<PAGE>

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                                   FORM 20-F
       [_]   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                       OR
       [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 2000
                                       OR
       [_]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         Commission file number 1-14538

            COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV)
             (Exact name of Registrant as specified in its charter)

                NATIONAL TELEPHONE COMPANY OF VENEZUELA (CANTV)
                (Translation of Registrant's name into English)

                        BOLIVARIAN REPUBLIC OF VENEZUELA
                (Jurisdiction of incorporation or organization)

           AVENIDA LIBERTADOR, CENTRO NACIONAL DE TELECOMUNICACIONES,
          NUEVO EDIFICIO ADMINISTRATIVO, PISO.1, APARTADO POSTAL 1226
                            CARACAS, VENEZUELA  1010
                    (Address of principal executive offices)

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

<TABLE>
<CAPTION>
<S>                                                                                   <C>
Title of each class                                                                   Name of each exchange on which registered
-------------------                                                                   -----------------------------------------
Class D Shares of common stock, par                                                   New York Stock Exchange*
value Bs.36.90182224915 per share

American Depository Shares (ADSs) each                                                New York Stock Exchange
of which represents 7 Class D
Shares of common stock
</TABLE>

___________
* Not for trading but only in connection with the registration of ADSs pursuant
  to the requirements of the Securities and Exchange Commission.

                               _________________

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

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

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

    Class A Shares...... 400,000,000        Class C Shares...... 101,981,800
    Class B Shares......  51,900,000        Class D Shares...... 372,155,585

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                  Yes [X]      No [_]

     Indicate by check mark which financial statement item the registrant has
elected to follow.
                              Item 17 [_]      Item 18 [X]

================================================================================
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                       Page
                                                                                                                       ----
<S>                                                                                                                    <C>
INTRODUCTION........................................................................................................     1

PART I..............................................................................................................     3

  Item 1.       Identity of Directors, Senior Management and Advisers...............................................     3
  Item 2.       Offer Statistics and Expected Timetable.............................................................     3
  Item 3.       Key Information.....................................................................................     3
  Item 4.       Information on the Company..........................................................................    19
  Item 5.       Operating and Financial Review and Prospects........................................................    61
  Item 6.       Directors, Senior Management and Employees..........................................................    90
  Item 7.       Major Shareholders and Related Party Transactions...................................................    98
  Item 8.       Financial Information...............................................................................   102
  Item 9.       The Offer and Listing...............................................................................   103
  Item 10.      Additional Information..............................................................................   106
  Item 11.      Quantitative and Qualitative Disclosures About Market Risk..........................................   116
  Item 12.      Description of Securities Other than Equity Securities..............................................   117

PART II.............................................................................................................   118

  Item 13.      Defaults, Dividend Arrearages and Delinquencies.....................................................   118
  Item 14.      Material Modifications to the Rights of Security Holders and Use of Proceeds........................   118
  Item 15.      (Reserved)..........................................................................................   118
  Item 16.      (Reserved)..........................................................................................   118

PART III............................................................................................................   119

  Item 17.      Financial Statements................................................................................   119
  Item 18.      Financial Statements................................................................................   119
  Item 19.      Financial Statements and Exhibits...................................................................   119
</TABLE>

                                      (i)
<PAGE>

                                  INTRODUCTION

     As used in this Form 20-F, unless the content otherwise requires, the
"Company" means Compania Anonima Nacional Telefonos de Venezuela (CANTV) and its
consolidated subsidiaries, and "CANTV" means Compania Anonima Nacional Telefonos
de Venezuela (CANTV). Unless otherwise specified, all references in this Form
20-F to "U.S. dollars," "dollars," "$" or "U.S.$" are to United States dollars
and references to "bolivars" or "Bs." are to Venezuelan bolivares, the legal
tender currency of the Bolivarian Republic of Venezuela ("Venezuela").
References to access "lines in service" are to lines billed. References to
"minutes of use" are to billed minutes of use excluding free minutes offered
under certain calling plans.

     The Company prepares its financial statements in constant bolivars and in
conformity with generally accepted accounting principles in Venezuela
("Venezuelan GAAP"). Venezuelan GAAP differs in certain important respects from
generally accepted accounting principles in the United States ("U.S. GAAP"). See
Note 25 to the Audited Consolidated Financial Statements of the Company as of
December 31, 1999 and 2000 and for the years ended December 31, 1998, 1999 and
2000 (the "Audited Financial Statements") also included in this Form 20-F for a
description of the principal differences between Venezuelan GAAP and U.S. GAAP
as they relate to the Company and a reconciliation to U.S. GAAP of net income
reported under Venezuelan GAAP for the years ended December 31, 1998, 1999 and
2000 and of total stockholders' equity as of December 31, 1999 and 2000.

     Pursuant to Venezuelan GAAP, financial data regarding the Company have been
adjusted to reflect the effects of inflation using the Indice General de Precios
al Consumidor del Area Metropolitana de Caracas (Index of Consumer Prices of the
Caracas Metropolitan Area) (the "Consumer Price Index" or "CPI") published by
the Banco Central de Venezuela (the "Central Bank of Venezuela"). See Note 4(b)
to the Audited Financial Statements. Unless otherwise specified, financial data
regarding the Company is presented in this Form 20-F in constant bolivars as of
December 31, 2000. Although the restatement of nominal bolivar amounts into
constant bolivar amounts lessens the distorting effect that an inflationary
environment has on comparisons of financial statements over time, such
restatement does not wholly eliminate those distortions, and evaluation of
period to period trends may be difficult. References in this Form 20-F to
amounts in "nominal" bolivars or "historical" bolivars are to bolivars that have
not been adjusted for inflation. As indicated in this Form 20-F, the rates the
Company charges for certain telephone services are subject to regulation
including adjustments to reflect the effects of inflation using the Indice de
Precios al Mayor (the "Wholesale Price Index" or "WPI") published by the Central
Bank of Venezuela.

     For the convenience of the reader, this Form 20-F contains translations of
certain constant bolivar amounts into U.S. dollars at the average daily exchange
rate announced by the Central Bank of Venezuela (the "Daily Exchange Rate") on
December 31, 2000 (unless otherwise specified), which was Bs. 700.00 =
U.S.$1.00. No representation is made that the bolivar or U.S. dollar amounts
shown in this Form 20-F could have been or could be converted into U.S. dollars
or bolivars, as the case may be, at such rates or at any other rates. The
translation of amounts expressed in nominal or constant bolivars as of a
specified date by the then prevailing exchange rate may result in presentation
of dollar amounts that differ from the dollar amounts that would have been
obtained by translating nominal or constant bolivars as of another specified
date.

     Operational data regarding the Company contained in this Form 20-F is
presented as of December 31, 2000, unless otherwise stated.

                                       1
<PAGE>

     Neither the Government of Venezuela (the "Government") nor private
independent sources publish definitive data regarding telecommunications markets
in Venezuela. However, certain Government entities have published statistics on
wireless service competitors which the Company has used in computing the market
share data relating to such competitors. Additional data, including population
data, were obtained from third-party sources. To the extent estimates are
contained in this Form 20-F, the management of the Company believes that such
estimates, which are based on internal data, are reliable but they have not been
confirmed by independent sources.

                                       2
<PAGE>

                                     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 information should be read in conjunction with and is
qualified in its entirety by reference to the Audited Financial Statements of
the Company, including the Notes thereto also included in this Form 20-F. The
Company's Audited Financial Statements are prepared in accordance with
Venezuelan GAAP, which differ in certain important respects from U.S. GAAP, and
have been presented in constant bolivars as of December 31, 2000. See "Item 5.
Operating and Financial Review and Prospects -- Introduction" and Note 4(b) to
the Audited Financial Statements for a discussion of the methodology used to
prepare the constant bolivar financial statements. Note 25 to the Audited
Financial Statements provides a description of the principal differences between
Venezuelan GAAP and U.S. GAAP and a reconciliation to U.S. GAAP of net income
for the years ended December 31, 1998, 1999 and 2000 and total stockholders'
equity at December 31, 1999 and 2000.

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                 -----------------------------------------------------------------------------
                                                   1996/(1)/      1997/(1)/     1998/(1)/   1999/(1)/    2000/(1)/   2000/(3)/
                                                                                                           /(2)/       /(2)/
                                                 -----------------------------------------------------------------------------
                                                               (in millions, except per share and per ADS data)
<S>                                              <C>          <C>           <C>           <C>          <C>          <C>
Income Statement Data:
Venezuelan GAAP:
---------------
   Revenues
      Local and domestic long distance usage     Bs.749,267   Bs.770,703    Bs.649,866    Bs.614,502   Bs.618,917   U.S.$  884
      Basic rent                                    286,018      367,834       387,063       362,673      316,152          452
      Public telephones                              91,041      126,470       123,271       119,680      108,655          155
                                                 ----------   ----------   -----------   -----------   ----------   ----------
         Local and domestic long distance         1,126,326    1,265,007     1,160,200     1,096,855    1,043,724        1,491
      International long distance                   302,605      273,994       204,049       151,027       99,107          142
      Net settlements                                55,414       58,837        47,693        31,780       29,373           42
                                                 ----------   ----------   -----------   -----------   ----------   ----------
         International long distance                358,019      332,831       251,742       182,807      128,480          184
      Other wireline-related services                75,517      123,870       142,214       162,450      139,749          199
                                                 ----------   ----------   -----------   -----------   ----------   ----------
           Total wireline services                1,559,862    1,721,708     1,554,156     1,442,112    1,311,953        1,874
      Wireless services                             189,136      245,266       347,196       460,714      466,993          667
      Other telecommunications-related
       services                                      17,226       22,076        36,833        43,856       46,186           66
                                                 ----------   ----------   -----------   -----------   ----------   ----------
           Total operating revenues               1,766,224    1,989,050     1,938,185     1,946,682    1,825,132        2,607
   Operating income                                 361,932      528,313       225,348       158,627       20,928           30
   Other income (expense), net                      180,907       78,879       (29,066)      (41,950)     (35,175)         (50)
                                                 ----------   ----------   -----------   -----------   ----------   ----------
   Income (loss) before income taxes and
   cumulative effect of accounting change,
       net of tax                                   542,839      607,192       196,282       116,677      (14,247)         (20)
   Income tax                                        36,947      136,965         1,327        15,487       35,428           51
                                                 ----------   ----------   -----------   -----------   ----------   ----------
   Income (loss) before cumulative effect of
       accounting change, net of tax                505,892      470,227       194,955       101,190      (49,675)         (71)
   Cumulative effect of accounting change,
       net of tax                                         -            -             -             -      (40,518)         (58)
                                                 ----------   ----------   -----------   -----------   ----------   ----------
   Net income (loss)                             Bs.505,892   Bs.470,227    Bs.194,955    Bs.101,190   Bs.(90,193)  U.S.$ (129)
                                                 ==========   ==========   ===========   ===========   ==========   ==========
   Operating income per share                    Bs. 361.93   Bs. 528.31    Bs. 225.35    Bs. 158.64   Bs.  21.98   U.S.$ 0.03
   Operating income per ADS                        2,533.52     3,698.19      1,577.44      1,110.50       153.89         0.22

   Income (loss) per share before cumulative
       effect of accounting change                   505.89       470.23        194.96        101.20       (52.18)       (0.07)
   Income (loss) per ADS before cumulative
       effect of accounting change                 3,541.23     3,291.61      1,364.72        708.40      (365.26)       (0.49)

   Net income (loss) per share                       505.89       470.23        194.96        101.20       (94.74)       (0.14)
   Net income (loss) per ADS                       3,541.23     3,291.61      1,364.72        708.40      (663.18)       (0.98)
   Basic net income (loss) per share (4)             505.89       470.23        194.96        101.20       (94.74)       (0.14)
   Basic net income (loss) per ADS (4)             3,541.23     3,291.61      1,364.72        708.40      (663.18)       (0.98)
   Cash dividends declared per share (5)                  -        30.24        198.27         70.79        66.06         0.10
   Cash dividends declared per ADS (5)                    -       211.68      1,387.86        495.55       462.41         0.69
   Extraordinary cash dividends declared per
       share (5)                                          -            -            -         113.43            -            -
   Extraordinary cash dividends declared per
       ADS (5)                                            -            -            -         794.01            -            -
   Average shares outstanding (6)                  1,000.00     1,000.00      1,000.00        999.90       951.96       951.96

</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                         1996/(1)/     1997/(1)/       1998/(1)/        1999/(1)/      2000/(1)(2)/   2000/(3)(2)/
                                       -------------------------------------------------------------------------------------------
                                                              (in millions, except per share and per ADS data)
<S>                                    <C>            <C>              <C>             <C>             <C>            <C>
U.S. GAAP:
---------
  Total operating revenues             Bs.1,766,224   Bs.1,989,050     Bs.1,938,185    Bs.1,946,682    Bs.1,825,132    U.S.$2,607
  Operating income                          386,653        292,890          212,038         158,623          20,928         30.00
  Net income (loss)                         276,412        211,941          217,260         189,936         (26,191)       (37.00)
  Net income (loss) per share                279.18         213.86           219.09          191.42          (27.73)        (0.04)
  Net income (loss) per ADS                1,954.26       1,497.02         1,533.63        1,339.94         (194.14)        (0.28)
  Cash dividends declared per share (5)           -          30.24           198.27           70.79           66.06          0.10
  Cash dividends declared per ADS (5)             -         211.68         1,387.86          495.55          462.41          0.69
  Extraordinary cash dividends declared
   per share (5)                                  -              -                -          113.43               -             -
  Extraordinary cash dividends declared
   per ADS (5)                                    -              -                -          794.01               -             -
  Average shares outstanding (6)             990.07         991.02           991.63          992.23          944.38        944.38
</TABLE>
_________________________________

(1)  Bolivar amounts are in constant bolivars as of December 31, 2000.
(2)  Year 2000 data includes a special one-time charge of Bs. 110.4 billion or
     approximately U.S. $158 million related to a workforce reduction program.
     See "Item 5. Operating and Financial Review and Prospects."
(3)  Bolivar amounts have been translated into U.S. dollars, solely for the
     convenience of the reader, at the rate of Bs. 700.00 = U.S.$1.00, the Daily
     Exchange Rate on December 31, 2000. Such translations should not be
     construed as representations that the bolivar amounts actually represent
     such U.S. dollar amounts or could be converted at the rate indicated, or at
     all. See "-- Exchange Rates."
(4)  During the periods presented, there were no common stock equivalents having
     a dilutive effect.
(5)  In 1997, ordinary cash dividends declared per share and per ADS at the
     dividend declaration date (expressed in nominal bolivars) were Bs. 13.24
     and Bs. 92.68, respectively, or U.S.$0.03 and U.S.$0.19, respectively. In
     1998, ordinary cash dividends declared per share and per ADS at the
     dividend declaration date were Bs. 124.10 and Bs. 868.70, respectively. The
     Company paid the dividends declared in 1998 in two equal payments. The
     first payment represented U.S.$0.12 per share and U.S.$0.81 per ADS and the
     second payment represented U.S.$0.11 per share and U.S.$0.75 per ADS. In
     1999, the Company declared and paid an ordinary dividend and an
     extraordinary dividend. Ordinary cash dividends declared per share and per
     ADS at the dividend declaration date were Bs. 55.33 and Bs. 387.31,
     respectively, or U.S.$0.09 and U.S.$0.63, respectively. Extraordinary cash
     dividends declared per share and per ADS at the dividend declaration date
     were Bs. 100.00 and Bs. 700.00, respectively, or U.S.$0.15 and U.S.$1.05,
     respectively. In 2000, ordinary cash dividends declared per share and per
     ADS at the dividend declaration date were Bs. 60.00 and Bs. 420.00,
     respectively, or U.S.$0.09 and U.S.$0.63, respectively. Dividend
     information in U.S. dollars is expressed at the exchange rate as of the
     dividend payment date.
(6)  The average shares outstanding under Venezuelan GAAP does not include
     shares held by the Company for distribution to employees in the form of
     awards. Under U.S. GAAP, these shares are treated as treasury stock, and
     the average shares outstanding include treasury stock.

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                   At December 31,
                               ---------------------------------------------------------------------------------------------
                                   1996 /(1)/      1997/(1)/       1998 /(1)/     1999 /(1)/     2000/(1)/        2000/(2)/
                               ---------------------------------------------------------------------------------------------
                                                            (in millions, except per share and per ADS data)

Balance Sheet Data:
Venezuelan GAAP:
---------------
<S>                            <C>                 <C>             <C>             <C>             <C>             <C>
  Working capital                  Bs.138,887      Bs.253,986      Bs.306,994      Bs.411,179      Bs.296,152      U.S.$423
  Property, plant and
  equipment, net                    3,719,995       3,783,282       3,771,764       3,535,274       3,253,902         4,648
  Total assets                      4,851,536       5,076,615       5,042,389       4,916,846       4,642,083         6,632
  Total indebtedness                  777,680         513,246         502,481         448,185         396,860           567
  Capital stock                     1,457,702       1,457,702       1,457,702       1,455,939       1,350,195         1,929
  Total stockholders' equity        3,358,763       3,799,851       3,799,426       3,541,171       3,714,768         5,307

U.S. GAAP:
---------
  Property, plant and
  equipment, net                 Bs.3,766,315    Bs.3,835,418    Bs.3,830,573    Bs.3,604,306    Bs.3,333,209    U.S.$4,762
  Capital stock                     1,418,643       1,418,643       1,421,865       1,420,102       1,314,358         1,878
  Total assets                      4,787,560       4,989,773       5,065,452       4,950,042       4,685,554         6,694
  Total stockholders' equity        3,490,889       3,673,702       3,702,063       3,581,961       3,279,560         4,685
</TABLE>
________________________________

(1) Bolivar amounts are in constant bolivars as of December 31, 2000.
(2) Bolivar amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Bs. 700.00 = U.S.$1.00, the Daily
Exchange Rate on December 31, 2000. Such translations should not be construed as
representations that the bolivar amounts actually represent such U.S. dollar
amounts or could be converted into U.S. dollars at the rate indicated, or at
all. See " -- Exchange Rates."

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                          ------------------------------------------------
                                             1996     1997      1998      1999      2000
                                          ------------------------------------------------
<S>                                       <C>         <C>       <C>       <C>       <C>
Inflation and Devaluation Data:
  Increase in Consumer Price Index          103.2%    37.6%     29.9%     20.0%     13.4%
  Increase in Wholesale Price Index         105.8%    17.3%     23.3%     13.6%     15.8%
  Rate of Bolivar devaluation                64.4%     5.9%     11.9%     14.9%      7.8%
</TABLE>

Average shares outstanding

     Income (loss) per share is calculated based on the average number of shares
outstanding in each relevant year. The average common shares outstanding at
December 31, 1998, 1999 and 2000 under Venezuelan GAAP were 1,000,000,000,
999,897,508 and 951,961,030 shares, respectively. The average shares outstanding
under Venezuelan GAAP does not include shares held by the Company for
distribution to employees in the form of awards. Under U.S. GAAP, these shares
are treated as treasury stock, and the average shares outstanding include
treasury stock.

