Use these links to rapidly review the documentTABLE OF CONTENTS WAVECOM S.A. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 20-F

|ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2002

Commission file number: 000-30078

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WAVECOM S.A.(Exact name of Registrant as specified in its charter)

France(Jurisdiction of Incorporation or Organization)

12 boulevard Garibaldi
92442 Issy-Les-Moulineaux Cedex,
France
Tel. 011 33 1 46 29 08 00(Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Title of each class

Name of each exchange on which registeredShares, nominal value €1.00 each*
American Depositary Shares, evidenced by
American Depositary Receipts, each representing one Share.

NASDAQ National Market


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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

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

Shares

15,107,890American Depositary Shares

1,649,730


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 ý    No o

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

Item 17 o    Item 18 ý

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TABLE OF CONTENTS



|         |  | PART I                                                
|-------- |  | ------------------------------------------------------
|Item 1:  |  | Identity of Directors, Senior Management and Advisors 
|Item 2:  |  | Offer Statistics and Expected Timetable               
|Item 3:  |  | Key Information                                       
|Item 4:  |  | Information on the Company                            
|Item 5:  |  | Operating and Financial Review and Prospects          
|Item 6:  |  | Directors, Senior Management and Employees            
|Item 7:  |  | Major Shareholders and Related Party Transactions     
|Item 8:  |  | Financial Information                                 
|Item 9:  |  | The Offer and Listing                                 
|Item 10: |  | Additional Information                                
|Item 11: |  | Market Risk                                           
|Item 12: |  | Description of Securities Other Than Equity Securities
|         |  | PART II                                               
|Item 13: |  | Defaults, Dividend Arrearages and Delinquencies       
|Item 14: |  | Use of Proceeds                                       
|Item 15: |  | Controls and Procedures                               
|Item 18: |  | Financial Statements                                  
|Item 19: |  | Exhibits                                              

PRESENTATION OF INFORMATION

Unless the context otherwise indicates, references to "Wavecom," "we" or us include Wavecom S.A. and its subsidiaries. References to "U.S. dollars" or "$"
contained herein are to the lawful currency of the United States, and references to "euro" or "€" are to are to the currency of the European Monetary Union.

FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are not guarantees of Wavecom's future operational or financial performance and are subject to risks and uncertainties. Actual operational and financial results may differ materially from
Wavecom's expectations contained in the forward-looking statements as a result of various factors. Factors that may cause such differences include, but are not limited to, factors discussed in "Item
3Key InformationRisk Factors" and "Item 5Operating and Financial Review and Prospects."

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PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

Selected Financial Data

The following selected financial data for the five years ended December 31, 2002 are derived from the consolidated financial statements of Wavecom, which
have been prepared in accordance with U.S. GAAP and have been audited by Ernst & Young Audit, independent auditors. The data should be read in conjunction with "Operating and Financial Review
and Prospects," the consolidated financial statements, related notes and other financial information included in this annual report. We derived the amounts shown below from our consolidated financial
statements, which for the year ended
December 31, 1998 we have translated into euro using the exchange rate fixed for French francs and euro on January 1, 1999.

|                                                                       |                                             | Years ended December 31, |           
|---------------------------------------------------------------------- | ------------------------------------------- | ------------------------ | ----------
|
|
|Consolidated statements of operations data:                            |                                             |                          |           
|Revenues:                                                              |                                             |                          |           
|                                                                       | Product sales                               |                          | €         
|                                                                       | Technology development and other services   |                          |           
|                                                                       | License fees and royalties                  |                          |           
|                                                                       |                                             |                          |           
|                                                                       |                                             | Total revenues           |           
|Cost of revenues:                                                      |                                             |                          |           
|                                                                       | Cost of goods sold                          |                          |           
|                                                                       | Cost of services                            |                          |           
|                                                                       |                                             |                          |           
|                                                                       |                                             | Total cost of revenues   |           
|                                                                       |                                             |                          |           
|Gross profit                                                           |                                             |                          | 5,271     
|Operating expenses:                                                    |                                             |                          |           
|                                                                       | Research and development                    |                          |           
|                                                                       | Sales and marketing                         |                          |           
|                                                                       | General and administrative                  |                          |           
|                                                                       | Amortization of goodwill                    |                          |           
|                                                                       | Deferred compensation amortization          |                          |           
|                                                                       | Provision for lossICO Development contract |                          |           
|                                                                       |                                             |                          |           
|                                                                       |                                             | Total operating expenses |           
|                                                                       |                                             |                          |           
|Operating income (loss)                                                |                                             |                          | (6,756    
|Interest and other financial income (expense), net                     |                                             |                          | (364      
|Provision for loss on long-term investment                             |                                             |                          |          
|Beneficial conversion feature of convertible debt                      |                                             |                          |          
|Income (loss) before minority interests and income taxes               |                                             |                          | (7,120    
|                                                                       |                                             |                          |           
|Minority interest                                                      |                                             |                          |          
|                                                                       |                                             |                          |           
|Income (loss) before income taxes                                      |                                             |                          | (7,120    
|Income tax expense (benefit)                                           |                                             |                          | (813      
|                                                                       |                                             |                          |           
|Net income (loss)                                                      |                                             | €                        | (6,307    
|                                                                       |                                             |                          |           
|Basic net income (loss) per share(1)                                   |                                             | €                        | (0.63     
|Diluted net income (loss) per share                                    |                                             | €                        | (0.63     
|Cash dividends declared per share(2)                                   |                                             | €                        | 0.015     
|Number of shares used in computing basic net income (loss) per share   |                                             |                          | 10,000,000
|Number of shares used in computing diluted net income (loss) per share |                                             |                          | 10,000,000

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|                                     |  | December 31,
|------------------------------------ |  | ------------
|
|Consolidated balance sheet data:     |  |             
|Total current assets                 |  | €11,322     
|Total assets                         |  | 15,843      
|Total current liabilities            |  | 18,274      
|Total long-term liabilities          |  | 1,414       
|Total shareholders' equity (deficit) |  | (3,845      

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Exchange Rate Data

Since January 1, 1999 our functional currency has been euro, the currency of the European Monetary Union, of which the Republic of France is a member. The
exchange rate for conversion of euros into U.S. dollars (using the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York) on May 14, 2003 was $1.1531 = €1.00. Fluctuations in the exchange rate between the euro and the dollar will affect the dollar amounts received by owners
of ADSs on conversion of dividends, if any, paid in euro on the shares and may affect the dollar price of the ADSs on the Nasdaq National Market.

The
following table shows the noon buying rates for the number of U.S. dollars per euro for the period since January 1, 1999. The average is computed using the noon buying rate on
the last business day of each month during the period indicated.

|Month                    |          | High |        | Low   
|------------------------ | -------- | ---- | ------ | ------
|2003May (through May 14) |          | $    | 1.1561 |       
|                         | April    |      |        | 1.1180
|                         | March    |      |        | 1.1062
|                         | February |      |        | 1.0875
|                         | January  |      |        | 1.0861
|2002                     |          |      |        |       
|                         | December |      |        | 1.0485
|                         | November |      |        | 1.0139
|                         | October  |      |        | 0.9881

|Year ended December 31, |      | Average
|----------------------- | ---- | -------
|                        | 2002 |        
|                        | 2001 |        
|                        | 2000 |        
|                        | 1999 |        

Since
the euro did not exist prior to January 1, 1999, we cannot present exchange rates between the euro and the U.S. dollar for 1998. Our functional currency during 1998 was the
French franc. The average noon buying rate for the French franc per $1.00 was FF5.90 for 1998, computed using the noon buying rate on the last business day of each month during 1998.

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Risk Factors

In addition to the other information contained in this annual report, the following risk factors should be carefully considered in
evaluating us and our business. These statements are intended to highlight the material risk factors that may affect our results.

We rely heavily on a small number of major customers. The loss of one or more of these customers, or a reduction of purchases by one or more major customers, may adversely
affect our sales, operating profit and cash flow

Although the global handset market experienced a downturn in 2001 and 2002, we experienced substantial growth during those periods as the market for mobile
telephones in East Asia, and particularly in China, expanded rapidly. Our customers in the East Asian market have been particularly successful in building market share in that expanding market.
However, if the Chinese and other markets in which our customers sell their products should experience a downturn, or if our customers are unable to remain competitive in their local markets or are
unable to increase their market share, or if we are unable to win new customers, our revenues may not continue to grow and may even decline.

We
believe that a small number of manufacturers will continue to dominate the worldwide market for mobile telephones. Our performance currently depends on a small number of customers who
place significant orders with us. Because our relationships with these major customers are very important to us, we may find it necessary from time to time to accept cancellations or order delays from
such customers on relatively short notice. In December 2002, we experienced for the first time such a cancellation of orders by TCL Communication (HK) Company Ltd., by far our largest
single customer in 2002.

In
order to decrease our dependence on a few major Asian customers, we have expanded our worldwide sales and marketing organization and significantly expanded our operations in the
non-Asian markets. However, the dynamics of the mobile telephone markets in Europe, North America and Asia are all very different, and we cannot assure you that the strategies that have
enabled us to grow quickly in the Asian handset supply market will work in those other markets, or that we will have any success in serving those markets.

The
following table sets forth revenues from our largest customers for the past three years:

|                                                                       |  | 2000 |    | 2001 |     | 2002 |     
|---------------------------------------------------------------------- |  | ---- | -- | ---- | --- | ---- | ----
|Percentage of total revenues represented by the five largest customers |  | 45.8 | %* | 80.4 | %** | 83.9 | %***
|Percentage of total revenues represented by the ten largest customers  |  | 68.4 | %  | 88.1 | %   | 90.1 | %   

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The wireless communication market in which we operate is characterized by rapidly changing and increasingly complex technologies. If we are unable to keep pace with these new
technology trends, our product offerings may not remain competitive and we may lose customers

The wireless communication markets in which we sell our products are developing new types of products and new versions of existing products regularly.
Manufacturers who purchase ourWISMOmodules and wireless modems for use in their mobile telephones and other applications compete with

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other
manufacturers and, to be competitive, must offer products that satisfy consumer demand for smaller, less expensive products with more features. To meet our customers' needs, we must continuously
update and enhance our products, shortening their life cycles so that they meet the latest standards and include up-to-date features.

To
develop these enhancements, new designs and technologies we must spend time and significant amounts on research and development. These investments are generally made before commercial
viability for such enhanced products is ensured and we may not receive any significant revenues from these products if we misjudge the market or miss a product life-cycle window. We may
lose market share if our competitors, most of which are larger and have greater resources than we do, are more successful or faster than we are in updating and improving products and technology.

In
addition, several of our products rely on unproven or evolving technologies that may cause defects or quality or performance problems, which may harm our reputation and increase our
costs.

Lack of growth in the markets for new wireless applications could have a significant adverse impact on our ability to grow our business

Our prospects depend upon continued development and growth of markets for wireless communications products. Although we anticipate that the market for mobile
telephones will continue to grow in the future, we believe that a significant potential for growth in the demand for our products will be in new wireless applications. These notably include:



The
markets for most of these types of products are still in their formative stages. We may not be successful if these and other potential markets for our products do not develop.

Declining sales prices of mobile telephones and other wireless products could affect our operating profit adversely

The prices of mobile telephones have tended to decrease steadily over time. We believe that the prices of other wireless communications products will also
decrease over time. As a result, prices for ourWISMOmodules and wireless modem products have declined and are likely to continue to decline. More
importantly, in order for us to address a larger market, and in order for our customers to introduce attractively priced products, we believe we must continue to reduce our selling prices. We will be
unable to maintain profitability unless we can offset these price decreases with increases in unit volume or reductions in per unit costs.

Our sales and operating profits could be adversely affected if the third parties on whom we rely for the supply, assembly and manufacture of our components and finished
products are unable to meet our supply, quality or manufacturing requirements

We rely primarily on third parties to supply components for our products and to assemble and to test our products. Suppliers such as Philips, Intel, ST Micro,
Silicon Labs and RF Micro Devices currently manufacture key components of our products. We also currently use three subcontractors, Solectron (Romania), Elcoteq (China) and Thales Microelectronic
(France), to assemble and test our products. Using third parties to manufacture key components of our products and to assemble and test our products reduces our control over product delivery
schedules, quality assurance, manufacturing

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yields
and costs. The third parties who manufacture, assemble and test our products also have other customers and may not have sufficient capacity to meet all of our manufacturing, assembly and
testing needs during periods of excess demand. They may experience financial difficulties, or delays or disruption to their production, or may fail to meet our specified requirements, notably our
quality standards.

We
believe that a number of our suppliers are sole sources for key components. These key components are complex and difficult to manufacture and require long lead times. We work with our
suppliers on a twelve-month rolling forecast basis and we currently believe that we have secured adequate supply based on our production forecasts for the next twelve months. To reduce such
uncertainty, we have developed a proprietary base band chipset and intend to continue developing other key components for our products, but we still run a risk in subcontracting the production of
these chipsets. In the event of a reduction or interruption of supply, or a degradation in quality, a number of months could be required before we could begin receiving adequate supplies from
alternative sources. Supply interruptions could delay product shipments, causing our revenues and operating results to decline.

We need to attract, retain and develop key personnel who are skilled in our business and technology to remain competitive and properly manage our growth

It is important to our success that we retain our highly skilled product development, sales and marketing employees and continue to attract and motivate
additional skilled employees. We rely to a large extent on independent contractors who work for consulting firms. In the future, it may become more difficult to recruit and retain the employees and
independent contractors that we would need to continue to grow. Any failure to attract, hire or retain personnel could delay our research and development projects and consequently affect our ability
to bring new products to market successfully or on a timely basis.

Change
in our market and growth in our business have placed and will continue to place a significant strain on our management systems and resources. We will need to continue to improve
our operational and information systems and managerial controls and procedures and expand, train and manage our workforce. We will have to maintain close coordination among our technical, accounting,
marketing, sales and research and development departments. If we fail to effectively face changes in our market and manage our growth to address the above concerns, it could affect our operating
profit and ability to pursue business opportunities and expand our business.

Destabilizing events in Asia, particularly in China, could hurt our revenues

In 2000, 2001 and 2002, sales to Asian customers represented 33.9%, 83.6% and 82.3%, respectively, of revenues reflecting shipments pursuant to large contracts
with customers in China, Taiwan and Korea. We expect that, for the foreseeable future, a significant portion of our revenues will be generated from Asian customers, and in particular from customers
based in China or serving the Chinese market. A new financial crisis in Asia, particularly in China, could substantially reduce our revenues from Asian customers or customers selling to end users in
Asia. In addition, political upheaval in China or a change in the political climate, making China a less favorable environment for foreign businesses, could substantially reduce our revenues.

SARS Virus

The recent outbreak of the SARS virus in parts of China has caused travel and business disruption throughout Asia since early 2003. In response to the outbreak,
we have curtailed business travel between our European and Asian offices. Personnel shortages and logistics problems resulting from the outbreak have caused delays in deliveries of vital electronic
components from Asia to many companies

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worldwide,
impairing their ability to meet commitments to their own customers. While the SARS outbreak has not yet directly affected production of our products or delivery of components to our
contract manufacturers' facilities, a protracted or more widespread epidemic of the SARS virus, or of another communicable disease, could affect the production or the distribution of our products,
which could materially harm our business.

Adherence to technical requirements or legal regulations may increase the Company's cost base

The implementation of new technical requirements or legal or environmental regulations, such as the European Union's recent directive mandating recycling of used
electronic components, may adversely
affect the timing and costs of introduction of our products. This could ultimately impair the success of our business even though these regulations may not directly apply to our company or industry.

Our costs may increase or we may have to redesign our products if they infringe other companies' intellectual property rights

Other companies have patents, copyrights, trade secrets and other intellectual property rights covering technology used in the wireless communications industry.
Currently, we have licenses to use only some of these rights. If any of our products were found to infringe on protected technology, we could be required to redesign them, to obtain licenses for this
technology or to pay royalties or damages to its owner. The resulting costs would harm our business. If we were unable to obtain these licenses or to redesign infringing products, we could be
prohibited from marketing them.

Our business could be hurt by the unauthorized use of our technology

We rely on a combination of patents, copyrights, trade secrets, trademarks and proprietary information to maintain and enhance our competitive position. We might,
however, have difficulty taking effective legal action against a competitor who copied important parts of the technology we use in our products and processes. If we were unable to prevent a competitor
from using our designs and techniques to produce competing products, our business would be adversely affected.

We may not be able to sell our products under the Wavecom name in the United States

We have not registered the Wavecom name in the United States. Several other companies, some of which are in businesses similar to our own, use the word Wavecom or
a similar word as either a trade name or as a brand name for their products. This could cause confusion in the marketplace and harm our sales. If one of these other companies were to take effective
legal action to prohibit us from continuing to use the name Wavecom in the United States, we could be forced to use a different name and, as a result, it would be more difficult for customers to
identify us and our sales might suffer.

Our quarterly revenues fluctuate significantly and may affect the price of our shares and ADSs

Our revenues and operating results fluctuate significantly from quarter to quarter. The many factors that could cause our quarterly results to fluctuate include:



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Due
to these and other factors, our results of operations could fluctuate substantially in the future and quarterly comparisons may not be reliable indicators of future performance.
Because many of our expenses for personnel, facilities and equipment are relatively fixed in nature, we may not be able to reduce expenses quickly to balance a decline in our revenues and could
experience net losses during extended periods. These quarterly fluctuations may have a negative effect on the price of our shares and ADSs. It is possible that in some future quarter our results of
operations will be below the
expectations of public market analysts and investors, in which case the price of our shares and ADSs could fall.

Our U.S. shareholders could suffer adverse tax consequences if we are characterized as a passive foreign investment company

If, for any taxable year, our passive income or our assets that produce passive income exceed levels provided by law, we may be characterized as a passive foreign
investment company, or PFIC, for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax consequences to our shareholders who are subject to U.S. taxation. U.S.
persons should consult with their own U.S. tax advisors with respect to the U.S. tax consequences of investing in our shares or our ADSs. See "Item 10Additional
InformationTaxationUnited States TaxationPassive Foreign Investment Company".

Fluctuation in the rate of exchange between our reporting currency the euro and the US dollar can affect our net sales and costs

We incurred foreign exchange losses in 2002 and we may incur such losses again in the future. Although the functional currency of Wavecom S.A. is the euro, a
significant portion of our revenues is recorded in U.S. dollars. At the same time, most of our components are purchased in U.S. dollars and a significant portion of our operating expenses is in U.S.
dollars. A strengthening of the euro against the U.S. dollar could reduce our reported revenues and negatively affect our reported operating and net results.

Beginning
in January 2003, we put in place a program to hedge our currency risk through the use of forward contracts and put and call options. The objective of this program is to
minimize our risk, but will never be able to eliminate the risk.

Events anticipated in forward-looking statements in this annual report may not occur

This annual report contains forward-looking statements that involve risks and uncertainties. These forward-looking statements are usually accompanied by words
such as "believe," "anticipate," "plan," "expect" and similar expressions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number
of factors, including the risks faced by us described above and elsewhere in this annual report.

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Item 4. Information on the Company

Business Overview

Wavecom develops, markets and sells technology solutions for a wide variety of wireless communication applications. The company's primary source of revenue is a
line of digital wireless standard modules, known asWISMOmodules, for use in mobile telephones and other wireless applications based on the Global
System for Mobile Communications ("GSM") and Global Packet Radio Standard ("GPRS") services. Following our acquisition of Iconn Wireless, Incorporated, a San Diego-based Code Division Multiple Access
("CDMA") technology company, in December 2001, we have also begun to manufacture and sell CDMA modules. We are in the process of developingWISMOmodules based on Wideband-Code Division Multiple Access (W-CDMA) (commonly known as "third generation" or "3G" technology) and EDGE, Enhanced Data GSM Environment, a faster version of GSM wireless
service. We are now able to offerWISMOmodules in GSM, GPRS, CDMA and, in the future, W-CDMA and EDGE versions which will allow us to address virtually
all the world's principal wireless markets.

WISMOmodules are compact devices that include substantially all of the hardware, software and other technology needed to enable wireless
communications.WISMOmodules offer a quick and simple way to integrate digital wireless communications in mobile telephones, wireless modems and a wide
range of other applications requiring wireless communications in our target markets: automotive, machine-to-machine and personal communication devices. Examples of these
applications include automotive navigation and interactive information systems, personal digital assistants with wireless communication functions and devices enabling communication between vending
machines or utility meters and central control centers. We believe that, in the future, wireless communication applications will allow all enterprises to effectively and efficiently monitor and manage
most of their assets via links to the enterprise IT system. We provide our customers with the services and expertise required to integrateWISMOmodules
into their mobile telephones and other wireless applications. We also sell wireless stand-alone and integrated modems that incorporateWISMOmodules.

The
principal advantages of ourWISMOsolutions for our customers are that:



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Our
products incorporate digital wireless technology that we have developed since 1993, when Wavecom was founded. Our product development calls for highly specialized technical
know-how and experience in digital and radio frequency circuit design and microchip architecture, the design of real-time software and, most importantly, the optimal
integration of these technologies. Between 1993 and 1996, we focused mainly on providing engineering services for our clients' customized digital wireless products. Building on engineering expertise
developed during this period, we commercially introduced the first version of theWISMOmodule in January 1997. We were the first company to
commercialize GSM technology in the form of a standard module and believe that our currentWISMOQuik and WISMOPac modules are among the smallest wireless standard
modules available.

In
March 2000, we began mass production of two dual-band versions of ourWISMOQuik 2300 series module. In the fourth
quarter of 2001, we commenced mass production of ourWISMOPac 3100 series module in two dual-band versions. The WISMOQuik modules are designed with a connector for
easy manual installation, while theWISMOPac
module is more compact and uses packaging technology that allows our customers to solder these modules onto the printed circuit board of the mobile telephone or other wireless application using
automated "pick and place" assembly processes. TheWISMOQuik andWISMOPac modules are now designed to
operate on both GSM and GPRS networks.

We
began production of a number of newWISMOmodules during 2002. In the second quarter, we launched mass production of the thinner,
lighter-weightWISMOQuik 2400 series module. A CDMA version of theWISMOQuik module will go into mass
production in the second quarter of 2003. In the fourth quarter, we introduced a quad-band version of theWISMOPac 5186 module that will
operate on all four GSM/GPRS frequencies (900MHz and 1800MHz for the European and Asian markets and 1900MHz and 850MHz for the North and South American GSM and GPRS markets). The WISMOPac 5186 module is
expected to go into mass production by mid-2003.

In
order to address a larger market segment, we announced plans in early 2003 to launch an open version of theWISMOtechnology which we
call theWISMOFlex. The new product line will combine Wavecom's proprietary baseband chipset design, radio frequency components co-developed with a
third party and recommended memory alternatives, and will allow the customer to choose the amount and type of memory required for each specific telephone model or other application developed around
theWISMOFlex technology. We will continue to offer complete solutions, but our customers will have greater flexibility in developing a wide variety of
models ranging from high end feature phones to market entry starter phones. By allowing the customer to create more of the product specifications themselves, they will be able to determine the choice
of some of the costliest hardware components such as flash memory and random access memory. We expect this new offer to be available in the fourth quarter of 2003, thus allowing us to compete more
effectively with reference design providers, while still maintaining Wavecom's key competitive advantages of time to market, guaranteed production yields, and ease of implementation.

In
early 2003, we introduced the Wireless Open Workshop offering. Wireless Open Workshop allows our customers to design unique products by selecting among the various Wismo hardware
platforms and Software Suites (hardware components plus associated software that allows the hardware to operate on the GSM, GPRS or CDMA standard), development tools and services offered by Wavecom.
Wireless Open Workshop allows our customers to create a unique look and feel for each product by adapting the man-machine-interface (MMI) and appropriate hardware platforms to meet their
specific needs, and to then bring the resultant product to market quickly. Wavecom calls this combination of hardware platform, software, development tools and services a "Development Lab." Currently,
we have seven different Development Labs for specific types of end-products: three Development Labs for portable telephones and four Development Labs for mobile computing,

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automotive,
and PDAs or machine-to-machine applications. As the demand for new applications grows, we intend to add new Development Labs to the Wireless Open Workshop.

GRAPHIC

Background of the wireless communications industry

The wireless communications industry has grown rapidly over the past several years as wireless communications products and services have become widely available
and increasingly affordable. Technological advances, changes in telecommunications regulations and the allocation and licensing of additional radio spectra have helped fuel this growth worldwide and
have led to the development of competing wireless communications services. At the same time, consumer demand for increased mobility has led to the use of wireless technology both in products that were
previously available only in "wired" versions and in completely new applications.

Transmission standards

The wireless communications market is characterized by a proliferation of transmission standards in different parts of the world, including first generation
analog standards, second generation digital standards, such as GSM, and so-called "2.5 generation" standards, as well as GPRS and CDMA 1xRTT. Digital wireless systems generally operate on
the 850MHz, 900MHz, 1800MHz or 1900MHz frequency bands. GSM is currently the dominant standard in Europe for both voice and data transmission.

The
wireless communications industry is currently developing specifications for third generation ("3G") standards to accommodate increased capacity and to allow for faster data
transmission. W-CDMA, the primary proposed 3G transmission standard, was introduced commercially in a limited geographic area in Japan in 2001. Its commercial introduction in Europe and in the rest of
Asia has experienced delays, and networks operating on this standard are generally not expected to be commercially operational until sometime after 2004. The increased capabilities of W-CDMA are
expected to attract subscribers from other wireless standards in use around the world. To enable the introduction of broadband wireless services, which enable faster data transmissions, prior to the
widespread availability of W-CDMA, the wireless industry is deploying interim "2.5 generation" solutions based on existing second generation technology, including GPRS, CDMA and EDGE. EDGE enables
data to be delivered at rates up to 384 Kbps on a broadband. These new standards are being designed to enable a more efficient use of a wireless communications network and provide faster transmission
speeds. Telecommunications networks operating on the GSM/GPRS standards became widespread in Europe, parts of Asia (including China) and the US during 2002. The first networks

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utilizing
the CDMA 1xRTT standard also became operational during 2002 in Asia and the United States. EDGE is expected to be introduced in U.S. by 2004.

Gartner,
a market research firm, projects that worldwide users of wireless communications services will increase from approximately 1.15 billion subscribers in 2002 to
approximately 1.7 billion subscribers in 2006, with handset sales increasing from 420 million units in 2002 to approximately 530 million units in 2006. Gartner also projects that
GSM/GPRS handset sales will increase from approximately 255 million in 2002 to approximately 330 million in 2006, which would represent 63% of the total estimated worldwide market for
wireless handset sales. CDMA and CDMA 1xRTT subscriptions represented nearly 19% of new subscribers in 2002 and are expected by Gartner to represent more than 22% of new subscribers in 2006. Gartner
expects the W-CDMA standard, which Wavecom intends to introduce in future products, to represent more than 13% of new subscribers in 2006.

Wireless terminals

A typical wireless terminal, such as a mobile telephone, contains baseband, digital and radio frequency hardware components and related software. Baseband
components process analog signals and convert signals from analog to digital or from digital to analog. Digital components control the wireless device's circuitry and send data to and receive data
from the network through the terminal's radio frequency components. They also process all of the information within the device and manage information going to and from the user. Radio frequency
components amplify, transmit and receive the high frequency analog signals that carry the information being communicated. Typically, up to two-thirds of the development effort for a
wireless communications application consists of writing software that integrates and manages the hardware components. The wireless applications designed for each band and transmission standard
generally require different hardware and software.

Currently,
prior to being placed in service, each new wireless communications device must satisfy a series of technical tests meeting the requirements of the relevant regulatory
authority (for example, the Federal Communications Commission in the United States). The process, commonly known as "full type approval," can take up to 6 weeks, depending on the experience of the
applicant and the familiarity of the regulator with the particular product. In European Union countries, a recent directive is being implemented which provides that sales of wireless communication
products into the European Union will no longer require full-type approval provided that the manufacturer makes a declaration of conformity with the requirements of the directive.

