. For US GAAP purposes, the gains resulting from these types
      of transactions between companies under common control should be
      recorded through shareholders' equity. Therefore the gain of R$12,571
      , less tax of R$4,276 recorded in the Brazilian GAAP income statement
      was reversed for US GAAP purposes.


                                      F-41
<PAGE>

l.    Incorporation of tax benefit of goodwill by Subsidiaries

      According to the Brazilian Corporate Law accounting principles, companies
      may assign the tax benefit of the goodwill to their subsidiaries in order
      to receive the tax benefit generated by the amortization of such goodwill.
      The tax benefit is shown as deferred and recoverable taxes with a contra
      account in a special reserve within Shareholders' equity. The deferred tax
      is amortized and recognized as an expense in the statement of income for
      the amount of the tax benefit. The tax benefit of the deduction of the
      amortization from the tax basis for income tax and social contribution
      generates a reduction of income tax and social contribution payable.
      Therefore, the amount recognized as an expense resulting from tax
      deductible amortization of goodwill is equal to the reduction in tax on
      taxable income. Such accounting generates a reduction in taxes payable,
      but has no effect on the determination of net income for the period.

      Once the benefit is realized, shares will be issued to the controlling
      shareholder for the amount of the realized benefit; minority shareholders
      will be entitled to buy shares in proportion to their interests by paying
      them directly to the controlling shareholder.

      Under USGAAP, goodwill generated internally is not recognized; however,
      the future tax benefit generated by the amortization of goodwill is
      recognized as a contribution from the controlling shareholder within
      additional paid-in capital, similarly to the accounting principles under
      the Brazilian Corporate Law. The realization of the tax benefit by the
      amortization of the goodwill is recognized as a decrease in the value of
      the deferred tax with a consequent decrease in the tax payable, and does
      not affect the determination of income for the period, similar to the
      accounting principles under the Brazilian Corporate Law. Accordingly,
      under US GAAP the deduction in the tax provision does not gross up the
      expenses, since under US GAAP the amortization of Goodwill is not recorded
      in the statements of operations. The additional capital paid is
      transferred to Capital upon the issuance of the shares.

m.   Tax benefit

     The Company recognized the tax benefit in the amount of R$50,520, as
     shown in Note 22, as a reduction of taxes expenses for fiscal 2003.
     This amount represents the participation of the Company in the total
     benefit recorded by the operating Companies in the amount of R$63,155.
     Under US GAAP, the difference of R$12,635 related to minority interest
     would also be included as a reduction of the tax expense with a
     corresponding increase in minority interest, without effect in the net
     income for the period.

n.    Financial revenues

      Accounting principles under the Brazilian Corporate Law require such
      amounts to be stated as part of operating profit. Under US GAAP, financial
      revenue is presented after operating profit in the statement of income.

o.    Goodwill amortization

      Accounting principles under the Brazilian Corporate Law require that the
      amortization of the deferred tax benefit related the goodwill amortization
      be stated as an appropriation of income for the year as other operating
      expenses. Under US GAAP, such amortization is shown as a reduction of the
      provision for income tax.


                                      F-42
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

   Reconciliations of the differences between net income (for the years ended
                        December 31, 2001, 2002 and 2003)
                     in Brazilian Corporate Law and US GAAP

                     (In thousands of Brazilian reais - R$)

<TABLE>
<CAPTION>
                                                                           Note        2001            2002            2003
                                                                          ------    -----------     -----------     -----------
<S>                                                                       <C>      <C>             <C>             <C>
Net income as reported ...............................................                   65,530         118,574         207,545

Add/(deduct):
     Indexation of property, plant and equipment, net ................     26(e)         (6,965)         (2,797)         (2,661)
     Different criteria for:
       Capitalized interest ..........................................     26(a)          2,213             590           1,239
       Amortization of capitalized interest ..........................     26(a)         (4,183)         (4,491)         (4,437)
     Pension plan ....................................................     26(b)          1,600           1,260          16,251
     Hedging and derivative financial instruments ....................     26(j)          6,108         (29,135)         27,883
     Pre-operational expenses (Blah!) ................................     26(k)         (5,268)          2,802           4,204
     Reversal of gain on sale of Blah! ...............................     26(k)           --              --           (12,571)
     Deferred tax effect of the above adjustments ....................                    2,143          10,802         (10,364)
     Minority interest in above adjustments ..........................                      187           4,861          (4,213)