Exchange Rates

     The following table sets forth the average, high, low and period-end noon
buying rates for the bolivar reported by the Federal Reserve Bank of New York
(the "Noon Buying Rate") expressed as bolivars per U.S. dollars concerning
bolivar/U.S. dollar exchange rates for the years 1996, 1997, 1998, 1999 and
2000, each of the last 3 months of 2000 and each of the first 4 months of 2001:

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                 End of
Year Ended December 31,                High (1)                 Low (1)                Average (2)               Year (3)
-----------------------------    -------------------        ---------------        -------------------     -------------------
<S>                              <C>                        <C>                    <C>                     <C>
1996                                    476.75                   290.00                    426.43                 476.75
1997                                    504.80                   474.90                    490.57                 504.80
1998                                    582.50                   511.15                    550.72                 565.00
1999                                    649.25                   573.75                    609.41                 649.25
2000                                    700.50                   655.75                    682.41                 700.50


                                                                                                                 End of
Monthly                                High (4)                 Low (4)                Average (5)             Month (6)
Year 2000                        -------------------        ---------------        -------------------     -------------------
 October                                694.40                   691.25                    692.86                 694.15
 November                               697.50                   693.75                    695.77                 697.50
 December                               700.50                   696.69                    698.85                 700.50

Year 2001
 January                                701.26                   698.75                    700.02                 701.25
 February                               705.15                   701.30                    703.36                 705.00
 March                                  705.00                   708.00                    706.06                 707.25
  April                                 712.26                   708.25                    710.39                 712.26
____________________________
</TABLE>

(1)  The highest and lowest of the Noon Buying Rates for the bolivar per U.S.
     dollar reported by the Federal Reserve Bank of New York on the last
     business day of each month during the relevant year.
(2)  The average of the Noon Buying Rates on the last date of each month during
     the relevant year.
(3)  The Noon Buying Rates on the last day of each relevant year.
(4)  The highest and lowest of the Noon Buying Rates of each day in the relevant
     month.
(5)  The average of the Noon Buying Rates of each day in the relevant month.
(6)  The Noon Buying Rates on the last day of each relevant month.

     On April 30, 2001, the Noon Buying Rate was Bs. 712.26 = U.S.$1.00
(equivalent to Bs. 1.00 = U.S.$0.0014).

     The Company's financial statements are based on the exchange rates
announced by the Central Bank of Venezuela, which do not differ significantly
from the Noon Buying Rates reported by the Federal Reserve Bank of New York.

     There are currently no restrictions under Venezuelan law on the export or
import of capital including, without limitation, foreign exchange controls,
restrictions on payments or remittance of dividends. See "Item 10. Additional
Information -- Exchange Controls." There can be no assurance that the
Government will not institute restrictive exchange control, payments or dividend
remittance policies in the future. See "--Risk Factors."

     For a discussion of the effect, and potential effect, of fluctuations in
bolivar/U.S. dollar exchange rates on the Company, its results of operations and
financial condition and on the market price, liquidity of, and return on
investment on the American Depositary Shares (the "ADSs") and the Class D
Shares, see "Item 5. Operating and Financial Review and Prospects."

Capitalization and Indebtedness

     Not applicable.

Reasons for the Offer and Use of Proceeds

     Not applicable.

                                       7
<PAGE>

Risk Factors

Factors Relating to Venezuela

Venezuelan Political Risk

     Substantially all of the Company's business is conducted in Venezuela. The
Company's results of operations and financial condition have been, and are
expected to continue to be, affected generally by inflation, exchange rates,
interest rates, changes in Government leadership and policy, taxation and other
political, economic or other developments in or affecting Venezuela. Venezuela
has had continuous democratically elected governments since 1958. However, two
overthrows of the government were attempted in 1992 but were quickly suppressed
by military forces. In May 1993, the Venezuelan Senate voted to authorize
impeachment proceedings against then-President Carlos Andres Perez. The current
President, Hugo Chavez Frias, who led one of the 1992 coup attempts, was elected
in December 1998 and took office in February 1999.

     Since taking office, the government of Hugo Chavez has implemented
significant political changes. The Chavez administration convened the National
Constituent Assembly for the purpose of writing a new Venezuelan Constitution,
which became effective on December 30, 1999, providing for a third "Citizen
Power" branch in addition to the President and Congress. On July 30, 2000 voters
re-elected President Chavez, whose political party, the Fifth Republic Movement
(MVR), also won 77 of 165 seats in the legislature. President Chavez's
government has relied heavily on his connection with the Venezuelan military and
there has been increasing controversy over the use of armed forces personnel in
traditionally non-military roles, such as the appointment of active or retired
military officers to high government posts including the presidencies of the
major state-owned corporations, Petroleos de Venezuela, S.A. ("PDVSA"), CITGO
Petroleum Corporation and Corporacion Venezolana de Guayana (CVG). In August
2000, President Chavez announced plans for broad economic reform, designed to
promote private investment and economic growth. In November 2000, the Venezuelan
Congress passed the Ley Habilitante (Enabling Law), which allows President
Chavez to enact laws for a one year period by decree. The Government has
outlined several areas in which decrees will be made, including infrastructure
and the financial sector, which may affect foreign investment. There can be no
assurance that the economic and political uncertainty which has negatively
affected the growth of the Venezuelan economy in the past will not persist.

     The Government has historically exercised significant influence over the
Venezuelan economy, (including in 1994 by imposing exchange controls, assuming
control of a number of large banks and imposing bonus payments to workers and in
1996 by suspending constitutional rights), and although over the last few years
the Government has intermittently begun reform programs to lessen the public
sector's role in the economy, the Government continues to exercise a significant
influence over the economy. Government actions concerning the economy are
likely to continue to have an important effect on:

          the financial condition and results of the operations of Venezuelan
          companies;

          the ability of Venezuelan companies to make capital expenditures; and

          the market price, liquidity and return on securities carrying
          Venezuelan risk, such as the ADSs and the Class D Shares.


Economic Considerations

     Demand for telephone services in Venezuela and the Company's results of
operations and financial condition have been, and are expected to continue to
be, affected by the state of Venezuela's

                                       8
<PAGE>

economy. Venezuela's gross domestic product ("GDP") increased by 5.1% in 1997,
contracted by 0.7% in 1998, contracted by 7.2% in 1999 and increased by 3.2% in
2000. Not accounting for petroleum related activities, Venezuela's GDP increased
by 3.3% in 1997, contracted by 0.8% in 1998, contracted by 4.9% in 1999 and
increased by 2.7% in 2000. See "-- Importance of Oil Sector." There can be no
assurance that economic conditions in Venezuela will improve or that they will
not continue to have an adverse effect on demand for the Company's services or
on the Company's results of operations and financial condition. See "Item 5.
Operating and Financial Review and Prospects."

Inflation and Tariff Regulation

     Venezuela has experienced high levels of inflation during the past decade.
The general rate of inflation as measured by the Consumer Price Index was 37.6%,
29.9%, 20.0% and 13.4% for 1997, 1998, 1999 and 2000, respectively, and as
measured by the Wholesale Price Index was 17.3%, 23.3%, 13.6%, and 15.8% for
1997, 1998, 1999 and 2000, respectively. There can be no assurance that
inflation will not continue at or increase from its current level.

     Prior to entering into an agreement in February 2000 with Comision Nacional
de Telecomunicaciones (the National Commission of Telecommunications)
("CONATEL") relating to, among other things, the rates CANTV charged for
telephone services during 2000 (the "Agreement"), CANTV's rates were regulated
under the Concession (as described herein). See "Item 4. Information on the
Company -- Regulatory Framework." The Concession had provided for a "price-cap"
mechanism to set and adjust rates on a quarterly basis throughout each calendar
year. The price-cap mechanism was designed to vary quarterly based on the
Wholesale Price Index. Although in principle tariffs were to be adjusted to
reflect inflation in the preceding quarter, tariffs were, in practice, generally
calculated based upon rates of inflation during the second quarter preceding the
adjustment The delay was due to the time period required to calculate the
inflation rate during a specific quarter. Accordingly, in many instances
tariffs were implemented based on inflation levels relating to periods ending as
much as six months preceding their implementation date.

     The increase in CANTV's tariffs did not, in all cases, fully offset the
effects of inflation used in preparing the Company's financial statements since
the rate of inflation used in preparing the Company's financial statements is
based on the more commonly accepted Consumer Price Index which, at times,
significantly exceeded the rate of inflation as measured by the Wholesale Price
Index.  Further, the price-cap mechanism was not always implemented as
described in the Concession.  CONATEL sometimes delayed the approval of rate
increases or did not allow the full tariff increases allowed by the Concession's
price-cap mechanism.  In other cases, the Company decided not to implement the
full increase authorized for competitive or other reasons. For example, in 1999,
CANTV received authorization for a rate increase effective January 1, 1999 and
in March 1999, CONATEL approved a tariff increase, which became effective on
April 30, 1999. At the request of CONATEL, CANTV agreed not to implement the
rate increase permitted pursuant to this authorization for basic residential
rent. Thereafter, CANTV was unable to obtain approval to increase its tariffs
as stipulated in the Concession following CANTV's rate increase effective April
30, 1999. Under the Agreement, the first tariff increase became effective March
23, 2000 and the second tariff increase became effective on June 16, 2000. See
"Item 4. Information on the Company -- Regulatory Framework -- Regulation and
the Concession -- the Agreement."

     The tariffs provided for under the Agreement were effective until March 10,
2001 if CANTV and CONATEL were not to reach an agreement on the tariffs to apply
to CANTV after November 27, 2000. During 2000, CANTV and CONATEL failed to
reach an agreement on tariffs to apply after November 27, 2000.

                                       9
<PAGE>

     CANTV will be subject to tariff regulation under the new regulatory
framework as the established operator in the telecommunications services market
in Venezuela. On February 19, 2001 pursuant to the Ley Organica de
Telecomunicaciones (Gaceta Oficial No. 36,970, enacted on June 12, 2000) (the
"New Telecommunications Law"), CONATEL established the maximum tariffs for 2001
that are applicable to the Company effective March 10, 2001 and a new price-cap
system that replaced the tariff adjustment mechanism provided under the
Agreement. The first tariff increase is effective from March 10, 2001 through
June 30, 2001 and the second tariff increase will be effective on July 1, 2001.
The new  price-cap system will apply to the rates CANTV charges during 2001.
CANTV and CONATEL have not reached an agreement on a tariff system to apply
after 2001. The principal effect of the new price-cap system as applied to CANTV
is to increase local rates for residential and commercial customers by
approximately 5% and to increase charges for certain public telecommunications
services by approximately 14%. Domestic and international long distance rates
remain unchanged.

     Under the new price-cap system, the maximum tariffs may be adjusted upwards
or downwards based on a formula tied to the Wholesale Price Index and the rate
of devaluation in the bolivar. The price-cap system provides for an upward or
downward adjustment to the established tariffs based on deviations of 2.5% above
or 2.5% below projected monthly estimates of an index based on the Wholesale
Price Index and the rate of devaluation in the bolivar. CANTV may apply for an
upward adjustment to the established rates up to the excess percent that the
accumulated index is greater than 2.5% from the projected index. CONATEL may
request a downward adjustment to the established tariffs by the excess percent
that the accumulated index is less than 2.5% from the projected index. Where
the accumulated index deviates in excess of 7.5% from the projected index,
CONATEL is required to revise the price-cap formula. See "Item 4. Information
on the Company -- Regulatory Framework -- Proposed Regulation of Tariffs."

     As in the past, delays and variances from the price-cap may cause the
inflation rate used as a basis for adjustment of CANTV's rates to differ from
the rate of inflation prevailing during the period in which the adjustment is
made and in periods of increasing inflation CANTV's rates may not always fully
offset the effects of inflation. CONATEL may not allow or may delay upward
adjustments to CANTV's rates pursuant to the new price-cap system. Increasing
inflation may also cause a reduction in the value of CANTV's accounts receivable
balance. Also to the extent that CANTV's rates are adjusted on the basis of
agreed-upon projected exchange rates, devaluation of the bolivar at rates
greater than the ones contemplated by the price-cap or the inability of the
Company to raise its tariffs pursuant to the new price-cap system to compensate
for exchange losses and inflation could result in an adverse effect on the
Company's financial condition and results of operations.

Exchange Controls and Currency Devaluation

     On June 27, 1994, the Government established certain foreign currency
exchange controls and soon thereafter fixed the official bolivar/U.S. dollar
exchange rate. The rate was originally fixed at Bs. 170.00 per U.S. dollar and
was adjusted to Bs. 290.00 per U.S. dollar in December 1995. These controls,
together with economic conditions in Venezuela, caused the Company to seek to
restructure its debt obligations in 1994. See "Item 5. Operating and Financial
Review and Prospects." Such controls also limited the ability of foreign
investors to repatriate capital and of Venezuelan companies to remit dividends
in shares of Venezuelan companies represented by American Depositary Shares,
American Depositary Receipts ("ADRs"), Global Depositary Shares or Global
Depositary Receipts. These controls were removed on April 22, 1996.

     The Central Bank of Venezuela, in order to keep the exchange rate within
certain limits, currently intervenes to maintain the exchange rate between 7.5%
above and 7.5% below a reference rate set by it. Such reference rate was
originally set at Bs. 470.00 per U.S. dollar and is adjusted from time to time
to

                                       10
<PAGE>

account for projected inflation. On January 14, 1998, the reference rate was
reset to Bs. 508.50 per U.S. Dollar. The Central Bank of Venezuela has indicated
that such reference rate will be adjusted by 1.16% to 1.28% monthly. Under this
policy, the reference rate for the Central Bank of Venezuela was Bs. 686.54 per
U.S. dollar at December 31, 1999 and Bs. 700.00 per U.S. dollar at December 31,
2000.

     There can be no assurance that the Central Bank of Venezuela will continue
its current policy or that the Government will not impose foreign exchange
restrictions or otherwise take future action to limit the ability of
depositaries to repatriate capital or remit dividends on shares of Venezuelan
companies represented by ADSs, ADRs, Global Depositary Shares or Global
Depositary Receipts or to restrict the Company's ability to deliver underlying
Class D Shares in exchange for ADSs. There also can be no assurance that the
bolivar will not continue to decline in value with respect to the U.S. dollar or
that a one-time substantial devaluation of the bolivar will not be imposed by
the Government. Any such imposition or decline could adversely affect the
financial condition and results of operations of the Company and the market
value of the Class D Shares and the ADSs. See "Item 10.  Additional Information
-- Exchange Controls."

     Substantially all of the Company's revenues are denominated in bolivars
while a substantial majority of its capital expenditures and liabilities have
been and are expected to continue to be denominated in U.S. dollars. Although
the Company continually reviews opportunities to minimize its exposure to
devaluation, under current market conditions, the Company does not engage in
hedging activities. Reductions in the value of the bolivar against the U.S.
dollar and other foreign currencies have significantly affected the business and
operations of the Company in the past and may do so again in the future. If the
value of the bolivar relative to the U.S. dollar were to continue to decline
substantially, the Company's consolidated net income and stockholders' equity,
in certain circumstances, would be greatly diminished when expressed in U.S.
dollars, and the market price and liquidity of, or the return on an investment
in, the ADSs and the Class D Shares could also be adversely affected.

     Cash dividends and other cash distributions, if any, with respect to the
Class D Shares underlying the ADSs will be paid by the Company in bolivars,
whereas distributions made by the Depositary in respect of such dividends and
other distributions generally will be paid in U.S. dollars to holders of ADSs
outside Venezuela. Consequently, the U.S. dollar amount of any cash
distributions made by the Depositary to holders of ADSs would be adversely
affected by reductions in the value of the bolivar relative to the U.S. dollar
between the dividend declaration date and the dividend date.

Investment Restrictions

     The Government has in the past imposed restrictions on foreign ownership of
Venezuelan equity securities, and continues to limit foreign investment in
certain sectors of the economy, including television and radio stations, Spanish
language newspapers and professional services regulated by specific national
laws such as accounting and medical services. Currently there are no
restrictions on foreign ownership of the Company's equity securities. Although
foreign investment restrictions were liberalized in January 1990, there can be
no assurance that any such restrictions will not be reimposed. The reimposition
of any such restrictions could have an adverse effect on the results of
operations and financial condition of the Company and the market price and
liquidity of the ADSs and the Class D Shares.

Importance of Oil Sector

     The petroleum industry is central to and dominates the Venezuelan economy.
In 2000, the oil industry accounted for an estimated:

              27.5% of Venezuela's GDP;

                                       11
<PAGE>

              approximately 51.0% of the Government's total current revenues;
              and

              84.0% of the total value of Venezuela's exports.

     Consequently, the rate of economic growth, the level of tax revenue,
Government spending and Government borrowing and the supply of foreign exchange
in Venezuela are materially affected by oil prices and conditions in the
international petroleum markets generally. A future downturn in the economic
results of Venezuela's petroleum industry may have a material adverse effect on
the Venezuelan economy, which could adversely affect the financial condition and
results of operations of the Company.

     Beginning in the fourth quarter of 1997 and continuing through the first
quarter of 1999, the Venezuelan economy was adversely affected by the
significant decline in international oil prices. During that period, Venezuela
and other oil producing nations realized lower per barrel oil prices than at any
other time in the past ten years. As a result of the decline in oil revenues,
cuts in Government spending and a decline in foreign and domestic private
investment, the Venezuelan economy contracted in 1998. Beginning in April 1999,
international oil prices have increased partially as a result of production cuts
mandated by the Organization of Petroleum Producing Countries, referred to as
OPEC. The Government has announced a desire to strengthen OPEC and continue with
OPEC's directed production cuts.

     The increase in oil prices has had a beneficial effect on the Government's
budget. The average price of Venezuelan oil is currently U.S.$26 per barrel as
of December 31, 2000. For budgetary purposes the Government estimated the
average price of oil for 2000 and 2001 at U.S.$16 per barrel and U.S. $20 per
barrel, respectively.

     The Government has recently begun a program to permit foreign companies to
invest in the Venezuelan oil sector which will likely contribute to the further
growth and increased importance of the oil sector in the Venezuelan economy.
PDVSA, the Venezuelan national oil company, including its affiliates, is CANTV's
largest governmental customer.