In
addition to testing to confirm compliance with regulatory requirements, prior to commercialization, each new wireless application must be field tested in its target markets to ensure
that it operates properly with each wireless network for which it is intended to be used. These networks all vary due to different infrastructure design and the ongoing evolution of GSM/GPRS network
software, which is managed independently by each network operator.

Our market

The market for wireless communications terminals has generally been characterized by rapid growth, evolving industry transmission standards and the frequent
introduction of new applications. Manufacturers of mobile telephones must continually re-design their products to meet consumer demands for an increased number of functions such as color
screens, digital cameras, messaging capabilities and internet access, as well as a wider variety of styles, smaller and lighter equipment, longer battery life and greater reliability, all at reduced
costs. With the slowing of demand in 2001 and 2002, mobile telephone manufacturers are under increased pressure to achieve profitability. Manufacturers of many other wireless communications products
must offer compact, cost-effective products that provide a wide range of functionality and can be quickly brought to market. As segments

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of
the wireless communications market evolve, the industry must offer a wider range of products to better meet the specific needs of individual consumers.

These
market demands have made it increasingly difficult for manufacturers to develop and supply all the technology they need for new wireless applications, to meet regulatory
requirements and to complete field testing, all in a timely and cost-effective manner. Developing and producing the software, chip sets and other integrated components in a compact
wireless communications product requires significant expertise. Some manufacturers of products for the wireless market choose not to develop this technology in-house, preferring to rely on
a third party supplier. Other consumer products companies do not have the financial means or technical resources to develop their own wireless technology. As a result, many manufacturers rely
increasingly on subcontractors to develop and supply critical digital wireless components.

Strategy

We believe that as the wireless communications industry matures, it will evolve from a model where providers of wireless applications manufacture all of the
technology in the end product to a model where each provider of the end product focuses on branding, marketing, distribution and product design, favoring a trend toward outsourcing the wireless
communication technology function.

Wavecom's
solutions are designed to enable product manufacturers to incorporate advanced digital wireless technology quickly and efficiently into their applications. We strive to
maintain technological leadership and to be a leading independent vendor of wireless standard software features and functionalities, hardware platforms (including modules and modems), customization
tools and services for our products' integration in consumer and business digital wireless applications.

Key
elements of our strategy include:

Expanding the use of Wavecom solutions in mobile telephones and new wireless applications



Adapting our technology for use with evolving digital transmission standards.The current versions of
Wavecom solutions are based on GSM/GPRS and CDMA 1X RTT technology. We intend to introduce products addressing new wireless communications standards as they become mainstream. We are also focusing our
research and development efforts on products for the W-CDMA and EDGE standards.

Working closely with customers in the early stage of product development.Our success to date has
been based on our technical expertise and collaboration with a number of strategic customers. We will continue to work with customers early in their product design stage in order to help them develop
applications in a way that will easily support the integration of the wireless technology. We believe that early collaboration allows customers to lower their development costs and reduce the time
required to introduce new products and enter new markets. It also enables Wavecom to better anticipate and meet its customers' future wireless technology requirements.

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Pursuing strategic acquisitions.We intend to explore opportunities for acquisitions of businesses,
products, services and technologies that are complementary to our existing business in order to expand our position in the wireless communications market. Although we have no present commitments or
agreements regarding any acquisitions, we believe that there are acquisition candidates that could enhance our position in this market. A likely goal of any such acquisitions would be to acquire
technology that would allow us to achieve our research and development objectives more quickly or efficiently.

Expanding sales to additional geographic markets.We are expanding our sales and marketing
capabilities in order to address the worldwide market for our products. We increased our direct sales capabilities from 16 sales people at the end of 2001 to 29 people at the end of 2002. We increased
our distributor network from 25 at the end of 2001 to 40 at the end of 2002. We opened offices in Tokyo (April 2000), Seoul (January 2001), Darmstadt, Germany (October 2001),
Taipei (February 2002) and Beijing (October 2002). Most recently, we opened a subsidiary in the UK near London (March 2003). We intend to add direct sales staff in all three
regions and to continue to expand indirect channels by adding more distributors.

Products and services offering

We offer a diverse array of hardware and software products, services and technical support to our customers. Our principal products are WISMOmodules, combining various hardware and software features. We provide services and technical support only as an adjunct to the sale of WISMOmodules and the devices into which they are incorporated. We
recently introduced a new product design platform that we call Wireless Open
Workshop, which gives our customers greater flexibility in the design of their own products by allowing them to select from a range of our hardware, software and service offerings.

WISMOhardware platforms

TheWISMOQuik line of modules currently consists of theWISMOQuik 2400 series, which has been in production since June 2002. The Q2400 series is available in GSM/GPRS in two dual-band versions and that operate either on the 900MHz/1800MHz
bands or the 850MHz/1900MHz bands (WISMOQuik 2406 for 900/1800 MHz, andWISMOQuik 2426 for 850/1900
MHz), each existing in GPRS class 2 and class 10, and measures 58x32x3.9 mm and weighs 11g. TheWISMOQuik is also available for single
and dual band CDMA 1X RTT.

TheWISMOPac line currently comprises theWISMOPac 3200 series (an update of the WISMOPac 3100 series introduced in 2001) andWISMOPac 5100 series. The P3200 series, like the Q2400
series, is available in GSM/GPRS in two dual-band versions that operate either on the 900MHz/1800MHz bands or the 900MHz/1900MHz bands and two GPRS classes (class 2 and
class 10).The P3200 series has an area of less than 15cm2, a thickness of 5.1mm and a weight of 11g. We commenced mass production of WISMOPac 3200 in the third quarter of 2002. TheWISMOPac 5100 series introduces a new form factor with
what we believe is the smallest footprint available today on the market for cellular digital communication modules measuring just 25.4x32.4x4.75mm (roughly half the size of a WISMOPac 3200) and weighing less
than 5 grams. Its product features are very close to theWISMOPac
3200 except for the baseband chipset that comes from proprietary Wavecom technology. We believe it is the first module commercially available covers the four commercial bands (850/900/1800/1900 MHz),
thus offering worldwide coverage. TheWISMOPac 5100 series was launched in February 2003 and is expected to go into mass production by
mid-year 2003.

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Wireless modems

In addition to theWISMOmodule product line, we offer a GSM-based external stand-alone wireless
modem, the FASTRACK, designed for data, fax, short message service and voice applications. In response to customer demand for smaller modems which can be more easily integrated into a product, we
introduced an integrated wireless modem, the INTEGRA, in the second quarter of 2000 that is intended to be soldered onto a printed circuit board. Our wireless modems have full type approval and
therefore can be used off-the-shelf. This enables a customer to incorporate immediately wireless connectivity in its own application without any delays related to type
approval. Typical uses for wireless modems include vehicle fleet management and remote measuring and reporting of information in such applications as utility meters, vending machines or security
systems. WhereasWISMOmodules are typically purchased by product manufacturers for integration into mobile telephones, personal digital assistants and
other high volume products, wireless modems are more commonly purchased by customers seeking an off-the-shelf wireless solution for relatively small volume applications where
size is not a critical factor. In 2002, our average sale price for wireless modems was €113 compared to €136 in 2001, although prices may vary
significantly depending on volume. Sales of wireless modems represented 36.8% in 2000; 9.9% in 2001 and 6.6% in 2002.

Software

We have developed a wide range of software features adapted to different types of wireless applications.

We
currently offer the following software features for mobile phones:



We
currently offer the following software features for M2M, automotive, mobile PDA and mobile computing devices:



We
also assist our customers by providing them with software development tools. Our MUSE Platform, or Modular User Software Environment, is an open software
environment that allows our customers' software engineers to easily develop and embed wireless applications directly ontoWISMOmodules and modems. Our
first product available based on the MUSE Platform, Open AT, is designed for vertical applications such as telemetric, automotive and multimedia systems. Relying on AT commands to drive the WISMO, Open AT lets
developers take advantage of available processing

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capacity
and intelligence ofWISMOmodules and modems. Open AT allows our customers to have more autonomy and flexibility when developing their wireless
applications. We introduced our second MUSE platform offer, Open MMI, in the third quarter of 2002 that is designed for use in developing handsets.

Services and technical support

We believe that providing customers with comprehensive product service and support is critical to maintaining a competitive position in the wireless
communications market. Our support services enable the customer to pass rapidly through the development phase and to begin production. Services include:



We
believe that close contact with our customers improves their level of satisfaction and provides us with insights into their future product development plans. To expand our customer
base, we offerWISMOmodules as part of starter kits, enabling potential customers to perform initial feasibility studies.

Wireless Open Workshop:

Wireless Open Workshop brings together all of Wavecom's existing technology, service and market expertise to provide a wide range of design options and to enable
customers to quickly take their products from the drawing board to implementation. Wireless Open Workshop is a complete suite of
hardware and software (including development tools and services) in an open and integrated environment.

Wireless
Open Workshop consists of a series of Development Labs tailored to the different needs of specific industry segments. Each Lab includes a range of software options, from
wireless communications standards and protocols to a catalog of market-specific interfaces, protocols and support for operating systems and peripheral devices. Each Lab includes a choice of Wismo
Platform hardware options (Wismo Quik, Wismo Pac and Wismo Flex), MUSE (Modular User Software Environment) Platform development tools (Open AT and Open MMI), and services adapted to different types of
customers and applications.

Applications and customers

We are an established third-party supplier of digital wireless modules for the mobile telephone market and for new and emerging wireless applications markets. We
are targeting three wireless applications markets that we believe will generate the most significant demand for our products over the next three to five years. In the revenues figures shown below for
each of our four applications markets, we have included our direct product sales by wireless application as a percentage of total product sales for 2001 and 2002. Most indirect sales to our
distributors constitute sales of modems, which we believe are used mainly for machine-to-machine applications. In 2002, product sales to our distributors accounted for 11.3% of
our total product sales (13.2% in 2001).

Personal Communication Devices (PCD)

We market theWISMOmodule to mobile telephone and Personal Digital Assistant (PDA) manufacturers. The WISMOmodule allows these manufacturers to introduce a product to the market

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quickly,
to minimize their internal research and development costs and to focus their efforts on product design, marketing and distribution. Our customers typically assemble their own mobile
telephones and PDAs using aWISMOmodule. For certain customers we tailor theWISMOmodule to meet their
needs. Companies that have integrated or are in the process of integrating our products or technology into their mobile telephones include Chinese manufacturers: TCL Mobile Communications
Co. Ltd., and Guangzhou Southern High-tech Co., Ltd. ("Soutec") as well as South Korean manufacturers like Sewon Telecom Co., Ltd., Pantech, Everkom, ASE, Giga, Nixxo
(via our U.S. subsidiary) and most recently Curitel.

WISMOmodules can enable personal digital assistants, smart phones, notebook computers and other portable devices to be connected to a
wireless communications network. We believe that the
introduction of the GPRS standard, with its increased speed and efficiency, will accelerate the demand for these applications, by allowing easier access to e-mail and the Internet. During
2002, we soldWISMOmodules to Handspring Inc. for integration into its Treo line of wireless personal digital assistants.

In
2002 revenues from direct product sales for PCD applications were 82.2% of total product sales (79.1% in 2001).

Automotive

Automotive applications combine digital wireless technology with global positioning system technology that together provide interactive information regarding
traffic, emergency assistance, routing, local businesses and places of interest. Automotive applications could also include an emergency assistance feature that would provide information, including
vehicle location, in the case of accidents or theft. These applications also include the provision of a wireless telephone as a standard equipment option in an automobile. We are supplying WISMOmodules to
Autoliv, SiemensVDO and Magneti Marelli, three of Europe's largest automotive equipment suppliers.

This
category also includes applications for fleet management. Digital wireless technology in combination with global positioning system technology allows the location of trucks, taxis,
and other vehicles to be monitored from a central location. We are supplyingWISMOmodules to Trimble for integration into a fleet management product.

In
2002 direct product sales for automotive applications accounted for 3.0% of total product sales (2.3% in 2001).

Machine-to-Machine

Telemetry, better known as "machine-to-machine communication", is the use of communications networks to obtain information from remote
locations. The use ofWISMOmodules makes machine-to-machine communication possible where the installation of landlines is not
practical. Applications include remote meter reading by utility companies, real-time updating of information on electronic billboards, credit card authorization for mobile payment
terminals and remote messaging from vending machines to report inventory levels or maintenance requirements. Falcom GmbH, a German integrator of wireless products, has built WISMOmodules into terminals for
specialized applications in vending machines, hospitals, high technology companies, homes and other market sectors.
Necta (formerly Zanussi) has incorporatedWISMOmodules into its vending machines. In addition, utilities in Australia and Finland use our modems for
remote reporting of electric power consumption. In March 2003, we announced that Grundig would be
incorporatingWISMOmodules in their products to be used for a wireless toll collection project in Germany.

In
February of 2003, Wavecom and IBM jointly announced a business partnership for the development of enterprise machine-to-machine applications. These
applications will help to link (via

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wireless
transmission of data using theWISMOmodule) remote assets into a user's central information management system, providing company management
with a powerful information tool to maximize day-to-day operational efficiency.

In
2002 direct product sales for machine-to-machine communication applications accounted for 3.5% of our total product sales (5.4% in 2001).

Sales, marketing and distribution

We rely primarily on our direct sales force to sell our line ofWISMOmodules and to market related services. To
sell wireless modems, we use both our direct sales force and value-added distributors. Because modems are sold as a finished product, they can normally be integrated into an end-user
application without Wavecom's technical expertise (unlikeWISMOmodules). We currently work with distributors serving approximately 60 countries in
Europe, the Asia-Pacific region and the Americas. Our sales, marketing and distribution efforts are organized into three geographical areas: Europe, Middle East and African (EMEA),
Asia-Pacific and the Americas. We recently appointed a new group vice president to head up the EMEA region and have generally strengthened our sales efforts in that region. Our San Diego
office is responsible for the Americas region, while our Hong Kong office is responsible for the Asia-Pacific region, including overseeing our offices and subsidiaries in Tokyo, Seoul,
Taipei and Beijing. At December 31, 2002, we had 78 sales and marketing staff worldwide of which 76 are salaried full-time equivalent employees and 2 are independent contractors (47 full-time
equivalents and independent contractors in 2001).

Manufacture and assembly

We use a fabless business model in which we outsource the manufacture, assembly and most testing of our products. By using third-party manufacturers, we gain
access to up-to-date facilities and processes without significant capital outlay and are able to focus our resources on research and development, product design, quality
assurance, marketing and customer support. Through our third-party manufacturers, we order components for our
products from microchip foundries, including Philips, Toshiba, Intel, ST MicroElectronics, Silicon Labs, Skyworks and RF Micro Devices. Non-standard components are based on our design. We
intend to outsource production of our newly developed baseband. In January 2001, we added personnel to our purchasing staff and since then we negotiate directly with the component suppliers. We work
with our manufacturers on a twelve-month rolling forecast basis with firm orders placed one to two months in advance. In addition, our sales contracts generally require our customers to place orders
three to four months in advance and to provide us with a six- to twelve-month product purchasing forecast that we use as the basis for preparing our own forecasts and negotiations with
suppliers to secure the supply of components for our products. Late in 2002, due to market conditions, this forecast period become shorter and by early 2003 many customers were placing orders only two
months before delivery, giving us very little forward visibility.

We
use two high-volume third-party manufacturers to assemble the majority of ourWISMOmodules and to test our products:
Solectron Corporation, which manufactures our products in Timisoara, Romania, and Elcoteq, which began manufacturing our products near Beijing, China, during the third quarter of 2002. A third
contract manufacturer, Thales, near Rennes, France, is used as a platform for new product introductions, as well as providing additional production capacity when needed.

These
two high-volume contract manufacturers are certified to applicable ISO 9000 and 14,000 series specifications, which means that their operations have in each case been determined by
independent examiners to comply with internationally developed quality control standards. Solectron, Elcoteq and Thales are important suppliers for us, and should any of them fail to meet our

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requirements,
we may have difficulty meeting customer demand in the short-term. We have, however, identified other manufacturers that could replace them.

In
1999, we entered into a contract for manufacturing and related services with Solectron-France S.A. Pursuant to this agreement, Solectron manufactures, assembles and tests our WISMOmodule lines. The term of
the agreement was for one year and is automatically renewed for additional terms of one year each, unless written notice
to the contrary is sent by one of the parties at least 90 days before the anniversary date of the agreement. The total term of the agreement was not to exceed three years. We renegotiated an
extension of the contract with Solectron during 2002. Formal contracts were signed with Thales in early 2002 and with Elcoteq in July 2002.

Our
arrangements with Solectron, Elcoteq and Thales call for us to purchase the tested finished products. Component procurement is the responsibility of the third-party manufacturer. The
third-party manufacturer issues purchase orders to the component suppliers based on the quantities of finished goods ordered by Wavecom. In general, components need to be ordered two to four months
before they enter the production process. In the event that we initiate an engineering change that results in the obsolescence of components specific to our products, the third-party manufacturer may
invoice Wavecom for the cost of these unusable components.

Wavecom
owns all testing equipment related to the manufacturing of its products and could transfer it to a different manufacturer if necessary. We conduct our own quality control at the
premises of our third-party manufacturers. As of December 31, 2002 we had 112 full time equivalent employees and 45 independent contractors in production oversight, manufacturing, purchasing
and quality assurance (108 full-time equivalents and independent contractors in 2001).

Research and development

To keep pace with rapid technological changes and market pressures in our industry, we maintain a substantial program of research and product development. This
program focuses primarily on developing new products that are progressively smaller and lighter, with higher performance levels and enhanced features and functions, as well as adapting our products to
evolving and new transmission standards.

We
intend to continue internal product development to further reduce the size of theWISMOmodules, to reduce their power consumption and
to enhance their functionality. During 2002, we launched two new dual band GSM/GPRS modules and a CDMA version of theWISMOQuik module. Our current
projects include the introduction of the first generation of theWISMOFlex product line, which targets customers who have considerable experience with
large volume production. Customers will be able to create a wider variety of telephone handsets from entry-level price points to top-of-the line feature phones. This product
offer is expected to be available during the fourth quarter of 2003.

During
2002 we announced the introduction of theWISMOPac 5186 module, which integrates our proprietary baseband chipset design. The WISMOPac 5186 enhances the choice ofWISMOhardware platform options within Wavecom's Wireless Open
Workshop. TheWISMOPac 5186 platform supports high-resolution color displays, GPRS Class 10, MMS and a variety of multimedia
peripherals. Interfaces and software plug-ins, including Java and Bluetooth, provide support for on-line gaming, multimedia messaging and Web downloads. The WISMOPac 5186 platform can also be coupled with a
co-processor for high-end phones offering additional features and
peripherals. Measuring 25.4 × 32.4 × 4.75 mm, with a weight of 5.2 g, theWISMOPac 5186 operates in
the 850, 900, 1800 and 1900 MHz bands for global roaming. TheWISMOPac 5186 is expected to be in mass production and begin shipping to customers by the
end of the second quarter 2003.

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We also intend to continue to maintain research and development efforts on the 3G W-CDMA and EDGE, standards. Our research and development efforts in this area will be timed to develop
in-line with our expectations of when this standard will be commercially available. We currently do not expect this to happen before the end of 2004.

Wavecom's
research and development expenditures totalled approximately €16.1 million in 2000 (24.6% of revenues), €32.6 million in 2001
(10.1% of revenues) and €64.1 million (11.6% of revenues) in 2002. We intend to maintain a substantial research and development program and expect research and development
expenses to increase in the future although not at the same pace as in the past. As of December 31, 2002, our research and development staff included approximately 535 people, of which 387 were
salaried full time equivalents and 148 were independent contractors most of whom work in France. We use independent contractors to gain access to their specialized expertise and to give us greater
flexibility in staffing particular projects.

Competition

Competition in our markets is intense. While we believe we are one of the largest suppliers of complete modular solutions, we face competition from historical
chipset firms and software providers, such as Texas Instruments, Infineon, Agere, Analog Devices partnering with TTP Com, and Skyworks and new entrants such as Ericsson Mobile Platform and Motorola,
as well as from pure module manufacturers like Sagem and Siemens. We believe that our ability to compete successfully in the wireless communications market depends upon a number of factors within and
outside our control, including price, quality, availability, product performance and features; the timing of new product introductions by us, our customers and competitors; and customer service and
technical support.

Intellectual property

The European Telecommunications Standards Institute ("ETSI") has a policy that allows third parties to disclose intellectual property rights which they believe
are essential to the use or operation of GSM/GPRS-based equipment. Once an owner of such a right gives notice to ETSI, it must grant irrevocable licenses to third parties on fair,
reasonable and non-discriminatory terms and conditions to allow the manufacture and sale of equipment. Some owners of GSM/GPRS-related patents may not have notified them to
ETSI.

In
order to produce and market our GSM/GPRS-basedWISMOmodules and wireless modems, we must assess whether licenses from
third-party patent owners are required. Because of the intense competition in our industry, there may be a substantial number of patents to consider and it is difficult to identify all those which may
have an impact on our products. We believe that most of the patents important to us are the GSM/GPRS patents covered by ETSI's policy. These include patents of Motorola, Siemens, Philips, Nokia,
Ericsson, Mitsubishi, NEC, and Alcatel. At this time, we have licenses (or equivalent arrangements) to use the GSM/GPRS-essential patents of Motorola, Siemens, Philips and NEC and are
currently negotiating licenses or other arrangements with other patent holders. As we identify other potentially essential patents, we may need to enter into additional license agreements. Should we
fail to identify all patents needed to produce our products or to obtain the required license agreements, we could be found to have infringed the patent rights of third parties. In addition, as new
digital transmission standards develop, we will have to acquire additional licenses for new essential patents.

In
January 1999 we entered into a cross license agreement with Motorola Inc. Under this agreement, Motorola and Wavecom each grant to the other a license to use the
intellectual property rights it owns or develops for the GSM standard. In addition, the agreement requires us to pay to Motorola a license fee for each GSM product we sell. The agreement remains
effective as long as both Motorola and Wavecom continue to manufacture products which use the GSM standard and as long as the licensed GSM/GPRS essential patents remain in force.

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In
September 2001, we entered into a cross license agreement with Philips N.V. whereby Philips has granted us a license to use GSM/GPRS essential patents that Philips owns or
develops for the GSM/GPRS standard in consideration for our payment to Philips of a fixed fee covering all past and future royalties due. In addition, under this agreement, we have granted Philips a
royalty bearing license to use GSM/GPRS essential patents that we own or develop for the GSM/GPRS standard. The agreement remains in effect for so long as the licensed GSM/GPRS essential patents
remain in force.

In
January 2002, we entered into a cross license agreement with Siemens A.G. whereby Siemens has granted us a license to use GSM/GPRS essential patents that Siemens owns or
develops for the GSM/GPRS standard in consideration for our payment to Siemens of a fixed fee covering past royalties due and a royalty percentage based on each GSM/GPRS product we sell in the future.
In addition, under this agreement, we have granted Siemens a royalty free license to use GSM/GPRS essential patents that we own or develop for the GSM/GPRS standard. The agreement remains in effect
for so long as the licensed GSM/GPRS essential patents remain in force.

In
November 2002, we entered into a patent non assertion agreement with NEC Corporation whereby NEC has agreed not to assert any NEC GSM/GPRS essential patent against Wavecom, its
affiliates, manufacturing partners or customers, in consideration for our payment to NEC of a fixed fee covering
past royalties due and a royalty percentage based on each GSM/GPRS product we sell in the future. In addition, under this agreement we agree not to assert any of our GSM/GPRS patents against NEC, its
affiliates, manufacturing partners or customers, and to grant a nonexclusive, royalty-free and worldwide license to NEC and its affiliates under three WAVECOM patents issued in relation to
a current and/or future telecommunication standard selected by NEC within two (2) years from the effective date of the agreement. The agreement remains in effect until the expiration of the
last patent subject of the agreement.

In
May 2003, Wavecom entered into a license agreement with Thomson Licensing S.A., as exclusive agent for Alcatel, granted us a license to use GSM/GPRS essential patents that
Alcatel owns or develops for the GSM/GPRS standard in exchange for our payment to Thomson of a fixed fee covering all past and future royalties due up until December 31, 2008.

In
order to produce and market CDMA-basedWISMOmodules and wireless modems, we entered into a cross license agreement with
Qualcomm in May 2002. Under this agreement, Qualcomm has granted us a license to use CDMA essential patents that Qualcomm owns or is able to license for the CDMA standard in consideration for
our payment to Qualcomm of an up-front fee and a royalty percentage based on each CDMA product we sell in the future. In addition, under this agreement, we have granted Qualcomm a royalty
free license to use CDMA essential patents that we own or develop for the CDMA standard. We have been granted an option to include WCDMA and/or TD-SCDMA at Qualcomm's
then-standard terms and conditions for a license to such standard.

To
protect the intellectual property we have developed in the course of our research and development activities, we rely upon a variety of legal measures, including patents and patent
applications. Our employment agreements contain provisions to protect our trade secrets by forbidding the unauthorized disclosure of confidential information. Our independent contractors are required
to enter into confidentiality agreements that also assign us rights to inventions they make while engaged by us. We have also entered into non-disclosure agreements to protect our
confidential information delivered to third parties in conjunction with possible collaborations and for other purposes.

In
October 1999, we established an employee patent incentive program designed to recognize employee-inventors and to encourage employee-inventors to sponsor patent applications.
The patent incentive program provides employees who have developed an invention in the course of their employment with cash compensation if and when we file a patent application and a second
cash payment upon the effective commercial use of the patent within five years after the filing of the patent.

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We
currently own eight French patents and one US patent expiring at various dates beginning in 2015. We have filed twenty-four other patent applications currently undergoing
evaluation in
France and six patent applications undergoing evaluation in the United States, and have begun proceedings for the extension of some of our patents to other jurisdictions.

We
have registered trademarks or filed applications for such registration for "WAVECOM", "WISMO",
"WISMOWITHIN", "MUSE Platform" and other trademarks in France. We have also registered these trademarks or filed applications for such registration in
certain other jurisdictions. We do not have the trademark "Wavecom" registered in the United States, where there are several other companies using that name.

Backlog

At December 31, 2002 our product backlog was approximately €95 million. We include in our backlog all accepted product purchase
orders for which delivery has been specified within one year, however, we do not require customers to place firm orders more than four months in advance. Product orders in our backlog are subject to
changes in delivery schedules or to cancellation at the option of the purchaser without significant penalty. Our backlog may vary significantly from time to time depending upon the level of capacity
of our suppliers and subcontractors available to satisfy unfilled orders. Accordingly, although useful for scheduling production, backlog as of any particular date may not be a reliable indicator of
sales for any future period.

Capital expenditures

Wavecom's capital expenditures relate primarily to the purchase of laboratory, testing and computer equipment, principally at our headquarters in France. Total
expenditures on property and equipment were €8.4 million in 2000, €10.3 million in 2001 and €27.3 million in 2002. All capital
expenditures during these three years were internally financed.

Corporate Information

Wavecom S.A. is asociété anonyme, or limited liability company, organized under the
laws of France in 1993 with authorization to operate for a period of 99 years, which period may be extended by vote of the shareholders. Our registered offices are at 12 boulevard Garibaldi,
92442 Issy-Les-Moulineaux Cedex, France and our telephone number is +33 (0)1 46 29 08 00. Our principal offices in the United States are at 4810 Eastgate Mall,
2nd Floor, San Diego, CA 92121, and our telephone number at that address is +1 858 362 0101.