Net income under US GAAP .............................................                   61,365         102,466         222,876

Basic and diluted earnings, in Reais per 20,000 thousand preferred
  and common shares
Before cumulative effect of accounting change ........................                     3.46            5.99           12.61
Cumulative effect of accounting change ...............................                     0.19            --              --
Net income ...........................................................                     3.65            5.99           12.61

Weighted average number of shares outstanding
Preferred shares .....................................................              126,150,769     129,390,418     219,802,764
Common shares ........................................................              210,029,997     212,745,880     133,646,352
</TABLE>


                                      F-43
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

           Reconciliations of the differences in shareholders' equity
   (as of December 31, 2002 and 2003) in Brazilian Corporate Law and US GAAP

                     (In thousands of Brazilian reais - R$)

<TABLE>
<CAPTION>
                                                                  Note             2002          2003
                                                               ----------       ----------    ----------
<S>                                                              <C>           <C>           <C>
      Total shareholders' equity as reported ...............                       710,145       877,042
      Add/(deduct):
         Indexation of property, plant and equipment, net ..           26(e)        10,892         8,231
         Different criteria for:
           Capitalized interest ............................           26(a)        30,801        32,040
           Amortization of capitalized interest ............           26(a)       (10,494)      (14,931)
         Provision for loss on pension plan ................           26(b)       (16,251)         --
         Hedging and derivative financial instruments ......           26(l)       (23,027)        4,856
         Pre-operational expenses (Blah!) ..................           26(m)        (4,204)         --
      Deferred tax effects of above adjustments ............                         4,371       (10,267)
      Minority interest in above adjustments ...............                           173        (4,042)
                                                                                ----------    ----------
      US GAAP shareholders' equity .........................                       702,406       892,929
                                                                                ==========    ==========

      Supplementary information:
      Total assets under US GAAP ...........................                     1,476,311     1,561,629
                                                                                ==========    ==========
         Property, plant and equipment .....................                     1,305,674     1,598,689
         Accumulated depreciation ..........................                      (693,565)     (884,106)
                                                                                ----------    ----------
         Net property, plant and equipment .................                       612,109       714,583
                                                                                ==========    ==========
</TABLE>


                                      F-44
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
             (FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002)
                           IN ACCORDANCE WITH US GAAP

                     (In thousands of Brazilian reais -R$)

<TABLE>
<CAPTION>
                                                           Capital
                                                           reserves                       Income reserves
                                                           --------    -------------------------------------------------------
                                              Additional                                    Unrealized  Realizable
                                      Share     paid in      Share      Legal    Statutory    Income      profit     Dividends
                                     Capital    Capital     Premium    Reserve    Reserve     reserve     Reserve     reserve
                                     -------  ----------   --------    -------   ---------  ----------  ----------   ---------
<S>                                 <C>         <C>        <C>         <C>        <C>         <C>        <C>          <C>
Balances at December 31, 2000 ...    108,843       --       204,068     13,255     87,154      69,996        --          --

Capitalization of reserves and
  retained earnings .............     77,211                (10,985)      --         --          --          --          --
Net income ......................       --                     --         --         --          --          --          --
Transfers to and from reserves
  (Note 17) .....................       --                     --        3,277       --       (69,996)       --          --
Dividends .......................       --                     --         --         --          --          --        14,825
                                     -------    -------     -------     ------     ------      ------     -------     -------
Balances at December 31, 2001 ...    186,054       --       193,083     16,532     87,154        --          --        14,825

Capitalization of reserves and
  retained earnings .............    102,389                (23,551)      --         --          --          --          --
Reduction of dividends reserve ..       --                     --         --         --          --          --        (2,244)
Net income ......................       --                     --         --         --          --          --          --
Transfers to and from reserves
  (Note 17) .....................       --                     --        5,929       --          --          --          --
Dividends .......................       --                     --         --         --          --          --          --
                                     -------    -------     -------     ------     ------      ------     -------     -------
Balances at December 31, 2002 ...    288,443       --       169,532     22,461     87,154        --                    12,581