Different Corporate Disclosure and Governance

     The securities laws of Venezuela which govern publicly traded companies
such as the Company differ from those in the United States in certain important
respects. Publicly available information about issuers of securities listed on
the Venezuela stock exchanges provides less detail in certain respects than
information regularly published by or about listed companies in the United
States or certain other countries. Although the Company is subject to the
periodic reporting requirements of the U.S. Exchange Act of 1934 (the "Exchange
Act"), the periodic disclosure required of foreign issuers under the Exchange
Act is more limited than the periodic disclosure required of U.S. issuers. In
addition, the Venezuelan securities markets are not as highly regulated and
supervised as the United States securities markets. Minority stockholders of the
Company may also have fewer and less well defined rights under Venezuelan law
and CANTV's Estatutos (the "By-laws") than they might have as minority
stockholders of a corporation incorporated in a United States jurisdiction. See
"Item 10. Additional Information -- Memorandum and Articles of Association" and
Note 16 to the Audited Financial Statements.

     The liability of stockholders of a Venezuelan company, such as CANTV,
including holders of Class D Shares, for company's losses is generally limited
to their shareholdings in the company. The Venezuelan Commercial Code provides,
however, that in the event that a company's accumulated losses (calculated in
accordance with Venezuelan GAAP on a constant bolivar basis), reduce
stockholders' equity to an amount equal to or less than two-thirds of the
company's capital stock (i.e., the aggregate of the par value of the company's
outstanding capital stock on a nominal bolivar basis), a stockholders' meeting
must be convened. At such meeting the stockholders must consider whether to: (i)
liquidate the company, (ii) reduce the company's capital stock to an amount
equal to the company's remaining

                                       12
<PAGE>

stockholders' equity, (iii) require capital contributions from stockholders to
the extent required so that stockholders' equity is equal to more than two-
thirds of the company's capital stock or (iv) take none of the foregoing
actions. If accumulated losses reduce stockholders' equity to an amount equal to
or less than one-third of the company's capital stock, the company must be
liquidated unless a stockholders' meeting is convened at which the stockholders
determine to: (i) reduce the company's capital stock to the company's remaining
stockholders' equity or (ii) require capital contributions from stockholders to
the extent required so that stockholders' equity is equal to more than two-
thirds of the company's capital stock. If the stockholders decide to require
capital contributions or to increase the capital stock as described above, each
stockholder is required under penalty of forfeiture of such stockholders shares,
to contribute additional capital to the company based upon the number of shares
that it holds, provided that any stockholder that did not attend the meeting in
person or by proxy or that voted against the increase of capital is entitled to
withdraw from the company and to receive an amount equal to the book value per
share of the shares that it holds, calculated based upon the company's most
recent unconsolidated balance sheet that has been approved at a meeting of the
company's stockholders.

Venezuelan Taxation of ADSs and Class D Shares.

     Dividends paid by CANTV with respect to Class D Shares will not be subject
to Venezuelan income tax or withholding tax with respect to dividends arising
out of earnings and profits for periods prior to December 31, 2000. Any
dividends arising out of either accumulated or current earnings and profits for
periods closing after January 1, 2001 paid to the Depositary with respect to
Class D Shares underlying the ADSs (whether in cash or stock) will be treated as
foreign source income and will not be subject to Venezuelan taxation or income
tax withholding. Any dividends arising out of either accumulated or current
earnings and profits for periods closing after January 1, 2001 and paid in cash
with respect to Class D Shares held by a person other than the Depositary will
be subject to withholding at the rate of 34% at the time of payment of the
dividend to the shareholder except as may be provided in an applicable tax
treaty. Subject to any applicable tax treaty, any such dividends arising out of
either accumulated earnings and profits or current earnings and profits for
periods closing after January 1, 2001 and paid in stock with respect to Class D
Shares held by a person other than the Depositary will be subject to withholding
at the rate of 34%, at the time that such stock is disposed of by the
shareholder. Prospective investors of the ADSs should carefully read, and should
also consult their tax advisors with respect to, the summary of Venezuelan and
United States taxes set forth under "Item 10. Additional Information --
Taxation."

Enforceability of Civil Liabilities

     CANTV is a "compania anonima" organized under the laws of Venezuela. A
majority of CANTV's directors and officers and certain experts named herein
reside outside the United States (principally in Venezuela). All or a
substantial portion of the assets of such persons or CANTV are located outside
the United States. As a result, it may not be possible for investors to effect
service of process within the United States upon such persons or CANTV or to
enforce against them in federal or state courts in the United States judgments
predicated upon the civil liability provisions of the federal securities laws of
the United States. CANTV has been advised by its Venezuelan counsel, that there
is uncertainty as to the enforceability, in original actions in Venezuelan
courts, of liabilities predicated solely under the United States federal
securities laws and as to the enforceability in Venezuelan courts of judgments
of United States courts obtained in actions predicated upon the civil liability
provisions of the United States federal securities laws.

                                       13
<PAGE>

Factors Relating to the Company

Concession and the New Telecommunications Law

     The Company experienced certain difficulties in implementing certain
aspects of the Concession, including actions contemplated to be taken by the
Government and actions contemplated to be taken by the Company under the
Concession. There can be no assurance that any disputes that may arise between
the Company and the Government in the future will be resolved expeditiously or
in a manner favorable to the Company. See Note 2 to the Audited Financial
Statements and "Item 4. Information on the Company -- Regulatory Framework".

     The Concession contemplated the implementation of a rate rebalancing
program to allow CANTV to eliminate the subsidy provided by its long distance
services to basic rent charges for residential customers and thereby permitting
CANTV to offer competitive pricing for its international and domestic long
distance services by the year 2000. The Concession also contemplated the
implementation of certain specific rate rebalancing steps each quarter
commencing in the first quarter of 1994. Due to the economic conditions in
Venezuela existing since 1994 and other factors, such rebalancing did not take
place as contemplated in the Concession. On September 9, 1996, CANTV entered
into an agreement with the Ministry of Transportation and Communications (now
known as the Ministry of Infrastructure) designed to achieve the level of rate
rebalancing originally contemplated by the Concession. In 1997, CONATEL delayed
the quarterly rate increases and rate rebalancing authorized under the
Concession and this agreement for fourteen days. In February 2000, following the
delays in tariff approvals in 1999 and the commencement of a preliminary
proceeding in contemplation of a legal action by CANTV against the Government
for breach of the Concession, CANTV and CONATEL entered into the Agreement with
respect to the rate structures and previously regulated services under the
Concession including rate rebalancing and service level mandates.

     The New Telecommunications Law enacted on June 12, 2000, provides the
general legal framework for the provision and regulation of telecommunications
services in Venezuela with the stated objectives of establishing the conditions
for fair competition between operators and service providers, setting the rules
on tariffs and interconnection, developing and modernizing the
telecommunications systems, and establishing universal service contributions.
See "Item 4. Information on the Company -- Regulatory Framework." CANTV will be
subject to tariff regulation under the new regulatory framework as the
established operator in the telecommunications services market in Venezuela. New
market entrants will be free to set rates. On February 19, 2001 pursuant to the
New Telecommunications Law, CONATEL established the maximum tariffs that are
applicable effective March 10, 2001 during 2001 and a new price-cap system that
replaced the tariff adjustment mechanism provided under the Agreement. The new
price-cap system will apply to the rates CANTV charges during 2001. CANTV and
CONATEL have not reached agreement on a tariff system to apply after 2001. The
principal effect of the new price-cap system as applied to CANTV is to increase
local rates for residential and commercial customers by approximately 5% and to
increase charges for certain public telecommunications services by approximately
14%. Domestic and international long distance rates remain unchanged.

     There can be no assurance that rebalancing will ever be completed as
contemplated under the Agreement or the Concession. In addition, while none of
the Concession, the Agreement or the New Telecommunications Law requires CANTV
to agree to any change in its rate mechanism, there can be no assurance that
CONATEL will not delay changes in rates or attempt to revise the price-cap and
rate rebalancing mechanisms in ways which would have a material adverse effect
on the Company's financial condition and results of operations. Also, as the
established operator, CANTV is also subject to more demanding interconnection
requirements, and may be subject to greater universal service obligations and
quality and service standards to be established under the new regulatory
framework. There is no assurance that the disparity of treatment will be reduced
or that it will not worsen and have a negative

                                       14
<PAGE>

effect on the ability of CANTV to compete with new market entrants. Inasmuch as
CANTV continues to have the rates it charges subject to regulation while new
market entrants are free to set rates, it may also experience decreases to its
profit margin as a result of the opening of the telecommunications services
market to competition. The extent of any decrease in profit margins will depend,
in part, on the number of new market entrants that compete with CANTV for the
more lucrative long distance services while CANTV retains the larger share of
the less profitable local services market subject to price regulation. In the
event that CANTV is unable to raise the rates it charges for local services
without offsetting increases in call volume to compensate for losses in long
distance service revenues, CANTV may experience an adverse effect to its
financial condition and results of operation.

Delays in Receiving Payments from Government Entities

     The Company's largest customer is the Venezuelan public sector, including
the Government, its agencies and enterprises, and Venezuelan states and
municipalities (collectively, "Government entities"). In 2000, Government
entities generated approximately 9% of the Company's revenues.

     The amounts that Government entities pay for telecommunications services is
established pursuant to annual budgets rather than based upon actual usage
during such year. As a result of these budgeting processes and other reasons, a
number of Government entities have not paid the Company in full for
telecommunications services rendered. The Company has not been able to make
adjustments for inflation or charge interest on such overdue amounts. As a
result, the loss in value related to amounts owed CANTV by Government entities
is significantly greater than the amounts reflected as currently outstanding. On
November 3, 1999, the Venezuelan Congress passed a law authorizing the issuance
of bonds for the purpose of paying certain outstanding obligations including
those related to telephone services. The amount of bonds authorized for payments
of debt owed CANTV as of December 31, 1998, under such legislation was estimated
to be Bs. 63,218 million (U.S.$90.3 million). In December 2000, CANTV received a
payment from the Government of Bs. 34,089 million (U.S.$48.7 million) from a
bond issuance by the Government related to amounts outstanding in respect of
years 1998 and prior. As of December 31, 2000, the amounts outstanding in
respect of years 1998 and prior was Bs. 18,836 million. In 2000, the Government
budgeted an issuance of bonds to cover the partial payment of amounts
outstanding as of December 31, 1999, which totaled Bs. 137.5 billion after
adjusting for inflation as of December 31, 2000. CANTV expects to receive
approximately Bs. 20,000 million (U.S.$28.6 million) during 2001 in respect of
this bond issuance.

     At December 31, 2000, Government entities, including certain ministries of
the Government, owed the Company approximately Bs. 102.8 billion (U.S.$146.8
million) of which approximately Bs. 47.6 billion (U.S.$68.0 million) was
outstanding from prior years. As a result of the effects of inflation and
devaluation, the value to the Company of these amounts has been reduced
substantially. During 1999 and 2000, the losses from the exposure to inflation
was Bs. 22,531 million and Bs. 15,239 million, respectively. See Note 9 to the
Audited Financial Statements.

     There can be no assurance as to whether currently outstanding receivables
from these Government entities will be paid or as to the timing of any such
payments. In addition, because the amounts that such Government entities can pay
for telecommunication services continues to be based upon budgeted amounts and
not actual usage, it is expected that additional receivables generated by
Government entities in 2001 will be outstanding as of December 31, 2001.
Although the Company has in the case of certain Government entities reduced the
number of lines available, there can be no assurance that Government entities
will not continue to use telecommunications services in excess of the amounts
that have been budgeted for and can be paid, that the Company will not continue
to experience significant delays in collecting receivables from Government
entities or that inflation and devaluation will not continue to decrease the
value of these receivables to the Company. Failure by Government entities to

                                       15
<PAGE>

pay the amounts owed to the Company or amounts to be billed in the future has
had and will continue to have an adverse effect on the profitability of the
Company.

Collections

     At December 31, 2000, the average number of days that receivables remained
outstanding was approximately 40 days for all customers except Government
entities, for which the average was approximately 280 days. The Company
disconnected approximately 2.4 million customers during 2000 due to non-payment.
Although approximately 81.9% of such customers paid the overdue amounts and were
subsequently reconnected, the value of the payments received is reduced as a
result of the inflationary environment that has existed in Venezuela in the last
several years. The Company started applying a reconnection fee, which varies
depending on the type of customer. The Company also began charging interest at a
rate of 12% per annum on overdue amounts from non-Government customers. There
can be no assurance that the Company will not continue to experience significant
delays in collecting receivables, that inflation will not continue to erode the
value of payments received on overdue amounts, that significant number of
customers will not be disconnected for failure to pay for services and that such
factors will not continue to have an adverse impact on the Company.

Competition

     Pursuant to the Concession, the Company was the sole provider of switched,
fixed local, domestic and international long distance telephone services
throughout Venezuela until November 27, 2000. Beginning on November 27, 2000,
however, the Concession allowed for direct competition for these services. In
addition, the Concession permitted the Ministry of Transportation and
Communications to grant concessions for basic telephone services to third
parties prior to October 2000 in certain rural areas not served by CANTV.

     On January 15, 1991 CONATEL granted the first cellular concession to Telcel
BellSouth, C.A. ("Telcel"). On May 19, 1992, the Company purchased one of two
cellular concessions from the Government and established Telecomunicaciones
Movilnet, C.A. ("Movilnet").

     In December 1996, Infonet Redes de Informacion C.A. ("Infonet") was granted
a rural concession to provide multiple services, except national and
international long distance services, to population centers with 5,000 or fewer
inhabitants in eight western states of Venezuela. Infonet has also installed
digital fixed and mobile wireless services in rural areas in western Venezuela
using global service mobile ("GSM") technology and has also expanded its
services into large population areas. In January 1998, two additional companies
were granted multiple services concessions. Corporacion Digitel C.A. ("Digitel")
(since late 2000 majority owned by Telecom Italia) was granted a concession to
provide services in seven central states and Digicel (formerly Consorcio Elca,
C.A.) ("Digicel") was granted a concession to provide services in six eastern
states. Infonet and Digitel are providing digital fixed wireless and cellular
services and both have expanded their services into larger population areas
where they compete directly with services provided by Movilnet and indirectly
with services provided by CANTV.

     With the opening of the telecommunications market to competition in
Venezuela, CANTV is subject to competition in all areas of its business. Several
companies have completed the process of applying for administrative licenses and
concessions on various services. Beginning in November 2000, the Government
started the auction of frequencies for Wireless Local Loop ("WLL") services.
Five regions were defined, three permits in each region were auctioned and six
concessions were granted. CANTV was not allowed to participate in this auction.
See "Item 4. Information on the Company -- Regulatory Framework --Competitive
Framework." Competition in services provided by the Company may arise from a
variety of new entrants, including telecommunications services providers from
other countries.

                                       16
<PAGE>

Such competitors will be able to provide telecommunications services either
through newly installed facilities and networks or through facilities and
networks of existing providers.

     As of April 30, 2001, after the opening of the telecommunications market to
competition, the Venezuelan Telecommunications market is composed of one
integrated service provider, namely CANTV; wireless service providers, such as
Movilnet, Telcel, Digitel and Infonet; fixed wireless service providers, such as
Telcel, Genesis Telecom, C.A. ("Genesis Telecom"), Entel Chile, S.A. ("Entel
Chile"), Millicom International Cellular, S.A. ("Millicom"), Digitel and
Digicel; data transmission service providers, such as Telecomunicaciones ImpSat,
S.A. ("ImpSat"), Compsat, Bantel, NetUno, Viptel, BellCanada International and
Texcom Telecomunicaciones, C.A. ("Texcom"); Internet service providers ("ISPs"),
such as CANTV Servicios, C.A. ("CANTV Servicios"), T-Net, Etheron, AOL, UOL and
Eldish; paging operators, such as Skytel, Telemensajes Metropolitanos, Radio
Contacto and TeleKontacto; trunking service providers, such as Americatel, Radio
Movil Digital and Comunicaciones Moviles EDC, C.A. ("Conmovil"); and Cable TV
operators, such as SuperCable ALK Internacional, C.A. ("SuperCable"), Cable
Corp. T.V., C.A. ("Cabletel") and Corporacion Telemic, C.A. ("Intercable"),
including DirectTV satellite transmission. These telecommunications services
providers and other market entrants may establish customer relationships, as
well as other capabilities and resources to expand their current service
offerings. The Company believes that its competitors will target large clients,
top tier commercial customers and high-income residential customers.

     CONATEL had intended to auction concessions for frequency to provide Local
Multipoint Distribution Services ("LMDS") in each of five regions of Venezuela.
LMDS is a fixed wireless service that offers a broad band access and fast data
transmission. On April 2, 2001, CONATEL temporarily suspended the auction
process for LMDS. CONATEL has not announced the new date for the LMDS auction.

     The scope of increased competition and any corresponding adverse effect on
the Company's results will depend on a variety of factors. Among such factors
are the business strategies and financial and technical capabilities of
potential competitors, prevailing market conditions, as well as the
effectiveness of the Company's efforts to compete successfully. Increased
competition will further change the environment in which the Company operates.
Competition will require the increased development of a competitive culture,
including greater customer care, differentiated services, continuous
introduction of innovative technologies, competitive cost positioning and
operational efficiencies. There is no assurance that the Company will be able to
operate effectively in a highly competitive environment.

Labor Relations

     The Company's employees are members of 28 separate labor unions which deal
with CANTV either directly or through the Federacion de Trabajadores de
Telecomunicaciones de Venezuela (Federation of Telecommunications Workers of
Venezuela) ("FETRATEL"). Approximately 39.2% of the 13,592 Company employees at
December 31, 2000 were members of a labor union. In the past, contract
negotiations have generally not been concluded by the expiration date of the
collective bargaining agreement, but employees have continued to act under the
terms of the expired contracts during negotiations. However, the Company has
experienced work stoppages from time to time. The most recent work stoppage,
which lasted 23 days, occurred in March 1997 during contract negotiations
following the expiration of a collective bargaining agreement on December 31,
1996. On April 2, 1997 the Government suspended the strike and convened an
arbitration panel to draft a new collective bargaining agreement. This agreement
expired on June 18, 1999. On September 3, 1999, the Company signed a new
collective bargaining agreement with FETRATEL, which expires on June 17, 2001.
This agreement established a 20% base salary increase retroactive to June 18,
1999 for all union workers and merit increases in June 2000 and 2001. Future
conflicts with the Company's unionized employees or

                                       17
<PAGE>

other employees could have a material adverse effect on the Company. See "Item
6. Directors, Senior Management and Employees -- Employees."