Wavecom
S.A. owns majority interests in six subsidiaries:



Property, Plant and Equipment

Our headquarters are located in Issy-les-Moulineaux, a suburb of Paris, France, where we occupy approximately 15,000 square meters of
leased facilities. We also have long-term leases covering a total of approximately 10,000 square meters in two other buildings in Issy-les-Moulineaux, where we had
our

23

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headquarters
until early 2003. We are actively looking for subtenants for these premises. The leases for the former premises will terminate at various times through May 2008. Remaining
operating lease commitments for these vacated premises totaled approximately €16 million at December 31, 2002. We also currently lease office space in Rennes (France),
San Diego (United States), Tokyo (Japan), Hong Kong (China), Seoul (Korea), Taipei (Taiwan), Darmstadt (Germany), Beijing (China) and Guilford (United Kingdom).

Item 5. Operating and Financial Review and Prospects

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated
financial statements and the related notes, and the other financial information included elsewhere in this annual report. Our consolidated financial statements and our quarterly financial results
included in this discussion have been prepared in accordance with U.S. GAAP. This discussion includes forward-looking statements based on assumptions about our future business. Our actual results
could differ materially from those contained in the forward-looking statements.

Background

Wavecom develops, markets and sells technology solutions for a wide variety of wireless communication applications. The company's primary source of revenues is a
line of wireless standard modules, known asWISMOmodules for use in mobile telephones and other wireless applications based on GSM,GPRS and CDMA mobile
communications standards. Our products incorporate digital wireless technology that we have developed since June 1993, when Wavecom was founded.

We
began commercial production and sales of theWISMOmodule in January 1997 and over the years we have introduced new generations
of ourWISMOmodules, progressively reducing the size, weight and cost, while increasing functionality. Different geographic regions have different
telecommunications standards and we have developedWISMOmodules to meet those different standards. As telecommunications standards have changed, we
have developed newWISMOmodules that operate in accordance with those new standards. Where possible, we utilize the same technology for modules
operating on different standards. For example, the GSM and GPRS versions ofWISMOmodules both use the same hardware, but require the download of
different software onto theWISMOmodule. This allows us to manufacture theWISMOmodules and determine
just prior to shipment whether the product will be GSM or GPRS.

By
mid-2003, we expect to commence mass production of a quad-band version of theWISMOPac module
(WISMOPac 5186), which will operate on the 850MHz, 900MHz, 1800MHz and 1900MHz bands. In addition to WISMOmodules, we currently sell both an external, stand-alone
wireless modem and an integrated wireless modem that is intended to be soldered onto a
printed circuit board. Both wireless modems incorporate theWISMOmodule. We sell wireless modems, which have regulatory approval, as finished products.
The external wireless modem was introduced in late 1997 and the integrated wireless modem was introduced in mid-2000.

TheWISMOmodule is designed to be used not only in mobile telephones and wireless modems, but also in other wireless applications. We
believe that great growth potential for theWISMOmodule is in applications other than mobile phones, such as automatic vehicle location systems,
handheld electronic devices, such as personal digital assistants, machine-to-machine
applications where the measurement and transmission of data is necessary. None of these new markets is well established, however, and we cannot be certain that they will develop.

In
2000, we believe that our average sales prices declined at a faster rate than the general industry as we moved from small volume, higher priced contracts in the first half of the
year, to high volume, lower priced contracts beginning in the third quarter. In 2001, our average sales price declined 17.4% from the fourth quarter of 2000 to the fourth quarter of 2001. In 2002,
average selling prices forWISMOmodules continued to trend down, decreasing by 20.1% from fourth quarter 2001 to fourth

24

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quarter
2002. We believe that downward pressure on the prices of mobile telephones may continue in the future and that similar pressure will affect the newer types of wireless communications
applications in which our products are used or may be used. We therefore expect a continuing decline in the sales prices of our products. In 2002, the average price of a WISMOmodule was €60 compared to
€76 in 2001. The actual price we charge for WISMOmodules varies considerably and depends on the application for which they are used, the amount of software customization required and the volume
ordered. In 2002, our average sale price for wireless modems was €113 compared to €136 in 2001. As withWISMOmodules,
the prices may vary significantly depending on volume.

We
also provide services to customers to help them to integrate theWISMOmodule into their applications. However, we currently expect
that service revenues will continue to decrease as a percentage of our revenues.

In
2002, 2001 and 2000, our operating costs increased substantially, largely due to increased research and development spending, although selling, general and administrative expenses
increased as well as we added headcount to meet the expanding volume of business. All research and development costs are expensed as incurred. Research and development spending increased from
€16,133,000 in 2000, to €32,634,000 in 2001 and to €64,093,000 in 2002. Selling and marketing expenses increased as we reinforced our marketing team,
added sales personnel and distributors and increased promotional spending in an effort to increase recognition of Wavecom by prospective customers. We also added management and administrative
infrastructure costs to manage our growth as we increased the volume of activity and expanded internationally. We recorded operating income of €56.0 million in 2002, of
€3.0 million in 2001 and an operating loss of €19.8 million in 2000, and we generated cash from operating activities of
€41.9 million in 2002 and, €50.0 million in 2001 (while we used €8.6 million in 2000).

Our
customer base is predominantly international, with the majority of our revenues coming from Asia and from European customers outside of France, including Germany, Italy, Spain and
the United Kingdom. Revenues from Asia represented 82% of our sales in 2002, 84% of our sales in 2001 and a third of our sales in 2000. In order to better serve the Asian markets, we established
subsidiaries in Hong Kong, PRC and Seoul, Korea, a branch office in Tokyo, Japan and representative offices in
Taipei, Taiwan and Beijing, PRC. We also have subsidiaries based in San Diego, California, Darmstadt, Germany and Guilford, UK (March 2003) We are considering opening representative offices in
other locations in 2003.

Critical Accounting Judgments and Estimates

In response to the SEC's Release No. 33-8040, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies," we have identified
the most critical accounting principles upon which our financial status depends and that involve the most complex or subjective judgments and estimates. Our judgment used to determine the appropriate
assumptions and to make estimates is based on our historical experience, terms of existing contracts, our observation of trends in the industry, information provided by our customers and information
available from other outside sources. We believe that our most critical accounting estimates are:



25

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Both
of these provisions have an impact on the determination of cost of goods sold. Both are recorded in "other accrued expenses" on the balance sheet and are described more fully in the
footnotes to our annual consolidated financial statements.



Results of Operations

Fiscal year 2002 compared to fiscal year 2001



Total revenues increased 70.8% to €551,089,000 in 2002 from €322,664,000 in 2001. The increase reflects a
€231,972,000 increase in product sales offset by a €3,547,000 decrease in service revenues.

Most
of our revenues are from export sales. Customers in Asian countries accounted for 82.3% of our revenues in 2002 (compared to 83.6% in 2001). In 2002, 9.3% of our revenues were from
customers in European countries excluding France, particularly Germany and Italy, compared to 11.7% in 2001. French customers made up 1.7% of total revenues in 2002 (compared to 1.9% in 2001), 4.6%
came from customers in the Americas (compared to 1.1% in 2001) and 2.1% came from customers in the rest of the world (compared to 1.7% in 2001).

Product sales.Revenues from sales of our products totaled €549,543,000 in 2002 compared to
€317,571,000 in 2001. Sales ofWISMOmodules accounted for 93% of total product sales in 2002, while 7% was from sales of wireless
modems. The increase in product revenues in 2002 was due principally to increased sales ofWISMOmodules for personal communication device applications,
but in absolute terms sales in all our target markets (automotive and
machine-to-machine as well as personal communication devices) increased.

Technology development and other services.Revenues from services decreased from €5,093,000 in 2001 to
€1,546,000 in 2002. This decrease reflects the Company's ongoing efforts to ease the process of integrating theWISMOmodule into
customers' products and therefore reduce the amount of services needed from Wavecom. We recognize service revenues for development work once all work is completed. At December 31, 2002, we had
€1.5 million in deferred service revenue on the balance sheet relating to development services in progress.



Cost of goods sold.Cost of goods sold consists primarily of the cost of components and our manufacturers' charges. Our cost
of goods sold increased from €254,658,000 in 2001 to €371,919,000 in

26

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2002.
Our gross profit on product sales in 2002 was €177,624,000 (32.3% gross profit on product revenues) compared to €62,913,000 (19.8% gross profit on product
revenues) in 2001.

In
2002, our product gross margin increased in each of the four quarters continuing the trend of sequential quarterly improvements realized throughout 2001. The improvements in gross
margin resulted principally from these factors:



Cost of services.Our cost of providing services decreased slightly from €4,718,000 in 2001 to
€4,709,000 in 2002. We realized a loss on services of €3,163,000 in 2002 compared to gross profit from services of €375,000 in 2001. The variability in
gross profit or loss on services reflects the fact that we expense all development service costs as incurred, while we recognize service revenue only when the project is complete and the services have
been accepted by the customer.



Research and development.We spent €64,093,000 (11.63% of revenues) on research and development in 2002
compared to €32,634,000 (10.1% of revenues) in 2001. This 96.4% increase in our research and development spending reflects, in particular, the development efforts related to new WISMOmodules as we
expanded our product line with new modules based on CDMA as well as GSM/GPRS. Research and development expenses also reflect the
significant resources being used to adapt our existing products for new digital wireless standards, including GPRS and W-CDMA. Research and development personnel increased from 373 at
December 31, 2001 to 535 at December 31, 2002. Of the total personnel at December 31, 2002, 387 were salaried full time equivalent employees and 148 were independent contractors
or temporary personnel.

Sales and marketing.Sales and marketing expenses in 2002 totalled €26,600,000 (4.8% of revenues) compared to
€12,416,000 (3.8% of revenues) in 2001. This 114.2% increase of sales and marketing expenses in 2002 reflects an increase in headcount from 47 people in 2001 to 79 by the end of 2002,
as well as increased promotional and advertising spending, particularly in the fourth quarter of 2002. As part of an effort to increase the visibility of Wavecom to prospective customers, we sponsored
a golf tournament in China and ran print advertising in major publications in our main target markets for the first time We also increased the amount of sales commissions to sales personnel and to
sales agents, reflecting the increased level of revenues.

General and administrative.General and administrative expenses increased 94% from €13,297,000 (4.1% of
revenues) in 2001 to €26,163,000 (4.7% of revenues) in 2002. We increased the number of personnel in our general and administrative services (including finance, legal, corporate
communications, human resources, and information systems departments from 89 at December 31, 2001

27

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to
130 at December 31, 2002. Rent expense increased following the signing of a new office lease in Issy-les-Moulineaux in July 2002, with the objective of
regrouping in 2003 personnel previously spread over three locations. Insurance and information technology expenses also increased significantly. These increases reflect the growth of our business and
the development of our subsidiaries in Asia and in the United States. In addition, legal and patent attorney fees increased as we continued to negotiate licensing agreements with an increasing number
of GSM, GPRS, CDMA and other patent and technology holders, as well as increasing the number of registrations of our own patents.

Deferred compensation amortization.We recorded deferred compensation expense of €7,366,000 in connection
with the issuance of founders' warrants and stock options in September 1998 and February 1999. This deferred expense is amortized on a straight-line basis over the
four-year vesting periods of the warrants and options. Consequently, we had amortization expense of €1,587,000 in 2002 and €1,711,000 in 2001. Deferred
compensation expense related to the September 1998 grants was completely amortized at the end of September 2002, and the deferred expense related to the February 1999 grants was
completely amortized at the end of February 2003.



Interest income, net.We recorded net interest income of €3,159,000 in 2002, compared to
€3,827,000 in 2001. The decrease in net interest income results from the decline in interest rates over the course of the year, partially offset by higher average cash balances
invested.

Foreign exchange gain (loss).We had a net foreign exchange loss of €10,857,000 in 2002 compared to a net
gain of €142,000 in 2001, due primarily to changes in the value of the U.S. dollar (the primary currency other than the euro in which we invoice sales and make purchases) compared to
the euro. Of the total 2002 loss, €8,415,000 was recognized during the second quarter of the year when the U.S. dollar declined significantly against the euro at the same time as we
began generating significant amounts of U.S. dollar-denominated cash. Foreign
exchange losses were incurred on cash balances and accounts receivable denominated in dollars, offset partly by gains on accounts payable in dollars.

Income tax expense (benefit).With the increased profitability of the group in 2002, we used all tax loss carryforwards
remaining in France during 2002 and recorded a net tax expense of €6,556,000 for the year. The net expense reflects tax expense recognized in all jurisdictions, except the United
States, net of French research tax credits totaling €449,000 in 2002. Our €2,299,000 net tax benefit in 2001 represents principally French research tax credits, offset
slightly by tax expense in certain jurisdictions. Research tax credits are received in cash in the fourth year after the period in which they are recorded, if they are not used to offset income taxes
payable in France prior to that time.

Fiscal year 2001 compared to fiscal year 2000



Total revenues increased 392% from €65,573,000 in 2000 to €322,664,000 in 2001. The increase reflects a 404% increase in product
sales and a 102% increase in service revenues.

Most
of our revenues are from export sales. In 2001, 11% of our revenues were from customers in European countries excluding France, particularly Germany and Italy, compared to 52% in
2000. Customers in Asian countries accounted for 84% of our revenues in 2001 (compared to 33% in 2000), French customers made up 2% of total revenues in 2001 (compared to 3% in 2000), 1% came from
customers in the Americas (compared to 3% in 2000) and 2% came from customers in the rest of the world (compared to 9% in 2000).

Product sales.Revenues from sales of our products totaled €317,571,000 in 2001 compared to
€63,055,000 in 2000. Sales ofWISMOmodules accounted for 90% of total product sales in 2001, while 10% was from sales of wireless
modems. The increase in product revenues in 2001 was due principally

28

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to
increased sales ofWISMOmodules for telephony applications, but in absolute terms sales in all our target markets (multimedia, automotive and
telemetry as well as telephony) increased.

Technology development and other services.Revenues from services increased from €2,518,000 in 2000 to
€5,093,000 in 2001. This increase reflects the increasing completion of product integration services forWISMOmodule customers. We
recognize service revenues for development work once all work is completed. At December 31, 2001, we had €2.4 million in deferred service revenue on the balance sheet
relating to development services in progress.



Cost of goods sold.Cost of goods sold consists primarily of the cost of components and our manufacturers' charges. Our cost
of goods sold increased from €51,457,000 in 2000 to €254,658,000 in 2001. Our gross profit on product sales in 2001 was €62,913,000 (19.8% of product
revenues) compared to €11,598,000 (18.4% of product revenues) in 2000.

In
2001, our product gross margin increased in each of the four quarters after declining substantially in the second half of 2000. The improvements in gross margin resulted principally
from three factors:



Cost of services.Our cost of providing services increased slightly from €4,522,000 in 2000 to
€4,718,000 in 2001. We realized a gross profit from services of €375,000 in 2001 compared to a loss on services of €2,004,000 in 2000. The variability
in gross profit or loss on services reflects the fact that we expense all development service costs as incurred, while we recognize service revenue only when the project is complete and the services
have been accepted by the customer.



Research and development.We spent €32,634,000 (10.1% of revenues) on research and development in 2001
compared to €16,133,000 (24.6% of revenues) in 2000. This 102% increase in our research and development spending reflects, in part, the development efforts related to new WISMOmodules as we began to
expand our product line, and to improved software interfaces and development tools. Research and development expenses also
reflect the significant resources being used to adapt our existing products for new digital wireless standards, including GPRS and W-CDMA.

Sales and marketing.Sales and marketing expenses in 2001 totaled €12,416,000 (3.8% of revenues) compared to
€5,836,000 (8.9% of revenues) in 2000. This doubling of sales and marketing expenses in 2001 reflects an increase in our presence in the Asia-Pacific and U.S. markets
through our

29

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local
offices, as well as substantial increases in the staffing of our marketing department. We also incurred increased promotional expense related to the launches of the WISMOPac module series and the MUSE
Platform in 2001. We increased the number of direct sales personnel from 13 at the end of 2000 to 15 at
December 31, 2001.

General and administrative.General and administrative expenses increased 138% from €5,598,000 (8.5% of
revenues) in 2000 to €13,297,000 (4.1% of revenues) in 2001. We increased the number of personnel in our general and administrative services (including finance, legal, corporate
communications, human resources, and information systems departments from 52 at December 31, 2000 to 77 at December 31, 2001. These increases accompanied
the growth of our business and the development of our subsidiaries in Asia and in the United States. In 2001, we also more than doubled the amount of our office space (primarily with the leasing of
our new 6,500 square meter corporate headquarters in France and incurred related moving costs.

Amortization of goodwill.In December 2001, we purchased the tangible and intangible assets of Iconn Wireless, a San
Diego-based CDMA-technology company, for $4.6 million (€5.3 million) of which $4.1 million (€4.6 million) has been allocated to
goodwill. In accordance with new U.S. accounting rules issued in 2001 (Statement of Financial Accounting Standards No. 142), this goodwill is not being amortized. However the ongoing value of
the goodwill will be subject to review and any impairment in value will result in a write-down of the value. In October 2000, we purchased for €3,454,000 in cash a
61.88% interest in a San Diego-based software development company. As a result of this acquisition, we recorded goodwill of €1,326,000 which was being amortized over five years. The
charge of €278,000 represents twelve months of amortization related to our October 2000 acquisition. The goodwill related to this acquisition will cease being amortized as of
January 1, 2002.

Deferred compensation amortization.Deferred compensation expense of €7,366,000 was recorded in connection
with the issuance of founders' warrants and stock options in September 1998 and February 1999. This deferred expense is amortized on a straight-line basis over the
four-year vesting periods of the warrants and options. Consequently, amortization expense of €1,711,000 was recorded in 2001, compared to €1,758,000 in
2000.



Interest income, net.We recorded net interest income of €3,827,000 in 2001, compared to
€2,745,000 in 2000. The increase in net interest income results from the investment of cash proceeds from our public offering in June 2000 in low-risk securities,
net of interest expense related to capital leases.

Foreign exchange gain (loss).We had a net foreign exchange gain of €142,000 in 2001 compared to a net gain
of €989,000 in 2000, due primarily to changes in the value of the U.S. dollar (the primary currency other than the euro in which we invoice sales and make purchases) compared to the
euro.

Provision for loss on long-term investment.In October 2000, we invested approximately $1 million
(€1.2 million) in a privately-owned developer of Bluetooth technology. In
the fourth quarter of 2001, we recorded a provision in the amount of €716,000 for the estimated loss in value of this investment, based on the lower valuation of the company in later
financing rounds (in which we did not participate).

Income tax expense (benefit).Our €2,299,000 net tax benefit in 2001 (€1,534,000 in 2000)
represents principally French research tax credits, offset slightly by tax expense in certain jurisdictions. We recorded no tax expense in most jurisdictions, including France, due to the existence of
tax loss carryforwards in excess of taxable income.

30

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Selected quarterly operating results

The following table sets forth a summary of Wavecom's unaudited quarterly operating results for each of the eight fiscal quarters in the period ended
December 31, 2002. We have derived this information from our unaudited interim consolidated financial statements which have been prepared on a basis consistent with our audited consolidated
financial statements. The results of operations for any quarter are not necessarily indicative of results for any future period.

|                                                             |                                           | Three months ended       |           
|------------------------------------------------------------ | ----------------------------------------- | ------------------------ | ----------
|
|
|Revenues:                                                    |                                           |                          |           
|                                                             | Product sales                             |                          | €         
|                                                             | Technology development and other services |                          |           
|                                                             | Total revenues                            |                          |           
|                                                             |                                           |                          |           
|Cost of revenues:                                            |                                           |                          |           
|                                                             | Cost of goods sold                        |                          |           
|                                                             | Cost of services                          |                          |           
|                                                             |                                           |                          |           
|                                                             |                                           | Total cost of revenues   |           
|                                                             |                                           |                          |           
|Gross profit                                                 |                                           |                          | 9,706     
|Operating expenses:                                          |                                           |                          |           
|                                                             | Research and development                  |                          |           
|                                                             | Sales and marketing                       |                          |           
|                                                             | General and administrative                |                          |           
|                                                             | Amortization of goodwill                  |                          |           
|                                                             | Deferred compensation amortization        |                          |           
|                                                             |                                           |                          |           
|                                                             |                                           | Total operating expenses |           
|                                                             |                                           |                          |           
|Operating income (loss)                                      |                                           |                          | (2,307    
|Interest and other financial income (expense), net           |                                           |                          | 244       
|Provision for loss on long-term investment                   |                                           |                          |          
|                                                             |                                           |                          |           
|Income (loss) before minority interests and income taxes     |                                           |                          | (2,063    
|Minority interests                                           |                                           |                          | 118       
|                                                             |                                           |                          |           
|Income (loss) before income taxes                            |                                           |                          | (1,945    
|Income tax expense (benefit)                                 |                                           |                          | (399      
|                                                             |                                           |                          |           
|Net income (loss)                                            |                                           | €                        | (1,546    
|                                                             |                                           |                          |           
|Basic net income (loss) per share                            |                                           | €                        | (0.11     
|Diluted net income (loss) per share                          |                                           | €                        | (0.11     
|Shares used in computing basic net income (loss) per share   |                                           |                          | 14,692,300
|Shares used in computing diluted net income (loss) per share |                                           |                          | 14,692,300

31

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We believe that period-to-period comparisons of our operating results are not necessarily meaningful. Our quarterly and annual operating results have fluctuated
in the past and are likely to fluctuate significantly in the future. You should not rely on them to predict future performance. Our revenue may fluctuate due to the amount of new customer orders and
the timing in beginning production and delivery of these new orders. The amount and timing of our operating expenses may fluctuate significantly in the future as a result of the timing of these orders
and our development of new products and technologies. For a discussion of factors which may affect our quarterly and annual operating results, see "Item 3Key InformationRisk
FactorsOur quarterly revenues fluctuate significantly and may affect the price of our shares and ADSs."

Liquidity and capital resources

At December 31, 2002, we had working capital of €105,418,000 and our debt and capital lease obligations (including the current portion)
amounted to €501,000 compared to debt and capital lease obligations of €917,000 at the end of 2001. We had €134,528,000 in cash, cash equivalents and
short-term investments at December 31, 2002.

At
December 31, 2002 we had a multi-currency overdraft facility with a French bank allowing for borrowings of up to €1,000,000. The overdraft facility bore
interest based on a market rate (Fed Funds) plus a margin of 1.5% from January to September 2002 and 0.85% for the fourth quarter of 2002. No amounts had been drawn on this facility at
December 31, 2002. The overdraft facility does not have a fixed term.

At
December 31, 2002, we had a €15,978,000 dedicated line of credit used for the issuance of bank guarantees to secure lease payments under office leases signed in
December 2000 and July 2002. These lines were secured by pledged certificates of deposit in the amount of €13,671,000 at December 31, 2002 recorded as
long-term assets, rather than as cash or short-term investments, because the guarantee has a term greater than one year.

The
average rate on our overdraft facilities corresponded to an effective rate of 4.29% at December 31, 2002 and an average rate of 4.45% for the year ended December 31,
2002. The dedicated lines of credit were remunerated by a fixed fee rather than by interest.

At
December 31, 2002, we had no material commitments for capital expenditures during 2003. Our future capital requirements, the timing and amount of expenditures, and the adequacy
of funds available to us will depend on our success in developing and selling new and existing products, on technological and market developments in the wireless communications industry and on other
factors. Based on our current plans, we believe that existing cash and cash flows generated by operations will be adequate to satisfy our capital requirements at least through 2003.

The
company's contractual obligations consist principally of obligations under capital leases, operating leases, and other short-term obligations.

Payments due by period (amounts in millions)Contractual obligations

Total

Less than
1 year

1-3 years

4-5 years

After
5 yearsCapital lease obligations

€
0.5

€
0.2

€
0.3Operating leases

€
76.1

€
11.4

€
20.8

€
19.4

€
24.5Total contractual cash obligations

€
76.6

€
11.6

€
21.1

€
19.4

€
24.5


Our
contractual obligations under operating leasing as of December 31, 2002 include approximately €16 million related to two leases, expiring in
March 2005 and May 2008, for office space which we intend to vacate by mid-2003 following the consolidation of all personnel in Issy-les-Moulineaux in
one building We are actively looking sub-lessors for this office space.

32

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At
December 31, 2002, we had purchase commitments with our third-party manufacturers for future deliveries of products principally during the first quarter of 2003. These purchase
commitments totaled approximately €45.4 million.

Interest rate risk

At December 31, 2002, €92,826,,000 in cash equivalents were invested in short-term money-market accounts bearing variable rates
of interest. We had no variable rate debt at December 31, 2002.

Impact of currency fluctuations

We publish our consolidated financial statements in euro and the functional currency of Wavecom S.A. is the euro. In 2002, we recorded 86% of our total revenues
in U.S. dollars, with virtually all the rest in euro. We purchase many of our components for U.S. dollars and the operating expenses of our U.S. subsidiaries are in U.S. dollars. The operating
expenses of our Hong Kong subsidiary are primarily in Hong Kong dollars, which are closely tied to the U.S. dollar. Most of our other operating expenses are in euros. Dollar purchases and expenses
represented approximately 77% of our cost of revenues and operating expenses in 2002. A strengthening of the euro against the U.S. dollar and other currencies in which we receive revenues could reduce
our reported revenues and our reported operating and net results. We incurred a net foreign exchange loss of €10,857,000 in 2002 and net foreign exchange gains of
€142,000 in 2001 and €989,000 in 2000.

We
have not previously engaged in significant or speculative currency hedging transactions. From time to time, we have entered into short-term currency swap agreements in
order to hedge specific transactions. In January 2003, we began to use a combination of options and forward exchange contracts in order to minimize the risk to our net dollar position over the
coming months. Because these financial instruments do not always hedge specific transactions, they may be accounted for as speculative transactions, with the fair market value of the instruments being
recorded on our balance sheet and marked to market at the end of each accounting period.

Item 6. Directors, Senior Management and Employees

Board of directors and executive officers

Our business is managed by our board of directors(Conseil d'Administration)and by our Chief Executive Officer
(Directeur Général). French law governing asociété
anonymeand our by-laws provide that the general management of the company is performed either by the chairman of the board of directors or by another individual,
elected by the board of directors and bearing the title of chief executive officer. At its meeting held on October 21, 2002, the board of directors opted for a dual management structure and
appointed Mr. Michel Alard as Chairman of the board of directors and Mr. Aram Hékimian, who previously held the position of Deputy Chief Executive Officer and who is also
a member of the board of directors, as our Chief Executive Officer.

Mr. Hékimian
is vested with extensive powers to act under most circumstances on behalf of the company, within the limits set out by the corporate
by-laws, and has capacity to act on the company's behalf. As the chief executive officer, subject to the prior authorization of the board of directors for certain decisions, he therefore
has full authority to manage Wavecom's affairs. The chief executive officer may be removed by the board of directors at any time. However, in case of removal without cause, he may be entitled to
damages.

The
chairman of the board of directors represents the board and organizes its work. In addition, the chairman is responsible for the proper functioning of the company's managing bodies
and, in particular, has to verify the ability of the board members to perform their mission.

33

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Under
our by-laws, each director is elected by the shareholders at an ordinary general meeting for a maximum three-year term. Each director must own at least one
Wavecom share. Under French law, a director may be an individual or a corporation. Our board currently has five directors. Directors may resign at any time and their functions as members of the board
of directors may be terminated at any time by the shareholders at a general meeting. Directors must resign at the age of 65. A director does not need to be a French national and there is no limitation
on the number of terms that a director may serve. In case of removal without cause, members of the board of directors are not entitled to damages, except in certain circumstances.

Under
French law, our board of directors defines the orientations of the company's activity and supervises their implementation. Within the limits set out by the corporate
by-laws, and the powers expressly granted by law to the general shareholders meetings, the board of directors may deliberate upon the business of the company and take any decision in this
regard. In addition, the board of directors is responsible, among other things, for presenting financial statements to our shareholders and convening shareholders' meetings.