Capital increase with reserves ..     25,180                (25,180)       --         --         --          --          --
Option exercised ................         86                   --          --         --         --          --          --
Reduction of dividends reserve ..       --                     --          --         --         --                   (10,280)
Gain on sale of Blah!, net of
   taxes of R$4,274 .............                 8,295
Net income ......................       --                     --          --         --         --          --          --
Transfer to and from reserves
  (Note 21) .....................       --                     --        10,377       --         --          --          --
Dividends .......................       --                     --          --         --         --                      --
Realizable profit reserve .......       --                     --          --         --         --        18,838        --
                                     -------    -------     -------     ------     ------      ------     -------     -------
Balances at December 31, 2003 ...    313,709      8,295     144,352     32,838     87,154        --        18,838       2,301
                                     =======     ======     =======     ======     ======      ======     =======     =======

<CAPTION>

                                     Retained
                                     earnings      Total
                                     --------     -------
<S>                                 <C>         <C>
Balances at December 31, 2000 ...     105,102     588,418

Capitalization of reserves and
  retained earnings .............     (66,226)       --
Net income ......................      61,365      61,365
Transfers to and from reserves
  (Note 17) .....................      66,719        --
Dividends .......................     (34,263)    (19,438)
                                      -------     -------
Balances at December 31, 2001 ...     132,697     630,345

Capitalization of reserves and
  retained earnings .............     (78,838)       --
Reduction of dividends reserve ..        --        (2,244)
Net income ......................     102,466     102,466
Transfers to and from reserves
  (Note 17) .....................      (5,929)       --
Dividends .......................     (28,161)    (28,161)
                                      -------     -------
Balances at December 31, 2002 ...     122,235     702,406

Capital increase with reserves ..        --          --
Option exercised ................        --            86
Reduction of dividends reserve ..        --       (10,280)
Reversal of gain on sale of
  Blah! .........................                   8,295
Net income ......................     222,876     222,876
Transfer to and from reserves
  (Note 21) .....................     (10,377)       --
Dividends .......................     (30,454)    (30,454)
Realizable profit reserve .......     (18,838)       --
                                      -------     -------
Balances at December 31, 2003 ...     285,442     892,929
                                      =======     =======
</TABLE>

    See notes to consolidated financial statements.


                                      F-45
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

 (Amounts expressed in thousands of Brazilian reais unless otherwise indicated)


27.   Additional disclosures required by US GAAP

a.    Consolidated Statement of Cash Flow for the years ended December 31, 2000,
      2001 and 2002

      Accounting principles under the Brazilian Corporate Law require
      presentation of a statement of changes in financial position reflecting
      the sources and uses of funds. A statement of cash flows to complement the
      information disclosed under Brazilian Corporate Law is presented below:

<TABLE>
<CAPTION>
                                                                                            2001        2002        2003
                                                                                          --------     -------    --------
<S>                                                                                      <C>          <C>        <C>
      Operating activities:
        Net income ....................................................................     65,530     118,574     207,545
         Adjustments to reconcile net income for the year to net cash
           provided  by operating activities
           Depreciation ...............................................................    155,367     179,472     184,574
           Minority interests .........................................................     21,511      38,547      45,635
           Foreign exchange losses (gains) on loans ...................................     10,640      21,053     (27,187)
           Losses on disposal of fixed assets .........................................      7,441       2,231       3,259
           Gain on sale of Blah! ......................................................       --          --       (12,570)
           Allowance for  doubtful accounts ...........................................     44,578      46,729      57,410
           Provision for contingencies ................................................      1,800      13,655      (6,443)
           Equity loss of investee ....................................................      1,888       4,288       3,250
           Net effect on assets and liabilities for dilution of interest in investee ..     (4,500)       (755)       --
           (Increase) in accounts receivable ..........................................     (7,074)    (59,825)    (97,530)
           (Increase)  decrease in deferred and recoverable taxes .....................     20,144      14,983     (65,757)
           (Increase) decrease in other current assets ................................     23,749      (3,789)     (5,323)
           (Increase) decrease in other noncurrent assets .............................     (6,007)     (1,739)      9,130
           Increase (decrease) in payroll and related accruals ........................      1,205       1,378      (1,342)
           Increase (decrease) in accounts payable and accrued expenses ...............     (4,959)     (7,067)     21,248
           Increase (decrease) in taxes other than income taxes .......................     11,891       8,313       6,919
           Increase (decrease) in accrued interest ....................................        339       1,282     (11,086)
           Increase (decrease) in other long term liabilities .........................      1,800         300     (6,443)
                                                                                          --------     -------    --------
                                                                                           343,543     377,030     311,732
                                                                                          ========     =======    ========
      Investing activities:
         Acquisition of property, equipment and plant .................................   (129,790)    (74,014)   (158,101)
         Proceeds from sale of Blah! ..................................................       --          --        19,500
         Investment in equity investee ................................................    (11,100)       --          --
         Capitalized interest .........................................................     (2,187)       (852)     (3,134)
                                                                                          --------     -------    --------
                                                                                          (143,077)    (74,866)   (141,735)
                                                                                          ========     =======    ========
      Financing activities:
         Repayments of loans and hedging activities ...................................    (69,711)    (36,956)   (214,717)
         Options exercised ............................................................       --          --            86
         Dividends paid ...............................................................    (11,564)    (23,061)    (31,668)
                                                                                          --------     -------    --------
                                                                                           (81,275)    (60,017)   (246,299)
                                                                                          ========     =======    ========