Liquidity of Market for Class D Shares

     The Caracas Stock Exchange, the smaller Maracaibo Stock Exchange and
Electronic Stock Exchange are Venezuela's only stock exchanges. The Venezuelan
securities markets are substantially smaller, less liquid and more volatile than
the securities markets in the United States and certain other countries. At
April 30, 2001, the aggregate market capitalization of the fifteen largest
Venezuelan companies listed on the Caracas Stock Exchange was Bs. 3,505 billion
(U.S.$4.9 billion at the exchange rate as of April 30, 2001).

     A disproportionately large percentage of the market capitalization and
trading value of the Venezuelan securities markets is represented by a small
number of issuers, and a high proportion of the shares of many Venezuelan
companies are held by a relatively limited number of persons.  The Company is
the largest company in Venezuela in terms of market capitalization.

     The Caracas Stock Exchange has in the past experienced substantial
fluctuations in the market prices of listed securities. These and other market
characteristics have in the past affected, and may in the future affect, the
market price and liquidity of shares of Venezuelan companies, including the
Class D Shares, and may also affect the market prices and trading of the ADSs.

Forward-Looking Information is Subject to Risk and Uncertainty

     Certain statements contained in this Form 20-F contain "forward-looking"
information (as defined in the U.S. Private Securities Litigation Reform Act of
1995) that involves risks and uncertainties, including (i) the Company's plans
for expansion and modernization of its networks and the benefits to the Company
that may result from the Company's implementation of such plans, (ii) the
Company's plans to expand its service offerings, (iii) the implications to the
Company of any economic situation in Venezuela, (iv) information as to potential
competitors and as to potential market share gains by the Company that may
result from the Company's implementation of its business strategy, (v) the
Company's plans to further implement rate rebalancing and the effects on the
Company's business that may result from such rebalancing and (vi) the effects of
the changes brought about by the new regulatory framework designed to open the
telecommunications sector to competition. Actual future results and trends may
differ materially depending on a variety of factors discussed in this "Risk
Factors" section and elsewhere in this Form 20-F, including, among others, the
Company's success in implementing its business plans, the nature and extent of
future competition, changes in the Venezuelan and global economy, regulatory
conditions and Venezuelan political and legal developments.

                                       18
<PAGE>

Item 4.   Information on the Company

Introduction

     CANTV is the primary provider of fixed telecommunications services in
Venezuela. The Company provides substantially all of its services within
Venezuela and substantially all of its operating income is derived from
Venezuelan domiciled customers and from settlements with foreign carriers for
calls completed in Venezuela. CANTV is the proprietor of the only basic
telecommunications network with nationwide coverage in Venezuela. Through this
network, CANTV provides local, national and international telecommunications
services. In addition, the Company provides private network, data, public
telephone, rural telephone and telex services. Through its subsidiaries, the
Company provides other telecommunications-related services including wireless
communications, Internet access and telephone directories.

     CANTV is a "compania anonima" organized under the laws of Venezuela. CANTV
was incorporated in Venezuela as Compania Anonima Nacional Telefonos de
Venezuela (CANTV) on June 20, 1930. The Company's registered office is located
at Avenida Libertador, Centro Nacional de Telecomunicaciones, Nuevo Edificio
Administrativo, Piso 1., Apartado Postal 1226, Caracas, Venezuela 1010 (58-212-
500-6800). CANTV's Internet website address is http://www.cantv.com.ve. The
                                               -----------------------
information on CANTV's website is not incorporated into this document.

     The Company had gross revenues and net loss of Bs. 1,825.1 billion
(U.S.$2.6 billion) and Bs. 90.2 billion (U.S.$129 million), respectively, for
the year ended December 31, 2000. At December 31, 2000, the Company had
approximately 2.6 million access lines in service and approximately 1.7 million
wireless subscribers.


History

     In December 1991, VenWorld Telecom, C.A. ("VenWorld"), a company organized
under the laws of Venezuela by a private consortium of companies and currently
57.8%-owned by Verizon Communications Inc. ("Verizon") (formerly GTE
Corporation), acquired operating control and initially 40% of the equity share
capital of CANTV from the Government through Fondo de Inversiones de Venezuela
(the "Venezuelan Investment Fund") for a purchase price of approximately
U.S.$1.885 billion. As a result of the share repurchase programs, the shares
represented by that stake constitute as of December 31, 2000 43.19% of the
equity share capital of CANTV. Since VenWorld obtained operating control, the
Company has substantially increased the number of access lines in service,
modernized its network, increased employee productivity, consolidated
operations, strengthened management controls and improved network planning,
design and construction. In late 1996, the Government sold 348,100,000 Class D
Shares representing 34.8% of the equity share capital of CANTV in an
international equity offering (the "Initial Public Offering").

     CANTV operates the nation-wide fixed-line network in Venezuela. CANTV's
principal subsidiaries are Movilnet, CANTV Servicios and Caveguias, C.A.
("Caveguias"). Movilnet was incorporated in Venezuela on March 24, 1992 and its
business is to provide, manage and develop wireless telecommunications services.
CANTV Servicios was incorporated in Venezuela on January 26, 1994 and its
business is to provide value-added services such as Internet access and data
transmission. Caveguias was incorporated in Venezuela on November 12, 1975 and
its business is to provide telephone directory information services.

     The Company is subject to comprehensive regulation and supervision by the
Ministry of Infrastructure (previously known as the Ministry of Transportation
and Communications) (the "Ministry") and CONATEL.  See "-- Regulatory Framework
-- Regulation and the Concession."

                                       19
<PAGE>

     Prior to privatization, the quality of services provided by the Company and
its operating results were negatively affected by severe congestion in the
domestic telephone network, which was largely attributable to outdated
equipment, poor network design, poor equipment maintenance and inadequate
management systems and controls. Pursuant to an expansion and modernization
program, the Company has increased its access lines in service and wireless
subscribers from approximately 2.5 million and 213,655 at December 31, 1996,
respectively, to approximately 2.6 million and 1.7 million at December 31, 2000,
respectively. The percentage of digital access lines installed in the Company's
network has increased from 59.3% at December 31, 1996 to 80.0% at December 31,
2000. All of the Company's international and domestic long distance switches are
digital. During 2000, the Company has also connected several cities to newly
built segments of a high capacity broadband fiber optic network, which offers
the latest technology in fixed telecommunications networks with additional
capacity for expansion in the future.

     Since privatization, the Company has implemented a number of programs
designed to lead to greater productivity and improved customer service. As a
result of productivity improvements, the Company has also been able to reduce
the number of its employees and at the same time grow its business. Access lines
in service per CANTV employee have increased from 151 at December 31, 1996 to
235 at December 31, 2000. As part of its customer service enhancements, the
Company has automated its customer service system, introduced detailed billing
and a computerized payment system, increased the number of bilingual
international and domestic operators, consolidated operator centers, modernized
and increased the number of customer service centers, improved the quality of
its trouble reporting system, increased the number of maintenance facilities and
implemented an automated disconnect and reconnect system. In addition, the
Company has redesigned its employee training programs, emphasizing quality and
efficient service in order to promote a customer-oriented service culture. The
Company continuously seeks to enhance customer service through the introduction
of innovative, value added services.

     The consortium of companies that originally formed VenWorld, directly or
through subsidiaries, in addition to Verizon includes: T.I. Telefonica
Internacional de Espana, S.A. ("Telefonica Internacional"); C.A. La Electricidad
de Caracas, S.A.C.A. ("Electricidad de Caracas"), Venezuela's largest private
sector power generating and distribution company now a subsidiary of AES
Corporation; Consorcio Inversionista Mercantil ("CIMA"), C.A., S.A.C.A.,
individually and as trustee for 239 trusts established as a result of the
liquidation of Inversiones Cimatel, C.A.; and AT&T International, Inc. ("AT&T")
(together with their successors, collectively referred to as the "Participants
in the Consortium"). The Participants in the Consortium contribute broad
operating experience and expertise to the operation of the Company and provide
the Company with access to technology, research and product development and
procurement. In addition, certain Participants in the Consortium have entered
into service agreements with the Company to provide technical, consulting and
other assistance. See "Item 7. Major Shareholders and Related Party
Transactions." VenWorld, as the holder of the Company's Class A Shares, had the
right until January 1, 2001 to elect the President of the Company and the four
principal directors, which collectively comprise a majority of CANTV's nine
member Board of Directors. After January 1, 2001, the President of the Company
and four directors that had been elected by VenWorld as holder of the Company's
Class A Shares, together with one of the two directors that had been elected by
the Government as holder of the Company's Class B Shares, are now elected by all
holders of CANTV's outstanding shares voting as a single class. See "Item 6.
Directors, Senior Management and Employees."

Company Strategy

     The Company's mission is to maximize shareholder value through
communications solutions that exceed customer expectations and meet evolving
global technological standards in telecommunications. To achieve this end, the
Company focuses its strategy towards obtaining profitable growth in its
telecommunications business through increased market focus and by continuing to
selectively expand its

                                       20
<PAGE>

network, broaden service offerings, increase network utilization, increase
market penetration, reduce costs and improve overall productivity. Key elements
of the Company's strategy include:

     Improve Profitability Through Effective Customer Focus and an Integrated
Service Offering. The Company has made substantial progress on its expansion and
modernization program and continues to focus on key customer groups. The Company
uses improvements in customer service and technological infrastructure to market
its services more effectively following the opening of the Venezuelan market to
competition in November 2000. The Company is using an integrated marketing focus
by capitalizing on the operational synergies between CANTV and its subsidiaries
to identify and meet customer needs. The Company has been integrating its
information technology systems to provide the information and tools necessary to
better target customers and improve overall customer service and satisfaction.
The Company has also created business units to focus on specifically targeted
customer groups. These units and customer groups are described below:

     CANTV Corporations. This unit is responsible for the relationship with the
largest corporations operating in Venezuela. CANTV Corporations offers
integrated telecommunications solutions and seeks to seize new business
opportunities to support the growth of data transmission services. This business
unit is focused on providing higher quality telecommunications services ranging
from voice and data transmission to customer network management. CANTV
Corporations plans to consolidate its Televoting/Telecontest product offering
launched in 2000, which has become an integral part of the franchised TV contest
programs recently aired. Televoting is a telecommunications product through
which opinion polls and surveys can be conducted by telephone in a fast and
economical way. Telecontest is a similar interactive product created to enable
the measurement of response levels and ratings in connection with televised
broadcasts and contests.

     CANTV Companies. This unit serves medium and small commercial clients in
each of the financial, manufacturing, petroleum, media and service sectors. This
unit develops and markets new services to these customers, focusing on enhanced
services, including data transmission services, in order to increase access
lines and usage per access line. In order to accomplish this goal during 2000,
the Company has completed 80% digitalization of its installed lines, and it
continues to make investments designed to improve the quality of its network,
including: (i) the planned completion during 2001 of a high capacity broadband
fiber optic network linking Venezuela's major urban centers, (ii) the
development of wireless technology to expand basic service where cost effective,
and (iii) the offering of integrated services through CANTV's wholly-owned
subsidiaries. During 2000, the Company introduced flat fee Internet access
nationwide, intelligent network applications such as an 800 number service,
Televoting and Telecontest and international long distance service plans known
as preferred country ("Pais Preferido") and frequent country ("Pais Frecuente").
Additionally, this unit is developing two projects for TV video transmission and
videoconferencing on demand. The Company is also working on an additional new
model for customer service through the Internet. With this new marketing
channel, CANTV's customers will be able to access a web site to place new
service orders, and review the status of their orders and claims, among other
things.

     CANTV Public Institutions. This unit serves the Government, as well as
state and municipal governments, and tailors its service offerings to the
Government's diverse telecommunications needs. These include voice, data
transmission, video and value-added services. By offering innovative services
such as integrated services through CANTV's wholly-owned subsidiaries (Movilnet
and CANTV Servicios), a broad-band high-speed Internet access service called
"Acceso Banda Ancha" ("ABA"), fixed wireline prepaid service through a prepaid
card (called "CoolCard," currently used for wireless service) and a new digital
invoice, the Company encourages the modernization of the telecommunications
infrastructure used by the Government. The Company is also actively involved in
several social projects such as the virtual library which consists of computer
rooms with Internet access offering a selection of reading titles and
educational resources. The virtual library project is managed by regional
governments.

                                       21
<PAGE>

During 2000, the Company installed 7 virtual libraries and plans to install
approximately 21 during 2001. Other planned projects to be undertaken in
cooperation with the Government include citizen watch, telemedicine and the
modernization and expansion of the national postal office ("IPOSTEL").

     CANTV Residential. This unit serves residential customers by seeking to
increase services while decreasing the costs of providing these services. Its
objective is to offer products and services under new technical platforms that
promote usage and customer loyalty through improvements in customer care. As
part of this objective, during 2000, CANTV introduced a fixed wireline prepaid
service to make CANTV's services more accessible to lower income consumers.
Additionally, in October 2000 CANTV Residential introduced "ABA," which provides
broad-band high-speed Internet access for residential customers. Currently,
prepaid mobile services through prepaid cards are being tested by the Company.

     CANTV Public Telecommunications. This unit's objective is to provide to
customers high quality public telecommunications services that meet a broad
array of telecommunications needs. In order to achieve this objective, the
Company offers high quality and prompt service throughout the country by using
an innovative technology and a highly motivated employee workforce. CANTV Public
Telecommunications offers several services including Community
Telecommunications Centers, Telecommunications Centers, prepaid debit card
public telephones, rented public telephones, prepaid debit cards selling
machines and other services. Community Telecommunications Centers reduce the
Company's cost of providing telecommunications services through lower
maintenance costs. During 2000 the Company installed approximately 4,983 public
telephones, 29 Community Telecommunications Centers and 84 Telecommunications
Centers.

     CANTV Interconnection. This unit serves interconnection customers and
proactively markets CANTV's interconnection services. Its strategy is to (i)
become the preferred "carrier's carrier" using the Company's current and future
infrastructure; (ii) offer timely solutions to customer requirements at
competitive prices; (iii) develop long-term strategic alliances; and (iv)
maximize the efficiency of the Company's interconnection facilities while
minimizing costs. To this end, the Company has entered into interconnection
agreements with several competing telecommunications services providers. During
2000 this unit has developed the processes, negotiation teams and contract
models to prepare for the expected high number of interconnection negotiations
with new operators, following the opening of the telecommunications services
market to competition. Additionally the Company is developing specific packages
that encourage other telecommunications services providers to use the Company's
network. In addition, the Company continues to introduce new services to
increase domestic and international traffic to strengthen its position in both
the national and international data transmission markets.

     Continue Expanding Wireless Services. The Company, through its wholly-owned
subsidiary Movilnet, plans to continue expanding its wireless communications
business. The Company is also seeking to increase the revenues and margins of
its wireless business by (i) minimizing customer acquisition cost; (ii)
continuing the introduction of attractive products in the Venezuelan market;
(iii) continuing the development of the wireless data market; (iv) expanding its
geographic coverage and concentrating in key markets; (v) continuing improvement
of Movilnet's market position through increased product segmentation; (vi)
providing packages of services that maximize the utilization of Movilnet's
technological, marketing and personnel infrastructure; and (vii) centralizing
marketing efforts and client service functions to better focus on customer care,
build loyalty and improve customer satisfaction. During 2000, the Company
coordinated its marketing efforts with Movilnet to better serve its large
corporate customers and make efficient use of marketing resources.

     Grow Data Transmission and Value-Added Services. The Company provides
various telecommunications services, including data transmission and an array of
value-added services such as voice mail, call waiting, call forwarding, call
blocking, speed dialing, toll free and 800 number services, Venezuela Direct
service (which allows customers to reach a Venezuelan operator from outside

                                       22
<PAGE>

Venezuela), direct long distance calling services to other countries, video
conferencing, "web page" hosting, enhanced fax service, audio text, country-wide
900 service, Televoting, Telecontest and other intelligent network and data
capabilities that increase network utilization. The Company plans to offer
additional value-added services in the future and seeks to capture the largest
share of this market by leveraging its existing infrastructure, its
relationships with the Participants in the Consortium and first-mover advantage,
to be the first to offer new telecommunications services in Venezuela.
Currently, the Company is testing the mobile prepaid service which will allow
customers to make local, domestic and international long distance calls from any
telephone, using a Dual Tone Multi-Frequency signal system. The payment system
used for this mobile prepaid service will be CoolCard, currently used by
Movilnet and CANTV Servicios for prepaid services.

     Consolidate Our Position as the Preferred Internet Service Provider in
Venezuela. The Company seeks to remain the recognized market leader in the
provision of Internet services. The Company's strategy to retain the largest
share of this high-growth market includes the development of an advanced
services platform and integrated services network. The Company actively targets
the development of Internet services in the corporate market by emphasizing
long-term partnerships and delivering reliable and secure services aimed at
ensuring the promises of the e-economy. The Company also continues to deliver
and market its Internet services to medium- and small-sized companies and to the
broader consumer market.

     Achieve "World Class" Efficiency Standards. The Company has made
substantial progress in reducing costs and increasing productivity, reducing
CANTV's labor force by approximately 32.9% and increasing the number of access
lines in service per CANTV employee by 55.6%, from 151 to 235 between December
31, 1996 and December 31, 2000. Other efficiencies achieved include improvement
of internal controls, consolidation of operator centers and centralization of
the Company's ordering and procurement processes. The Company is seeking to
enhance the quality of its workforce through training programs, improved hiring
practices and analysis of employee capabilities in connection with workforce
reductions. Additionally, the Company has implemented special retirement
programs to encourage workforce reductions. The Company believes that these
measures, in combination with the ongoing improvement of its network
infrastructure, should continue to make possible substantial additional
improvements in efficiency and productivity, which should result in improvements
to its operating margins.

     Lead the Implementation of a Fair and Balanced Regulatory Framework. The
Company seeks to promote the establishment of a regulatory framework that will
ensure that the Company is adequately compensated for providing access to its
network both during and after the period of exclusivity under the Concession to
provide switched, fixed, local and domestic and international long distance
service throughout Venezuela. The Company has reached interconnection agreements
with a number of competitive service providers and seeks to become Venezuela's
preferred carrier by leveraging on its extensive country-wide fiber optic
"backbone."

     Globalization. The Company continues to take advantage of its relationship
with Verizon in order to benefit from its strengths in processes, systems and
resources to strengthen the Company's competitive position after the opening of
the telecommunications market in Venezuela to competition in November 2000. See
"-- Competition." In addition, in April 2001 Movilnet and CANTV Servicios
changed their logos to resemble CANTV's own, as part of a brand name unification
strategy. Using the same graphics and font, Movilnet adopted a new slogan
"contigo siempre" (always with you) and CANTV Servicios changed its name to
CANTV.net and adopted the new slogan "te acerca el futuro" (taking you closer to
the future).