Directors
are required to comply with applicable law and with our by-laws. Our directors may be jointly and severally responsible for actions that they take contrary to
Wavecom's interests.

Under
French commercial law and our by-laws, any transaction we enter into (either directly or indirectly or through an intermediary) in which a member of our board of
directors, or our chief executive officer, or one of our shareholders holding more than 5% of the voting rights (or, if it is a company, the company controlling it) has a direct or indirect interest
and that is not in the ordinary course of business and/or is not at arm's-length is subject to the prior consent of our board of directors. The same applies for transactions between the company and
another company, whenever one of our directors or our chief executive officer is the owner, a partner with unlimited liability, a manager, director, chief executive officer, member of the directorate (directoire)or supervisory board(conseil de surveillance)of such company. Such transactions have to
be reported to the chairman by the concerned person. Furthermore, the types and the purposes of these transactions must be communicated by the chairman to the board of directors and to the statutory
auditors. The interested director is not taken into account for the quorum calculation and his or her vote is not taken into consideration for the calculation of whether the transaction has been
approved by the board of directors. Any such transaction concluded without the prior consent of our board of directors can be nullified if it causes prejudice to us. The interested director, or chief
executive officer, can be held liable on this basis. Our statutory auditor must be informed of the transaction within one month following its conclusion and must prepare a special report to be
submitted to our shareholders for approval at their next meeting. In the event the transaction is not ratified by our shareholders at a shareholders' meeting, it will remain enforceable by third
parties against us, but we may in turn hold the interested director or chief executive officer, as the case may be, and, in some circumstances, the other members of the board of directors, liable for
any damages we may suffer as a result. In addition, the transaction may be cancelled if it is fraudulent. Moreover, certain transactions between a corporation and a member of its board of directors
who is a natural person and/or its managing directors, chief executive officer or deputy chief executive if any, are prohibited under French commercial law. Such prohibition also applies to natural
persons representing a company acting as board member.

The
following table sets forth the names of the directors of Wavecom, their current positions with Wavecom, the dates of their initial appointment as directors and the expiration dates
of their current term. Dates specified for directors representing corporations relate to the entity represented. Each of

34

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our
director's terms expires on the date of the annual general meeting of shareholders that approves our accounts for the year indicated in the table below. Cumulative voting is not permitted.

|Name                                      |  | Age |  | Current position                   |  | Initially appointed |  | Term expires
|----------------------------------------- |  | --- |  | ---------------------------------- |  | ------------------- |  | ------------
|Michel Alard                              |  | 48  |  | Chairman of the Board of Directors |  | 1993                |  | 2004        
|Aram Hékimian                             |  | 47  |  | Director, Chief Executive Officer  |  | 1993                |  | 2004        
|Delphis S.A. represented by Marc Fourrier |  | 49  |  | Director                           |  | 1997                |  | 2003        
|Bernard Gilly                             |  | 46  |  | Director                           |  | 1999                |  | 2005        
|Stephen Imbler                            |  | 51  |  | Director                           |  | 2000                |  | 2005        

Six
board meetings were held in 2002.

The
day-to-day operations of Wavecom are managed by our team of executive officers, managed by our Chief Executive Officer The following table sets forth the name
and current position of each of our executive officers as of the date of this report:

|Name                 |  | Age |  | Current position                                                  |  | Current position
since |  | Joined
Wavecom
|-------------------- |  | --- |  | ----------------------------------------------------------------- |  | ---------------------- |  | --------------
|Michel Alard         |  | 48  |  | Chairman of the Board of Directors                                |  | 1993                   |  | 1993          
|Aram Hékimian        |  | 47  |  | Chief Executive Officer                                           |  | 1993                   |  | 1993          
|Marc Cases           |  | 40  |  | Group VP Operations                                               |  | 2000                   |  | 2000          
|Deborah Choate       |  | 39  |  | Group VP Finance and Administration, Chief Financial Officer      |  | 1998                   |  | 1998          
|Didier Dutronc       |  | 43  |  | Group VP Asia Pacific, Managing Director Wavecom Asia Pacific Ltd |  | 2003                   |  | 2003          
|Hervé Gagnard        |  | 38  |  | Group VP Corporate Development, Marketing and Communications      |  | 2000                   |  | 1997          
|Philippe Guillemette |  | 37  |  | Group VP Chief Technology Officer                                 |  | 2003                   |  | 2000          
|Etienne Menut        |  | 52  |  | Group VP Human Resources                                          |  | 2003                   |  | 2002          
|Vincent Mouret       |  | 44  |  | Group VP Research & Development                                   |  | 2003                   |  | 2002          
|Hany Neoman          |  | 41  |  | Group VP The Americas, President Wavecom Inc.                     |  | 2000                   |  | 2000          
|Pierre Piver         |  | 43  |  | Group VP Europe, Middle East and Africa                           |  | 2003                   |  | 2003          

There
are no family relationships between any of the directors or executive officers or of Wavecom.

Directors

Michel Alardhas served as Chairman of the Board since he co-founded Wavecom in 1993. From 1988 to
1993, Mr. Alard was GSM project manager for Matra Communications, a telecommunications equipment company. Before joining Matra, Mr. Alard was joint head of research and development for
CCETT, a joint telecommunication research center of France Telecom and TéléDiffusion de France (TDF). From 1979 to 1982, Mr. Alard was a research
engineer at SFP (Société Française de

35

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Production)
and TDF, and was involved in television broadcasting. Mr. Alard has engineering degrees from the Ecole Polytechnique and the Ecole Nationale Supérieure des
Télécommunications. Mr. Alard also serves on the board of directors of ILOG, S.A., a French software company listed on Nasdaq and the Euronext Nouveau Marché. Other Wavecom
group directorships: Wavecom Inc. (US); Wavecom Asia Pacific Ltd. (Hong Kong);
Arguin Communications Inc. (US); and Wavecom Korea Co. Ltd. (Korea).

Aram Hékimian, a co-founder of Wavecom, has served as a director since 1993 and is currently the Chief
Executive Officer (Directeur Général). He was head of the software department for Matra Communications from 1984 until
1993. Prior to joining Matra, he was a software engineer at Marben, a software engineering company, and CS Telecom, a company active in the field of telecommunications and railway signaling systems.
Mr. Hékimian has a masters degree in science and technology from the University of Paris XII. Other Wavecom group directorships: Wavecom Inc. (US); Wavecom Asia
Pacific Ltd. (Hong Kong); Arguin Communications Inc. (US); Wavecom Korea Co. Ltd (Korea); Wavecom Northern Europe Ltd (UK); and Wavecom Deutschland GmbH (Germany).

Marc Fourrierserved as a director of Wavecom individually from 1993 to 1997 and since 1997, on behalf of Delphis, a company that
specializes in the creation and development of high technology companies. Since 1988, Mr. Fourrier has served as President and Chief Executive Officer of Delphis. Mr. Fourrier received
engineering degrees from the Ecole Polytechnique and the Ecole Nationale des Ponts et Chaussées, and an M.S. from the Massachusetts Institute of Technology. Mr. Fourrier also
serves on the board of directors of ILOG, S.A., a French software company listed on Nasdaq and theEuronext Nouveau Marché.Other outside
directorships include: High Deal, a privately-held French company, and, as representative of Delphis, Dexem, a privately-held French company; and Kiala, a
privately-held Belgian company.

Bernard Gillyhas served as a director of Wavecom since April 1999. He is a partner in the Life Sciences team of Sofinnova
Partners, a European venture capital fund, having joined them in December 2000. From 1992 to 2000, he served as Chief Executive Officer of Transgene, a French biotechnology company listed on
Nasdaq and theEuronext Nouveau Marché. From 1994 to June 1997, Dr. Gilly also served as Research Director of
bioMérieux. Prior to that, he served in various capacities at Pasteur Mérieux, including that of Vice President, Research and Development, from 1990 to 1994. He received
his doctoral degree in bioeconomics from the University of Rennes, and holds an AMP from INSEAD. Other outside directorships include: High Deal, a privately-held French company;
Noxxon Pharma, a privately-held German company; Web'Surg a privately-held French company; Carex, a privately-held French company; Faust Pharmaceuticals, a
privately-held French company; INSERM, a French public institute; CNRS, a French public institute; and ENS Lyon, a French school.

Stephen Imblerhas served as a director of Wavecom since March 2000. He served as President and Chief Financial Officer of Liquid
Audio Solutions until March 2003. He served as President and Chief Operating Officer of Hyperion Solutions through the end of 2001, and as Advisor to the company through August, 2002. Prior to
the 1998 merger between Arbor Software and Hyperion Software that created Hyperion Solutions, Mr. Imbler held the position of Senior Vice President and Chief Financial Officer at Arbor Software
for three years. Prior to joining Arbor Software in 1995, Mr. Imbler served as Senior Vice President of Finance and Operations and Chief Financial Officer for Gupta Corporation, a software
company. Mr. Imbler previously served as Vice President and Chief Financial Officer of Quick Response Services, Inc.; Vice President, U.S. Finance and Operations, and Vice President,
Finance (Oracle Corporate) at Oracle Corporation; and Senior Tax Manager at Peat Marwick, San Francisco. Mr. Imbler received a master's degree in public accounting from the University of Texas
and a bachelor's degree in piano performance from Wichita State University. Other outside directorships include: Liquid Audio Inc, a US company listed on NASDAQ.

36

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Executives officers

Marc Caseshas served as Wavecom's Group VP of Operations since January 2003 and previously as Group VP of
Manufacturing since December 2000. He is a member of the Executive Committee of Wavecom group. Prior to joining Wavecom, Mr. Cases was Manager of Corporate Sourcing at the research and
development headquarters in Italy of Magneti Marelli, a Fiat subsidiary, from 1995 to 2000. From 1992 to 1995, he was an electronic components purchasing manager for Magneti Marelli. His experience
prior to Magneti Marelli included various positions at Sextant Avionique in France. Mr. Cases has an engineering degree from the Conservatoire National des Arts et Métiers and a
business degree from the Institut Administration des Entreprises.

Deborah Choatehas served as Wavecom's Group VP Finance and Administration and Chief Financial Officer since August 1998. She is a
member of the Executive Committee of the Wavecom group. Prior to joining Wavecom, Ms. Choate was a partner of Ernst & Young Audit in Paris. From 1984 until she joined the Paris office in
1991, Ms. Choate worked in Ernst & Young's San Francisco office and its national headquarters in Cleveland, Ohio. Ms. Choate has a B.S. in business administration from the
University of California at Berkeley. Wavecom group directorships: Arguin Communications Inc. (US); Wavecom Korea Co. Ltd (Korea); and Wavecom Northern Europe Ltd (UK).

Didier Dutronc,Group VP for the Asia-Pacific region and Managing Director of Wavecom Asia Pacific Ltd, joined Wavecom
in March 2003. He is a member of the Executive Committee of the Wavecom group. Prior to joining Wavecom, he served as Worldwide VP Sales and Marketing for Alcatel Optronics and served as
President and CEO of Alcatel Optronics, Inc., in Dallas, Texas (from August 1997 to June 2000 as VP sales and Marketing and from June 2000 to February 2003 as
President and CEO). Prior to Alcatel he also worked for Analog Devices from August 1984 to August 1987 and Texas Instruments from September 1987 to August 1997.
Mr. Dutronc holds a degree in electrical engineering from ESME in Paris and received an MBA from IAE in Paris. Wavecom group directorships: Wavecom Asia Pacific Ltd. (Hong Kong) and
Wavecom Korea Co. Ltd (Korea).

Hervé Gagnard,Wavecom's Group VP Corporate Development, Marketing and Communications, joined Wavecom in
January 1997. From January 1997 until December 1999 he served as Director of Marketing and was named Director of Corporate Development and Communications on January 1,
2000. He is a member of the Executive Committee of the Wavecom group. From 1994 until the end of 1996, Mr. Gagnard was the head of product marketing at TDR, a French paging services company.
From 1991 to 1993, Mr. Gagnard was business development manager at Motorola Codex, the French telecommunications subsidiary of Motorola. From 1987 until he joined Motorola Codex,
Mr. Gagnard worked in commercial engineering and marketing positions at Fininfo and Line Data, French information technology companies. Mr. Gagnard has an engineering degree from the
Ecole Nationale Supérieure des Arts et Metiers.

Philippe Guillemettehas been Group VP Technology since January 2003. From December 2000 to December 2002,
Mr. Guillemette was Group VP of Research and Development. Mr. Guillemette was Assistant Director of Research and Development during 2000, and from June 1995 until
December 1999 he was Director of Software Development. He is a member of the Executive Committee of the Wavecom group. Prior to joining Wavecom in 1993, Mr. Guillemette was a software
engineer at Nortel Networks. He has an engineering degree from the Ecole d'Ingenieurs en Electronique et Electrotechnique.

Etienne Menut,Group VP for Human Resources joined Wavecom in July 2002 as a consultant and was appointed to his current position
in January 2003. He is a member of the Executive Committee of Wavecom group. Prior to joining Wavecom, he was Human Resources Director of Microsoft France from1992-1999.
Mr. Menut also has worked with companies such as Cogema and Matra from 1977-1990. Mr. Menut holds a master's degree in Business Law from the University of Angers (France).

37

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Vincent Mouretwas appointed Group VP Research and Development in January 2003. From July 2002 to December 2002, he
served as Group VP Marketing. He is a member of the Wavecom Executive Committee. Prior to joining Wavecom, Mr. Mouret was Vice President and Managing Director of Alcatel Microelectronics
Wireless Business Division from 1999 to June 2002. Mr Mouret started his career at Matra Communication in 1980 as a component engineer. He then joined Texas Instruments in
1984 where he held various marketing and international sales management positions. In 1993 he worked for Motorola as technical and marketing director, before joining Alcatel in 1999. Mr. Mouret
holds a degree in Physics from Paris University.

Hany Neomanhas been Wavecom's Group VP of the Americas region and the president of our U.S. subsidiary, Wavecom, Inc., since
October 2000. He is a member of the Executive Committee of the Wavecom group. From 1997 until joining Wavecom, he was first a General Manager of the Southern European division, and then
Marketing Vice President, of Sterling Commerce. From 1994 to 1997, Mr. Neoman was president and chief executive officer of NeoSystems Inc., a start-up based in London and New
York that specialized in modular digital applications, which he founded. From 1990 to 1992 he was Head of Sales for Western Europe for Intel's Business Communications Division. Mr. Neoman has a
degree in Design Engineering from the University of Turin, Italy, and an MBA from Strathclyde University in Glasgow, UK. Wavecom group directorships: Wavecom Inc. (US).

Pierre Piverhas served as Wavecom Group's Vice President Europe, Middle East and Africa Region since January 2003. He serves on
the Executive Committee of Wavecom group. Before joining Wavecom, Mr. Piver was the Managing Director of Infineon Technologies France which he joined in September 1996 when it was the
Semiconductor division of Siemens in France. Previously, Mr. Piver had occupied various positions in Sales and in Product Marketing from 1985 to 1989 at RTC Compelec (Philips) in Caen (France)
and, from 1989 to 1996, at Texas Instruments in Vélizy (France) and Freising (Germany). Mr. Piver holds a degree in Electronic Engineering from ESME (Ecole
Spéciale de Mécanique et d'ElectricitéParis) and a Master in Business Administration from EM Lyon. Wavecom group directorships: Wavecom
Northern Europe Ltd, (UK).

Since
the beginning of 2002, two executive officers left Wavecom: Patrick Guérillot, former Group VP and Chief Technology Officer (December 2002) and
Jean-Charles Andreani, former Group VP Asia Pacific (January 2003).

Committees of the Board of Directors

The board of directors has established the following committees with a view to assisting the directors in their duties and ensuring that the company acts at all
times in accordance with the highest standards of conduct and transparency:

Audit Committee

The Audit Committee provides assistance to the board of directors in fulfilling its oversight responsibility to the Wavecom shareholders, potential shareholders,
the investment community, and others relating to: the integrity of Wavecom's financial statements; the financial reporting process; the systems of internal accounting and financial controls; the
selection and evaluation of the performance
of the independent auditors; the independent auditors' qualifications and independence; and the Company's compliance with ethics policies and legal and regulatory requirements.

The
Audit Committee is directly responsible for the appointment (subject to shareholder ratification) and termination (subject to the limitations of French law regarding the
six-year mandates of statutory auditors), compensation and oversight of the work of the independent auditors, including resolution of disagreements between management and the auditors
regarding financial reporting. The Committee must pre-approve all audit and permitted non-audit services provided by the independent auditors. The Committee is also responsible
for reviewing the audit firms' internal quality control

38

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procedures
and for assuring, in consultation with management and the Company's independent auditors, the adequacy and effectiveness of the Company's accounting and financial controls, including
Wavecom's policies and procedures to assess, monitor and manage business risk, and legal and ethical compliance programs.

The
Audit Committee must comprise at least three members, all of whom must be independent members of the Company's board of directors. The members are appointed by (and may be removed,
with or without cause, by), the board of directors. The current members of the Audit Committee are Delphis SA (represented by Marc Fourrier), Bernard Gilly and Stephen Imbler (Chairman).

Fees to auditors

The following table presents the fees paid to auditors for the year ended 2002 (in thousands of euros):

Ernst & Young

Rouer, Bernard, Bretout
(French statutory auditor)Amount

%

Amount

%Audit fees

€
418

93

€142

100Tax fees


19

4



Legal fees


11

3



Total

€
448

100

€142

100


Nomination and Compensation Committee

The Nomination and Compensation Committee proposes the appointment of independent directors, determines the compensation of the chairman of the board and the
chief executive officer, and advises on managers' and senior officers' compensation. The Committee is also responsible for proposing the level of directors' fees. The current members of the Nomination
and Compensation Committee are Bernard Gilly (Chairman) and Stephen Imbler.

Strategic Studies Committee

The Strategic Studies Committee, which includes all members of the board as well as external experts, has the task of sharing information and strategic points of
view on Wavecom's business and activities. Mr. Hékimian is the Chairman of the committee.

Compliance Committee

The Compliance Committee assists the chairman of the board and the chief executive officer in ensuring that the Company complies at all time with all applicable
laws and with all provisions of its internal Code of Ethics and Business Conduct. The members of the Compliance Committee, who are appointed by the board of directors, comprise the following members
of management: Deborah Choate, Hervé Gagnard, Claire Olivier (Quality Assurance), Lionel Bochurberg (Company Secretary), Alain
Chiliot (Risk Management and Internal Audit Director) and Etienne Menut. Hervé Gagnard is the Chairman of the Compliance Committee.

Corporate Governance Activities

The board of directors has adopted the following internal rules and code of business ethics, which formalize and codify the Company's existing policies and
guidelines.

39

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Board of directors internal rules / Corporate governance code

The internal rules of the board of directors, also called Corporate Governance Code (the "Code"), sets out the mission and objectives of the board of directors as
well as its functioning rules. The Code also incorporates guidelines relating to the duties of directors with respect to the shares they own in the company. The Code requires that at least a majority
of the members of the board of directors be independent, and sets out the rules for determining independence. Among the criteria for independence, a director would not be considered independent if: he
or she is, or has been during the past five years, a salaried employee or a corporate officer(mandataire social)of the company or of a company's
subsidiary; he or she is related to any corporate officer(mandataire social)of the company; he or she is a client, supplier, or a bank playing a
significant role for the company; he or she is a statutory auditor or non-statutory auditor of the company; or he or she holds 10% or more of the company share capital.

Code of Ethics and Business Conduct

The Wavecom group Code of Ethics and Business Conduct (the "Code of Conduct") applies to all company directors, officers and employees, regardless of job
function. The aim of the Code of Conduct is to enable the company employees and officers to decide how to proceed when faced with concretesometimes complexsituations by
reference to clear and precise principles. It applies to conduct both within the group and with clients, suppliers and intermediaries. The Code of Conduct also incorporates an internal
"whistle-blowing" procedure and defines the Compliance Committee's role and powers.

Code of Ethics for Senior Financial Management

The Wavecom Group Code of Ethics for Senior Financial Management (the "Code of Ethics") sets forth the basic principles by which Wavecom financial management must
fulfill its responsibilities for accurate, complete and timely financial reporting while at the same time safeguarding Wavecom's assets. The Code of Ethics applies to all members of "senior financial
management," defined as all those with responsibility for financial statement presentation, or for decisions on key accounting policies or judgments, as well as those managers with overall
responsibility for a legal or reporting entity. Senior financial management also includes those with responsibility for communicating financial information to the investment community. The Code of
Ethics incorporates compliance monitoring procedures and provides for the application of sanctions in the event of any violation of its provisions.

Compensation of Directors and Officers

We paid a total of €2,277,000 in compensation to our directors and executive officers (10 persons) during the year ended December 31, 2002.
Non-salaried board members earn fees based on their attendance at board meetings; €21,000 in such board fees was earned by non-salaried board members during
2002. Under French law, the aggregate amount of attendance fees to be paid to our board members must be approved by our shareholders at a general meeting and such aggregate amount is allocated among
board members by decision of the board.

In
addition to cash compensation, each of our executive officers (except Mr. Alard and Mr. Hékimian) has received stock options or founders' warrants, and
two non-salaried board members have received warrants. During 2002, we granted stock options and founders' warrants to executive officers to purchase a total of 87,000 shares, with an
exercise price of €39.18 per share and an expiration date of June 16, 2012. In June 2002, we granted to each of Bernard Gilly and Stephen Imbler warrants to purchase
20,000 shares, with an exercise price of €42.46 per share and an expiration date of June 16, 2007.

Michel
Alard, Chairman of the Board, received €135,000 in base salary in 2002 (€129,886 in 2001), and earned a performance-based bonus of
€37,500 for 2002. Aram Hékimian, Chief Executive Officer,

40

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received
€135,000 (€128,972 in 2001) in base salary for each 2002 and 2001, and earned a performance-based bonus of €45,000 in 2002. Both
Mr. Alard and Mr. Hékimian are entitled to the use of company cars or the maintenance of one vehicle in lieu of a company car. Compensation paid to our Chairman and to our
Chief Executive Officer is monitored by the Compensation and Nomination Committee and is set by our board of directors. Messrs. Alard and Hékimian do not participate in such
decisions and both are excluded for purposes of the quorum and majority calculations.Performance-based bonuses for Mr. Alard and
Mr. Hékimian are decided by the board of directors based on the achievement of personal and company objectives. No salaries or other compensation were paid by any group companies
other than Wavecom S.A. Neither Mr. Alard nor Mr. Hékimian receive any fees related to their positions as members of the board of directors, nor are they granted warrants,
stock options or founders' warrants.

Share Ownership and Option and Warrant Information

Except as described in Item 7 below, as of March 31, 2003, each of our directors and executive officers beneficially owns less than 1% of the share capital
of Wavecom S.A (and none of whom has voting rights which are different from those of our other shareholders).

On
September 21, 1998, our shareholders authorized the creation of a stock option plan and a founders' warrant plan for employees. This plan was modified at a shareholders'
meeting on December 19, 2001. As of December 31, 2002, there were outstanding options, founders warrants (BCEs) and warrants (BSAs) to purchase a total of 2,779,096 shares, of which
options, founders warrants and warrants to purchase 144,719 shares were held by our current directors and executive officers. As of December 31, 2002, a total of 1,111,564 shares were available
for grant pursuant to the stock options and founders' warrants under the plan.

On
March 25, 2003, the board of directors granted options to purchase a total of 308,200 shares and founders' warrants to purchase a total of 348,200 shares, in each case at an
exercise price of €8.07 and with an expiration date of March 24, 2013.

41

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During
2002, the following ten employees were granted the largest number of stock options or founders' warrants:

|Name                    |  | Position                                                        |  | Number of
stock options or
founders' warrants
granted in 2002 |  | Exercise price
per shares |  | Final
expiration date
|----------------------- |  | --------------------------------------------------------------- |  | ------------------------------------------------------------- |  | ------------------------- |  | ---------------------
|Vincent Mouret*         |  | Group VP Research and Development, Wavecom S.A.                 |  | 25,000                                                        |  | €39.18                    |  | June 16, 2012        
|Jean-Charles Andreani** |  | Group Managing DirectorWavecom Asia Pacific Ltd.               |  | 10,000                                                        |  | €39.18                    |  | June 16, 2012        
|Marc Cases*             |  | Group VP Operations, Wavecom SA.                                |  | 10,000                                                        |  | €39.18                    |  | June 16, 2012        
|Siu Ching Yeung         |  | Finance director, Wavecom Asia Pacific.Ltd.                     |  | 10,000                                                        |  | €39.18                    |  | June 16, 2012        
|Deborah Choate*         |  | Group VP Finance and Administration and CFO, Wavecom S.A.       |  | 8,500                                                         |  | €39.18                    |  | June 16, 2012        
|Hervé Gagnard*          |  | Group VP Corporate Development, Wavecom S.A.                    |  | 8,500                                                         |  | €39.18                    |  | June 16, 2012        
|Patrick Guérillot**     |  | Group VP and CTO, Wavecom S.A.                                  |  | 8,500                                                         |  | €39.18                    |  | June 16, 2012        
|Philippe Guillemette*   |  | Group VP and CTO, Wavecom S.A.                                  |  | 8,500                                                         |  | €39.18                    |  | June 16, 2012        
|Franck Belime           |  | Senior manager industrial operations, Wavecom Asia-Pacific.Ltd. |  | 8,000                                                         |  | €39.18                    |  | June 16, 2012        
|Hany Neoman*            |  | Group VP Americas and President of Wavecom Inc                  |  | 8,000                                                         |  | €39.18                    |  | June 16, 2012        

---

42

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During 2002, the following ten employees exercised the largest number of stock options or founders' warrants:

|Name                 |  | Position                                                  |  | Number of
stock options or
founders' warrants
exercised in 2002 |  | Exercise price per
stock option or
founders' warrant
|-------------------- |  | --------------------------------------------------------- |  | --------------------------------------------------------------- |  | ----------------------------------------------------
|Philippe Faurie      |  | CEO, Arguin Communications                                |  | 25,026
6,314                                                    |  | €2.29
€4.57                                         
|Philippe Beché       |  | Director of Baseband Research & Development, Wavecom S.A. |  | 18,125
6,497                                                    |  | €2.29
€4.57                                         
|Charles Chaussonnier |  | Director of sales EMEA, Wavecom S.A.                      |  | 8,855
9,834                                                     |  | €2.29
€4.57                                         
|Christophe Seveau    |  | Deputy Director, Engineering, Wavecom Asia-Pacific Ltd.   |  | 13,000
4,000                                                    |  | €2.29
€4.57                                         
|Patrick Guérillot*   |  | Group VP and CTO, Wavecom S.A.                            |  | 8,441
8,250                                                     |  | €2.29
€4.57                                         
|Philippe Thomasse    |  | Research and Development Engineer, Wavecom S.A.           |  | 8,442
4,268                                                     |  | €2.29
€4.57                                         
|Michelle Célie       |  | Vice President, Software, Arguin Communications           |  | 9,167
3,379                                                     |  | €2.29
€4.57                                         
|Philippe Calvez      |  | Director of W-CDMA Program, Wavecom S.A.                  |  | 5,625
5,005                                                     |  | €2.29
€4.57                                         
|Antoine Dambre       |  | Vice President Engineering, Arguin Communications         |  | 6,883
2,816                                                     |  | €2.29
€4.57                                         
|Xavier De Villepin   |  | Director of Industrial Projects, Wavecom S.A.             |  | 3,375
5,947                                                     |  | €2.29
€4.57                                         

---

Options expire ten years after the grant date. Founders' warrants, which were issued to our French tax resident employees, expire after five
years, as is required by French law. Any founders' warrants remaining unexercised at the expiration date automatically convert to stock options with a five-year term remaining. Founders'
warrants were issued to French employees to take advantage of favorable tax treatment for both employees and Wavecom. These tax benefits are not available for stock options in France. Other than the
expiration dates, the terms of the founders' warrants are identical to the stock options.