          Increase (decrease) in cash and cash equivalents ............................    119,191     242,147     (76,302)
          Cash and cash equivalents at beginning of year ..............................     53,075     172,266     414,413
                                                                                          --------     -------    --------
          Cash and cash equivalents at end of year ....................................    172,266     414,413     338,111
                                                                                          ========     =======    ========

      Supplemental disclosure of cash flow information
      Interest paid ...................................................................     56,536      43,080      51,660
      Income and social contribution tax paid .........................................     22,471      44,498      77,093
      Non cash capital expenditures ...................................................      2,187         852     134,933
                                                                                          ========     =======    ========
</TABLE>


                                      F-46
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

 (Amounts expressed in thousands of Brazilian reais unless otherwise indicated)


b.    Recent accounting pronouncements

      In August 2001, the Financial Accounting Standards Board ("FASB") issued
      Statement No. 143, "Accounting for Asset Retirement Obligations."
      Statement No. 143 addresses the financial accounting and reporting for
      obligations and retirement costs related to the retirement of tangible
      long-lived assets. The provisions of Statement No. 143 were effective for
      fiscal years beginning January 1, 2003. The adoption of Statement 143 did
      not have a significant impact on the Company's financial statements.

      In August 2001, the FASB issued SFAS No. 144, "Accounting for the
      Impairment or Disposal of Long-Lived Assets." SFAS 144 amends existing
      accounting guidance on asset impairment and provides a single accounting
      model for long-lived assets to be disposed of. Among other provisions, the
      new rules change the criteria for classifying an asset as held-for-sale.
      The standard also broadens the scope of businesses to be disposed of that
      qualify for reporting as discontinued operations, and changes the timing
      of recognizing losses on such operations. The provisions of SFAS 144 were
      effective for the Company's fiscal year 2002. The adoption of SFAS 144 did
      not have a significant impact on the Company's financial statements.

      Effective January 1, 2003, the Company adopted SFAS No. 145, "Rescission
      of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13,
      and Technical Corrections." SFAS 145 rescinds SFAS 4, which required that
      all gains and losses from extinguishment of debt be reported as an
      extraordinary item. Previously recorded losses on the early extinguishment
      of debts that were classified as an extraordinary item in prior periods
      have been reclassified to other income (expense), net. The adoption of
      SFAS 145 had no effect on the company's consolidated financial position or
      results of operations.

      In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
      Associated with Exit or Disposal Activities." SFAS 146 provides guidance
      related to accounting for costs associated with disposal activities
      covered by SFAS 144 or with exit or restructuring activities previously
      covered by Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
      Recognition for Certain Employee Termination Benefits and Other Costs to
      Exit an Activity (including Certain Costs Incurred in a Restructuring)."
      SFAS 146 supersedes EITF 94-3 in its entirety. SFAS 146 requires that
      costs related to exiting an activity or to a restructuring not be
      recognized until the liability is incurred. SFAS 146 will be applied
      prospectively to exit or disposal activities that are initiated after
      December 31, 2002. SFAS 146 had no effect on the company's consolidated
      financial position or results of operations.