                                       23
<PAGE>

Capital Expenditures

     Based on nominal bolivars converted to U.S. dollars at average exchange
rates during the relevant period, the Company made capital expenditures of
approximately U.S.$312 million, U.S.$593 million, U.S.$706 million, U.S.$546
million and U.S.$442 million in 1996, 1997, 1998, 1999 and 2000, respectively.
The Company presently plans capital expenditures of approximately U.S.$518
million in 2001. Expenditures are directed towards sales (47.1%), operations
support (27.9%), overhead (12.5%), maintenance (6.2%) and other (6.3%). Sales
expenditures cover new products and technologies. Operations support consists of
the development, upgrading and installation of new systems. The Company's
capital expenditures are expected to be funded through internally generated
cash. Even though capital expenditures are expected to drop to lower levels in
the 2002 to 2005 planning period, expenditures will continue to be directed
towards network expansion, digitalization and modernization. The Company plans
to continue to focus its capital investments on the wireless, data transmission
and e-business areas.

Breakdown of revenues by category of activity

     The breakdown of revenues by category of activity for each of the last
three years is included in "Item 5. Operating and Financial Review and
Prospects--Results of Operations for the Years Ended December 31, 1998, 1999 and
2000."

Domestic Telephone Services

     Domestic telephone services include local and domestic long distance and
public telephone services. These services accounted for 57.2% of the Company's
total operating revenues during 2000.

Local and Domestic Long Distance Services

     Pursuant to the Concession, CANTV until November 27, 2000, was the
exclusive provider of switched, fixed, local and domestic long distance
telephone services throughout Venezuela, except in limited circumstances. As of
December 31, 2000, CANTV's domestic telephone network included approximately 3.1
million installed lines and 2.6 million access lines in service extending
throughout the whole of Venezuela.

     The following table provides information relating to the development and
improvement of the Company's domestic telephone system over the most recent five
years:

<TABLE>
<CAPTION>
                                                                             At December 31,
                                   --------------------------------------------------------------------------------------------
                                        1996                1997               1998                1999                2000
                                   ------------        ------------       -------------       -------------       -------------
<S>                               <C>                  <C>                <C>                 <C>                 <C>
Lines installed                       3,208,977           3,403,521           3,550,706           3,546,538           3,074,506
Percentage of lines installed
 in digital exchanges                      59.4%               62.3%               66.1%               68.5%               80.0%
Access lines in service: /(1)/
 Non-residential                        705,694             736,759             681,761             634,969             627,785
 Residential                          1,732,756           1,895,838           1,859,073           1,870,859           1,892,801
 Public telephones                       56,409              70,012              75,097              80,033              85,016
                                   ------------        ------------       -------------       -------------       -------------
 Total                                2,494,859           2,702,609           2,615,931           2,585,861           2,605,602
                                   ============        ============       =============       =============       =============

Access lines in service per
 100 inhabitants                           11.1                11.8                11.2                10.8                10.7
Customer satisfaction /(2)/
 Public telephones                         80.4%               70.1%               69.6%               72.3%                N/A
 Residential                               87.7%               89.8%               91.5%               88.2%                N/A
 Non-residential                           90.2%               88.2%               88.5%               83.2%                N/A
</TABLE>

                                       24
<PAGE>

_____________________________
(1)  References to "access lines in service" are to lines in billing.
(2)  Percentage of customers satisfied with CANTV's service as measured by
     customer opinion surveys conducted by third parties. The lower customer
     satisfaction results obtained from the 1999 customer survey compared to the
     1998 survey are primarily attributable to differences in survey design and
     methodology. Customer satisfaction data for 2000 is not available because
     the survey design and methodology was not reviewed and approved by CONATEL
     as part of the Government's review of service quality mandates. CONATEL
     plans to issue a new regulation covering service quality mandates for all
     operator companies. See "-- Regulatory Framework."

        The number of lines installed during 2000 decreased by 472,032 (13.3%)
to 3,074,506 lines at December 31, 2000 from 3,546,538 lines at December 31,
1999. The decrease was due primarily to the elimination of analog lines by using
fewer digital lines with excess capacity. During 2000, the Company transferred
and eliminated approximately 502,808 analog lines and installed approximately
43,504 new digital lines, which included 12,688 relocated digital lines.

        During 1996 and 1997, the access lines in service increased 4.5% and
8.3%, respectively and penetration increased from 11.1 to 11.8 lines per 100
inhabitants. In 1998 and 1999, the number of access lines in service decreased
3.2% and 1.1%, respectively, reflecting the permanent disconnection of
approximately 478,686 and 453,900 lines, in 1998 and 1999, respectively. The
number of access lines increased slightly during 2000 by 0.8%, reflecting the
success of the prepaid platform combined with fewer permanent disconnections.
Additionally, penetration decreased during 1998, 1999 and 2000, from 11.8 lines
per 100 inhabitants in 1997 to 10.7 lines per 100 inhabitants in 2000 as a
result of the general growth of the population. Permanent disconnections have
resulted principally from management's continued aggressive focus on
collections. The Company is reassigning these disconnected lines to new
customers following upfront credit history checks. See "-- Billing."

        Following privatization, the Company began a modernization program to
replace analog switches in high traffic areas with new digital switches and to
replace obsolete switches in low traffic areas with more modern analog switches
displaced by the digitalization program. This switch modernization program has
increased the percentage of digital access lines installed in the network from
59.4% at December 31, 1996 to 80.0% at December 31, 2000. Digital systems
improve the quality and efficiency of the network, accommodate higher traffic
levels, require less maintenance and enable the Company to offer a broad range
of voice and data applications simultaneously on the same network. At December
31, 2000, CANTV achieved digitalization of 80.0% of its lines installed
satisfying an agreement reached between CONATEL and CANTV. See "-- Regulatory
Framework -- Regulation and the Concession."

        In order to expand its ability to provide advanced services generally
and to meet the existing and future needs of certain of its large corporate
customers, the Company is further upgrading the network's technological
infrastructure. The Company implemented ATM Frame Relay platforms in the second
half of 1997. Additionally, in 1997 the Company began to install an advanced
Signaling System 7 ("SS7") intelligent network platform. These technologies
enhance the Company's ability to provide high speed data transmission services
to its customers, as well as enhanced services including caller ID, automatic
calling card validation, automatic redial and call forwarding. At December 31,
2000, the Company had completed the installation of the SS7 system through its
international long distance switches, and plans to continue expanding this
system. During 1999, the Company began installing Digital Loop Carriers
("DLCs"). CANTV continued the implementation of DLCs in 2000. DLCs provide
voice, data and video services and allow for the introduction of other potential
future services, improving the present transmission resources (copper, fiber
optics, radio, etc.), the switching exchange plant and available structure. DLCs
allow line concentration and voice transmission services to remote locations as
well as data transmission services in high concentration areas such as
commercial areas. DLCs technology will provide the current network with
significant intelligence functionality. The Company upgraded

                                       25
<PAGE>

approximately 12,480 lines during 2000 to DLCs and expects to upgrade
approximately 20,000 additional lines in 2001.

     In the fourth quarter of 1998, CANTV launched Extended Local Area Service
("EAS") in certain parts of Venezuela. EAS migrates certain domestic long
distance traffic to local area service, permitting CANTV to effectively achieve
additional rate rebalancing while providing the opportunity to shift revenues to
the local service category, which is less vulnerable to competition and price
elasticity. EAS gives customers a better tariff package for specific calling
patterns. See "-- Rates" and "-- Regulatory Framework -- Regulation and the
Concession -- Rate Regime." By the end of 2000, the Company began the "National
Numbering Plan" which upgrades the Company national numbering system for both
basic telephony and wireless to world class standards. The National Numbering
Plan changes the area codes from 3 numbers to 4 numbers and this change will be
applied gradually in each region. This project will migrate certain domestic
long distance service areas to local area service and vice-versa for year 2002.
During 2001, the National Numbering Plan will not include any migration. This
project is expected to be completed on September 15, 2001.

     In order to provide high-speed services, the Company has adopted fiber
optics as the medium of transportation for the transmission of voice, data, and
video. During 1999, the Company completed the installation of an interurban high
capacity broadband fiber optic network to interconnect the northern part of
Venezuela. This area encompasses the vast majority of Venezuela's population. Up
to 1999 and during 2000 the Company installed 3,264 and 307 kilometers of fiber
optic transmission lines, respectively. The network, currently consisting of
four rings, is being extended to cover other geographical areas. A fifth ring,
which is already 70% complete, will cover the telecommunications needs of the
southeastern part of Venezuela. Two additional rings are planned for the
southwestern part of Venezuela and the Company plans to install approximately
210 kilometers of fiber optic transmission lines during 2001. When completed,
the fiber optic network will consist of strategically deployed rings connecting
all major cities and most large corporate customers. This fiber optic network
increased capacity and provided higher reliability to our Domestic and
International Telecommunications systems. This system will also upgrade our
current technology to international quality standards. The Company believes that
the full fiber optic network will be put into service by the end of 2001 and
will connect approximately 80.0% of total users. The Company plans to use the
fiber optic network as its "backbone" while maintaining its digital microwave
network for redundancy.

     The Company continuously seeks to enhance customer service and product
offerings. The Company has successfully completed a project to install
Asymmetrical Digital Subscriber Lines ("ADSLs"). A total of 15,000 ADSL lines
are available for commercialization in 47 areas, including Caracas and other
areas. CANTV Servicios will offer high-speed Internet access using the Company's
ADSLs. Additionally, the Company incorporated 100.0% of its digital lines and a
62.6% of its analog lines into its "4Tel System" during 2000. The objective of
the 4Tel System is to improve customer service by identifying the particular
faulty network element, thereby reducing dispatch and repair times. At present,
a new system "4Tel System II" is in process. The 4Tel System II will provide
faster execution in repair services for CANTV's customers, through the
identification of specific outages locations in the network. This project aims
to provide a faster customer repair service of one touch, it means that the
system only needs one order to start the reparation.

     The Company's revenues from local and domestic long distance telephone
services consist of installation and charges for new lines, monthly line rental
charges, usage charges, public telephone usage and equipment sales. At December
31, 2000, non-residential customers represented 24.1% of access lines in service
and accounted for 45.6% of local and domestic long distance revenues in 2000.
Revenues from usage constitute 59.3% of the Company's local and domestic long
distance revenues in 2000.

                                       26
<PAGE>

     The Company's local and domestic long distance traffic for the years 1996
to 2000 is presented in the table below:

                        Domestic Service Usage
--------------------------------------------------------------------------------
                      Total Local and Domestic Long
                         Distance Minutes of Use          Minutes of Use per
       Year                   (millions)                  Average Access Line
--------------------------------------------------------------------------------
       1996                    13,312                            5,454
       1997                    13,565                            5,220
       1998                    15,674                            5,894
       1999                    15,804                            6,076
       2000                    16,381                            6,311

     Total minutes of use of the Company's domestic services increased
constantly during the period 1996 through 2000 mainly due to a net increase in
lines in use. Minutes of use per average line in service decreased from 1996 to
1997 due to the expansion of service to lower-usage customers and to weakness in
the Venezuelan economy. Minutes of use per average line in service increased in
1998, 1999 and 2000 due primarily to lower domestic long distance rates in real
terms and the "Free Nights and Weekends" flat rate plan for domestic long
distance.

     In November 2000, CANTV implemented the "Free Nights and Weekend" plan for
domestic long distance service. This plan consists of a flat fee, in addition to
the basic rent fee, for calls made between 9:00 p.m. and 5:59 a.m. during the
week, and all day on Saturdays and Sundays.

Public Telephones

     The Company owned and operated 85,016 public telephones located throughout
Venezuela at December 31, 2000. Approximately, 91.6% of these public telephones
operate with prepaid debit cards. As part of its strategy to improve customer
service and operating results, the Company relocated approximately 2,435 less
productive public telephones to high traffic areas during 2000, and plans to
relocate approximately 5,000 public telephones during 2001. The Company is
planning to install approximately 1,500 additional public phones during 2001.
The Company has also developed a modernization plan covering the upgrade and
maintenance of the public telephone system over the next four years.

Community Telecommunications Centers

     During 1996 the Company began to open Community Telecommunications Centers
which are located in rural and urban popular areas to serve customers with
limited economic resources. Community Telecommunications Centers are operated by
third parties with social labor experience and provide telephone, fax and
messaging service to persons who otherwise have no access to such services.
Telephone lines installed at Community Telecommunications Centers provide a
substantially higher call volume than public telephones at a substantially lower
maintenance cost. The Company believes that these centers provide an important
community service and have been well received throughout the country. At
December 31, 2000 the Company had 2,987 lines serving 1,255 Community
Telecommunications Centers. The Company has no expansion plans for Community
Telecommunications Centers for 2001.

Telecommunications Centers

     Telecommunications Centers are offices where an array of telecommunications
services are offered. These centers are operated by third parties, with support
from the Company and are required by

                                       27
<PAGE>

the Company to meet certain quality standards. These centers provide local,
domestic long distance and international long distance telecommunications
services, Internet access, sale of prepaid cards, electronic money transfers,
bank draft payments, electronic sales points, mailing services and copying and
faxing services. The Company plans to open 250 new Telecommunications Centers
during 2001.

Rural Service

     On December 15, 1997, the Company signed a joint venture with Direct-to-
Phone International Incorporated, a subsidiary of STM Wireless Incorporated, to
develop rural telephone services via satellite. The Company began these
operations in early 1998. In September 1999, Direct-to-Phone International
Incorporated was acquired by SkyOnline Incorporated. At December 31, 2000, the
Company had 1,048 satellite-based lines serving rural areas with satellite
technology.

     The Company also provides radio-based telecommunications services to remote
rural areas, which are linked to the main public switched network via base
station transreceivers and radio terminals. As of December 31, 2000, the Company
had 1,013 radio-based lines.

     The Company provides rural services to approximately 1,418 rural areas and
the Company has identified additional rural areas where it expects to provide
basic, public telephone, and data transmission services in the future using both
radio- and satellite-based technology.

Interconnection Agreements

     The Concession requires CANTV to provide interconnection to other
telecommunications operators in order to complete calls. In addition to these
interconnections, CANTV also permits private telephone line interconnections
pursuant to specific contract arrangements. Under the recently adopted
Interconnection Regulations (as defined herein), companies must work together to
develop interconnection agreements. The Government may only intervene in cases
where a formal agreement is not reached. See "-- Regulatory Framework --
Regulation and the Concession -- Recent Amendments to the Regulatory Framework."
The main objective of these regulations is to establish general conventions and
technical, administrative and economic norms to regulate the interconnection of
telecommunications networks. CANTV provides interconnection services through
which wireless and rural operators establish points of interconnection between
their networks and CANTV's networks. As part of its overall strategy, the
Company intends to pursue interconnection agreements with competing
telecommunications services providers, to develop specific packages that
encourage other providers to use the Company's network and to enhance its
domestic and international connectivity. Interconnection agreements entered into
prior to the enactment of the Interconnection Regulations remain in force
provided they are amended to conform to the Interconnection Regulations on or
before May 24, 2001. Prior to the enactment of the Interconnection Regulations,
interconnection charges were based on negotiations between the Company and other
operators. The Interconnection Regulations provide for interconnection charges
to reflect the recovery of costs incurred to allow access to other carriers plus
a reasonable profit margin. The Company expects that the rates it charges and
pays for interconnection will be reduced under the Interconnection Regulations.
See "-- Regulatory Framework -- Regulation and the Concession -- Recent
Amendments to the Regulatory Framework."

International Long Distance Services

     Pursuant to the Concession, CANTV was the exclusive provider of switched,
fixed international telephone services in Venezuela until November 27, 2000. The
Company's international services include voice, video and data communication
services that represented 7.0% of the Company's operating revenues in 2000. The
largest of these services is international voice service.

                                       28
<PAGE>

     The Company provides international services through submarine cables,
satellite and microwave links. Satellite capacity is provided via the
International Telecommunications Satellite Organization ("INTELSAT"), the global
satellite consortium with 122 member countries, of which CANTV is a signatory
with a 1.426785% equity ownership interest. Traffic is primarily handled by two
satellite antenna earth stations. The Company also operates four additional
satellite antenna earth stations, which are used for international point-to-
point data transmission, video conferencing, and Very Small Aperture Terminals
("VSAT") service. The Company owns 16.2% of the Americas I and 4.4% of the
Columbus II fiber optic submarine cable systems. The Americas I cable system
connects South America to the United States. The Columbus II cable system
connects the United States, Mexico and the Caribbean to Western Europe. As of
2000, the Company owns 4.26% of the Pan American system and 6.84% of the
Americas II system. The Pan American cable system connects Venezuela to Chile
through the western coast of South America and part of the Caribbean to United
States. The Americas II cable system connects the eastern part of South America
and the Caribbean to the United States. CANTV also owns 0.47% of the Columbus
III system. The Columbus III cable system connects the United States to Europe.
The Company is currently evaluating its possible participation in the Americas
III cable system which will also connect South America, Central America and the
Caribbean to the United States. In addition, the Company has minor participation
in eight other submarine cable systems, Taino Caribe, Rioja, TPC-4 and TAT-
12/13, Antillas I, ECFS, TCS-1 and Unisur.

     At December 31, 2000 the Company had 6,486 international long distance
circuits in service, including 3,030 leased circuits which are not operated by
CANTV. Of the Company's international circuits in service, 68.1% were provided
through submarine cable, 19.4% were provided via satellite and 12.5% were
provided through microwave links. The Company has two international digital
switches, both located in Caracas.

     Revenues from international telephone services are primarily derived from
(i) charges to subscribers in Venezuela for outgoing calls (a portion of which
the Company must pay to other international operators for calls which are
carried on their networks once outside of Venezuela) and (ii) access charges
paid by other international telecommunications operators for incoming calls
originating outside of Venezuela and carried through the Company's network once
in Venezuela.

     The Company's international traffic, which is measured in outgoing and
incoming minutes, is shown in the table below for the years 1996 through 2000:

<TABLE>
<CAPTION>
                                          International Service Usage
  ---------------------------------------------------------------------------------------------------------------
                                                         Outgoing Traffic
                  Outgoing Traffic                          per Average     Incoming Traffic       Ratio of
                    (millions of                           Access Lines       (millions of       Incoming to
     Year             minutes)       Outgoing % Growth       (minutes)          minutes)       Outgoing Traffic
  ----------     -----------------  -------------------  -----------------  ----------------  ------------------
  <S>            <C>                <C>                  <C>                <C>               <C>
     1996               140.3             9.2                   57.5              221.7               1.58
     1997               152.6             8.8                   58.7              279.1               1.82
     1998               165.6             8.5                   62.3              302.2               1.83
     1999               162.6            (1.8)                  62.5              311.9               1.91
     2000               187.9            15.6                   72.4              366.8               1.95
</TABLE>

     Total outgoing traffic increased by 9.2% in 1996, 8.8% in 1997 and 8.5% in
1998, due in part to the Company's pricing strategy of reducing international
long distance rates. In 1999, outgoing traffic decreased 1.8% due to Venezuela's
recession. During 2000 outgoing traffic increased 15.6% due to a significant
reduction in the international long distance rates. Incoming traffic exceeded
outgoing traffic each year as a result of competitive pricing by international
carriers.