43

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The
following table sets forth information concerning outstanding options, founders' warrants and warrants at March 31, 2003.

Number of underlying shares

Exercise price
per share

Expiration date104,617

€
2.29

September 20, 20089,824

€
4.57

February 8, 2009254,764

€
4.57

February 24, 20091,500

€
4.57

April 26, 2009134,300

€
139.52

March 29, 201015,000

€
150.00

March 14, 2005160,790

€
103.23

June 26, 201015,000

€
103.23

June 26, 200527,500

€
136.62

July 23, 2010417,160

€
69.86

December 19, 201041,716

€
26.68

March 13, 2011537,455

€
34.66

June 29, 201130,000

€
34.66

June 29, 2006377,500

€
41.09

December 19, 201120,000

€
42.46

June 16, 2007542,880

€
39.18

July 6, 2012348,200

€
8.07

March 24, 2013


Employees and independent contractors

The number of employees and independent contractors as of the end of each of the past three years is as follows:

Year ended

Employees

Independent contractors and
temporary employeesDecember 31, 2002

666

236December 31, 2001

421

163December 31, 2000

225

97


At
December 31, 2002 our employees were primarily located in France, while 106 were located in Asia (2001: 42 and 2000: 11) and 73 were located in the United States (2001:
51 and 2000: 3).

As
of December 31, 2002, of our 902 employees and independent contractors, 78 were engaged in sales and marketing (2001: 47 and 2000: 33), 157 in production, assembly and quality
control (2001: 108 and 2000: 51), 537 in research and development (2001: 354 and 2000: 188) and 130 in general and administrative services (2001: 76 and 2000: 52).

We
believe that the level of competency of our personnel and the spirit of team work and cooperation that exists among them are our principle resources and this allows us to have a
stable environment and to attract the best talent. For this reason, we strive for employee retention through different methods, including competitive compensation and option and warrant programs. The
options and warrants granted to our employees represent potentially 15.2% of our fully-diluted share capital. We believe that we have good relations with our employees and their representatives and,
for this reason, we have a low rate of employee turnover: 4% in 2002 (5% in 2001 and 6.2% in 2000).

Employment
contracts with all of our employees in France are subject to the provisions of theconvention collective SYNTEC, the collective
bargaining agreement applicable to employees in our industry. In addition, as is required by French law, our management holds periodic meetings with employee representatives of the Workers Committee
(comité d'entreprise).

44

---

French
employers are subject to a law limiting the workweek to 35 hours. This law is implemented on the basis of two employee categories. In this respect, we established an
implementation plan with respect to both categories, in 2000, for which we received final validation in 2001 by the collective bargaining organization with which we negotiated.

Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

The following table sets forth certain information regarding beneficial ownership of our shares (including ADSs) by each person known by us to own beneficially
more than 5% of our outstanding shares (none of whom has voting rights which are different from our other shareholders) of March 31, 2003, based on our legal share capital of 15,107,890 shares
as of that date. To our knowledge, we are not directly or indirectly owned or controlled by any corporation or by any foreign government.

|                 |  | Shares beneficially owned
|---------------- |  | -------------------------
|
|
|Michel Alard(1)  |  | 2,030,110                
|Aram Hékimian(2) |  | 2,250,381                
|Delphis          |  | 1,061,961                

---

Major changes in ownership

Several of our directors and executive officers sold shares in our initial public offering in June 1999, in our follow-on public offering in
June 2000 and during the course of 2001 and 2002. The following table sets forth the related changes in these holdings as a percentage of our legal capital as of the given date:

|Name                                    |  | Percentage at
December 31, 1999 |   | Percentage at
December 31, 2000 |   | Percentage at
December 31, 2001 |   | Percentage at
December 31, 2002 |  
|--------------------------------------- |  | ------------------------------- | - | ------------------------------- | - | ------------------------------- | - | ------------------------------- | -
|Michel Alard                            |  | 19.4                            | % | 16.4                            | % | 16.3                            | % | 13.8                            | %
|Aram Hékimian                           |  | 19.5                            | % | 16.6                            | % | 16.6                            | % | 15.2                            | %
|Delphis                                 |  | 10.0                            | % | 8.6                             | % | 7.3                             | % | 7.2                             | %
|André Jolivet                           |  | 19.5                            | % | 14.7                            | % | <5.0                            | % |                                 |  
|Legal share capital used in calculation |  | 13,423,469                      |   | 14,478,623                      |   | 14,717,710                      |   | 14,810,614                      |  

Distribution of Shareholdings

There were four holders of record of our ADSs and approximately 1850 beneficial holders as of April 11, 2003. ADSs held in the U.S. represented
approximately 14.6% of our issued and outstanding

45

---

shares
as of April 11, 2003. Our ADSs are issued by The Bank of New York, as depositary. Each ADS evidences one share.

Related Party Transactions

In December 2000, we entered into a consulting agreement with Delphis, a major shareholder and member of our board of directors. The agreement calls for
Marc Fourrier, who represents Delphis, to provide consulting services in the areas of corporate organization, information systems and general management from time to time, for a maximum of two days
per week. Such services are compensated at the rate of €1,448 per day. During the year ended December 31, 2002, Delphis invoiced €26,157
(€17,303 in 2001 and €8,826 in 2000).

In
November 2001, we loaned $200,000 to a senior employee. The loan bears a market rate of interest, is repayable in three years and is secured by a lien on the employee's
residence. The loan and accrued interest were repaid in full in February 2003.

We
were not a party to any other related-party transactions during 2002.

Item 8. Financial Information

Financial Statements

See Item 18 and the financial statements beginning on page F-1 of this annual report.

Legal Proceedings

We were not a party to any material legal proceedings during 2002 and are not currently party to any material legal proceedings, nor are we aware of any
threatened or potential material legal proceedings involving Wavecom, except as described below.

In
April 2003, we received a letter from the French company Novatec SA stating that one of the processes we use to manufacture our WISMOPAC modules violates French and European patents owned by Novatec. The
letter demands that we cease manufacturing these modules until we have
obtained a patent license from Novatec. We believe the claims made by Novatec in its letter to be without merit and intend to vigorously defend any action that might be brought by Novatec.

Dividends

Wavecom did not declare any dividends in 2000, in 2001 or in 2002. We intend to retain any future earnings for investment in the development and expansion of our
business and do not expect to pay any cash dividends on our shares in the foreseeable future.

Item 9. The Offer and Listing

Price Range of Shares and ADSs

Our shares have been listed on theEuronext Nouveau Marché(7306)of the Paris Bourse since
June 14, 1999 and our ADSs have been quoted on the NASDAQ National Market under the symbol

46

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"WVCM"
since June 9, 1999. The following table sets forth the range of high and low closing sale prices of our shares and ADSs for the periods indicated:

Per Share

Per ADSHigh

Low

High

LowYear ended December 31, 1999Second Quarter

€
13.50

€
11.40

$
14.06

$
11.75Third Quarter

€
18.45

€
13.11

$
18.81

$
14.13Fourth Quarter

€
99.00

€
14.00

$
94.75

$
15.06Year ended December 31, 2000First Quarter

€
166.90

€
66.00

$
168.87

$
64.50Second Quarter

€
127.00

€
76.10

$
110.00

$
70.00Third Quarter

€
161.50

€
113.50

$
149.75

$
104.00Fourth Quarter

€
138.00

€
53.00

$
119.50

$
44.00Year ended December 31, 2001First Quarter

€
67.00

€
17.17

$
67.13

$
15.00Second Quarter

€
44.20

€
16.70

$
36.60

$
15.25Third Quarter

€
34.00

€
16.06

$
30.00

$
15.75Fourth Quarter

€
45.06

€
37.51

$
39.99

$
16.96Year ended December 31, 2002First Quarter 2002

€
46.50

€
28.75

$
41.56

$
24.81Second Quarter 2002

€
48.28

€
27.90

$
44.56

$
24.10Third Quarter 2002

€
45.00

€
32.75

$
44.65

$
31.88Fourth Quarter 2002

€
43.00

€
10.91

$
43.09

$
11.34October 2002

€
44.00

€
31.41

$
43.40

$
30.10November 2002

€
36.00

€
27.65

$
34.69

$
27.84December 2002

€
35.58

€
9.84

$
34.72

$
11.00Year ending December 31, 2003January 2003

€
15.20

€
9.09

$
15.68

$
10.47February 2003

€
11.18

€
8.10

$
12.13

$
8.87March 2003

€
8.65

€
6.59

$
9.45

$
7.42April 2003

€
11.35

€
8.10

$
12.47

$
8.55May 2003 (through May 14, 2003)

€
13.01

€
11.65

$
14.65

$
12.50


On
May 14, 2003, the last reported sale price for our ADSs on The NASDAQ National Market was $14.00 per ADS and the last reported sale price for our shares on the Euronext Nouveau Marchéwas
€12.15 per share.

Item 10. Additional Information

Memorandum and articles of association

General

This section summarizes the material rights of holders of our shares under French law and the material provisions of our by-laws or statuts. The description of our share capital is only a summary and does not describe everything that our by-laws contain. Copies of our
by-laws are publicly available from theregistre du commerce et des sociétésin Nanterre, France, and an
English translation of our by-laws is attached as exhibit 1 to this annual report. A description of certain limitations affecting shareholders of a French company and the material
rights of holders of our ADSs may be found in Amendment No. 1 to our registration statement on Form F-1, registration number 333-11764, dated and filed with the

47

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Securities
and Exchange Commission on June 6, 2000, under the headings "Limitations Affecting Shareholders of a French Company" and "Descriptions of American Depositary Receipts," respectively.

Objects and purposes

Our objects and purposes, as specified in Article 3 of our by-laws, are, in France and abroad: fundamental and applied research, and the
development of systems and products in the areas of radio-transmission, radio-communication, telecommunications, electronics and data processing markets; and, within these sectors: the design,
manufacturing and commercialization of components, products and software; any provision of services; the registration and exploitation of patterns, patents, trademarks, and manufacturing processes;
the establishment, organization, and delivery of lectures, seminars, debates, conferences and more generally of any activity relating to training schemes; the publishing of books, newspapers,
information bulletins, articles and the distribution of any audio-visual aids; the direct or indirect holding of shares within any existing companies or companies to be set up, the business purposes
of which is linked, related or similar to that of the company; and more generally, any industrial, commercial, financial, civil, personal property or real estate operations directly or indirectly
linked to the business purposes stated above or related or similar to business purposes or likely to facilitate the performance or development thereof.

Directors

For additional information regarding our board of directors, please see "Item 6Directors, Senior Management and EmployeesBoard of
Directors and executive officers" and "Compensation of Directors and Officers."

Composition of share capital

We have only one class of shares. As of April 16, 2003, this class consisted of 15,107,890 authorized ordinary shares, nominal value €1 per
share, resulting in a share capital of €15,107,890 in nominal value, all of which shares were outstanding as of such date. All of our outstanding shares are fully paid. Each share is
entitled to one vote on all matters submitted to our shareholders.

Dividend and liquidation rights

We may make dividend distributions to our shareholders from net income in each fiscal year (after deductions for depreciation and reserves), as increased or
reduced by any profit or loss carried forward from prior years, and less any contributions to reserves. These distributions are also subject to the requirements of French law and our
by-laws.

Under
French law, we must allocate 5% of our net profits in each fiscal year to a legal reserve fund until the amount in that fund is equal to 10% of the nominal amount of our share
capital. The legal reserve is distributable only upon our liquidation.

Upon
recommendation of our board of directors, our shareholders may decide to allocate all or a part of any distributable profits among special or general reserves, to carry them forward
to the next fiscal year as retained earnings, or to allocate them to the shareholders as dividends. Shareholders holding a certain percentage (2% of a share capital of
€15.1 million) of our shares or a duly authorized association of shareholders holding their shares in registered form for at least two years and holding a certain percentage
(1%) of our voting rights may require our board of directors to propose the declaration of a dividend at an ordinary general meeting of shareholders. If shareholders at this meeting approve the
proposal, dividends are declared.

48

---

Our
by-laws provide that reserves that are available for distribution under French law and our by-laws may be distributed as dividends, subject to shareholder
approval and other limitations. We may distribute dividends in shares instead of paying cash dividends.

If
our interim income statement certified by our auditors shows that we have made distributable profits since the end of the preceding fiscal year, our board of directors may, subject to
French law and
regulations, distribute interim dividends without the approval of shareholders. An interim dividend may not exceed distributed profits.

Under
French law, we must distribute dividends to our shareholders pro rata according to their share holdings. Dividends are payable to holders of shares outstanding on the date of the
shareholders' meeting approving the distribution of dividends or, in the case of interim dividends, on the date our board of directors meets and approves the distribution of interim dividends. The
actual dividend payment date is decided by our shareholders at an ordinary general meeting, or by our board of directors, if no decision is taken by our shareholders. The payment of the dividends must
occur within nine months of the end of our fiscal year. Under French law, dividends not claimed within five years of the date of payment revert to the French State.

In
the event that Wavecom is liquidated, our assets remaining after payment of our debts, liquidation expenses and all of our other remaining obligations will be distributed first to
repay the nominal value of our shares. After these payments have been made, any surplus will be distributed pro rata among the holders of shares based on the nominal value of their shareholdings.

Changes in share capital

We may increase our share capital only with approval of our shareholders at an extraordinary general meeting. There are two methods to increase share capital: the
issuance of additional shares (including the creation of a new class of shares) and the increase in the nominal value of existing shares. We may issue additional shares for cash or for assets
contributed in kind, upon the conversion of debt securities that we may have issued, by capitalization of our reserves or, subject to certain conditions, in satisfaction of our indebtedness. Although
currently we have only one class of shares, French law permits different classes of shares to have different liquidation, voting and dividend rights.

We
may decrease our share capital only with the approval of our shareholders at an extraordinary general meeting. There are two methods to reduce our share capital: the reduction of the
number of shares outstanding and the decrease in the nominal value of our shares. The conditions under which the share capital may be reduced will vary depending upon whether the reduction is
attributable to losses. We may reduce the number of outstanding shares either by an exchange of shares or by the repurchase and cancellation of our shares. Any decrease must meet the requirements of
French company law, which states that all the holders of shares in each class of shares must be treated equally unless the affected shareholders otherwise agree.

Attendance and voting at shareholders' meetings

French companies may hold either ordinary or extraordinary general meetings of shareholders. Ordinary general meetings are required for matters that are not
specifically reserved by law to the extraordinary general meetings: the election of the members of the board of directors, the appointment of statutory auditors, the approval of a management report
prepared by the board of directors, the approval of the annual accounts, the declaration of dividends and the issuance of bonds. Extraordinary general meetings are required for approval of amendments
to our by-laws, modification of shareholders' rights, mergers, increases or decreases in share capital (including a waiver of preferential subscription rights), the creation of a new class
of shares, the authorization of the issuance of investment certificates or securities convertible or exchangeable into shares and for the sale or transfer of substantially all of our assets.

49

---

Our
board of directors is required to convene an annual general meeting of shareholders for approval of the annual accounts. This meeting must be held within six months of the end of our
fiscal year. However, the president of thetribunal de commerce, the French commercial court, may order an extension of this six-month
period. We may convene other ordinary and extraordinary meetings at any time during the year. Meetings of shareholders may be convened by our board of directors or, if it fails to call a meeting, by
our statutory auditors or by a court-appointed agent. A shareholder or shareholders holding at least 5% of our share capital, a duly authorized association of shareholders holding their shares in
registered form for at least two years and holding a certain percentage (1%) of our voting rights, or the Employee Committee or another interested party under certain circumstances, may request that
the court appoint an agent. The notice of a meeting must state the agenda for the meeting.

French
law requires that a preliminary notice of a listed company's general shareholders' meeting be published in theBulletin des Annonces Légales
Obligatoires("BALO") at least 30 days prior to the meeting. The preliminary notice must first be sent to the French securities authority, the Commission des Opérations de
Bourse("COB") with an indication of the date it is to be published in the BALO. The COB also recommends
that such preliminary notice be published in a newspaper of national circulation in France. The preliminary notice must include the agenda of the meeting and a draft of the resolutions that will be
submitted to a shareholders' vote. Within 10 days of publication, one or more shareholders holding a certain percentage (2% of a share capital of €15.1 million) of our
share capital, a duly authorized association of shareholders holding their shares in registered form for at least two years and holding a certain percentage of our voting rights (1%), or the Employee
Committee may propose additional resolutions.

Notice
of a general shareholders' meeting must be sent by mail at least 15 days before the meeting to all holders of registered shares who have held their shares for more than one
month. However, in the case where quorum was not met and the original meeting was adjourned, this time period is reduced to six days. Notice of the meeting must also be published in BALO, after having
first been sent to the
COB. The notice must include the agenda of the meeting and a draft of the resolutions that will be submitted to a shareholders' vote.

Attendance
and the exercise of voting rights at both ordinary and extraordinary general meetings of shareholders are subject to certain conditions. Under our by-laws, in
order to participate in any general meeting, a holder of registered shares must have the shares registered in its name in a shareholder account maintained by or on behalf of Wavecom at least one day
prior to the meeting. Similarly, a holder of bearer shares must obtain a certificate (certificat d'immobilisation) from the accredited financial
intermediary (intermédiaire financier habilité) with whom the holder has deposited its shares. This certificate must
indicate the number of bearer shares held and evidence the holding of such shares in its account until the date of the meeting. The certificate must be deposited at a place specified in the notice of
the meeting at least one day before the meeting.

Subject
to the above restrictions, all of our shareholders have the right to participate in our general meetings, either in person or by proxy. Shareholders may vote, either in person,
by proxy or by mail, and their votes are counted in proportion to the number of shares they hold. A shareholder may grant a proxy to his or her spouse, to another shareholder or, if the shareholder is
a corporation, to a legal representative. A shareholder may grant a proxy to us by returning a blank proxy form. In this last case, the chairman of the shareholders' meeting will vote the shares in
favor of all resolutions proposed by the board of directors and against all others. Proxy forms will be sent to shareholders upon request. In order to be counted, proxies must be received prior to the
general shareholders' meeting at our registered office or at another address indicated in the notice convening the meeting. We must send our shareholders forms to vote by mail and these forms must be
received by us at least three days prior to the date of a meeting in order to be valid. Under French law, our shares held by entities controlled directly or indirectly by Wavecom are not entitled to
voting rights. There is no

50

---

requirement
that a shareholder have a minimum number of shares in order to be able to attend or be represented at an extraordinary general meeting.

Under
French law, a quorum requires the presence, in person or by proxy (including those voting by mail) of shareholders having at least (1) 25% of the shares entitled to vote in
the case of an ordinary general shareholders' meeting or at an extraordinary general meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share
premium, or (2) 33.3% of the shares entitled to vote in the case of any other extraordinary general shareholders' meeting. If a quorum is not present at any meeting, the meeting is adjourned.
There is no quorum requirement when an ordinary general meeting is reconvened, but the reconvened meeting may consider only questions which were on the agenda of the adjourned meeting. When an
extraordinary general meeting is reconvened, the quorum required is 25% of the shares entitled to vote, except where the reconvened meeting is considering capital increases through capitalization of
reserves, profits or share premium. For these matters, no quorum is required at the reconvened meeting. If a quorum is not present at a reconvened meeting requiring a quorum, then the meeting may be
adjourned for a maximum of two months.

At
an ordinary general meeting, approval of any resolution requires the affirmative vote of a simple majority of the votes of the shareholders present or represented by proxy. The
approval of any resolution at an extraordinary general meeting requires the affirmative vote of a two-thirds majority of the votes cast, except that any resolution to approve a capital
increase by capitalization of reserves only requires the affirmative vote of a simple majority of the votes cast. Notwithstanding these rules, a unanimous vote is required to increase shareholders'
liabilities. Abstention from voting by those present or represented by proxy is counted as a vote against any resolution submitted to a vote.

In
addition to the right to obtain certain information regarding Wavecom, any shareholder may, during the two-week period preceding a shareholders' meeting, submit written
questions relating to the agenda for the meeting to our board of directors. Our board of directors is required to respond to these questions during the meeting.

As
set forth in our by-laws, shareholders' meetings are held at our registered office or at any other location specified in the written notice.

Preferential subscription rights

Holders of our shares have preferential rights to subscribe on a pro rata basis for an additional number of our shares or any of our other equity securities or
other securities giving a right, directly or indirectly, to equity securities issued by us for cash. Shareholders may waive their preferential rights, either individually or, under certain
circumstances, as a group at an extraordinary general meeting. During the subscription period relating to a particular offering of shares, shareholders may transfer their preferential subscription
rights that they have not previously waived. To the extent permitted under French law, we intend to seek shareholder approval to waive preferential subscription rights at each annual general meeting
of shareholders.

Form and holding of shares

Form of shares

Our by-laws provide that our shares may be held in either registered or bearer form at the option of the shareholder. Shares traded on the Euronext Nouveau
Marchéare cleared and settled through Euroclear, a continuous net settlement system. We may use the procedure known as titres au porteur identifiableaccording to which
Euroclear will, upon our request, disclose to us the name,
nationality, address and number of shares held by each shareholder. This information may be requested only by us and may not be communicated to third parties.

51

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Holding of shares

In accordance with French law concerning the "dematerialization" of securities, the ownership rights of shareholders are represented by book entries instead of
share certificates. Registered shares are entered into an account maintained by us or by a representative that we have nominated, while shares in bearer form must be held in an account maintained by
an accredited financial intermediary on the shareholder's behalf.

With
respect to all shares in registered form we maintain a share account with Euroclear which is administered by BNP Paribas Group, acting through Paribas. In addition, we maintain
accounts in the name of each shareholder either directly or, at a shareholder's request, through such shareholder's accredited intermediary, in separate accounts maintained by BNP Paribas Group,
acting through Paribas on our behalf. Each shareholder's account shows the name and number of shares held and, in the case of shares registered through an accredited financial intermediary, the fact
that they are so held. BNP Paribas Group, acting through Paribas, as a matter of course, issues confirmations to each registered shareholder as to shares registered in a shareholder's account, but
these confirmations do not constitute documents of title.

Shares
held in bearer form are held and registered on the shareholder's behalf in an account maintained by an accredited financial intermediary and are credited to an account at
Euroclear maintained by the intermediary. Each accredited financial intermediary maintains a record of shares held through it and will issue certificates of inscription for the shares that it holds.
Transfers of shares held in bearer form only may be made through accredited financial intermediaries and Euroclear.

Repurchase and redemption of shares

Under French law, we may not acquire our shares except:



The
amounts repurchased under (2) and (3) may not, in either case, result in us holding more than 10% of our issued shares. In the event that such repurchases result in us
holding more than 10% of our issued shares, we are required to transfer any shares in excess of the 10% threshold within one year. French law requires that we cancel any shares in excess of this 10%
limit that have not been transferred within the one-year period. Shares repurchased under (3) may be cancelled by an extraordinary general shareholders' meeting, although no more
than 10% of our registered capital may be cancelled in any 24-month period.

With
respect to (3) above, at a general meeting of shareholders held on April 29, 1999, our shareholders authorized us to purchase our shares representing up to 10% of our
share capital until October 29, 2000. At a general meeting of shareholders held on December 20, 2000, our shareholders renewed this authorization for an additional 18-month
period until June 20, 2002. At a general meeting of shareholders held on June 17, 2002, our shareholders renewed this authorization for an additional 18-month period until
December 16, 2003. A Board meeting held January 28, 2003 has used this authorization, and a prospectus of our trading program in our own shares was submitted to the COB (French Stock
Market Authority) which gave its approval no 03-052 dated February 10, 2003. We are required to notify the COB on a monthly basis of our trading program in our own shares. We
are also

52

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required
to report all other trades we make in our shares to the COB and, on a monthly basis, to theConseil des Marchés Financiers("CMF"), the self-regulatory organization that has general regulatory authority over the French stock exchanges and whose members include representatives of French stockbrokers.

When
we purchase our own shares, they must be held in registered form and be fully paid. These shares are deemed to be outstanding under French law, but are not entitled to any dividends
or voting rights, and we may not exercise preferential subscription rights. Our shareholders, at an extraordinary general meeting, may decide not to take such shares into account in determining the
preferential subscription rights attached to the other shares. In the absence of such a decision, the rights attached to any shares held by us must either be sold on the market before the end of the
subscription period or distributed to other shareholders on a pro rata basis.

As
of March 31, 2003, we had repurchased 156,345 shares at prices ranging from €7.60 to €8.69. All transactions took place during the month of
March 2003.

Cross shareholdings and holding of our shares by our subsidiaries

French law prohibits a company from holding our shares if we hold more than 10% of that company's share capital and we may not own any interest in a French
company holding more than 10% of our share capital. In the event of a cross shareholding that violates this rule, the company owning the smaller percentage of shares in the other company must sell its
interest. Until sold, these shares are deprived of their voting rights. Failure by the officers and directors of a company to sell these shares is a criminal offense.

In
the event that one of our subsidiaries holds our shares, these shares are deprived of their voting rights. However, French law does not require the subsidiary to sell the shares.

Requirement for holdings exceeding certain percentages

French law provides that any individual or entity, acting alone or in concert with others, that holds, directly or indirectly, more than 5%, 10%, 20%,
332/3%, 50% or 662/3% of our outstanding voting shares or the voting rights attached to our shares, or that increases or decreases its shareholding or voting rights
thereof by any such percentage, must notify us by registered letter (with return receipt) within 15 calendar days of crossing such threshold, of the number of shares and voting rights it holds.
Such individual or entity must also notify the CMF by registered letter (with return receipt) within five trading days of crossing such threshold. Any shareholder who fails to comply with these
requirements may have all or part of its voting rights suspended for up to five years by the Commercial Court at the request of our Chairman, any of our shareholders or the COB, and may be subject to
a fine.

In
addition, Article 7.2 of our by-laws provide that every shareholder (including a holder of ADSs) who, directly or indirectly, acting alone or in concert with
others, acquires ownership or control of shares representing 5%, or any multiple of 5%, of our share capital or voting rights, or whose holding falls below any such limit, shall be required to notify
us of such fact by registered letter (with return receipt) within 15 days of such acquisition or disposition. Failure to comply with such notification provisions will result in the suspension
of the voting rights attached to the shares exceeding such 5% threshold held by such shareholder for all shareholders' meetings until the end of a two-year period following the date on
which their owner complies with the notification requirements if requested by one or more shareholders holding shares representing at least 5% of our share capital or voting rights.

French
law and COB regulations impose additional reporting requirements on persons who acquire more than 10% or 20% of the outstanding shares or voting rights of a listed company. These
persons must file a report with the company, the COB and the CMF within fifteen calendar days of the date they cross the threshold. In the report, the acquirer must specify its intentions for
the following 12-month period, including whether or not it intends to continue its purchases, to acquire control of

53

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the
company in question or to nominate candidates for the board of directors. The CMF makes the notice public. The acquirer must also publish a press release stating its intentions in a financial
newspaper of national circulation in France. The acquirer may amend its stated intentions, provided that it does so on the basis of significant changes in its own situation or that of its
shareholders. Upon any change of intention, it must file a new report.

Under
CMF regulations, and subject to limited exemptions granted by the CMF, any person or persons acting in concert that own in excess of one third of the share capital or voting rights
of a French listed company must initiate a public tender offer for the balance of the share capital of such company.

To
permit holders to give the required notice, we are required to publish in the BALO no later than 15 calendar days after the annual ordinary general meeting of shareholders information
with respect to the total number of voting rights outstanding as of the date of such meeting. In addition, if the number of outstanding voting rights changes by 5% or more between two annual ordinary
general meetings, we are required to publish in the BALO, within 15 calendar days of such change, the number of voting rights outstanding and provide the CMF with written notice of such information.
The CMF publishes the total number of voting rights so notified by all listed companies in a weekly notice (avis), noting the date each such number was
last updated.