      In December 2002, the FASB issued SFAS No. 148, "Accounting for
      Stock-Based Compensation, Transition and Disclosure." SFAS 148 provides
      alternative methods of transition for a voluntary change to the fair value
      based method of accounting for stock-based employee compensation. SFAS 148
      also requires that disclosures of the pro forma effect of using the fair
      value method of accounting for stock-based employee compensation be
      displayed more prominently and in a tabular format. The transition and
      annual disclosure requirements of SFAS 148 are effective for the Company's
      fiscal ending after December 15, 2002. SFAS 148 had no effect on Company's
      results of operations or financial condition.


                                      F-47
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

 (Amounts expressed in thousands of Brazilian reais unless otherwise indicated)


      In November 2002, the FASB issued Interpretation No. 45, Guarantor's
      Accounting and Disclosure Requirements for Guarantees, Including
      Indirect Guarantees of Indebtedness to Others, an interpretation of
      FASB Statements No. 5, 57 and 107 and a rescission of FASB
      Interpretation No. 34. This Interpretation elaborates on the
      disclosures to be made by a guarantor in its interim and annual
      financial statements about its obligations under guarantees issued.
      The Interpretation also clarifies that a guarantor is required to
      recognize, at inception of a guarantee, a liability for the fair value
      of the obligation undertaken. The adoption of these requirements had
      no effect on the company's consolidated financial statements and
      disclosures. The disclosure requirements are effective for financial
      statements of interim or annual periods ending after December 15,
      2002.

      In January 2003, the Financial Accounting Standards Board issued
      Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest
      Entities, an Interpretation of ARB No. 51". FIN 46 requires certain
      variable interest entities to be consolidated by the primary beneficiary
      of the entity if the equity investors in the entity do not have the
      characteristics of a controlling financial interest or do not have
      sufficient equity at risk for the entity to finance its activities without
      additional subordinated financial support from other parties. FIN 46 is
      effective immediately for all new variable interest entities created or
      acquired after January 31, 2003. For variable interest entities created or
      acquired prior to February 1, 2003, the provisions of FIN 46 must be
      applied by foreign private issuers, like the Company, on the January 1,
      2004 income statement for special purpose entities and on the December 31,
      2004 balance sheet for non-special purpose entities. Management does not
      expect adoption of FIN 46 to have a material impact on the Company's
      consolidated financial position, consolidated results of operations, or
      liquidity.

      In May 2003, the Financial Accounting Standards Board issued Statement No.
      150, "Accounting for Certain Financial Instruments with Characteristics of
      both Liabilities and Equity". Statement No. 150 requires that certain
      financial instruments that are settled in cash, including certain types of
      mandatorily redeemable securities, be classified as liabilities rather
      than as equity. Statement No. 150 becomes effective for financial
      instruments entered into or modified after May 31, 2003, and otherwise is
      effective at the beginning of the first interim period after June 15,
      2003. Management does not expect adoption of Statement No. 150 to have a
      material impact on the Company's consolidated financial position,
      consolidated results of operations, or liquidity.

c.    Pension and other post-retirement benefits

      In December of 1999, the Company and the other companies which participate
      in the Sistel plan, reached an agreement to withdraw the active
      participants from the pension plan and establish a new plan for each of
      the companies. The parties agreed to allocate the plan assets based on an
      independent actuarial calculation. The allocation of the initial
      transition obligation and unamortized gains and losses was based on the
      projected benefit obligation (PBO) of each individual sponsor divided by
      the total PBO of Sistel at December 31,1999. The inactives employees of
      all the New Holding Companies which participated in the Sistel defined
      benefit pension plan remain as part of the multiemployer plan in Sistel.
      The postretirement benefit plans also remain as a multiemployer plan,
      however, Sistel will no longer subsidize life insurance premiums for
      inactive (retired) employees.