                                       29
<PAGE>

     The Concession signed in 1991 provided for rate rebalancing to allow the
Company to eliminate the subsidy provided by its long distance services to its
basic rent for residential customers and thereby has gradually permitted the
Company to offer more competitive pricing for its international long distance
services in anticipation of the opening of the markets to competition in
November 2000. The Agreement reached by CONATEL and CANTV in February 2000 set
the rate for outgoing international long distance calls at a weighted average
rate of U.S.$0.7437 per minute. Under the new tariffs approved by CONATEL for
2001, the international long distance rates were not changed from the tariffs
approved under the Agreement. See "-- Rates" and "-- Regulatory Framework --
Regulation and the Concession -- Rate Regime."

     In 2000, 45 direct routes to 35 countries accounted for approximately 97.0%
of the Company's international traffic. Transit centers in the United States,
Italy, Canada, France, Curacao and Spain, which provide for indirect routing of
international calls to 190 countries, accounted for the remaining 3.0% of
traffic. The Company's largest international traffic route is between Venezuela
and North America (the United States, Mexico and Canada), which accounted for
approximately 59.5% of its 2000 international traffic.

     The following table sets forth the number of minutes of international long
distance calls in each specified category, and the percentage of total
international long distance call minutes by category, for 1996 through 2000:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                             -------------------------------------------------------------------
                                1996          1997          1998          1999          2000
                             -----------   -----------   -----------   -----------   -----------
                                                       (millions of minutes)
<S>                          <C>           <C>           <C>           <C>           <C>
Outgoing international
 long distance minutes:
North America                 69.6  19.2%   81.2  18.8%   88.1  18.8%   78.8  16.6%   77.6  14.0%
South America                 31.2   8.6%   30.1   7.0%   29.7   6.4%   36.7   7.7%   58.8  10.6%
Europe                        25.0   6.9%   26.4   6.1%   34.6   7.4%   34.8   7.3%   39.1   7.0%
Others                        14.5   4.1%   14.9   3.5%   13.2   2.8%   12.3   2.7%   12.4   2.2%
                             -----  ----   -----  ----   -----  ----   -----  ----   -----  ----
 Total                       140.3  38.8%  152.6  35.4%  165.6  35.4%  162.6  34.3%  187.9  33.8%
                             =====  ====   =====  ====   =====  ====   =====  ====   =====  ====

Incoming international
 long distance minutes:
North America                155.8  43.1%  197.9  45.8%  225.8  48.3%  222.9  47.0%  252.2  45.5%
South America                 22.9   6.3%   29.4   6.8%   30.1   6.4%   34.0   7.2%   51.5   9.3%
Europe                        28.0   7.7%   36.5   8.5%   32.0   6.8%   40.8   8.6%   47.1   8.5%
Others                        15.0   4.1%   15.3   3.5%   14.3   3.1%   14.2   2.9%   16.0   2.9%
                             -----  ----   -----  ----   -----  ----   -----  ----   -----  ----
                             221.7  61.2%  279.1  64.6%  302.2  64.6%  311.9  65.7%  366.8  66.2%
                             =====  ====   =====  ====   =====  ====   =====  ====   =====  ====
</TABLE>

Wireless Services

     As of December 31, 2000, the Company, through its wholly-owned subsidiary,
Movilnet, provided wireless communications services in areas that covered
approximately 70.7% of Venezuela's population. Movilnet provides these services
pursuant to a cellular concession (the "Cellular Concession") which has an
initial term of 20 years. The Cellular Concession may be extended, subject to
certain conditions, for an additional 20 years. The Company purchased the B-band
Cellular Concession from the Government in May 1992 for the bolivar equivalent
of approximately U.S.$82 million. Pursuant to the Cellular Concession, Movilnet
was required to pay 10% of its annual revenues to CONATEL. The New
Telecommunications Law eliminated the former annual cellular concession fee and
established that cellular services providers are subject to several supplemental
taxes starting at 9.3% of annual revenues in the year 2001 and decreasing by
1.0% per annum until 2005. Beginning in 2006, the cellular supplemental tax of
0.5% will be eliminated and the annual tax for cellular services providers will
be 4.8% of annual revenues. The following table sets the taxes for cellular
services providers:

                                       30
<PAGE>

<TABLE>
<CAPTION>
                                                          ----------------------------------------------------------------------
                                            2000           2001         2002         2003           2004         2005      2006
                                           ------         ------       ------       ------         ------       ------    ------
<S>                                        <C>            <C>          <C>          <C>            <C>          <C>       <C>
Concession tax                              10.0%          N/A          N/A          N/A            N/A          N/A       N/A
Activity tax                                 N/A           2.3%         2.3%         2.3%           2.3%         2.3%      2.3%
Tax to cover CONATEL's activities            N/A           0.5%         0.5%         0.5%           0.5%         0.5%      0.5%
Tax for spectrum allocation /(1)/            N/A           0.5%         0.5%         0.5%           0.5%         0.5%      0.5%
Tax to create the Universal Service Fund     N/A           1.0%         1.0%         1.0%           1.0%         1.0%      1.0%
Tax for the Telecommunications Training
 and Development Fund                        N/A           0.5%         0.5%         0.5%           0.5%         0.5%      0.5%
Cellular supplemental tax                    N/A           4.5%         3.5%         2.5%           1.5%         0.5%      N/A
                                           ------         ------       ------       ------         ------       ------    ------
                                            10.0%          9.3%         8.3%         7.3%           6.3%         5.3%      4.8%

</TABLE>

_____________________________

/(1)/ The New Telecommunications Law established a maximum of 0.5%. The specific
      rate will be set by regulations under the New Telecommunications Law.

          The following chart provides information regarding the growth of
Movilnet's subscriber base and traffic from 1996 to 2000:

<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                        -----------------------------------------------------------------------------------
                                            1996             1997             1998              1999              2000
                                        ------------     -----------     --------------     -------------     -------------
<S>                                     <C>              <C>             <C>                <C>               <C>
Number of Subscribers:
Postpaid                                     208,656         279,011            371,347           314,933           207,134
Prepaid                                        4,999          95,864            267,760           866,340         1,498,856
                                        ------------     -----------     --------------     -------------     -------------
Total                                        213,655         374,875            639,107         1,181,273         1,705,990
                                        ============     ===========     ==============     =============     =============

Traffic (in thousands of minutes) (1)        433,667         563,901            945,811         1,324,220         1,855,150

Penetration (2)                                  1.0%            1.6%               2.8%              4.9%              7.0%
</TABLE>

_____________________________

(1)   Billed minutes excluding night, weekend, and free minutes.
(2)   Customers as a percentage of total population.

          Wireless services are the Company's fastest growing business.  As of
December 31, 2000, Movilnet served 1,705,990 customers, which represented an
estimated market share of approximately 36.0%.  The number of customers served
by Movilnet has increased by a compounded annual growth rate of 68.1% from
December 31, 1996 through December 31, 2000.  Although Movilnet has experienced
rapid growth of its customer base, the Company believes that there exists
unsatisfied demand for wireless services in Venezuela.  The Company markets its
wireless services through a network of agents and the Company's commercial
offices.  As of December 31, 2000, the number of postpaid subscribers decreased
by 107,800 or 34.2% from December 31, 1999.  The decrease was primarily due to
the migration from postpaid to prepaid services and increased competition.

          Wireless services postpaid customers are charged an activation fee, a
basic monthly service fee, special fees and usage fees on a per-minute basis and
per-second basis. Prepaid customers are also charged usage fees on a per-minute
and per-second basis. In 2000, Movilnet introduced a per-second plan for post
paid and prepaid services. Movilnet operates on a "calling party pays" system
under which customers are charged only for calls they originate with the
exception of roaming charges to customers receiving calls from other than a
Movilnet client outside his home area. Movilnet also receives revenues from
incoming calls to both postpaid and prepaid customers primarily from its
interconnection agreement with CANTV.

          Subscribers are offered a number of value-added services, including
voice mail, call forwarding, call waiting, caller ID, message waiting indicator,
conferencing, detailed billing, automated customer service, national and
international roaming, and Mobile Data Solutions using Cellular Digital Package
Data ("CDPD") technology. During 1999 Movilnet launched a number of new services
and products,

                                       31
<PAGE>

including wireless data transmission services ("Movidata"), value-added services
such as "Moviltexto", which is a general information center and a variety of
prepaid services which target specific customer needs in various segments of its
market. During 2000 Movilnet launched Wireless Access Protocol ("WAP") for both
post-paid and prepaid customers. This new product provides wireless Internet
services with a flat fee using its CDPD network. Movilnet plans to enhance the
services and features of its wireless network. The increasing interest in
wireless data transmission comes as a response to the evolution of wireless
networks to third generation cellular services ("3G"). Movilnet plans to become
a leader in 3G wireless services through the introduction of new services such
as Movidata and Tun-Tun.com and development of advanced product offerings. Tun-
Tun.com is a personal mobile Internet portal through a wireless phone. This
service allows Movilnet's customers to receive and read selected information
including web pages and to receive and send e-mail messages.

     The Company continues to invest in its wireless business to increase
network coverage, efficiency, capacity and service quality.  Movilnet is
developing applications that support its positioning for migration into more
advanced data services.  Movilnet has installed Time Division Multiple Access
("TDMA") digital technology, including switches and cell sites, in its service
areas, with plans to further expand its digital network during 2001.  Movilnet
currently provides wireless services utilizing Ericsson switching equipment and
radio base stations.  This equipment allows for a relatively easy conversion to
a digital network.  The Company believes that digital technology will be
attractive to its existing and potential customers because it allows for higher
quality service as well as advanced value-added features. At December 31, 2000,
Movilnet's digitalization level was approximately 67.0% of its voice paths
capacity. In addition, approximately 99% of its customer base handsets were
digital as of December 31, 2000.

Other Telecommunications-Related Services

     The Company provides various telecommunications-related services that
extend beyond basic telephone service and wireless services, including data
transmission, directory information services and value-added services including
Internet access.  In addition, the Company currently provides free of charge to
its customers, time information, trouble/repair reporting, directory assistance
and other operator and emergency services.

Data Transmission

     The Company's data transmission services are provided through high-capacity
private links, which at December 31, 2000 consisted of approximately 40,000
circuits serving approximately 1,800 private line customers.  As part of its
strategy with respect to large corporate customers, the Company is implementing
Virtual Private Network (VPN) technology and intends to encourage its private
line customers to use VPN services.  VPN technology should enable the Company to
provide higher quality dedicated services while improving efficiency by
increasing utilization of the network.  There are other data transmission
service providers in the market.  The Company had an estimated market share of
approximately 70% as of December 31, 2000.  In February 2000, CANTV introduced
ADSL technology.  This technology allows simultaneous voice and data traffic on
the same line. At December 31, 2000, the Company had approximately 4,473 ADSL
subscribers.

Value-Added Services and Other Services

   The Company offers an array of value-added services and other services,
including voice mail, call waiting, call forwarding, call blocking, speed
dialing, toll free and 800 number services, Venezuela Direct service (which
allows customers to reach a Venezuelan operator from outside Venezuela), other
country direct long distance calling services, video conferencing, "web page"
hosting, enhanced fax service, audio text, 900 service in all the country,
inside wire maintenance service, data transmission services, computer

                                       32
<PAGE>

network management, professional services including outsourcing of
telecommunications networks and other intelligent network and data capabilities,
all of which lead to higher usage of the Company's network. The Company aims to
capture the largest share of the market for value-added services by utilizing
its existing telecommunications resources and leveraging its relationships with
the Participants in the Consortium.

Internet Access

     The Company provides Internet access service through its wholly-owned
subsidiary, CANTV Servicios.  CANTV Servicios provides nationwide one-number
dial-up Internet access as well as international Internet roaming capabilities.
CANTV Servicios is the largest Internet service provider in Venezuela, serving
approximately 113,226 subscribers and 283,065 users through these subscribers at
December 31, 2000, with an estimated market share of approximately 47.0%.  In
addition to Internet access, subscribers may choose from an array of products
such as web hosting, Intranet development, virtual private networks, e-commerce
solutions, portal kits and integrated products that include PC's, Internet
access and financing facilities.

     Through various initiatives, CANTV Servicios is rapidly becoming one of the
most sophisticated Internet service providers in the region. During 2000, CANTV
Servicios expanded its international broadband capacity from 67 Mbps (megabits
per second) to 98 Mbps and plans to expand it by another 45  Mbps in 2001.
Access to this capacity is provided by broadband technologies that facilitate
multimedia and business applications such as Frame Relay and ADSL.

     CANTV Servicios also launched a prepaid card for Internet access. This
service is designed to strongly support the e-media strategies of the Company
and to expand the use of the new CANTV.net portal.  CANTV.net includes a new
product named "el kit de e-commerce" which offers e-commerce solutions.

     According to Alexa Research (http://www.alexaresearch.com), an industry
                                  ----------------------------
research organization,  in 2000 CANTV.net was the most visited portal in
Venezuela, receiving an average of 9.6 million visits per month with more than
17 million page views during the month of December 2000 alone. Additionally, in
October 10, 2000, the magazine PC News and Report 2000 awarded CANTV Servicios
the "LoMejorDe.com" award, which included recognition as the "Best Internet
Provider," "Best Free Mail" and "Best Web-Hosting Site" in Venezuela.

Directory Information Services

     The Company provides telephone directory information services through its
80%-owned subsidiary Caveguias (the remaining 20% is owned by an affiliate of a
major newspaper publisher in Venezuela).  Caveguias publishes telephone
directories ("White Pages") and business directories ("Yellow Pages").  It also
operates an Internet portal that provides on-line access to the Company's
directories as well as access to information of public interest including
special events, art exhibitions, job search services, restaurant locations and
tourist information.  This portal is among the ten top visited Venezuelan
portals.  Caveguias derives revenues from sales of advertising space in its
printed and electronic directories as well as other media such as telephone
prepaid cards. Advertisers in the Company's printed telephone directories are
charged an annual fee, which varies depending on the size of the advertisement
placed and the circulation of the edition of the directory in which such
advertisement is published. Caveguias currently competes with all other major
media suppliers in the sale of advertising.

                                       33
<PAGE>

Property, Plants and Equipment

     The Company's property consists principally of network facilities, land and
structures required to provide telecommunications services.  As of December 31,
2000 the Company's fixed assets were comprised of network facilities (81.2%),
buildings and facilities (10.2%), other support assets (8.0%) and construction
work in process (0.6%).

     The Company provides local, national and international telecommunications
services in Venezuela through a full service telecommunications network.
Pursuant to an expansion and modernization program, the Company has increased
its access lines in service and wireless subscribers from approximately 2.5
million and 213,655 at December 31, 1996, respectively, to approximately 2.6
million and 1.7 million at December 31, 2000, respectively.  The percentage of
digital access lines installed in the Company's network has increased from 59.3%
at December 31, 1996 to 80.0% at December 31, 2000. All of the Company's
international and domestic long distance switches are digital. The Company also
continues to make investments designed to improve the quality of its network,
including the planned completion during 2002 of a high capacity broadband fiber
optic network linking Venezuela's major urban centers. During 2000, the Company
has also connected several cities to newly built segments of a high capacity
broadband fiber optic network, which offers the latest technology in fixed
telecommunications networks with additional capacity for expansion in the
future.  In addition, the Company provides private network, data, public
telephone, rural telephone and telex services.  For a detailed description of
the development, uses and utilization of the Company's network please see "--
Domestic Telephone Services," "--International Long Distance Services,"
"Wireless Services" and "--Other Telecommunications-Related Services."

     Prior to the privatization, certain municipalities granted land to the
Company in order to facilitate the provision of telephone services in their
respective communities.  In many cases, no formal documentation was prepared for
the transfer of title to the Company of such land.  Since privatization,
irregularities with respect to a substantial number of titles to real property
have been favorably resolved.  In other cases, the Company is in discussions
with the municipalities to resolve these title issues.  The Company expects that
these negotiations will be favorably resolved.  At the present time, there are
no legal proceedings involving such properties.

Business Segments

     Segment information for the Company's two main business segments, wireline
and wireless services, is set forth in Note 26(e) to the Audited Financial
Statements.

Rates

     The following table sets forth information regarding the average rates
charged by the Company (expressed in constant bolivars at December 31, 2000) for
local and domestic long distance service, international long distance service,
public telephone service and wireless services for the years ended December 31,
1998, 1999 and 2000. Despite the requirements under the Concession allowing for
quarterly adjustments to rates, CANTV's rates were not permitted to be increased
after April 30, 1999 until March 23, 2000 when rates were again permitted to be
increased in accordance with the terms of the Concession. Movilnet's rates were
last adjusted effective November 15, 1999.  Following negotiations with the
Government, the Agreement was reached between CANTV and CONATEL in February 2000
relating to new rate structures for regulated services for the year 2000.  The
Agreement also provided for rebalancing levels as well as service level
commitments in 2000. Under the Agreement CANTV was permitted to implement new
rates effective March 23, 2000 and June 16, 2000.  Pursuant to the New
Telecommunications Law, on February 19, 2001, CONATEL approved two tariff
increases. The first tariff increase is effective from March 10, 2001 through
June 30, 2001, and the second will be effective

                                       34
<PAGE>

from July 1, 2001 and forward. See "-- Regulatory Framework -- Regulation and
the Concession -- Proposed Regulation of Tariffs."