Material Contracts

This section provides a summary of all material contracts to which we are a party and that are to be performed in whole or in part after the date hereof or that
have otherwise been entered into during the two immediately preceding financial years. We have filed each of the agreements with the U.S. Securities and Exchange Commission, and copies of the
agreements are in some case available on the SEC's website (www.sec.gov) or, if not, then they may be obtained from the SEC itself.

In
July 1999 we entered into an agreement relating to the development and manufacture of GSM modules with Amtal International Limited. Amtal, acting as agent for TCL Industrial
Holdings Limited, agreed to purchase an initial order of 200,000WISMOmodules. TheWISMOmodules
provided pursuant to this agreement are for use in mobile telephones. We commenced shipment under the agreement in July 2000 and completed the initial shipment in early 2001. We continued to
shipWISMOmodules to Amtal under the agreement through 2002. The agreement was terminated in October 2002. In
November 2002, we began selling directly to TCL. In February 2000, we entered into an agreement relating to the development and manufacture of a GSM hand held portable with NEC
Corporation. The contract called for an initial order by NEC of 600,000WISMOmodules to be delivered within the first 12 months of production.
TheWISMOmodules to be provided pursuant to this agreement are based on theWISMO2C
dual-band GSM modules and are for use in mobile telephones. The agreement provides for us paying NEC liquidated damages in the event that certain development schedule milestones are not
met. The price to be paid perWISMOmodule shall be reviewed each quarter and may be amended with the written agreement of both parties. The agreement
may be terminated with 90 days prior written notice if either party fails to perform a material obligation of the Agreement and such failure is not remedied within 30 days. We began
delivering product to NEC Corporation in 2001.

In
June 1999, we entered into a contract for manufacturing and related services with Solectron-France S.A. Pursuant to this agreement, Solectron manufactures, assembles and tests
ourWISMOmodule lines. We are required to provide Solectron with certain specified components necessary for the manufacturing of WISMOmodules and Solectron provides
other specified components. The agreement was set to expire on June 30, 2002 but was extended by an
amendment. We are currently in the process of renegotiating the terms of the extended agreement.

In
February 2000 we entered into an agreement with Funkanlagen. This agreement calls for an initial order of 100,000WISMOmodules
to be delivered over a 14-month period. TheWISMOmodules

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provided
pursuant to this agreement are for use in telemetry applications. We commenced shipment under the agreement in March 2000 and completed the initial shipment by the end of 2001. We are
continuing to shipWISMOmodules to Funkanlagen under the agreement. We are required to give Funkanlagen 60 days prior notice of any price
modifications for our products. The agreement may be terminated by either party by providing written notice of termination 180 days prior to the effective date of termination.

In
January 1999, October 2001, January 2002, May 2002, November 2002 and May 2003, we entered into crosslicense agreements or similar agreements
with Motorola Inc., Philips N.V., Siemens A.G., Qualcomm Inc., NEC and Alcatel, respectively. For a summary of each of these agreements, please see "Item 4Information
on the CompanyIntellectual Property".

Exchange Controls

See "Limitations Affecting Shareholders of a French Company" in Amendment No. 1 to our registration statement on Form F-1, registration
number 333-11764, dated and filed with the Securities and Exchange Commission on June 6, 2000.

Taxation

French Taxation

The following discussion generally summarizes the material French tax consequences of purchasing, owning and disposing of shares and ADSs. This discussion is
based on the laws in force on the date of this annual report, and is subject to any changes in applicable French laws or in any applicable double taxation conventions or treaties with France and
another country or territory occurring after this date.

There
are currently no procedures available for non-U.S. residents who are holders of ADSs or shares to claim or receive from the French tax authorities any tax treaty
benefits with respect to dividends. These benefits include payment of theavoir fiscaland potential reduced withholding tax rates, that a holder may be
entitled to receive under a treaty between France and the holder's country of residence. Those considering the purchase of shares or of ADSs, including non-U.S. residents, are urged to
consult their own tax advisors concerning the consequences of purchase, ownership and disposition of ADSs.

Taxation on sale or disposition of shares or ADSs

Non-residents of France are generally not subject to any French income tax or capital gains tax on the sale or disposition of shares or ADSs, unless
they have held, either individually or jointly with family members, directly or indirectly, more than 25% of the dividend rights (bénéfices
sociaux) of the company at any time during the five preceding years. This rule may be modified by more favorable provisions of a tax treaty. Foreign states, international
organizations and certain public bodies are generally not French residents for French tax purposes.

If
a transfer of a listed company's shares is evidenced by a written agreement, that agreement is, in principle, subject to registration formalities, including a 1% registration duty
assessed on the market value of the shares (subject to a maximum assessment of €3,049 per transfer). Generally, no such duty is due if the agreement providing the transfer of a listed
company's shares is effected by means of a written agreement that is executed outside France. In general, no stock exchange stamp tax is payable on the sale of shares by non-French
residents. Prospective investors in shares or ADSs should consult their own advisors concerning the applicability of French transfer tax to any agreement evidencing the transfer of their shares or
ADSs.

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Taxation of dividends on shares

Under French law, our dividends are paid out of after-tax income. French residents are entitled to a tax credit, known as the avoir fiscal,
 equal to 50% of any dividend we pay. However, the 2003 Finance Law provides that, subject to certain limited exceptions, the rate of the avoir fiscalis reduced to 10% in 2003 of the dividend paid when
used or received by persons other than individuals and companies owning at least 5% of
the share capital of the distributing company. Dividends paid to non-French residents normally are subject to a 25% French withholding tax and non-residents are not eligible
for the benefit of theavoir fiscal. Non-resident holders that are entitled to and comply with the procedures for claiming benefits under an
applicable tax treaty may benefit from a reduced rate of withholding tax and may be entitled to a tax credit in their country of residence equal to the amount of the tax withheld in France. They also
may be entitled to receive a refund of theavoir fiscal,as described below.

France
has entered into treaties with the following countries, territories andTerritoires d'Outre-Merunder which qualifying
residents are entitled to obtain, from the French tax authorities, a reduction (generally to 15%) of all or part of the French withholding tax and a refund of theavoir
fiscal(net of applicable withholding tax). In the case of German tax residents, a tax credit in an amount equal to, and in lieu of the applicableavoir
fiscalis available. Treaties with some of the countries or territories listed below contain specific limitations applicable to corporate entities' eligibility to the benefit
of theavoir fiscalor limit the right to such a refund strictly to individual residents as opposed to corporate entities.

CountriesAustralia

MexicoAustria

NetherlandsBelgium

New ZealandBolivia

NigerBrazil

NorwayBurkina Faso

PakistanCameroon

SenegalCanada

SingaporeFinland

South KoreaGabon

SpainGhana

SwedenGermany

SwitzerlandIceland

TogoIndia

TurkeyIsrael

United KingdomItaly

United States of AmericaIvory Coast

VenezuelaJapanLuxembourg

Territoires d'Outre Mer and OthersMalaysia

MayotteMali

New CaledoniaMalta

Saint-Pierre et MiquelonMauritius


Dividends
paid to non-residents of France benefiting from theavoir fiscalin accordance with a tax treaty (other than German
residents) will be subject at the time of payment to withholding tax at the reduced rate, as provided in the applicable treaty rather than to the 25% French withholding tax, provided that they
establish their entitlement to the reduced rate before the payment of the dividend.

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French
companies that distribute dividends out of profits which were not taxed at the ordinary corporate rate, or which have been earned and taxed more than five years before the
distribution of the dividend must pay an equalization tax calledprécompteequal to 50% of the net dividend before withholding tax. When
a tax treaty does not provide for a refund of theavoir fiscalor when the non-resident investor is not entitled to such refund but
otherwise is entitled to the benefits of a tax treaty, that investor may obtain from the French tax authorities a refund, net of applicable withholding tax, of the précomptepaid in cash by the
company, if any.

Estate and gift tax

France imposes estate and gift tax on the shares of a French company acquired by inheritance or gift from a non-resident of France. France has entered
into estate and gift tax treaties with a number of countries under which, assuming certain conditions are met, residents of the treaty countries may be exempted from estate and gift taxes or may
obtain a tax credit. Prospective investors in shares or ADSs should consult their own advisors concerning the applicability of French estate and gift tax to their investment in Wavecom and the
availability of, and the conditions for claiming exemption under an applicable treaty.

Wealth tax

In the absence of a more favorable tax treaty, the French wealth tax (impôt de solidarité sur la
fortune) does not apply to non-French resident individual investors owning directly or indirectly less than 10% of the company's share capital.

Taxation of U.S. Investors

The following discussion generally summarizes the material U.S. federal tax consequences and the material French tax consequences of the purchase, ownership and
disposition of shares or ADSs by holders who are for United States federal income tax purposes:



and,
solely for purposes of the discussion of French tax consequences below, only the above-described holders:



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This
discussion may not describe all of the tax considerations related to the purchase, ownership and disposition of shares or ADSs that may be relevant to an investor in light of that
investor's particular tax situation. In particular, this discussion deals with holders that hold shares or ADSs as capital assets, as that term is defined in the U.S. Internal Revenue Code, and does
not address the tax considerations relevant to investors that are subject to special tax rules, such as financial institutions, insurance companies, tax-exempt organizations, securities
dealers, persons subject to the alternative minimum tax, persons who are owners of an interest in a partnership or other pass-through entity that is a holder of shares or ADSs, persons
that will hold shares or ADSs as part of an integrated investment, including a straddle, hedging or conversion transaction, comprised of shares or ADSs and one or more other positions for tax purposes
and persons that have a functional currency other than the U.S. dollar. For a discussion of French tax matters relating to the holdings of shares or ADSs generally, see "French Taxation".

The
statements on United States tax law are based on the tax laws and practice of the United States, and the statements on French tax law are based upon the tax laws and practice of
France, in effect on the date of this annual report as well as on the U.S.-French income tax convention, all of which are subject to change. In addition, the statements are based in part upon the
representations of the Bank of New York and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms. Owners and
prospective purchasers of shares or ADSs should consult their own advisors as to the tax consequences of the purchase, ownership and disposition of shares or ADSs in light of their particular
circumstances, including the effect of any state or local and other foreign tax laws.

French Taxation

The following discussion generally summarizes the material French tax consequences to holders of the acquisition, ownership and disposition of the shares or ADSs.

Holders of ADSs deemed to be owners of shares.For purposes of the U.S.-French income tax convention, owners of ADSs will be
treated as the owners of the shares represented by such ADSs. Exchanges, deposits and withdrawals of shares for ADSs or ADSs for shares by a holder will not result in the imposition of French tax.

Dividends.Dividends paid to non-residents of France generally are subject to French withholding tax at a 25%
rate and are not eligible for the benefit of theavoir fiscal.Theavoir fiscalis a tax credit
available to French residents equal to 50% of the amount of dividends received from French companies such as ours. However, subject to certain limited exceptions, the 2003 Finance Law provides that
the rate of theavoir fiscalis reduced to 10% in 2003 of the dividend paid when used or received by persons other than individuals and corporations
owning at least 5% of the distributing company. Such persons may also be entitled to an additional tax credit equal to (i) 80% of the précompte, paid in cash if theavoir fiscalis calculated at a 10% rate. Under the
U.S.-French income tax convention, the rate of French withholding tax on dividends paid to eligible holders is reduced to 15%. Such holders are also entitled to a payment equal to the avoir fiscalat
the rate of [25% (for 2001), 15% (for 2002),] 10% (for 2003) or 50%, if the holder is an individual, less a 15%
withholding tax. Subject to certain conditions, such holders may also benefit from the additional tax credit equal to 50%, 70% or 80% of the

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précompteas previously mentioned. Dividends paid to a holder will be immediately subject to the reduced rate of withholding of 15% at the time of payment,
provided that such holder establishes before the date of payment that it is a resident of the United States under the U.S.-French income tax convention and, if it is not an individual, that it is the
owner of all the rights relating to the full ownership of the shares or ADSs, including, but not limited to, dividend rights. A holder generally will be entitled to receive a payment of the avoir fiscalonly if such holder, or its partners, beneficiaries or grantors, if the holder is a partnership, estate or trust, is subject to U.S.
federal income tax on theavoir fiscalpayment and the dividend to which it relates.

Some
entities are not entitled to the fullavoir fiscal. Tax-exempt U.S. pension funds, various other tax-exempt
entities, not-for-profit organizations and individuals (with respect to dividends beneficially owned by such individuals and derived from an investment retirement account) that
own, directly and indirectly, less than 10% of our capital, and that satisfy certain filing formalities:



Currently,
to benefit from the reduced rate of French withholding tax immediately upon payment of a dividend and to receive the payment of theavoir
fiscalor the partial payment of theavoir fiscal, a holder must complete and file French Treasury Form RF 1A
EU-No. 5052, Application for Refund, before the date of payment of the relevant dividend together with, if such holder is not an individual, an affidavit attesting that it is the
beneficial owner of all the rights attached to the full ownership of such shares or ADSs including but not limited to dividend rights, or, if such holder is not the owner of all such rights, certain
information concerning the holder of the rights other than the dividend rights. If completion of the French Treasury Form and the attached affidavit is not possible prior to the payment of dividends,
the holder may, however, be eligible for the reduced rate of 15% at the time the dividends are paid if the holder duly and timely completes and provides to the French tax authorities prior to the
payment of dividends a simplified certificate, stating that:



The
French Treasury Form RF 1A EU-No. 5052, Application for Refund, together with instructions, will be provided by the depositary to any ADR holder upon request.
Copies are also
available from the U.S. Internal Revenue Service. The depositary will arrange for the filing with the French tax authorities of all forms or certificates completed by holders and returned to the
depositary in time for prompt filing with the French tax authorities. If the French Treasury Form is not timely filed, the holder may claim a refund of the excess withholding tax and may claim the avoir fiscalby filing the French Treasury Form before December 31 of the year following the year in which the related dividend is paid.

Theavoir fiscalor partialavoir fiscalis generally expected to be paid to holders
within 12 months of filing the French Treasury Form RF 1A EU-No. 5052, Application for Refund, but not before January 15 following the end of the calendar year in
which the dividend is paid.

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Amounts
distributed as dividends by French companies out of profits which have not been taxed at the ordinary corporate income tax rate or which have been earned and taxed more than five
years before the distribution are subject to a payment of an equalization tax calledprécompteby such companies equal to 50% of the net
amount distributed. A holder not entitled to the full or partialavoir fiscalgenerally may obtain from the French tax authorities a refund of any précompte,at the rate of 50%, paid in cash, as opposed to anyprécomptepaid by offsetting French and/or foreign tax credit, in respect of the dividends less the French withholding tax at the rate of 5 or 15%. Holders entitled to the refund of the précomptemust
apply for such refund by filing a French Treasury Form RF 1B EU-No. 5053 before the end of the year
following the year in which the dividend was paid. The form, together with instructions, is available from the U.S. Internal Revenue Service or at theCentre des
Impôts des Non-Résidentsat 9, rue d'Uzés, 75094 Paris Cedex 2.

Sales of shares or ADSs.Under the U.S.-French income tax convention, no French tax is levied on any capital gain derived
from the sale of shares or ADSs by a holder.

Estate and gift tax.Under the estate and gift tax convention between the United States and France dated November 24,
1978, a transfer of shares or ADSs by gift or by reason of the death of a holder entitled to benefits under that convention will not be subject to French gift or inheritance tax, unless the donor or
the decedent was domiciled in France at the time of making the gift, or of his or her death, or the shares or ADSs were used or held for use in the conduct of a business or profession through a
permanent establishment or fixed base in France.

Wealth tax.The French Wealth Tax(impôt de solidarité sur la
fortune)does not apply to a holder, provided that the holder does not own, individually or with related persons, directly or indirectly, shares or ADSs which collectively
represent the right to at least 10% of the corporate earnings and the shares or ADSs are not part of the assets of a permanent establishment or a fixed base located in France.

Transfer taxes.Transfers of a listed company's shares will not be subject to French registration or transfer taxes, unless
the transfer is effected by means of a written agreement that is executed within France. Should such written agreement be executed within France, it would be subject to transfer taxes at the rate of
1% to a maximum of €3,049 per transaction. A stock exchange stamp tax may be due in some cases.

United States Taxation

The following discussion generally summarizes the material U.S. federal income tax consequences to U.S. holders (as defined above) of the acquisition, ownership
and disposition of the ADSs or shares.

Holders of ADSs deemed to be owners of shares.For purposes of the U.S. Internal Revenue Code, a U.S. holder of ADSs will be
treated as the owner of the underlying shares represented by such ADSs. Exchanges, deposits and withdrawals of shares for ADSs or ADSs for shares by a U.S. holder will not result in recognition of
gain or loss for U.S. federal income tax purposes.

Dividends.Distributions, other than a mere pro rata distribution of shares, made by us with respect to our shares, including
shares represented by ADSs, and including the amount of any French taxes withheld there from, will be includable in the gross income of a U.S. holder as dividend income from a source outside the
United States to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes.Avoir fiscaland précomptepayments will be considered dividends to the same extent. Such dividends will not be eligible for the dividends received
deduction generally allowed to corporations. To the extent, if any, that the amount of any such distribution exceeds our current and accumulated earnings and profits as determined for U.S. federal
income tax purposes, it will be treated first as a tax-free return of the U.S. holder's tax basis in its shares or ADSs to the extent thereof, and then, to the extent in excess of such tax
basis, as capital gain. Dividends paid in euro will be includable in income in a U.S. dollar amount based on the prevailing

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U.S.
dollar-euro exchange rate on the date of receipt by the depositary or the date of receipt by the U.S. holder of shares, whether or not the payment is converted into U.S. dollars at
that time. Any gain or loss recognized upon a subsequent sale or conversion of the euro will be U.S. source ordinary income or loss. A U.S. holder may also recognize foreign currency gain or loss,
which will be U.S. source ordinary income or loss, on a subsequent conversion or other disposition of the refund of the excess withholding tax initially withheld from a dividend payment if the refund
is converted into U.S. dollars at an exchange rate different than the rate used to translate the U.S. holder's dividend income. Any French tax withheld from a dividend will be treated as a foreign tax
creditable, subject to the limitations discussed below, against the U.S. federal income tax liability of a U.S. holder. Amounts creditable against U.S. tax are permitted, at the election of the U.S.
holder, to be deducted. Under the U.S. Internal Revenue Code, the amount of foreign tax eligible for credit against the U.S. federal income tax liability of a U.S. holder is limited to the amount of
U.S. tax attributable to the U.S. holder's taxable income from sources outside the United States. For purposes of computing this limitation, the amount of foreign tax eligible for credit is calculated
separately with respect to specific classes of income. For this purpose, dividends paid by us will be "passive income" or in the case of certain U.S. holders, "financial services income". Prospective
investors should consult their own tax advisors regarding the availability of such a credit.

Sale of ADSs or shares.Upon a sale or exchange of ADSs or shares, a U.S. holder will recognize gain or loss for U.S. federal
income tax purposes equal to the difference between the amount realized upon the disposition and such U.S. holder's adjusted tax basis in the ADSs or shares. Subject to the discussion below under the
heading "Passive Foreign Investment Company", such gain or loss will generally be a capital gain or loss. Capital gains recognized on the sale or exchange by individuals of capital assets are subject
to a 20% maximum tax rate if the capital assets have been held for more than one year or 18% for capital assets acquired after 2000 and held for more than five years. Gains on the sale of ADSs or
shares held for one year or less will be treated as short-term capital gain and taxed as ordinary income at the U.S. holder's marginal income tax rate. Capital losses may only be used to
offset capital gains, except that U.S. individuals may deduct up to $3,000 of net capital losses against ordinary income. Prospective U.S. investors should consult their own tax advisors regarding the
availability of such an offset.

No
French tax is imposed on the capital gains of a U.S. holder arising from the sale or exchange of ADSs or shares provided that certain requirements of the U.S-French income
tax convention are satisfied. See "French TaxationSales of Shares or ADSs". In the event
that French tax is imposed on capital gains from the sale or exchange of ADSs or shares, U.S. holders should consult their own tax advisors with respect to their ability based on their particular
circumstances to credit such tax against their U.S. federal income.

Passive Foreign Investment Company Considerations

If, during any taxable year, 75% or more of our gross income consists of certain types of passive income, or the average value during a taxable year of our
passive assets (generally assets that generate passive income) is 50% or more of the average value of all of our assets, we will be treated as a "passive foreign investment company", or PFIC, under
U.S. federal income tax law for such year and succeeding years. Based on an analysis of our financial position, including an estimate of the value of our assets, we believe that we have not been a
PFIC for any preceding taxable year and expect that we will not become a PFIC during the current taxable year. Our determination of PFIC status may be challenged by the Internal Revenue Service. We
intend to use reasonable efforts to avoid becoming a PFIC, but can give no assurance that we will be successful. If we determine that we are a PFIC, we will take reasonable steps to notify U.S.
shareholders.

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If
we were classified as a PFIC, unless a U.S. shareholder made one of the elections described below in a timely manner, a special tax regime would apply to both:



Under
this regime, any excess distribution and realized gain would be treated as ordinary income and would be subject to tax as if the excess distribution or gain had been realized
rateably over the U.S. shareholder's holding period for the ordinary shares. As a result of this treatment:



If
a U.S. shareholder makes a mark-to-market election with respect to the ordinary shares, the shareholder will not be subject to the PFIC rules described above.
Instead, in general, the shareholder will include as ordinary income each year the excess, if any, of the fair market value of the shares at the end of the taxable year over the adjusted basis in the
shares. The U.S. shareholder will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of the shares over their fair market value at the end of the taxable
year, but only to the extent of the net amount of income previously included as a result of the mark-to-market election. The U.S. shareholder's basis in the shares will be
adjusted to reflect any such income or loss amounts. Any gain realized upon disposition of the shares will also be taxed as ordinary income.

The
special PFIC tax rules described above also will not apply to a U.S. shareholder if the shareholder makes a QEF election, that is, the shareholder elects to have us treated as a
qualified electing fund for U.S. federal income tax purposes. If we determine that we are a PFIC, we will provide U.S. shareholders with such information as such shareholders may require from us in
order to make an effective QEF election.

If
a U.S. shareholder makes a QEF election, the shareholder will be required to include in gross income for U.S. federal income tax purposes the shareholder's pro rata share of our
ordinary earnings and net capital gain for each of our taxable years that we are a PFIC, regardless of whether or not the shareholder receives any distributions from us. The U.S. shareholder's basis
in ordinary shares will be increased to reflect undistributed amounts which are included in the shareholder's gross income. Distributions of previously includible income will result in a corresponding
reduction of basis in the ordinary shares and will not be taxed again as a distribution to the shareholder.

U.S.
shareholders are urged to consult their own tax advisers concerning the potential application of the PFIC rules to their ownership and disposition of ordinary shares.

Information reporting and backup withholding

Dividend payments with respect to ADSs or shares and proceeds from the sale, exchange or redemption of ADSs or shares may be subject to information reporting to
the U.S. Internal Revenue Service and possible U.S. backup withholding (currently at a 30% rate). Backup withholding will not apply to you, however, if you furnish a correct taxpayer identification
number or certificate of foreign status and make any other required certification or if you are otherwise exempt from backup withholding. If you are required to establish your exempt status, you
generally must provide such

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certification
on U.S. Internal Revenue Service Form W-9 in the case of U.S. persons and on U.S. Internal Revenue Service Form W-8BEN (or suitable substitute form)
in the case of non-U.S. persons.

Amounts
withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup
withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information.

Documents on Display

We are subject to the reporting requirements of the U.S. Securities Exchange Act of 1934 (the "Exchange Act") applicable to foreign private issuers. In connection
with the Exchange Act, we file reports, including this annual report on Form 20-F, and other information with the Securities and Exchange Commission. Such reports and other
information are available on the SEC's Edgar website at www.sec.gov, and may also be inspected and copied at prescribed rates at the public reference facilities maintained by the SEC at its Public
Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Such reports and other information may be obtained, upon written request, from The Bank of New York, as depositary, at its office
located at 101 Barclay Street, New York, NY 10286.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The following discusses our exposure to market risk related to changes in interest rates, equity prices and foreign currency exchange rates. This discussion
contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors including those set forth in the Risk Factors
section.

As
of December 31, 2002, all of our cash and cash equivalents were classified as available-for-sale. The principal portion of our investments are not
subject to interest rate risk; however, declines in interest rates over time will reduce our interest income. A hypothetical 10% move in interest rates would have an insignificant effect on our
financial position, results of operations and cash flows. We do not have any investments in equity or debt securities traded in the public markets, nor do we currently use derivative financial
instruments. Therefore, we do not currently have any direct equity price risk.

We
conduct a significant portion of our business in currencies other than the Euro, the currency in which we report our financial statements. Assets and liabilities of our subsidiaries
are translated into Euros at exchange rates in effect as of the applicable balance sheet date, and any resulting translation adjustments are included as an adjustment to shareholders' equity. Revenues
and expenses generated from these subsidiaries are translated at average exchange rates during the month the transactions occur. Gains and losses from these currency transactions are included in net
earnings. Historically, we have generated a significant portion of our revenues and incurred a significant portion of our expenses in U.S. dollars and Hong Kong dollars. As a result, our operating
results have been in the past, and may be in the future, adversely impacted by currency exchange rate fluctuations on the Euro value of foreign currency (predominantly the U.S.
dollar)denominated revenues and expenses. We cannot predict the effect of exchange rate fluctuations upon our future operating results. As of December 31, 2002, we were not engaged
in a significant or speculative currency hedging program to cover our currency transaction or translation exposure. In January 2003, we began to use a combination of options and forward
exchange contracts in order to minimize the risk to our net U.S. dollar position over the coming months.

See
also Item 5: "Operating and Financial Review and ProspectImpact of currency fluctuations".

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Use of Proceeds

We successfully completed a public offering of our securities in June 2000, with net proceeds to Wavecom of €96.5 million.

In
2001, we used approximately €4.9 million to purchase property and equipment. In 2002, we used approximately €27.3 million to purchase
property and equipment.

ITEM 15. CONTROLS AND PROCEDURES

(a)Evaluation of disclosure controls and procedures.Based on the evaluation of our disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act) as of a date within 90 days of the filing date of this annual report on
Form 20-F, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and are
operating in an effective manner.

(b)Changes in internal controls.There were no significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of the most recent evaluation.

ITEM 18. FINANCIAL STATEMENTS

See the financial statements beginning on page F-1.