                                      F-48
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

 (Amounts expressed in thousands of Brazilian reais unless otherwise indicated)


      Following the creation of a separate defined contribution plan TIMPREV -
      NORDESTE on November 13, 2002, the Company has encouraged the transfer of
      the existing employees in the existing Tele Nordeste Celular defined PBS
      Plan to the new plan through the use of bonus incentives. The migration to
      the new plan is optional however, the bonus incentives offered by the
      Company expired on January 29, 2003. The effective date for the
      curtailment when the participants officially transferred to the new fund
      was February 28, 2003.

      The changes in the benefit obligation and plan assets, funding status on
      December 31, 2002 and 2003 for the pension plan for the active employees
      (PBS - Tele Nordeste Celular), and the annual pension cost of the active
      employees Company's sponsored defined benefit plan pension and the related
      actuarial assumptions in accordance with US GAAP, are as follows:

                                                             2002       2003
                                                            -------    -------
      Change in benefit obligation
      Benefit obligation at beginning of year ...........    26,364     29,403
      Service cost ......................................     1,655        507
      Interest cost .....................................     2,959      1,229
      Benefits paid and administrative expenses .........      (862)      (589)
      Effect of Curtailment .............................      --         (525)
      Effect of Settlement ..............................      --      (22,205)
      Actuarial losses/gains ............................      (713)       545
                                                            -------    -------
      Benefit obligation at end of year .................    29,403      8,365
                                                            =======    =======

      Change in plan assets
      Fair value of plan assets at beginning of year ....    26,512     34,137
      Employer contribution .............................       818        132
      Plan participants' contributions ..................       712        100
      Benefits paid and administrative expenses .........      (862)      (589)
      Effect of Settlement ..............................      --      (22,206)
      Actual return on plan assets ......................     6,957        (27)
                                                            -------    -------

      Fair value of plan assets at end of year ..........    34,137     11,547
                                                            =======    =======


                                      F-49
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

 (Amounts expressed in thousands of Brazilian reais unless otherwise indicated)


                                                       2002       2003
                                                     -------    -------

      Funded status ..............................     4,734      3,286
      Unrecognized net gains .....................   (25,231)    (3,235)
      Unrecognized net transitions obligation ....     4,246        355
                                                     -------    -------
      Net amount recognized ......................   (16,251)       406
                                                     =======    =======

      The accumulated benefit obligation for all defined persion plans was
      R$21,705 and R$8,064 at December 31, 2002 and 2003, respectively.

      The composition of net periodic benefits costs for the PBS - Tele Nordeste
      Celular plan for the years ended December 31, 2001, 2002 and 2003 as
      follows:

                                             2001      2002      2003
                                            ------    ------    ------

      Service cost ......................    1,573     1,655       507
      Expected employee contribution ....     (689)     (592)      (41)
      Interest cost .....................    2,656     2,959     1,229
      Expected return on plan assets ....   (3,300)   (3,918)   (1,818)
      Net amortization ..................     (533)     (545)     (339)
                                            ------    ------    ------
                                              (293)     (441)     (462)
                                            ------    ------    ------

      The actuarial assumptions for 2002 and 2003 used in the computation of the
      funding status of the PBS-A-Sistel and PBS-Tele Nordeste Celular were the
      following:

      Actuarial assumptions as of December 31:                   2002       2003
                                                           ---------- ----------

      Discount rate for determining projected
        benefit obligations..............................     11.30%     11.30%
      Rate of increase in compensation levels............      8.15%      7.10%
      Expected long-term rate of return on plan assets...     14.45%     11.83%


      The expected long-term rate of return for the plan assets was set up based
      on the pension portfolio's past average rate or earnings, discussion with
      portfolio managers and comparisons with similar companies. The expected
      long-term rate of return is based on an asset allocation assumption of 15%
      to equities and 85% fixed income securities.

      Plan Assets

      Company and its subsidiaries' pension plan weighted-average asset
      allocations at December 31, 2002 and 2003, by asset category are as
      follows:

                                          2002              2003
                                    ----------------- ---------------

      Equity securities                      13%               14%
      Debt securities                        87%               86%

                                    ----------------- ---------------
      Total                                 100%              100%
                                    ================= ===============

      The Sistel Tele Nordeste Celular Benefit Plan Investment Policy is
      addressed in the Equity Application Master Plan (PDAP), which sets forth
      the policy for application and management of funds supporting the Plan,
      with a view to meeting the profitability and social security goals in
      accordance with the related actuarial liability.