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                    -----------------------------------------------------
                                                       1998/(1)/           1999/(1)/         2000/(1)/
                                                    ---------------     ---------------   ---------------
<S>                                                 <C>                 <C>               <C>
Installation:
  Residential                                             Bs.50,129         Bs.49,883        Bs.47,117
  Non-Residential                                            57,451            55,214           51,135
Subscription /(2)/:
  Residential                                                80,421            74,761           70,456
  Non-Residential                                           259,721           242,499          141,061
Monthly rent charge:
  Residential /(3)/                                           6,487             7,118            7,231
  Non-Residential                                            17,718            17,081           15,332
Local usage (per minute):
  Residential /(3)/                                              19                21               23
  Non-Residential                                                27                28               27
Domestic long distance (per minute) /(4)/:
  Residential                                                   126               126              121
  Non-Residential                                               158               155              128
International long distance (per minute) /(5)/:               1,208               987              575
Public telephone service (per minute):
  Local call /(6)/                                               19                20               22
  Domestic long distance /(4)/                                  138               134              127
Wireless telephone service
  Postpaid /(7)/:
   Activation fee                                            10,310               688            6,707
   Basic monthly service fee                                 26,427            28,491           24,259
   Usage:
     Peak hour (per minute)                                     248               270              178
     Off-peak hour (per minute)                                 167               196              136
  Prepaid /(8)/:
     Peak hour (per minute)                                     N/A               306              355
     Off-peak hour (per minute)                                 N/A               181              124
</TABLE>

____________________________

(1)  In constant bolivars at December 31, 2000.
(2)  Subscription right fees, are upfront fees paid by customers when the
     service is activated.
(3)  Weighted average of three plans offered by the Company during 1998 and
     1999, and a weighted average of seven plans in 2000. Represents charges for
     usage in excess of free minutes.
(4)  Weighted average per minute rates.
(5)  Weighted average per minute rates. International long distance rates do not
     vary between residential and non-residential customers.
(6)  Represents a flat per minute charge. The rates as of December 31, 1998,
     1999 and 2000, represent a per minute charge.
(7)  Weighted average based on the number of customers by each plan offered by
     Movilnet for years 1998 and 1999. Weighted average based on actual billing
     for total plans in 2000.
(8)  Weighted average based on the number of customers by the two plans offered
     by Movilnet for years 1998 and 1999. Weighted average based on actual
     billing of two plans in 2000.

          The Company's revenues from local and domestic long distance telephone
service consist of installation and charges for new lines, monthly line rental
charges, usage charges, public telephones usage and equipment sales.  All local
traffic is measured and billed based on duration and, in the case of domestic
long distance calls are based on the time of day when the call is made.  The
number of impulses counted during each call measures the duration of local
calls.  A local call impulse is generated every 60 seconds.  Rates for domestic
long distance revenues do not differ for residential and non-residential

                                       35
<PAGE>

customers, but the weighted averages differ due to different usage patterns
between the two groups. Night time consumption, which is less expensive than day
time consumption, is generally greater for residential customers.

     At the beginning of 2000, CANTV offered three residential monthly rate
plans: (i) the Basic Plan had the lowest monthly rate, included 60 free local
minutes per month and charged relatively higher rates for additional local call
minutes, (ii) the Intermediate Plan had a higher monthly rate, included 100 free
local minutes per month and lower rates for additional local call minutes, and
(iii) the Premium Plan had the highest monthly rate, included 150 free local
minutes per month and the lowest rates for additional local call minutes.

     The Agreement by CANTV and CONATEL increased, effective March 23, 2000, the
number of permitted plan offerings from three to six and reduced the number of
free minutes to 40, 65 and 90 minutes from the 60, 100 and 150 minutes
established in the basic, intermediate and premium plans, respectively,
available in 1999.  The three additional plans include a special plan for
Internet users and a wireline prepaid plan.  The Agreement provided for a single
domestic long distance weighted average rate of approximately Bs. 131.25
(U.S.$0.1875) per minute.  The Agreement also advanced the rebalancing process
by reducing the international long distance rates by a weighted average of 35%.
The Agreement allowed for a 23% increase in public telephone rates.  CANTV
introduced the four new plans permitted by the Agreement and implemented the
changes required by the Agreement effective March 23, 2000.  Additional tariff
adjustments on local services were permitted effective June 16, 2000.  The
tariffs provided for under the Agreement were effective until March 10, 2001 if
CANTV and CONATEL were not to reach an agreement on the tariffs to apply after
November 27, 2000.  During 2000, CANTV and CONATEL did not reach an agreement on
tariffs to apply after November 27, 2000.  On February 19, 2001, pursuant to the
New Telecommunications Law, CONATEL established the maximum tariffs that are
applicable effective March 10, 2001 during 2001 and a new price-cap system that
replaced the tariff adjustment mechanism provided under the Agreement. The first
tariff increase is effective from March 10, 2001 through June 30, 2001 and the
second tariff increase will be effective on July 1, 2001.  See "--Regulatory
Framework -- Proposed Regulation of Tariffs."

     Under the new tariffs established by CONATEL applicable to the rates CANTV
charges effective March 10, 2001, certain calling residential plans were
modified from the changes introduced by the Agreement.  See "--Regulatory
Framework--Proposed Regulation of Tariffs" for information regarding the
Company's rates for each component of residential and non-residential local
service, domestic and international long distance calls, and public telephone
service effective for years 2000 and 2001.

     In the fourth quarter of 1998, CANTV launched EAS in certain parts of
Venezuela.  EAS migrates certain domestic long distance traffic to local area
service, permitting CANTV to effectively achieve additional rate rebalancing
while providing the opportunity to shift revenues to the local service category,
which is less vulnerable to competition and price elasticity. EAS gives
customers a better tariff package for specific calling patterns.  See "-- Rates"
and "-- Regulatory Framework -- Regulation and the Concession -- Rate Regime."

     By the end of 2000, the Company began the National Numbering Plan, which
upgrades the Company national numbering system for both basic telephony and
wireless to world class standards. The National Numbering Plan changes the area
codes from 3 numbers to 4 numbers and this change will be applied gradually in
each region.  During 2001, the National Numbering Plan will not include any
migration. This project is expected to be completed on September 15, 2001.

     Revenues from international telephone services are primarily derived from
receipts from (i) charges to subscribers in Venezuela for outgoing calls (a
portion of which the Company must pay to other international operators for calls
which are carried on their networks once outside of Venezuela) and (ii)

                                       36
<PAGE>

access charges paid by other international telecommunications operators for
incoming calls originating outside of Venezuela and carried through the
Company's network once in Venezuela. The Company charges its customers for
outgoing international long distance calls based on the destination country,
duration and time of day of the call and whether the call is direct-dial or
operator assisted (station-to-station or person-to-person). International long
distance rates do not vary between residential and non-residential customers.
Payments to and receipts from international operators for incoming and outgoing
calls are made and received pursuant to bilateral agreements between the Company
and foreign telecommunications administrations or private carriers under the
auspices of the International Telecommunications Union. The agreements govern
the rates of payment by the Company to the foreign carriers for the use of their
facilities in connecting international calls billed in Venezuela, and by the
foreign carriers to the Company for the use of its facilities in connecting
international calls billed abroad. The currency and rates of payment under such
agreements are negotiated with each foreign carrier. Such settlement agreements
generally require that outgoing traffic be routed among foreign carriers in the
same proportion as those operators carry incoming traffic to Venezuela. The
practice among carriers is for payments due in respect of the use of overseas
networks to be recorded, collected and forwarded by the carrier in the country
in which the call is billed. Settlements among carriers are normally made
monthly approximately six months in arrears on a net basis. In each of the past
several years, the Company received settlement payments from foreign carriers in
excess of payments made to such carriers. See "-- Regulatory Framework --
Regulation and Concession -- Rate Regime."

     Users of public telephones in Venezuela pay for calls based on the duration
and destination of the call.  Through the first quarter of 1998, local calls
from public telephones were charged to the user based upon a fixed rate for the
first three minutes and a slightly higher rate for each minute thereafter.  In
April 1998, CANTV changed its tariff structure to bill all public telephone
calls at a flat per minute charge.  Domestic long distance calls from public
telephones are charged based upon the time of day and the duration of the call
at the non-residential rate.  International long distance calls were subject to
a flat fee. Public telephones, which are available to make international long
distance calls, are located in strategic places such as tourist and high traffic
areas.

     Wireless postpaid subscribers are charged an activation fee, a basic
monthly service fee, special service fees and usage fees on a per-minute or per-
second basis, in excess of a monthly free allowance of included minutes,
depending on whether the call is made during "peak" hours or "off-peak" hours.
Movilnet offers its postpaid customers 18 service plans, which vary in terms of
price and services.  Prepaid customers are charged per-minute and per-second
usage only based on the number of minutes and seconds purchased on prepaid
cards.  The Company currently sells prepaid cards in Bs. 5,000, 10,000, 12,000
and Bs. 20,000 denominations.  The prepaid amount is valid through 45 days after
the activation of the prepaid card. Usage charges are based on a "calling party
pays" principle under which Movilnet's customers are charged only for calls they
originate.  Roaming charges are applied to customers receiving calls from
persons whose calls originate outside the receiving party's home area.  Movilnet
charges CANTV an access fee for calls terminating on Movilnet's wireless network
and CANTV charges Movilnet an access fee for cellular calls terminating on
CANTV's network.  This access fee structure also applies to competing cellular
service providers.

Billing

     Since privatization, the Company has substantially improved its billing and
collection systems by, among other things, providing detailed bills, issuing
bills on a more timely basis, enabling payment through the Internet, offering
credit card/debit card and bank draft payment options and significantly
expanding the number of payment centers.  Bolivar denominated bills are sent to
subscribers monthly.  Large corporate customers may choose to receive their
invoices in digital CD-ROM format.

                                       37
<PAGE>

     During 1998, the Company identified and aggressively addressed an
uncollectible accounts receivable problem arising primarily from a deterioration
in the Venezuelan macroeconomic environment and weaknesses in the Company's
collection and credit policies.  In response, the Company took decisive actions
and developed and launched an aggressive collection program that included a
tightening of its credit policies and strict procedures requiring temporary and
permanent disconnection of customer lines for nonpayment.  The Company also
implemented a stronger system of controls and reorganized the collection
function by assigning responsibility for collections to the business unit
leaders and incorporating collection performance standards into their
compensation packages.  CANTV also made personnel changes and provided intensive
training to all collections personnel.  To further avoid collection problems in
the future, procedures have also been put in place to minimize the risk of
providing service to customers with poor credit history.  During 2000, the
Company continued to implement process improvements as well as its strict
collection policies resulting in improved collections.

     The Company's new collections policies include a call to customers just
prior to and again shortly after the payment due date.  A bill becomes overdue
30 days after the payment due date, referred to as the bill cutoff date.
Customer lines are temporarily disconnected 15 days after the bill cutoff date
and, if the bill is not settled 60 days after the bill cutoff date, the line is
permanently removed.  During 2000, CANTV made approximately over 2.4 million
temporary disconnections and permanently removed 337,614 residential and
commercial lines.  CANTV charges a reconnection fee to the temporarily
disconnected customers.  Revenues from the reconnection charge were Bs. 15.8
billion for residential customers and Bs. 4.0 billion for non-residential
customers for the year ended December 31, 2000.  The Company also charges 12%
per annum on overdue amounts from non-Government customers.  The permanently
removed lines are being reassigned to new customers on the basis of credit
history checks.

     At December 31, 2000, the average number of days that CANTV receivables
remained outstanding was approximately 40 days for all customers except
Government entities, compared to 50 days at December 31, 1999.  During 1999, the
Company changed the methodology used to calculate the average number of days
that receivables remained outstanding to the "Average Billing Method" from the
"Countback Method." The new methodology consists of dividing the receivables
outstanding by the average billing for the last four months.  The result is then
multiplied by thirty.  The "Countback Method" calculates the average number of
days that receivables remained outstanding by subtracting the monthly billing
from the receivable balance.  During 2000 CANTV modified the "Average Billing
Method", by including the undistributed payments (payments received but
unidentified and previously excluded from amounts collected) to the amount of
accounts receivables outstanding used in this calculation.  The Company's
provision for uncollectibles represented 5.9% and 4.2% of total operating
revenues at December 31, 1999 and 2000, respectively.

     The average number of days that receivables remained outstanding from
Government entities was approximately 280 days at December 31, 2000 compared to
408 days at December 31, 1999.  Accounts receivable from Government entities
decreased 25.3% during the year to Bs. 102.8 billion at December 31, 2000 from
Bs. 137.5 billion at December 31, 1999. The accounts receivable from Government
decreased during 2000 primarily due to a payment received in December 2000, and
due to a reduction of basic telephone services rendered to Government entities
of approximately 20% as a result of rationalization programs established by
Government entities. Additionally, new modernization strategies aimed at
Government entities resulted in approximately a 30% reduction in analog services
rendered to Government entities.  The amounts that Government entities pay for
telecommunications services is established pursuant to annual budgets rather
than based upon actual usage during such year.  As a result of these budgeting
processes, a number of Government entities have not paid the Company in full for
telecommunications services rendered.  The Company has not been able to make
adjustments for inflation or charge interest on such overdue amounts. As a
result, the loss in value related to amounts owed CANTV by Government entities
is significantly greater than the amounts reflected as currently outstanding.

                                      38
<PAGE>

     On November 3, 1999, the Venezuelan Congress passed a law authorizing the
issuance of bonds for the purpose of paying certain outstanding obligations
including those related to telephone services. The amount of bonds authorized
for payments of debt owed CANTV as of December 31, 1998, under such legislation
was estimated to be Bs. 63,218 million (U.S.$90.3 million).  In December 2000,
CANTV received a payment from the Government of Bs. 34,089 million (U.S.$48.7
million) from a bond issuance by the Government related to amounts outstanding
in respect of years 1998 and prior.  As of December 31, 2000, the amounts
outstanding in respect of years 1998 and prior was Bs. 18,836 million.  In 2000,
the Government budgeted an issuance of bonds to cover the partial payment of
amounts outstanding as of December 31, 1999, which totaled Bs. 137.5 billion
after adjusting for inflation as of December 31, 2000. CANTV expects to receive
approximately Bs. 20,000 million(U.S.$28.6 million) during 2001 in respect of
this bond issuance. At December 31, 2000, Government entities, owed the Company
approximately Bs. 102.8 billion (U.S.$146.8 million) of which approximately Bs.
47.6 billion (U.S.$68.0 million) was outstanding from prior years.  See Note 8
to the Audited Financial Statements.  On March 6, 2001, the Government enacted
Decree N1,239 which approved the issuance of bonds in order to pay the
Government debt for basic services.  In addition, the government's budget for
2001 included a provision in the amount of Bs. 50.3 billion for telephone
services expense for 2001.

Competition

     Under the Concession, the Company was the exclusive provider of switched,
fixed, local, domestic and international telephone services in Venezuela until
November 27, 2000 except in certain circumstances.  Beginning on November 27,
2000, however, the Concession allowed direct competition for these services.

     In addition, the Concession also allowed the Ministry to grant concessions
for basic telephone services to third parties prior to November 27, 2000 in
certain circumstances. See "-- Regulatory Framework -- Regulation and the
Concession -- Competitive Framework." From December 1996 to January 1998, the
Ministry exercised its authority under this provision to grant concessions to
three companies to provide multiple services, except domestic and international
long distance services.

     On January 15, 1991, CONATEL granted the first cellular concession to
Telcel.  On May 19, 1992, the Company purchased one of two cellular concessions
from the Government and established Movilnet.  In December 1996, Infonet was
granted a rural concession to provide multiple services, except national and
international long distance services, to population centers with 5,000 or fewer
inhabitants in eight western states of Venezuela.  In January 1998, two
additional companies were granted multiple services concessions. Digitel was
granted a concession to provide services in seven central states and Digicel was
granted a concession to provide services in six eastern states. Infonet and
Digitel are providing digital fixed wireless and cellular services and both have
expanded their services into larger population areas where they compete directly
with services provided by Movilnet and indirectly with services provided by
CANTV.  The Company also faces competition in certain value-added services.

     The New Telecommunications Law enacted on June 12, 2000, provides the
general legal framework for the provision and regulation of telecommunications
services in Venezuela with the stated objectives of establishing the conditions
for fair competition between operators and service providers, setting the rules
on tariffs and interconnection, developing and modernizing the
telecommunications systems, and establishing universal service contributions.
See "-- Regulatory Framework -- Regulation and the Concession -- Recent
Amendments to the Regulatory Framework."  With the opening of the
telecommunications market to competition in Venezuela, CANTV is subject to
competition in all areas of its business.  Several companies have completed the
process of applying for administrative licenses and concessions on various
services.  See "-- Regulatory Framework -- Competitive Framework."

                                      39
<PAGE>

     Competition in services provided by the Company may arise from a variety of
new entrants, including telecommunications services providers from other
countries.  Such competitors will be able to provide telecommunications services
either through newly installed facilities and networks or through facilities and
networks of existing providers. As of April 30, 2001, after the opening of the
telecommunications market to competition, the Venezuelan Telecommunications
market is composed of one integrated service provider, namely CANTV; wireless
service providers, such as Movilnet, Telcel, Digitel and Infonet; wireless fixed
service providers, such as Telcel, Genesis Telecom, Entel Chile, Millicom,
Digitel and Digicel; data transmission service providers, such as ImpSat,
Compsat, Bantel, NetUno, Viptel, BellCanada International and Texcom; ISPs, such
as CANTV Servicios, T-Net, Etheron, AOL, UOL and Eldish; paging operators, such
as Skytel, Telemensajes Metropolitanos, Radio Contacto and TeleKontacto;
trunking service providers, such as Americatel, Radio Movil Digital and
Conmovil; and Cable TV operators, such as SuperCable, Cabletel and Intercable,
including DirectTV via satellite transmission. These telecommunications services
providers and other market entrants may establish customer relationships, as
well as other capabilities and resources to expand their current service
offerings. The Company believes that its competitors will target large clients,
top tier commercial customers and high-income residential customers.

     CANTV is currently evaluating the impact of the new market entrants on its
market share for basic telephone services.  As of April 30, 2001, the Company
believes that any loss of market share during 2001 attributable to the entry of
competitors into the market for basic telephone services is not likely to have a
material adverse impact on its financial position.  See "-- Regulatory Framework
-- Regulation and the Concession -- Competitive Framework."

     The scope of increased competition and any corresponding adverse effect on
the Company's results will depend on a variety of factors.  Among such factors
are the business strategies and financial and technical capabilities of
potential competitors, prevailing market conditions at the time competition is
permitted and applicable Venezuelan regulations, as well as the effectiveness of
the Company's efforts to prepare for increased competition.  Increased
competition will further change the environment in which the Company operates.
Competition will require the increased development of a competitive culture,
including greater customer care, differentiated services, continuous
introduction of innovative technologies, competitive cost positioning and
operational efficiencies.  The Company believes, however, that its existing
network, market share, quality and range of services position it to operate
effectively in a competitive environment.