ITEM 19. EXHIBITS

|1   |  | Statuts(by-laws) of the Registrant, updated as of February 7, 2003 (English Translation).*                                                                                                                                                                             
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1 |  | Form of Deposit Agreement among the Registrant, The Bank of New York, as Depositary, and the Holders of American Depositary Shares issued thereunder (filed as Exhibit 4.1 to the Registrant's Registration Statement on Form F-1, File No.
333-10372).                
|2.2 |  | Form of American Depositary Receipt (filed as Exhibit 4.2 to the Registrant's Registration Statement on Form F-1, File No. 333-10372).                                                                                                                                 
|4.1 |  | GSM Essential Properties Cross License Agreement, dated January 6, 1999, between the Registrant and Motorola, Inc. (filed as Exhibit 10.3 to the Registrant's Registration Statement on Form F-1, File No. 333-10372).**                                               
|4.2 |  | Agreement relating to the sale of GSM modules, dated July 7, 1999 between Amtal International Limited and Wavecom Asia Pacific Limited (filed as Exhibit 10.3 to the Registrant's Registration Statement on Form F-1, File No. 333-10372).**                           
|4.3 |  | Agreement relating to the development and manufacture of a GSM hand held portable, dated February 11, 2000 between NEC Corporation and Wavecom S.A (filed as Exhibit 10.2 to the Registrant's Annual Report on Form 20-F, filed with the Commission on May
24, 2000).**
|    |  |                                                                                                                                                                                                                                                                        

64

---

|4.4  |  | Contract for Manufacturing and Related Services, dated June 17, 1999 between Wavecom S.A. and Solectron-France S.A. (filed as Exhibit 10.3 to the Registrant's Annual Report on Form 20-F, filed with the Commission on May 24, 2000).**                                
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.5  |  | Agreement between Funkanlagen and Wavecom S.A. dated February 25, 2000 (filed as Exhibit 10.4 to the Registrant's Annual Report on Form 20-F, filed with the Commission on May 24, 2000).**                                                                             
|4.6  |  | GSM/DCS 1800/1900 Patent License Agreement between Wavecom S.A. and Koninklijke Philips Electronics N.V., dated October 9, 2001 (filed as Exhibit 4.6 to the Registrant's Annual Report on Form 20-F, filed with the Commission on June 28,
2002).**                    
|4.7  |  | Agreement relating to a cross-license of essential GSM patents between Wavecom S.A. and Siemens Aktiengesellschaft, effective as of October 31 2001 (filed as Exhibit 4.7 to the Registrant's Annual Report on Form 20-F, filed with the Commission
on June 28, 2002).**
|4.8  |  | GSM patent non assertion agreement with NEC Corporation effective November 19, 2002.*&                                                                                                                                                                                  
|4.9  |  | Patent License Agreement with Thomson Licensing S.A. and Alcatel S.A., effective January 1, 2003.*&                                                                                                                                                                     
|8    |  | List of subsidiaries of the Registrant.*                                                                                                                                                                                                                                
|10   |  | Consent of Ernst & Young Audit.*                                                                                                                                                                                                                                        
|99.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350*                                                                                                                                                                                        
|99.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350*                                                                                                                                                                                            

---

65

---

SIGNATURES

Wavecom S.A. hereby confirms that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

|                    |  | WAVECOM S.A.
|------------------- |  | ------------
|                    |  | By:         
|Date: May 21, 2003. |  |             

66

---



CERTIFICATIONS

I,
Aram Hékimiam, Chief Executive Officer, certify that:



|Date: May 21, 2003 |  | By: | /s/ARAM HÉKIMIANAram Hékimian
Chief Executive Officer
(Principal Executive Officer)
|------------------ |  | --- | -----------------------------------------------------------------------------------

67

---

CERTIFICATIONS

I,
Deborah Choate, Chief Financial Officer, certify that:



|Date: May 21, 2003 |  | By: | /s/DEBORAH CHOATEDeborah Choate
Chief Financial Officer
(Principal Financial Officer)
|------------------ |  | --- | -------------------------------------------------------------------------------------

68

---



WAVECOM S.A.        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Report of Independent Auditors                                                                                
|Consolidated Statements of Operations for the years ended December 31, 2000, 2001 and 2002                    
|Consolidated Balance Sheets at December 31, 2000, 2001 and 2002                                               
|Consolidated Statement of Changes in Shareholders' Equity for the years ended December 31, 2000, 2001 and 2002
|Consolidated Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002                    
|Notes to Consolidated Financial Statements                                                                    

F-1

---



REPORT OF INDEPENDENT AUDITORS

The
Board of Directors and Shareholders
Wavecom S.A.

We
have audited the accompanying consolidated balance sheets of Wavecom S.A. as of December 31, 2000, 2001 and 2002, and the related consolidated statements of operations, changes
in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2002. These consolidated financial statements are the responsibility of Wavecom's management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Wavecom, S.A. at December 31, 2000,
2001 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States.

ERNST &
YOUNG Audit

represented
by
John Mackey

Paris,
France
February 10, 2003, except for note 15 for which the date is April 4, 2003

F-2

---



WAVECOM S.A.        CONSOLIDATED STATEMENTS OF OPERATIONS        (in thousands, except share and per share data)

|                                                        |                                           | Years ended December 31, |        
|------------------------------------------------------- | ----------------------------------------- | ------------------------ | -------
|
|Revenues:                                               |                                           |                          |        
|                                                        | Product sales                             |                          | €      
|                                                        | Technology development and other services |                          |        
|                                                        |                                           |                          |        
|                                                        | Total revenues                            |                          |        
|Cost of revenues:                                       |                                           |                          |        
|                                                        | Cost of goods sold                        |                          |        
|                                                        | Cost of services                          |                          |        
|                                                        |                                           |                          |        
|                                                        | Total cost of revenues                    |                          |        
|                                                        |                                           |                          |        
|Gross profit                                            |                                           |                          | 9,594  
|Operating expenses:                                     |                                           |                          |        
|                                                        | Research and development                  |                          |        
|                                                        | Sales and marketing                       |                          |        
|                                                        | General and administrative                |                          |        
|                                                        | Deferred compensation amortization        |                          |        
|                                                        | Amortization of goodwill                  |                          |        
|                                                        |                                           |                          |        
|                                                        | Total operating expenses                  |                          |        
|                                                        |                                           |                          |        
|Operating income (loss)                                 |                                           |                          | (19,778
|Interest expense                                        |                                           |                          | (255   
|Interest income                                         |                                           |                          | 3,000  
|Foreign exchange gain (loss)                            |                                           |                          | 989    
|Provision for loss on long-term investments             |                                           |                          |       
|                                                        |                                           |                          |        
|Income (loss) before minority interest and income taxes |                                           |                          | (16,044
|Minority interests                                      |                                           |                          | (6     
|                                                        |                                           |                          |        
|Income (loss) before income taxes                       |                                           |                          | (16,038
|Income tax expense (benefit)                            |                                           |                          | (1,534 
|                                                        |                                           |                          |        
|Net income (loss)                                       |                                           | €                        | (14,504
|                                                        |                                           |                          |        
|Basic net income (loss) per share                       |                                           | €                        | (1.03  
|                                                        |                                           |                          |        
|Diluted net income (loss) per share                     |                                           | €                        | (1.03  
|                                                        |                                           |                          |        
|Number of shares used for computing:                    |                                           |                          |        
|                                                        | basic net income (loss) per share        |                          |        
|                                                        | diluted net income (loss) per share      |                          |        

See
notes to financial statements

F-3

---



WAVECOM S.A.        CONSOLIDATED BALANCE SHEETS        (in thousands, except share data)

|                                                                                                                  |                                                                                                                                     | December 31,                                                   |        
|----------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | -------
|
|ASSETS                                                                                                            |                                                                                                                                     |                                                                |        
|Current assets:                                                                                                   |                                                                                                                                     |                                                                |        
|                                                                                                                  | Cash and cash equivalents                                                                                                           |                                                                | €      
|                                                                                                                  | Short-term investments                                                                                                              |                                                                |        
|                                                                                                                  | Accounts receivable (less allowance for doubtful accounts of €477, €328 and €243 at December 31, 2000, 2001 and 2002, respectively) |                                                                |        
|                                                                                                                  | Inventory, net                                                                                                                      |                                                                |        
|                                                                                                                  | Value added tax recoverable                                                                                                         |                                                                |        
|                                                                                                                  | Prepaid expenses and other current assets                                                                                           |                                                                |        
|                                                                                                                  | Deferred tax assets, current portion                                                                                                |                                                                |        
|                                                                                                                  |                                                                                                                                     |                                                                |        
|                                                                                                                  |                                                                                                                                     | Total current assets                                           |        
|Property and equipment, net                                                                                       |                                                                                                                                     |                                                                | 10,067 
|Goodwill, net of accumulated amortization of €47, €326 and €326 at December 31, 2000, 2001 and 2002, respectively |                                                                                                                                     |                                                                | 1,279  
|Long-term investments, net of provision for loss of €716 at December 31, 2001 and 2002                            |                                                                                                                                     |                                                                | 4,078  
|Other assets                                                                                                      |                                                                                                                                     |                                                                | 4,159  
|Deferred tax assets                                                                                               |                                                                                                                                     |                                                                |       
|                                                                                                                  |                                                                                                                                     |                                                                |        
|                                                                                                                  |                                                                                                                                     | Total assets                                                   |        
|                                                                                                                  |                                                                                                                                     |                                                                |        
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                              |                                                                                                                                     |                                                                |        
|Current liabilities:                                                                                              |                                                                                                                                     |                                                                |        
|                                                                                                                  | Overdraft facility                                                                                                                  |                                                                | €      
|                                                                                                                  | Accounts payable                                                                                                                    |                                                                |        
|                                                                                                                  | Accrued compensation                                                                                                                |                                                                |        
|                                                                                                                  | Other accrued expenses                                                                                                              |                                                                |        
|                                                                                                                  | Current portion of loans                                                                                                            |                                                                |        
|                                                                                                                  | Current portion of capitalized lease obligations                                                                                    |                                                                |        
|                                                                                                                  | Deferred revenue and advances received from customers                                                                               |                                                                |        
|                                                                                                                  | Income tax payable                                                                                                                  |                                                                |        
|                                                                                                                  | Other liabilities                                                                                                                   |                                                                |        
|                                                                                                                  |                                                                                                                                     |                                                                |        
|                                                                                                                  |                                                                                                                                     | Total current liabilities                                      |        
|Long-term portion of capitalized lease obligations                                                                |                                                                                                                                     |                                                                | 166    
|Other long-term liabilities                                                                                       |                                                                                                                                     |                                                                |       
|                                                                                                                  |                                                                                                                                     |                                                                |        
|                                                                                                                  |                                                                                                                                     | Total long-term liabilities                                    |        
|                                                                                                                  |                                                                                                                                     |                                                                |        
|Minority interests                                                                                                |                                                                                                                                     |                                                                | 1,165  
|Commitments and contingencies                                                                                     |                                                                                                                                     |                                                                |        
|Shareholders' equity:                                                                                             |                                                                                                                                     |                                                                |        
|                                                                                                                  | Shares, €1 nominal value; 14,682,281 shares issued and outstanding at                                                               |                                                                |        
|                                                                                                                  |                                                                                                                                     | December 31, 2000; 14,810,614 shares issued and outstanding at |        
|                                                                                                                  |                                                                                                                                     | December 31, 2001; 15,107,890 shares issued and outstanding at |        
|                                                                                                                  |                                                                                                                                     | December 31, 2002                                              |        
|Additional paid in capital                                                                                        |                                                                                                                                     |                                                                | 132,993
|Deferred compensation                                                                                             |                                                                                                                                     |                                                                | (3,606 
|Retained earnings (deficit)                                                                                       |                                                                                                                                     |                                                                | (34,979
|Accumulated other comprehensive income (loss)                                                                     |                                                                                                                                     |                                                                | (1,080 
|                                                                                                                  |                                                                                                                                     |                                                                |        
|                                                                                                                  |                                                                                                                                     | Total shareholders' equity                                     |        
|                                                                                                                  |                                                                                                                                     |                                                                |        
|                                                                                                                  |                                                                                                                                     | Total liabilities and shareholders' equity                     |        
|                                                                                                                  |                                                                                                                                     |                                                                |        

See notes to financial statements

F-4

---



WAVECOM S.A        CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY        (in thousands of euro, except share data)

|                             |                                                                                                                                      | Shares                     |           |   |        |       |   |         |        | Accumulated
Other
Comprehensive
Income (loss) |        |        |  
|---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | - | ------ | ----- | - | ------- | ------ | --------------------------------------------- | ------ | ------ | -
|
|
|Balance at December 31, 1999 |                                                                                                                                      | 13,423,469                 |           | € | 13,423 |       | € | 37,297  |        | €                                             | (5,632 | )      | €
|                             | Forfeiture of options and founders' warrants                                                                                         |                            |           |   |        |       |   |         | (268   | )                                             |        | 268    |  
|                             | Amortization of deferred compensation                                                                                                |                            |           |   |        |       |   |         |        |                                               |        | 1,758  |  
|                             | Issuance of shares in connection with the public offering on Nasdaq and theNouveau Marchéat €98.50 per share (net of offering costs) |                            | 1,050,000 |   |        | 1,050 |   |         | 95,497 |                                               |        |        |  
|                             | Issuance of shares in connection with the exercise of 109,842 founders' warrants and 12,494 options at an exercise price of €2.29    |                            | 122,336   |   |        | 122   |   |         | 158    |                                               |        |        |  
|                             | Issuance of shares in connection with the exercise of 79,171 founders' warrants and 7,305 options at an exercise price of €4.57      |                            | 86,476    |   |        | 87    |   |         | 309    |                                               |        |        |  
|                             | Comprehensive loss:                                                                                                                  |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             | Net loss                                                                                                                             |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             | Foreign currency translation                                                                                                         |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      | Total comprehensive loss   |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      |                            |           |   |        |       |   |         |        |                                               |        |        |  
|Balance at December 31, 2000 |                                                                                                                                      | 14,682,281                 |           |   | 14,682 |       |   | 132,993 |        |                                               | (3,606 | )      |  
|                             | Forfeiture of options and founders' warrants                                                                                         |                            |           |   |        |       |   |         | (99    | )                                             |        | 99     |  
|                             | Deferred compensation arising from shares of Arguin Communications issued to minority shareholders                                   |                            |           |   |        |       |   |         | 1,862  |                                               |        | (1,862 | )
|                             | Amortization of deferred compensation                                                                                                |                            |           |   |        |       |   |         |        |                                               |        | 2,378  |  
|                             | Issuance of shares in connection with the exercise of 75,557 founders' warrants and 12,480 options at an exercise price of €2.29     |                            | 88,037    |   |        | 88    |   |         | 113    |                                               |        |        |  
|                             | Issuance of shares in connection with the exercise of 36,743 founders' warrants and 3,553 options at an exercise price of €4.57      |                            | 40,296    |   |        | 41    |   |         | 144    |                                               |        |        |  
|                             | Comprehensive income:                                                                                                                |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             | Net income                                                                                                                           |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             | Foreign currency translation                                                                                                         |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      | Total comprehensive income |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      |                            |           |   |        |       |   |         |        |                                               |        |        |  
|Balance at December 31, 2001 |                                                                                                                                      | 14,810,614                 |           |   | 14,811 |       |   | 135,013 |        |                                               | (2,991 | )      |  
|                             | Forfeiture of options and founders' warrants                                                                                         |                            |           |   |        |       |   |         | (5     | )                                             |        | 5      |  
|                             | Deferred compensation arising from shares of Arguin Communications issued to minority shareholders                                   |                            |           |   |        |       |   |         | 190    |                                               |        | (190   | )
|                             | Amortization of deferred compensation                                                                                                |                            |           |   |        |       |   |         |        |                                               |        | 2,201  |  
|                             | Issuance of shares in connection with the exercise of 154,075 founders' warrants and 25,026 options at an exercise price of €2.29    |                            | 179,101   |   |        | 179   |   |         | 231    |                                               |        |        |  
|                             | Issuance of shares in connection with the exercise of 98,173 founders' warrants and 15,318 options at an exercise price of €4.57     |                            | 113,491   |   |        | 113   |   |         | 405    |                                               |        |        |  
|                             | Issuance of shares in connection with the exercise of 4,684 options at an exercise price of €26.68                                   |                            | 4,684     |   |        | 5     |   |         | 120    |                                               |        |        |  
|                             | Comprehensive income:                                                                                                                |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             | Net income                                                                                                                           |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             | Foreign currency translation                                                                                                         |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      |                            |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      | Total comprehensive income |           |   |        |       |   |         |        |                                               |        |        |  
|                             |                                                                                                                                      |                            |           |   |        |       |   |         |        |                                               |        |        |  
|Balance at December 31, 2002 |                                                                                                                                      | 15,107,890                 |           | € | 15,108 |       | € | 135,954 |        | €                                             | (975   | )      | €
|                             |                                                                                                                                      |                            |           |   |        |       |   |         |        |                                               |        |        |  

See notes to financial statements

F-5

---



WAVECOM S.A.        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in thousands, except share data)

|                                                             |                                                                                                      | Years ended December 31,                              |                                                 
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------------------
|
|Cash flows from operating activities:                        |                                                                                                      |                                                       |                                                 
|Net income (loss)                                            |                                                                                                      | €                                                     | (14,504                                         
|                                                             | Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:      |                                                       |                                                 
|                                                             | Depreciation and amortization of property and equipment                                              |                                                       |                                                 
|                                                             | Provision for loss on long-term investments                                                          |                                                       |                                                 
|                                                             | Amortization of goodwill                                                                             |                                                       |                                                 
|                                                             | Amortization of deferred stock compensation                                                          |                                                       |                                                 
|                                                             | Minority interests                                                                                   |                                                       |                                                 
|                                                             | Deferred taxes                                                                                       |                                                       |                                                 
|                                                             | Increase (decrease) in cash from:                                                                    |                                                       |                                                 
|                                                             |                                                                                                      | Accounts receivable                                   |                                                 
|                                                             |                                                                                                      | Inventory                                             |                                                 
|                                                             |                                                                                                      | Value added tax recoverable                           |                                                 
|                                                             |                                                                                                      | Research tax credit reimbursed                        |                                                 
|                                                             |                                                                                                      | Prepaid expenses and other current assets             |                                                 
|                                                             |                                                                                                      | Accounts payable and other accrued expenses           |                                                 
|                                                             |                                                                                                      | Accrued compensation                                  |                                                 
|                                                             |                                                                                                      | Deferred revenue and advances received from customers |                                                 
|                                                             |                                                                                                      | Income tax payable                                    |                                                 
|                                                             |                                                                                                      | Other payables                                        |                                                 
|                                                             |                                                                                                      | Other                                                 |                                                 
|                                                             |                                                                                                      |                                                       |                                                 
|                                                             |                                                                                                      |                                                       | Net cash provided (used) by operating activities
|                                                             |                                                                                                      |                                                       |                                                 
|Cash flows from investing activities:                        |                                                                                                      |                                                       |                                                 
|                                                             | Acquisition of equity interest in Arguin Communications for $229 cash paid net of $270 cash acquired |                                                       |                                                 
|                                                             | Capital contribution by minority shareholders of Arguin Communications                               |                                                       |                                                 
|                                                             | Acquisition of equity interest in Cambridge Silicon Radio                                            |                                                       |                                                 
|                                                             | Acquisition of Iconn Wireless                                                                        |                                                       |                                                 
|                                                             | Arguin acquisition, net of cash acquired                                                             |                                                       |                                                 
|                                                             | Disposal (acquisition) of short-term investments                                                     |                                                       |                                                 
|                                                             | Acquisition of long-term investments                                                                 |                                                       |                                                 
|                                                             | Purchases of property and equipment                                                                  |                                                       |                                                 
|                                                             | Proceeds from sale of property and equipment                                                         |                                                       |                                                 
|                                                             |                                                                                                      |                                                       |                                                 
|                                                             |                                                                                                      |                                                       | Net cash provided (used) by investing activities
|Cash flows from financing activities:                        |                                                                                                      |                                                       |                                                 
|                                                             | Net increase (decrease) in overdrafts and lines of credit                                            |                                                       |                                                 
|                                                             | Proceeds from loans                                                                                  |                                                       |                                                 
|                                                             | Repayment of loans                                                                                   |                                                       |                                                 
|                                                             | Principal payments on capital lease obligations                                                      |                                                       |                                                 
|                                                             | Proceeds from public offering, net                                                                   |                                                       |                                                 
|                                                             | Exercise of stock options and founders' warrants                                                     |                                                       |                                                 
|                                                             |                                                                                                      |                                                       |                                                 
|                                                             |                                                                                                      |                                                       | Net cash provided (used) by financing activities
|                                                             |                                                                                                      |                                                       |                                                 
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                      |                                                       | (1,216                                          
|Net increase (decrease) in cash and cash equivalents         |                                                                                                      |                                                       | 47,144                                          
|Cash and cash equivalents, beginning of period               |                                                                                                      |                                                       | 22,080                                          
|                                                             |                                                                                                      |                                                       |                                                 
|Cash and cash equivalents, end of period                     |                                                                                                      | €                                                     | 69,224                                          
|                                                             |                                                                                                      |                                                       |                                                 

See notes to financial statements

F-6

---



WAVECOM S.A        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Nature of business and summary of significant accounting policies



Wavecom is organized as asociété anonyme, or limited liability company, under the
laws of the Republic of France. Wavecom was founded in 1993 and is publicly traded on Euronext Paris (Nouveau Marché) in France and on the Nasdaq National Market exchange in the U.S.
Wavecom develops, markets and sells a line of digital wireless standard modules, known asWISMOmodules, for use in mobile telephones and other wireless
applications based on GSM, GPRS and CDMA mobile communications standards. AWISMOmodule is a compact standardized device that contains substantially
all of the software, hardware and other technology needed to enable wireless communications. Wavecom also develops, markets and sells a line of wireless modems. WISMOmodules are distributed through Wavecom's
direct sales force; wireless modems are sold by the direct sales force as well as by distributors.



The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial
statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying footnotes. Actual results could differ from those estimates. The consolidated financial statements include the accounts of Wavecom S.A., its wholly-owned subsidiaries
Wavecom, Inc., a Delaware corporation, Wavecom Asia Pacific Ltd., a Hong Kong corporation, both of which commenced operations in 1998, Wavecom Korea Co. Ltd and Wavecom
Deutschland GmbH, branches transformed into subsidiaries in 2002, and Arguin Communications Inc (61,88% controlling interest purchased in October 2000). Inter-company accounts and transactions
have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation.



The reporting currency of Wavecom, for all years presented, is the euro (€).

The
functional currency of each subsidiary is the local currency. In accordance with Statement of Financial Accounting Standards No. 52, all accounts in the financial statements
are translated into euro from the functional currency at exchange rates as follows: (1) asset and liability accounts at year-end rates, (2) income statement accounts at
weighted average exchange rates for the year, and (3) shareholders' equity accounts at historical exchange rates. Translation differences are recorded in shareholders' equity.

Realized
and unrealized foreign currency transaction gains and losses are reflected in net income.

Wavecom
has not undertaken hedging transactions to cover its currency exposure at December 31, 2002.



Revenue is recognized when all of the following circumstances are satisfied: persuasive evidence of an agreement exists, the price is fixed or determinable,
collection is reasonably assured and delivery has occurred.

Revenue
from product sales is recognized at the time the units are shipped.

F-7

---

Revenue
from technical support and product development services and other service revenue is recognized when the service is performed, there is no material continuing performance
obligation and collection is probable. Under certain technology development agreements, where significant technological risk factors exist, costs are expensed as incurred and revenues are recognized
when all obligations under the agreement have been met.



Shipping and handling costs incurred by the Company are reflected in cost of goods sold.



Wavecom charges all research and development costs to expense as incurred.



The Company expenses advertising costs as incurred. Advertising expenses totaled €1,715,000 for the year ended 2002. Amounts in 2000 and 2001 were
not significant.



Net income (loss) per share amounts are computed using the weighted average number of shares outstanding.

In
accordance with SFAS 128Earnings per Share,basic and diluted earnings per share are presented. Basic earnings per share
excludes the dilutive effects of options and warrants, and reflects only the actual ordinary shares outstanding. The effect of options and warrants outstanding in 2000 have been excluded from the 2000
calculation of diluted earnings per share as Wavecom reported a net loss in the year ended December 31, 2000, and their effect is anti-dilutive. In 2001 and 2002, diluted earnings
per share includes the effects of dilutive options and warrants as if they had been exercised.



Financial instruments that potentially subject Wavecom to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables.

Wavecom
has cash investment policies that limit investments to short-term low-risk instruments. Wavecom's cash is held principally in euros and United States
dollars and concentrated primarily in three major banks in Paris and one major bank in Hong Kong.

As
of December 31, 2002, Wavecom sub-contracts the manufacturing and assembly of its products to three suppliers located in France, Romania and China. Wavecom believes
that alternate sub-contractors can be identified if the current manufacturers were unable to meet Wavecom's requirements.

Wavecom
sells its products to customers in a variety of industries principally in Asia/Pacific, Europe, North America and Africa. Wavecom performs ongoing credit evaluations of its
customers and maintains allowances for potential credit losses. To date, such losses have been within management's expectations. Wavecom generally requires no collateral, but does request advance
payments or letters of credit in order to secure payment in certain circumstances.

Accounts
receivable (before allowance for doubtful accounts) at December 2000, 2001 and 2002 totaled €27,251,000, €46,547,000 and
€86,164,000, respectively.

F-8

---

A
summary of the activity in the allowance for doubtful accounts is as follows (amounts in thousands):

Year ended December 31,

Beginning balance

Additions charged
to expenses

Recovered receivables

Ending balance2000

€
708

€
64

€
295

€
4772001


477


164


313


3282002


328


119


204


243


For
the years ended December 31, 2000, 2001 and 2002, certain customers represented revenues in excess of 10% of Wavecom's total consolidated revenues. The amounts of annual
revenues, and corresponding year-end amounts receivable, from these customers were as follows (in thousands):

2000

2001

2002Revenues

Receivable

Revenues

Receivable

Revenues

ReceivableCustomer A

€
4,798

€
1,598

€
106,162

€
15,817

€
368,402

€
56,633Customer B


9,716


6,277


114,130


12,780


42,047


594


Sales
to customers by geographic region are summarized as follows (in thousands):

Years ended December 31,2000

2001

2002China

€
6,901

€
126,860

€
396,030Korea


9,716


114,180


47,835Rest of Asia


4,703


28,662


8,294Germany


9,235


16,135


13,919Italy


7,832


8,791


11,345France


2,113


6,028


9,401United Kingdom


8,054


3,976


5,940Rest of Europe


8,846


8,891


20,409Americas


1,950


3,509


25,082Rest of world


6,223


5,632


12,834€
65,573

€
322,664

€
551,089


Geographic
region is determined by the customer's invoice address and may not indicate the final destination of product usage.

Substantially
all of the Company's long-lived assets are located in France.



Wavecom considers all highly liquid investments with insignificant interest risk, and purchased with an original maturity of three months or less, to be cash
equivalents. At December 31, 2000, 2001 and 2002, Wavecom had amounts of €66,459,000, €83,680,000 (of which €12,794,000 was denominated in U.S.
dollars) and €92,826,000, respectively, invested in money market accounts with no fixed maturity, earning interest at short-term variable rates. At December 31,
2000, 2001 and 2002, the book value of these cash equivalents approximated their market value.

At
December 31, 2000, securities had been pledged for a total amount of €2,371,000 representing guaranties of a multi currency overdraft
(€1,531,000) and an import documentary credit (€840,000).

F-9

---



As of December 31, 2000, 2001 and 2002, the Company held deposit certificates of €2,881,000, €2,994,000 and
€15,112,000, respectively. As of December 31, 2000, the Company held commercial paper for an amount of €23,723,000 which matured in January 2001, earning
interest at fixed rates ranging from 4.82% to 5.19%. These investments were classified as available-for-sale and were carried at cost which approximated market value at
December 31, 2000, 2001 and 2002.



Inventories are valued at the lower of cost or market.



Value added tax recoverable consists of value added tax paid by Wavecom to vendors and suppliers located in the European Union and recoverable from the tax
authorities. Value added tax recoverable is collected on a monthly basis. As of December 2000, 2001 and 2002, the Company had value added tax credits, immediately recoverable, of
€1,159,000, €20,600,000 and €2,350,000, respectively.



Property and equipment is stated at cost. The leases are capitalized in accordance with Financial Accounting Standards Board Statement No 13 Accounting for
leases(SFAS 13). Depreciation and amortization are computed using the straight-line method over the following
estimated useful lives:

Laboratory equipment

3-5 yearsComputer equipment and purchased software

1-3 yearsFurniture and office equipment

5 yearsLeasehold improvements

10 years, or lease term if less


Amortization
of capitalized leased equipment is included in depreciation expense.

Wavecom
reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If
factors indicate that long-lived assets should be evaluated for possible impairment, the Company uses an estimate of the undiscounted net cash flow over the remaining life of the
long-lived assets in measuring whether the carrying value is recoverable. An impairment loss would be measured by reducing the carrying value to fair value, based on a discounted cash flow
analysis.