      Based on the short, medium and long-term macroeconomic scenarios prepared
      by SISTEL, the PDAP sets out objectives, goals and restrictions as to the
      investment of plan funds, and determines and designs the strategic
      assignment of these funds in each segment and portfolio, as well as the
      assets that may be selected and the strategy to be adopted to manage these
      assets.

      The assignment addressed in the PDAP sets forth the ceiling and floor
      limits to break down the asset portfolio into fixed-income and variable
      assets, as well as loans and financings to the members of the plan, taking
      into consideration the limits set forth in National Monetary Council
      Resolution No. 3121, apart from the criteria for selection of these
      assets.

      The minimum actuarial rate forecast for the Plan consists of a
      profitability at least equal to INPC (Broad National Consumer Price Index)
      + 6% p.a.

      Cash Flows

      The Company expects to contribute R$121 to its pension plan in 2004.

      As mentioned in the note 20, the Company and its subsidiaries changed
      their pension plan to a defined contribution pension plan, TIMPREV.
      Migration to this new plan was exercised through January 28, 2003 and
      approximately 90% of the participants exercised their right to migrate to
      the new plan. TIMPREV became effective as of February 2, 2003. The
      following is a rollforward of the accrued post-retirement benefit
      liability for 2002 and 2003, including the effects of curtailment and
      settlement mentioned:

                                                   2002              2003
                                             ----------------- ----------------

      Accrued liability at beginning of
        the year                                   (17,511)         (16,251)
      Net periodic post-retirement
        benefits cost for the year                     441            1,142
      Actual company contribution during
        the year                                       819              131
      Effect of curtailment                              -           (3,214)
      Effect of settlement                               -           18,598
                                             ----------------- ----------------
      Accrued liability at end of the year         (16,251)             406
                                             ================= ================

      The effects of the curtailment and the settlement computed as of February
      28, 2003 are demonstrated below:

<TABLE>

                                                       Before                                        After
                                                    Curtailment      Effect of      Effect of      Curtailment
      PBS - Tele Nordeste Celular                  and Settlement    Curtailment    Settlement   and Settlement
                                                   --------------- -------------- -------------- ---------------

<S>   <C>                                                <C>              <C>         <C>               <C>
      1. Projected benefit obligation (PBO)              30,156           (525)       (22,206)          7,425
      2. Plan assets at fair value                      (34,908)             -         22,206         (12,702)
                                                   --------------- -------------- -------------- ---------------
      3. Funded status                                  (4,752)           (525)             -          (5,277)
      4. Unrecognized items
          (a) Initial transition obligation               4,144         (3,739)             -             405
      (asset)
          (b) (Gain) & loss                             (24,816)             -         18,598          (6,218)

                                                   --------------- -------------- -------------- ---------------
      5. Accrued / (prepaid) post-retirement
      benefit liability (3-(4a+4b))                      15,920           3,214       (18,598)            536
                                                   =============== ============== ============== ===============
</TABLE>


      A summary of the funding status of the Sistel PBS-A Sistel pension plan as
      of December 31, 2002 and 2003 for the multi employer portion (inactive
      employees pension plan) is as follows:

                                                         2002          2003
                                                      ----------    ----------
      Funded status
      Accumulated benefit obligation:
         Vested ...................................    2,922,542     3,484,245
      Projected benefit obligation ................    2,922,542     3,484,245
      Fair value of plan assets to be allocated
         to the Company's new plan ................   (3,684,883)   (4,163,102)
                                                      ----------    ----------
      Projected obligation less than of assets ....     (762,341)     (678,857)
                                                      ==========    ==========

d.    Concentration of risks

      The Company continually monitors the level of trade accounts receivable
      and limits the exposure to bad debts by cutting access to the telephone
      network if any invoice is fifteen days past due.

      The Company maintains cash and cash equivalents with various financial
      institutions and, as a policy, limits exposure to any one institution.
      Concentration of credit risk with respect to accounts receivable is
      limited to Tele Norte Leste Participacoes S.A. as described in Note 25.

      In conducting its businesses, the Company is fully dependent upon the
      cellular telecommunications concession as granted by the Federal
      Government.

      Approximately 20% of all employees are members of state labor unions
      associated with the Federacao Interestadual dos Trabalhadores em
      Telecomunicacoes ("Fittel"). The Company negotiates new collective labor
      agreements every year with the local unions. The collective agreements
      currently in force expired in December 2003.

      There is no concentration of available sources of labor, services,
      concessions or rights, other than those mentioned above, that could, if
      suddenly eliminated, severely impact the Company's operations.

e.    Comprehensive income

      Under US GAAP, the Company adopted SFAS No 130, "Reporting Comprehensive
      Income". Comprehensive income is not different from net income under US
      GAAP.

f.   Earnings per share

      In these consolidated financial statements, information is disclosed per
      lot of twenty thousand shares, because each American Depositary Share
      ("ADS") is equivalent to twenty thousands shares.


                                      F-52
<PAGE>

                    TELE NORDESTE CELULAR PARTICIPACOES S.A.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

 (Amounts expressed in thousands of Brazilian reais unless otherwise indicated)


      Since the preferred and common shareholders have different dividend,
      voting and liquidation rights, basic earnings per share has been
      calculated using the "two-class" method. The "two-class" method is an
      earnings allocation formula that determines earnings per share for
      preferred and common shares according to the dividends to be paid as
      required by the Company's by-laws and participation rights in
      undistributed earnings.

      Basic earnings per common share is computed by reducing net income by
      distributable and undistributable net income available to preferred
      shareholders and dividing net income available to common shareholders by
      the weighted-average number of common shares outstanding during the
      period. Net income available to preferred shareholders is the sum of the
      preferred dividends distributable net income and the preferred
      shareholders' portion of undistributed net income.

      Undistributed net income is computed by deducting preferred dividends and
      common dividends from net income. Undistributed net income is shared
      equally on a per share basis by the preferred and common shareholders.
      Options issued under the Company's stock options plan are antidilutive for
      each of the years presented. Therefore, diluted earnings per share equals
      basic earnings per share.

      Under the Company's bylaws, if the Company is able to pay dividends in
      excess of the minimum requirement for preferred shareholders and the
      remainder of the net income is sufficient to provide equal dividends to
      both common and preferred shareholders, then the earnings per share will
      be the same for both common and preferred shareholders.


                                      F-53
<PAGE>

      The following table sets forth the computation of basic and diluted
      earnings per thousand of common shares:

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                                     --------------------------------------------
                                                                         2001            2002            2003
                                                                     ------------    ------------    ------------
<S>                                                                 <C>             <C>             <C>
      Numerator:
      Net income for the year under US GAAP ......................         61,365         102,466         218,602
         Net income available to preferred shareholders -
      numerator for basic and diluted earnings per thousand
      share ......................................................        (38,338)        (63,715)       (135,944)
                                                                     ------------    ------------    ------------

         Net income available to common shareholders -
      numerator for basic and diluted earnings per thousand
      shares .....................................................         23,027          38,751          82,658
                                                                     ============    ============    ============


      Denominator:
      Weighted-average outstanding shares (in thousands)
         Common ..................................................    126,150,769     129,390,418     133,646,352
         Preferred ...............................................    210,029,997     212,745,880     219,802,764

      Earnings per 20,000 shares (basic and diluted)
         Common shares ...........................................           3.65            5.99           12.37
         Preferred shares ........................................           3.65            5.99           12.37
</TABLE>


28.   Subsequent events (Unaudited)

      On January 30, 2004, the Shareholders Extraordinary Meeting approved the
      merger of Telasa Celular S.A., Teleceara Celular S.A., Telepisa Celular
      S.A., Telern Celular S.A., Telpa Celular S.A. into Telpe Celular S.A., as
      part of a reorganization process approved by ANATEL in December 2003.

      The reorganization was as a result of the migration from the Mobile
      Cellular Service (SMC) to Personal Mobile Service (SMP). This corporate
      reorganization aims at integrating the activities of these operating
      companies that belong to the same economic group, to allow increased
      synergy, expansion of Telpe Celular S.A. operations, reduction of expenses
      related to maintenance of six individual companies and concentration of
      liquidity of shares of Tele Nordeste Celular Participacoes S.A.'s
      subsidiaries.


                                      F-54