Goodwill represents the excess purchase price of net tangible and intangible assets acquired in business combinations over their estimated fair value. In
accordance with Financial Accounting Standards Board statement No 142,Goodwill and Other Intangible Assets (SFAS 142), the Company ceased
amortizing goodwill on a straight-line basis as of January 1, 2002. Goodwill will be tested for impairment on an annual basis and whenever indicators of impairment arise. During
2002, the
Company performed the first of the required impairment tests of goodwill, which resulted in a finding that no impairment to goodwill existed.



In October 2000, the Company purchased convertible preferred shares representing less than 1% of the capital of Cambridge Silicon Radio (C.S.R.), a British
company, for €1,197,000. The cost method has been used to account for this investment because the Company does not have the ability to exercise significant influence over the
investee's operating and financial policies. During 2001 the Company

F-10

---

recorded
a provision for €716,000 to reflect the estimated decline in value of the investment. The estimated loss was determined based on a valuation used in recent financing rounds
for C.S.R. No additional impairment charges were considered necessary during the year ended December 31, 2002.

Bank
guarantees of €2,868,000 and €13,110,000 were issued in December 2000 and in July 2002 in favor of the owners of newly-leased office
space, in order to secure annual lease payments. At December 31, 2000 and 2001, investments in commercial paper were pledged as security for €2,881,000 and
€2,994,000 respectively, for the duration of a 7-year lease. At December 31, 2002, investments in commercial paper of €13,671,000 have been pledged
as security for the duration of a 9-year lease. These investments have been classified as long-term assets in the balance sheet.



Wavecom's products are designed to conform to certain wireless industry standards. Certain essential technologies are patented and Wavecom uses these essential
technologies under licensing agreements for which Wavecom pays royalties. Wavecom has concluded licensing agreements with four patent holders for technologies deemed to be essential for Wavecom's
products and is in the process of negotiating with other patent holders. Wavecom's management considers that it is probable that these other patent holders may claim that the technology covered by
their patents is essential to Wavecom's products.

The
estimated cost of royalties, which may be due to other patent holders in connection with their technologies as well as yet unasserted claims, have been accrued in the financial
statements, based on a percentage of consolidated product revenues. The ultimate royalty paid by the company may differ from the amounts accrued.



The company offers a warranty for all its products. The specific terms and conditions of those warranties vary depending upon the product sold and the customer.
Wavecom accrues for the costs of providing warranty service at the time the product is shipped and the sale recorded. The provision is calculated based on a statistical rate which is continually
revised for specific warranty issues and actual experience. An additional accrual is recorded to cover known repair risks not included in the statistical provision.

Factors
that affect Wavecom's warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. Wavecom periodically assesses
the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.



Deferred revenue includes amounts invoiced to customers in accordance with the terms of technology development contracts, but deferred by the Company as the
corresponding work has not yet been completed. Advances include cash received in advance of product shipments.



At December 31, 2000, 2001 and 2002, the carrying values of current financial instruments such as cash equivalents, accounts receivable, accounts payable,
other receivables and accrued liabilities approximated their market values, based on the short-term maturities of these instruments. There was no long-term debt at
December 31, 2000, 2001 or 2002. Other long-term liabilities at December 31, 2002 are not material.

F-11

---



In accordance with Statement of Financial Accounting Standards No. 109, the liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse. A valuation allowance is established if, based on the weight of available evidence, it is more likely than not that some portion or all
of the deferred tax asset will not be realized.



Wavecom accounts for stock options and warrants granted to employees in accordance with the provisions of Accounting Principles Board Statement No. 25, Accounting for Stock Issued to Employees. Under APB 25, no compensation expense is recognized for stock options and warrants issued to employees with an
exercise price equal to the fair value of the underlying shares. Options and warrants issued with an exercise price less than the fair value result in deferred compensation which is amortized to
expense over the vesting period.

Statement
of Financial Accounting Standards No. 123,Accounting for Stock Based Compensation, provides an alternative to APB 25 in
accounting for stock-based compensation issued to employees. SFAS 123 provides for a fair-value-based method of accounting for employee stock options and similar equity instruments.
Companies that elect to continue to account for stock-based compensation arrangements under APB 25 are required by SFAS 123 to disclose the pro forma effect on net income and net income per
share as if the fair-value-based method proposed by SFAS 123 had been adopted. The following table illustrates the effect on net income and earnings per share if the company had
applied the fair value recognition provisions of FASB Statement No. 123,Accounting for Stock-Based Compensation,to stock-based employee
compensation.

The
fair value for these options and founders' warrants was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions for the years ended
December 31, 2000, 2001 and 2002: risk-free interest rates of 5.10% for 2000, 4.94% for 2001 and 4.00% for 2002, no expected dividends, volatility factors of 0.92 for 2000, 1.17 for
2001 and 0.74 for 2002, and a weighted average expected life of the options and founders' warrants of 5 years.

|                                                                                                                                            |                     | Years ended December 31 |        
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | ----------------------- | -------
|
|
|Net income (loss), as reported                                                                                                              |                     | €                       | (14,504
|Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effects                           |                     |                         | 1,754  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |                     |                         | (8,787 
|                                                                                                                                            |                     |                         |        
|Pro forma net income (loss)                                                                                                                 |                     | €                       | (21,537
|                                                                                                                                            |                     |                         |        
|Earnings per share:                                                                                                                         |                     |                         |        
|                                                                                                                                            | Basicas reported   |                         | €      
|                                                                                                                                            | Basicpro forma     |                         | €      
|                                                                                                                                            | Dilutedas reported |                         | €      
|                                                                                                                                            | Dilutedpro forma   |                         | €      

F-12

---



Wavecom reports comprehensive income and its components in accordance with Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income. SFAS 130 requires foreign currency translation adjustments, to be included in other comprehensive income.



In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, Disclosures About Segments of an
Enterprise and Related Information, which established standards for the way public companies report information about
operating segments in annual financial statements and required that those companies report selected information about operating segments in interim financial reports issued to shareholders. It also
established standards for related disclosures about products and services, geographic areas and major customers. Management has determined that Wavecom operates as a single segment, as management
internally evaluates the performance of the enterprise as a whole and not on the basis of separate business units.



In June 2001, the Financial Accounting Standards Board issued SFAS 143,Accounting for Asset Retirement
Obligations. SFAS 143 requires the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. An entity shall measure changes in the
liability for an asset retirement obligation due to passage of time by applying an interest method of allocation to the amount of the liability at the beginning of the period. That amount shall be
recognized as an increase in the carrying amount of the liability and as an expense classified as an operating item in the statement of income. SFAS 143 will become effective for Wavecom
beginning on January 1, 2003. Wavecom does not anticipate that adoption of SFAS 143 will have a material impact on its results of operations or its financial position.

In
June 2002, the Financial Accounting Standards Board issued SFAS 146,Accounting for Costs Associated with Exit or Disposal
Activities.This statement addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, and nullifies EITF
94-3,"Liability Recognition for Certain Employee Termination Benefits and Other Costs to exit an Activity (including Certain Costs Incurred in a
Restructuring)".Under SFAS 146 the cost associated with an exit or disposal activity is recognized in the periods in which it is incurred rather than at the date the
company committed to the exit plan. This statement becomes effective for exit or disposal activities initiated after December 31, 2002 with earlier application encouraged. Wavecom does not
anticipate that adoption of SFAS 146 will have a material impact on its results of operations or its financial position.

On
November 25, 2002, the Financial Accounting Standards Board announced the issuance of Interpretation No. 45,Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,which expands on the accounting guidance of Statements No. 5, 57, and
107 and incorporates without change the provisions of FASB Interpretation No. 34, which has been superseded by this Interpretation. Given observed differences in practice, this Interpretation
clarifies the requirements for a guarantor's accounting and interim and annual financial statement disclosures of certain guarantees issued and outstanding. It also clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. This Interpretation does not prescribe a specific approach
for subsequently measuring the guarantor's recognized liability over the term of the related guarantee. The incremental disclosure requirements in this Interpretation are effective, and have been
adopted by Wavecom, for the financial statements ending December 31, 2002. The initial recognition and measurement provisions of this Interpretation are applicable to guarantees issued or
modified after

F-13

---

December 31,
2002. Wavecom does not anticipate that adoption of Interpretation No. 45 will have a material impact on its results of operations or its financial position.

In
November 2002, the Emerging Issues Task Force reached consensus on EITF Issue 00-21Accounting for Revenue Arrangements with Multiple
Deliverables. This Issue addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. In some
arrangements, the different revenue-generating activities (deliverables) are sufficiently separable, and there exists sufficient evidence of their fair values to separately account for some or all of
the deliverables (that is, there are separate units of accounting). In other arrangements, some or all of the deliverables are not independently functional, or there is not sufficient evidence of
their fair values to account for them separately. This Issue addresses when and, if so, how an arrangement involving multiple deliverables should be divided into separate units of accounting. This
Issue does not change otherwise applicable revenue recognition criteria. However, this Issue does provide guidance with respect to the effect of certain customer rights due to vendor nonperformance on
the recognition of revenue allocated to delivered units of accounting. This Issue also addresses the impact on the measurement and/or allocation of arrangement consideration of customer cancellation
provisions and consideration that varies as a result of future actions of the customer or the vendor. Finally, this Issue provides guidance with respect to the recognition of the cost of certain
deliverables that are excluded from the revenue accounting for an arrangement. The provisions of this Issue become effective for fiscal periods beginning after June 15, 2003. Wavecom is
currently reviewing this Issue to measure the potential impact on its results of operations and financial position.

2.     Acquisitions



In December 2001, the subsidiary Wavecom Inc acquired Iconn Wireless, a company based in San Diego, California, enabling Wavecom to acquire technology and
know-how for Code Division Multiple Access (CDMA) technology. Wavecom purchased Iconn Wireless for €5,270,000 including €625,000 in tangible and intangible
assets. The difference between the purchase price and the amount of identifiable assets (€4,645,000) was allocated to goodwill but is not amortized, in accordance with SFAS
No 142. In connection with the acquisition, €1,339,000 in cash was placed in escrow by Wavecom. The cash was paid to the employees as certain technology milestones were achieved
in 2002, and the company recognized the related charges as research and development expenses.



In October 2000, Wavecom purchased a majority interest of 51% of the voting rights in Arguin Communications Inc, headquartered in San Diego, California,
increased to 61,88% in January 2001, which enabled Wavecom to have strategic control over the future technology to be developed by Arguin Communications Inc.

The
Company purchased Arguin Communications Inc for €3,454,000 in cash including €691,000 for the purchase of existing shares (€229,000
paid in October 2000 and €462,000 paid in January 2001) and €2,763,000 to subscribe to a share capital increase. The total amount of this share capital
increase, including minority interests, was €3,109,000. The net assets purchased included €270,000 in cash. The purchase price exceeded the fair value of the net
tangible assets by €1,323,000, which was allocated to goodwill and previously was being amortized over 5 years. In accordance with the provisions of SFAS 142,
amortization of goodwill ceased as of December 31, 2001. Deferred compensation of €1,862,000 and €190,000 was recognized in 2001 and 2002, respectively, in
connection with the issuance of shares of Arguin Communications to the majority shareholders. Amortization related to these shares amounted to €667,000 and €613,000 in
the year ended December 31, 2001 and 2002, respectively.

F-14

---

Results of operations of Arguin Communications Inc. and Iconn Wireless are included in Wavecom's operating results from their respective dates of acquisition. Pro Forma results of
operations reflecting these acquisitions have not been presented because the results of operations of the acquired companies, either individually or collectively, are not material to Wavecom's results
of operations.

3.     Inventory

Components of inventory are:

December 31,2000

2001

2002(in thousands)Purchased components and raw materials

€
8,902

€
70

€
17,890Finished goods


2,806


15,785


19,70811,708


15,855


37,598Provision for obsolete inventory


378


1,997


7,393€
11,330

€
13,858

€
30,205


Beginning
in the second half year of 2001, all components used in the production process were purchased, by Wavecom's contract manufacturers who bore the risk of ownership.

In
June 2002, Wavecom amended the contract with two of its contract manufacturer to reflect its increased role in negotiating terms and conditions directly with component
suppliers, as well as the overall evolution of Wavecom industrial and purchasing organization. As a result of the changes in the contract terms, Wavecom believes that it bears the risk of ownership of
the components to be used for the products, although these components continue to be legally owned by the contract manufacturer. Therefore, at December 31, 2002, inventory includes these
components, with a corresponding liability due to the contract manufacturer.

At
December 31, 2002, the inventory of finished goods also includes €4,440,000 held by contract manufacturers for which Wavecom bears the risk of ownership. The
company had no such inventory in the previous years.

4.     Property and equipment

Property and equipment includes:

December 31,2000

2001

2002(in thousands)Laboratory and testing equipment

€
10,787

€
15,203

€
29,309Computer equipment and software


5,178


7,835


17,604Furniture and office equipment


1,118


2,288


2,801Leasehold improvements


716


2,445


4,998Other


650


1,288


1,36318,449


29,059


56,075Accumulated depreciation and amortization


8,382


13,393


26,451€
10,067

€
15,666

€
29,624


Depreciation
expense in the years ended December 2000, 2001 and 2002 totaled €3,136,000, €5,068,000 and €13,365,000, respectively.

F-15

---

Equipment
purchased under capital leases in the years ended December 31, 2000, 2001 and 2002 totaled €149,000, €291,000 and
€321,000 respectively. The cost of such equipment included in property and equipment at December 31, 2000, 2001 and 2002 totaled €4,489,000,
€4,755,000 and €4,937,000 respectively. Accumulated amortization of this equipment totaled €3,601,000, €4,343,000 and
€4,433,000 at December 31, 2000, 2001 and 2002, respectively.

5.     Prepaid expenses and other current assets

Prepaid expenses and other current assets include:

December 31,2000

2001

2002(in thousands)Research tax credit: current portion




€
813


Suppliers' credit note accruals

€
1,193


5,717


Prepaid expenses


1,205


4,245

€
8,023Iconn Wireless amounts held in escrow





1,339


Other current assets


449


606


1,312Total prepaid expenses and other current assets

€
2,847

€
12,720

€
9,335


Credit
notes from suppliers are accrued at the end of each period, based on amounts which have been negotiated and accepted by Wavecom's contract manufacturers. These amounts are
recorded as reductions of cost of goods sold. Settlements of the credit notes were received during the following year.

Prepaid
expenses includes primarily prepaid rent and other operating expenses. At December 31, 2002, it also included €2,009,000 in prepaid advertising expenses.

6.     Goodwill and intangible assets

Goodwill was approximately €1,279,000, €5,716,000 and €4,807,000 as of December 31, 2000, 2001 and 2002
respectively, net of accumulated amortization of approximately €47,000, €326,000 and €274,000 at December 31, 2000, 2001 and 2002, respectively.
All goodwill is denominated in U.S. dollars and translated into euros at the exchange rate at each balance sheet date.

During
2002 the Company performed the first of the required annual impairment tests of goodwill, which resulted in a finding that no impairment to goodwill existed. This test consisted
of a comparison of the fair value of the reporting unit with its carrying amount, including the goodwill. The fair value of the reporting unit was determined based on the income approach, which
estimates the fair value based on the future discounted cash flows. Based on the analysis, the Company determined that the fair value was in excess of the carrying amount of the reporting unit.

The
changes in the carrying amount of goodwill from December 31, 2000 through December 31, 2002, are as follows (in thousands):

December 31,2000

2001

2002Balance as of the beginning of the year




€
1,279

€
5,716Add: Goodwill acquired during the year

€
1,323


4,645


Less: Amortization of goodwill


(47
)

(279
)

Impact of foreign currency fluctuations on goodwill


3


71


(909
)Balance as of the end of the year

€
1,279

€
5,716

€
4,807


F-16

---

The
following table sets forth net income per share and ADS adjusted to exclude goodwill amortization recognized prior to the adoption of FAS 142 on January 1, 2002 (in
thousands, except for per share and ADS amounts):

Year Ended December 31,2000

2001

2002Reported net income (loss)

€
(14,504
)
€
9,308

€
42,087Add back: goodwill amortization


47


278


Adjusted net income

€
(14,457
)
€
9,586

€
42,087Net income (loss) per sharebasic:Reported

€
(1.03
)
€
0.63

€
2.82Add back: goodwill amortization





0.02


Adjusted

€
(1.03
)
€
0.65

€
2.82Net income (loss) per sharediluted:Reported

€
(1.03
)
€
0.61

€
2.74Add back: goodwill amortization





0.02


Adjusted

€
(1.03
)
€
0.63

€
2.74


Other
intangible assets are not material to the financial statements.

7.     Debts

The following table presents a summary of Wavecom's debt:

December 31,2000

2001

2002(in thousands)Short-term debt:Overdraft facility

€
529





Interest-free loan from government agency


634

€
488


Current portion of capital lease obligation


794


201


€214Total short-term debt and current portion of long-term debt

€
1,957

€
689

€
214Long-term debt:Long-term portion of capital lease obligation

€
166

€
228

€
287Total long-term debt, less current portion

€
166

€
228

€
287




At December 31, 2002, Wavecom had multi-currency overdraft facilities with one French bank for borrowings of up to €1,000,000. The
overdraft facilities bore interest at market rate plus margins of 1.5% from January to September 2002 and 0.85% for the fourth quarter of 2002. The average effective rate for the year ended
December 31,2002 relating to this credit line was 4.45%. The average effective rate at December 31, 2002 was 4.29%. Wavecom had not used these overdraft facilities at December 31,
2002.

At
December 31, 2001, Wavecom had multi-currency overdraft facilities with a French bank for borrowings of up to €2,287,000. The overdraft facilities bore interest
at market rate plus a margin of

F-17

---

1.5%.
The average effective rate at December 31, 2001 was 3.02%. Wavecom had not used these overdraft facilities at December 31, 2001. A multi-currency overdraft facilities of
€2,286,000 bearing interest at market rate plus a margin of 0.5% and the attached pledge of securities relating to this facility where terminated before December 31, 2001.

At
December 31, 2000 Wavecom had multi-currency overdraft facilities with two French banks allowing for borrowings of up to €4,573,000. The overdraft facilities
bore interest at market rate plus margins ranging from 0.5% to 1.5% which corresponded to an effective rate of 7.8% at December 31, 2000 and an average effective rate of 6.88% for the year then
ended. One of the facilities (€2,286,000) was secured for 67% of its total amount by pledged securities. At December 31, 2000, €529,000 was drawn on this
facility.



Wavecom received an interest-free loan from Coface (€294,000 at December 31, 1999, increased by €340,000 in
2000), an export credit agency of the French government. Timing of repayment of the loan is based upon the actual sales generated by Wavecom's United States subsidiary. Wavecom repaid
€146,000 of the loan in the year ended December 31, 2001 and the remaining €488,000 during the year ended December 31, 2002.

The
only significant debt covenants relate to short-term financing arrangements and require repayment in the event of default or liquidation of Wavecom.



Future minimum lease payments under capitalized lease obligations for the years ending December 31 are as follows (in thousands):

2003

€
2012004


1522005


982006


24Total minimum lease payments


475Less amount representing interest


(26
)Present value of net minimum lease payments


501Less current portion


214Long-term portion

€
287




Interest paid in the years ended December 31, 2000, 2001 and 2002 totaled approximately €240,000, €447,000 and
€515,000, respectively.

F-18

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8.     Other accrued expenses

Other accrued expenses consist principally of accruals for royalties, warranty costs and various other tax and general expense.

December 31,2000

2001

2002(in thousands)Accrued royalties

€
5,078

€
9,375

€
29,214Warranty accrual


114


2,392


3,810Other accrued expenses


1,009


3,758


3,343Total

€
6,201

€
15,525

€
36,367


Changes
of accrued royalties, warranty accrual and other accrued expenses during the period are as follows (in thousands):

|                       |  | Balance at
December 31,
2001 |        | Accruals issued
during the period |   | Settlements made
during the period |  | Changes in liability for
pre-existing accruals
during the period,
including expirations |        | Balance at
December 31,
2002
|---------------------- |  | ---------------------------- | ------ | --------------------------------- | - | ---------------------------------- |  | --------------------------------------------------------------------------------------- | ------ | ----------------------------
|Accrued royalties      |  | €                            | 9,375  |                                   | € | 20,636                             |  | €                                                                                       | 797    |                             
|Warranty accrual       |  |                              | 2,392  |                                   |   | 13,017                             |  |                                                                                         | 11,599 |                             
|Other accrued expenses |  |                              | 3,758  |                                   |   | 3,255                              |  |                                                                                         | 2,562  |                             
|                       |  |                              |        |                                   |   |                                    |  |                                                                                         |        |                             
|Total                  |  | €                            | 15,525 |                                   | € | 36.908                             |  | €                                                                                       | 14,958 |                             
|                       |  |                              |        |                                   |   |                                    |  |                                                                                         |        |                             

9.     Shareholders' equity

At December 31, 2002, 15,107,890 shares were issued and outstanding with a nominal value of €1 per share.



In June 2000, Wavecom issued 1,050,000 shares in an secondary public offering simultaneously on the Nasdaq National Market and French Nouveau
Marchéstock markets. The shares were issued at €98.50 per share for a net cash contribution of
€96,547,000.



Shareholders have preemptive rights to subscribe on a pro rata basis for additional shares issued by Wavecom for cash. Shareholders may waive such preemptive
subscription rights at an extraordinary general meeting under certain circumstances. Preemptive subscription rights, if not previously waived, are transferable during the subscription period relating
to a particular offering of shares.



Dividends may be distributed from the statutory retained earnings and additional paid in capital, subject to the requirements of French law and Wavecom's
by-laws. There were no distributable retained earnings at December 31, 2002. Dividend distributions by Wavecom, if any, will be made in euro.



The shareholders of Wavecom authorize the board of directors to grant founders' warrants to employees of the French parent company, stock options to employees of
subsidiaries and warrants to members of the board of directors. Under the terms of the plans, the options and warrants give the

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right
to purchase one share per option or warrant at an exercise price to be based on the stock market price of Wavecom shares on the grant date.

Options
and founders' warrants granted in 2000, 2001 and 2002 vest 25% per year over 4 years. The rights to exercise the warrants granted to Board members vest
331/3% per year over 3 years.

Options
expire 10 years after the grant date. Founders' warrants, which were issued to employees of the French parent company, expire after five years, as required by law. Any
founders' warrants remaining unexercised at the expiration date automatically convert to stock options with a five-year term remaining. Founders' warrants were issued to French employees
due to the existence of certain tax advantages (for both the employee and Wavecom) available in connection with the issuance of founders' warrants which are not available for stock option holders in
France. Other than the expiration dates, the terms of the founders' warrants are identical to the stock options. Warrants granted to Board members expire after five years.

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A summary of the founders' warrants and warrants to Board members is as follows:

|                                                                 |  | Founders' warrants to employees of the French parent company |  | Warrants to members of the
board of directors
|---------------------------------------------------------------- |  | ------------------------------------------------------------ |  | ---------------------------------------------
|Shareholders' meeting date                                       |  | 09/21/98                                                     |  | 02/25/99                                     
|Total of warrants authorized                                     |  | 495 000                                                      |  | 530 800                                      
|Board of directors date                                          |  | N/A                                                          |  | N/A                                          
|Total of warrants granted                                        |  | 495 000                                                      |  | 530 800                                      
|Exercise price                                                   |  | €2.29                                                        |  | €4.57                                        
|Total of warrants exercised                                      |  | 339 474                                                      |  | 214 087                                      
|Total of warrants cancelled at December 31, 2002                 |  | 29 159                                                       |  | 39 184                                       
|Total of warrants cancelled during the year ended                |  |                                                             |  | 1 860                                        
|Total of warrants granted and not exercised at December 31, 2002 |  | 126 367                                                      |  | 277 529                                      
|Total of warrants exercisable at December 31, 2002               |  | 126 367                                                      |  | 237 179                                      
|Expiration date(1)                                               |  | 09/20/03                                                     |  | 02/24/04                                     

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A summary of the stock options is as follows:

|                                                                      |  | STOCK OPTIONS
|--------------------------------------------------------------------- |  | -------------
|Shareholders' meeting date                                            |  | 09/21/98     
|Total of stock options authorized                                     |  | 650 000      
|Board of directors date                                               |  | 09/21/98     
|Total of stock options granted                                        |  | 495 000      
|Exercise price                                                        |  | €2.29        
|Total of stock options exercised                                      |  |              
|Total of stock options cancelled at December 31, 2002(2)              |  | 368 633      
|Total of stock options granted and not exercised at December 31, 2002 |  | 126 367      
|Total of stock options exercisable at December 31, 2002               |  |             
|Expiration date(1)                                                    |  | 09/20/08     

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EXHIBIT INDEX

|Number |  | Name                                                                                                                                                                                                                                                                    
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1      |  | Statuts(by-laws) of the Registrant, updated as of February 7, 2003 (English Translation).*                                                                                                                                                                              
|2.1    |  | Form of Deposit Agreement among the Registrant, The Bank of New York, as Depositary, and the Holders of American Depositary Shares issued thereunder (filed as Exhibit 4.1 to the Registrant's Registration Statement on Form F-1, File No.
333-10372).                 
|2.2    |  | Form of American Depositary Receipt (filed as Exhibit 4.2 to the Registrant's Registration Statement on Form F-1, File No. 333-10372).                                                                                                                                  
|4.1    |  | GSM Essential Properties Cross License Agreement, dated January 6, 1999, between the Registrant and Motorola, Inc. (filed as Exhibit 10.3 to the Registrant's Registration Statement on Form F-1, File No. 333-10372).**                                                
|4.2    |  | Agreement relating to the sale of GSM modules, dated July 7, 1999 between Amtal International Limited and Wavecom Asia Pacific Limited (filed as Exhibit 10.3 to the Registrant's Registration Statement on Form F-1, File
No. 333-10372).**                            
|4.3    |  | Agreement relating to the development and manufacture of a GSM hand held portable, dated February 11, 2000 between NEC Corporation and Wavecom S.A (filed as Exhibit 10.2 to the Registrant's Annual Report on Form 20-F, filed with the
Commission on May 24, 2000).** 
|4.4    |  | Contract for Manufacturing and Related Services, dated June 17, 1999 between Wavecom S.A. and Solectron-France S.A. (filed as Exhibit 10.3 to the Registrant's Annual Report on Form 20-F, filed with the Commission on May 24,
2000).**                                
|4.5    |  | Agreement between Funkanlagen and Wavecom S.A. dated February 25, 2000 (filed as Exhibit 10.4 to the Registrant's Annual Report on Form 20-F, filed with the Commission on May 24, 2000).**                                                                             
|4.6    |  | GSM/DCS 1800/1900 Patent License Agreement between Wavecom S.A. and Koninklijke Philips Electronics N.V., dated October 9, 2001 (filed as Exhibit 4.6 to the Registrant's Annual Report on Form 20-F, filed with the Commission on June 28,
2002).**                    
|4.7    |  | Agreement relating to a cross-license of essential GSM patents between Wavecom S.A. and Siemens Aktiengesellschaft, effective as of October 31 2001 (filed as Exhibit 4.7 to the Registrant's Annual Report on Form 20-F, filed with the
Commission on June 28, 2002).**
|4.8    |  | GSM patent non assertion agreement with NEC Corporation as of November 19, 2002.*&                                                                                                                                                                                      
|4.9    |  | Patent License Agreement with Thomson Licensing S.A. and Alcatel S.A., effective January 1, 2003.*&                                                                                                                                                                     
|8      |  | List of subsidiaries of the Registrant                                                                                                                                                                                                                                  
|10     |  | Consent of Ernst & Young Audit.                                                                                                                                                                                                                                         
|99.1   |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350*                                                                                                                                                                                        
|99.2   |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350*                                                                                                                                                                                            

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