Corporate Image

     The Company promotes its image through advertisements based on nationwide
and regional mass campaigns via television, radio and print media. A significant
effort has been made to target the messages to each particular segment of the
market by its business unit.  In September 2000, CANTV launched a new corporate
logo and image in a nationwide campaign to reflect the changes that the Company
has made in preparation for full competition. The campaign emphasizes the open
communication between the Company and its customers, adopting a new slogan
"comunicacion abierta" (open comunication) and reaffirms its commitment to
become a world class telecommunications company by offering innovative products
and quality services.  On April 2001, Movilnet and CANTV Servicios changed their
logos to resemble CANTV's own, as part of a brand consolidation strategy
including the presentation of a uniform image to customers.  Using the same
graphics and font, Movilnet launched their new slogan "contigo siempre" (always
with you) and CANTV Servicios is now CANTV.net with it's new slogan "te acerca
el futuro" (taking you closer to the future).  During 2000 and for the first
time, CANTV made public the donations made to nonprofit organizations, through a
massive advertising campaign to reflect the Company's good corporate
citizenship. Additionally, in order to reinforce its new corporate image, the
Company has changed the names of its operating units, as part of an
organizational restructuring.  See "--

                                      40
<PAGE>

Company Strategy." Customer satisfaction survey design and methodology was not
completely reviewed and approved by CONATEL as part of the Government's review
of service quality mandate during 2000. For this reason customer satisfaction
measures were not taken during 2000. CONATEL plans to introduce a new regulation
covering quality of service mandates, including customer satisfaction
measurement methodology, which will apply to all operator companies. Customer
satisfaction surveys conducted by independent third parties indicated that
approximately 88.2% and 83.2% of the public was satisfied with CANTV's
residential and non-residential service, respectively, as of December 31, 1999
compared to 87.7% and 90.2%, respectively, at December 31, 1996.

                                      41
<PAGE>

                             REGULATORY FRAMEWORK


     Set forth below is a summary of certain provisions of the general legal
framework for the regulation of the Company's activities, including the rates it
charges for telephone services.  The principal components of this regulatory
framework have been created by (1) the "New Telecommunications Law," which
supersedes the former telecommunications law enacted on August 1, 1940; (2) the
telecommunications regulations established on November 24, 2000 (collectively,
the "Telecommunications Regulations"), composed of (i) the Reglamento de
Apertura del Servico de Telefonia Basica (the "Regulations for Basic Telephony
Services"), (ii) the Reglamento de Interconexion (the "Interconnection
Regulations") and (iii) the Reglamento de la Ley Organica de Telecomunicaciones
Sobre Habilitaciones Administrativas y Concesiones de Uso y Explotacion del
Espectro Radioelectrico (the "Administrative and Concessions Regulations"); (3)
the Concession; (4) the Cellular Concession; (5) the Value-Added Concession; and
(6) the Agreement dated February 21, 2000 between CANTV and CONATEL.

Regulation and the Concession

General

     The Ministry is the Government entity principally responsible for
overseeing telecommunications services in Venezuela and has delegated
supervision and control of the telecommunications sector to CONATEL, an
independent regulatory body under its jurisdiction.  CONATEL was created by
presidential decree in September 1991 (the "CONATEL Decree").  The CONATEL
Decree provides that CONATEL has the authority to plan, manage, regulate and
supervise telecommunications services in Venezuela.  The CONATEL Decree further
provides that CONATEL shall promote telecommunications investment and
technological innovation in Venezuela.

     The Concession, granted to CANTV by the Government in October 1991, and
amended in November 1991, has an initial term of 35 years and, subject to the
approval of the Ministry and the satisfactory performance by CANTV of its
obligations under the Concession, may be extended for an additional 20 years.
The Concession provides that CANTV was the exclusive provider of switched, fixed
local, national and international telephone services, existing or to exist in
accordance with technological advances in telephony throughout Venezuela until
November 27, 2000, except in limited circumstances.  See "-- Competitive
Framework."

     CONATEL has the authority to review and approve CANTV's tariffs, expansion
and modernization plans, to inspect CANTV's equipment and properties, as well as
its accounting and other records and to impose sanctions, including forfeiture
of the Concession, for violations of the New Telecommunications Law, the
Telecommunications Regulations and the Concession. Under the Concession, CANTV
is required to provide CONATEL with information necessary for monitoring CANTV.
Among other things, CANTV is required to report annually to CONATEL on the
status of various services under the Concession, including CANTV's compliance
with quality improvements requirements and annual reports on network expansion
and modernization.

     In February 2000, CANTV entered into the Agreement with CONATEL in respect
of the rate structures and service levels through 2000.  The Agreement
superseded the Concession with respect to subject matter specifically referred
to therein and the Concession continued to control as to subject matter not
specifically covered by the Agreement.  In the event of a conflict between the
Agreement and the Concession, the Agreement controlled.  See "-- The Agreement."

                                      42
<PAGE>

     The Agreement was arrived at following the delays in tariff approvals in
1999 and the commencement of a preliminary proceeding in contemplation of a
legal action by CANTV against the Government for breach of the Concession.  The
Agreement concluded a mandated eighth year review required under the Concession
and resolved the outstanding differences between CANTV and CONATEL relating to
the definition of goals and measures of service mandates and methodologies.  In
effect, the Agreement retained for the Company the most significant rights
provided for under the Concession.  The Agreement included: (i) a significant
rebalancing between long distance and local tariffs, and between non-residential
and residential tariffs; (ii) a definitive ruling on tariffs and adjustments
based on an agreed projected devaluation of the bolivar against the U.S. dollar
during 2000; (iii) quality and service mandates including the elimination of the
service expansion mandate and the introduction of a new 80% digitalization
mandate; (iv) the introduction of new tariff plans including a fixed prepaid
plan and optional plans which CANTV may introduce without CONATEL's prior
approval and which, in the case of certain optional plans, CANTV may offer with
higher basic rent and free minutes up to a U.S.$80 maximum; and (v) CANTV's
agreement to refrain from taking any action, judicial or administrative, as a
result of the failure by the Government to approve tariffs during 1999, provided
that the Government meets the terms and obligations pursuant to the Agreement.

     The tariffs provided for under the Agreement were effective until March 10,
2001 if CANTV and CONATEL were not to reach an agreement on the tariffs to apply
after November 27, 2000.  During 2000, CANTV and CONATEL failed to reach an
agreement on tariffs to apply after November 27, 2000.  On February 19, 2001,
pursuant to the New Telecommunications Law,  CANTV reached an agreement with
CONATEL for the approval of new tariffs effective March 10, 2001 and a price-
cap, which will be used to adjust the rates CANTV charges during 2001.  See "--
Proposed Regulation of Tariffs."

Recent Amendments to the Regulatory Framework

     The New Telecommunications Law enacted on June 12, 2000, provides the
general legal framework for the provision and regulation of telecommunications
services in Venezuela with the stated objectives of establishing the conditions
for fair competition between operators and service providers, setting the rules
on tariffs and interconnection, developing and modernizing the
telecommunications systems, and at the same time obtaining and establishing
universal service contributions.  The New Telecommunications Law respects all
previously conferred rights and duties, including obligations under
interconnection agreements among operators, and provides for an equitable fiscal
regime.

     The New Telecommunications Law establishes CONATEL as an independent
regulatory body charged with overseeing the implementation of regulations
pursuant to the established framework for a new competitive market.  The New
Telecommunications Law considers telecommunications services to be an economic
activity that affects the public interest, which may be provided by the private
sector on a competitive basis subject to regulation.  The New Telecommunications
Law includes a requirement for universal contributions and public service
obligations to be shared by telecommunications service providers.  Under the new
tariff structure providers are free to set their own rates except where, due to
insufficient competition, certain telecommunications services are made subject
to tariff regulation.  In this case, CONATEL may subject any telecommunications
service to price regulation through the application of a price-cap system.
CONATEL has designated CANTV as the established operator and subject to tariff
regulation under a price-cap system during 2001.  See "-- Proposed Regulation of
Tariffs."

     The New Telecommunications Law also adopts a new tax regime applicable to
all telecommunications service providers on the basis of annual revenues.  The
new taxes, replace the former annual tax and concession fee of 5.5% for wireline
and 10.0% for wireless services.  The new taxes are:  a 2.3% activity tax, a
0.5% tax to cover CONATEL's activities, a maximum 0.5% tax for spectrum
allocation, a 1.0% tax to create the Universal Service Fund, a 0.5% tax for the
Telecommunications Training and Development Fund and charges for administrative
procedures.  In addition, cellular

                                      43
<PAGE>

providers are subject to a supplemental tax starting at 4.5% of annual revenues
in the year 2000 and decreasing by 1.0% per annum until 2005 after which time
the supplemental tax will be eliminated.

     The New Telecommunications Law provides for the creation of the Universal
Service Fund and the Telecommunications Training and Development Fund.  The
purpose of the Universal Service Fund is to afford to every citizen the
opportunity to have access to telecommunications services including Internet
services.  This fund will be used to subsidize the development of infrastructure
for the provision of telecommunications services by operators in unprofitable
areas.  Also, a research and development fund (the "Research and Development
Fund") will be used to provide financial resources to universities, technology
institutes and research institutions to study and research telecommunications
technology.

     On November 24, 2000, the Regulations for Basic Telephony Services, the
Administrative and Concessions Regulations and the Interconnection Regulations
were published and together with the New Telecommunications Law opened the
telecommunications services sector in Venezuela to free competition.  Prior to
the enactment of the New Telecommunications Law and the Telecommunications
Regulations and pursuant to the Concession, the Company had the right to provide
fixed local telephone services and domestic and international long distance
telephone services and international long distance services on an exclusive
basis until November 27, 2000, except in limited circumstances.

          (i)  The Regulations for Basic Telephony Services

     The Regulations for Basic Telephony Services establish the general model,
requirements, conditions, limitations and general provisions necessary to ensure
the opening of the basic telephony services market to free competition,
transparency and equality of opportunity among established operators and market
newcomers. Minimum obligations have been set for those operators who wish to
provide local and domestic long distance services in certain areas of the
country.  International long distance carriers must comply with, and provide
service to, pre-determined locations (i.e., certain countries of origin and call
termination).  A new regional scheme has been established, which divides the
country in five regions and allows for modifications of the tariff regime.
Regional operators will be able to set regional tariffs as appropriate.

     These regulations also govern the system for pre-selecting domestic and
international long distance carriers. Pursuant to the Regulations for Basic
Telephony Services, an independent third party will be contracted to handle the
pre-selection process under CONATEL's supervision.  The selected third party
will be the database administrator and will be responsible for the supervision
and migration of the long distance registry of all present consumers and the
selections they make.  This mechanism has been utilized successfully in several
countries and is designed to provide equality to carriers and consumers.
Consumers can also select the long distance carrier of choice on a per-call
basis by dialing the operator's prefix before the desired phone number based on
quality, price or service. CANTV will provide both types of presubscription
services to consumers.

          (ii) The Interconnection Regulations

     The New Telecommunications Law provides for mandatory interconnections with
charges based on costs to stimulate the commencement of effective competition,
eliminate cross subsidies and to promote self-regulation of the sector.  The
Interconnection Regulations require access for the interconnection of other
operators' networks to CANTV's telephone network and allow interested parties to
negotiate the terms and conditions of their interconnections subject to general
principles of              non-discrimination, equality of access and good
faith.

     Pursuant to the Interconnection Regulations, operators are required to make
available to other operators soliciting interconnection the essential resources
of its network needed to render

                                      44
<PAGE>

telecommunication services, including: call transport and termination of calls
for fixed, wireless and mobile local services, subscriber numbers, information
sufficient for billing and collection, systems used in transmission or routing
of calls, signaling and network access for "smart" features, and operator and
directory assistance. Signaling, the process of sending information between two
parts of a network to control, route and maintain a telephone call, is required
to be provided using a new system, the SS7, employing as many separate channels
as may be necessary to establish interconnections and optimal use of the
network. In 1997 the Company began to install SS7 and at December 31, 2000, the
Company had installed the SS7 system through its international long distance
switches, and plans to continue expanding this system. The Interconnection
Regulations also require CANTV to provide at least one centralized point of
interconnection in each local area for local traffic and one centralized point
of interconnection for each central long distance office. New market entrants
are required to provide less points of interconnection than CANTV.

     New interconnection agreements are required to be consummated no later than
60 days following the receipt of a request for interconnection and are subject
to review by CONATEL.  Each new interconnection agreement must provide the
rights and duties of each operator thereunder, which may be amended no later
than two years from the execution of the agreement.  In the event parties fail
to enter into an interconnection agreement within 60 days, CONATEL is required
to establish the terms and conditions of interconnection between the two parties
within 30 days, setting interconnection charges based on long-term incremental
costs related to the provision of unbundled network elements pursuant to the
Interconnection Regulations.  CONATEL is currently undertaking a two year study
of international benchmarks to establish interconnection charges that are to be
applied in the future.

     Interconnection agreements entered into prior to the enactment of the
Interconnection Regulations remain in force provided they are amended to conform
to the Interconnection Regulations on or before May 24, 2001. Prior to the
enactment of the Interconnection Regulations, interconnection charges were based
on tariffs established by the Company. The Interconnection Regulations provide
for interconnection charges to reflect the recovery of costs incurred to allow
access to other carriers plus a reasonable profit margin.  Currently, the
Company is in negotiations relating to interconnection with other operators such
as Movilnet, Telcel, Digitel and Infonet.  The Company expects a reduction in
the interconnection rates it pays and charges as a result of the application of
the Interconnection Regulations.

          (iii) The Administrative and Concessions Regulations

     The New Telecommunications Law provides a transparent and fair system for
granting administrative licenses and concessions by withdrawing discretion from
the regulatory body and establishing clear and specific rules and procedures.
All service providers are required to obtain an administrative license to
provide basic telecommunications services and to establish and make use of a
network.  The Administrative and Concessions Regulations establish the process
and requirements for applying for administrative licenses (habilitaciones
administrativas) and concessions for basic telecommunications services.  Basic
telecommunications services include fixed local telephone services and domestic
and international long distance telephone services.

     CONATEL has established the general conditions required to be met to obtain
an administrative license with the stated objectives of providing adequate
telecommunication services, consumer protection, free competition among
operators, efficient and effective numbering administration, satisfaction of
interconnection technical and service quality obligations, and universal service
contributions, among others. CONATEL is required to evaluate requests for
administrative licenses within 30 days of their solicitation starting on
November 28, 2000.  Administrative licenses have a term of up to 25 years, are
subject to renewal and may only be granted to persons or entities domiciled in
Venezuela.

                                      45
<PAGE>

     Administrative licenses for each service requested are subject to
compliance with a set of specific criteria.  The specific criteria are based on
technological convergence and on the services promoted by the Telecommunications
Regulations.  While fixed local service operators are not subject to certain
minimum service obligations applicable to domestic long distance service
operators, fixed local service operators will be required to have exchange
facilities or access to exchange facilities, and be able to satisfy the demand
for fixed local services, in their assigned area.  Also, fixed local service
operators will be required to install a number of public telephones equal to at
least 3% of their lines in use.  CANTV is required to complete the National
Numbering Plan maintaining existing local tariffs in affected areas until
January 2002.  Domestic long distance operators will be required to service all
of the newly established five national geographical regions within two years
following the receipt of an administrative license for this service.
International long distance operators will be required, at a minimum, to provide
international long distance service between Venezuela and the United States,
Colombia, Spain, Italy and Portugal within one year of obtaining an
administrative license for this service and provide, within their second year of
service, international long distance service between Venezuela and Ecuador,
Peru, Mexico, Bolivia, Brasil and Canada.

     The rights and obligations granted pursuant to existing concessions remain
in effect notwithstanding the grant of administrative licenses covering
competing services.  Operators will not be entitled to fund their existing
obligations under their concessions from the Universal Service Fund but may
solicit funds in respect of basic telephone services rendered to unprofitable
areas according to the New Telecommunications Law requirements.  Operators may
be required to offer basic telephone services in areas previously designated by
CONATEL as deserted.

     In order to use the radioelectric spectrum, an interested party must apply
for a limited period concession covering a pre-determined portion of the
spectrum. The process to obtain a concession for the radioelectric spectrum
includes a qualification phase and a selection phase based on a public auction
as it is considered a public resource under the new regulatory scheme.  CONATEL
will determine at the beginning of each calendar year, the portion of the
spectrum to be auctioned and conditions for selection. When spectrum is
auctioned, the winning bid obtains a non-assignable right to use the spectrum in
addition to an administrative license to provide services and establish and use
the network.  Concessions, such as cable television or fiber optic telephony,
may be granted shortly after a request is approved since they are not subject to
open bidding. Concessions for the use of the radioelectric spectrum for
broadcast television and standard radio transmission are granted through an
administrative proceeding.  Foreign investors are prohibited from participation
in broadcast television and standard radio transmission in Spanish.  The basic
telephony concession requires the payment of a surety bond.

Network Expansion, Modernization and Quality Improvement Requirements

     The Concession has required the Company to carry out a plan of network
expansion and modernization based on the construction of a specified minimum
number of new digital lines, the modernization of analog lines and installation
of public telephones, each year until the year 2000.  In accordance with the
Concession, the Company has filed with CONATEL certain network expansion and
modernization plans:  annual plans, a plan through 2000 and a fifteen-year plan.
Each annual plan has been subject to CONATEL's approval.  The Company's plans
have incorporated its expansion and modernization proposals for national,
regional and city network build-outs.  The plans have been on a principle of
uniform growth for all regions in the country.  Compliance with the approved
plans and mandates has been required by the Concession until December 31, 2000.
See "-- Assignment, Extension and Termination of the Concession."

     The economic forecasts developed and relied upon in 1991 on which the nine
year Concession mandates were originally based assumed, among other things,
substantial growth of Venezuela's gross domestic product.  Since 1992, the
Venezuelan economy began to experience a downturn, which has

                                      46
<PAGE>

continued throughout subsequent years. As a result of this constant downturn in
the economy, the Company experienced a decrease in the rate of demand for fixed
telephone lines and, in certain of its service areas, had more available
facilities than demand from persons able to afford telephone service. Pursuant
to a proposal submitted by the Company, on September 9, 1996, the Ministry
adopted a resolution to reduce the Company's expansion mandates for 1996 through
2000.

     Under the Agreement reached in February 2000, quality and service mandates
have been substantially modified, including the elimination of the mandatory
access line expansion requirements and an agreement by the Company to ensure
that 80% of its lines are digitized by December 31, 2000. After 2000, no
specific expansion, modernization and digitalization requirements need to be
complied under the Concession. The New Telecommunications Law and the Regulation
for Basic Telephony Services provide additional obligations for operators, such
as, the installation of a new signaling system for interconnections based on the
SS7 protocol and the installation of the minimum equivalent of 3% of lines in
use in public telephones.

     The access mandate under the Agreement required that the average
installation period be not greater than 67 days and that pending orders over 30
days must represent less than 82% of pending orders.  Under the Agreement,
operator response was required to be no more than 5 seconds for repair requests,
8 seconds for domestic long distance service, 20 seconds for information
requests and 20 seconds for international long distance service.  Billing
performance under the Agreement was required to be 99.5% accurate and 95.0% of
billings were required to be completed within less than 45 days for domestic
long distance and international long distance outgoing calls.  Also, no billing
of international long distance service was allowed after 110 days other than
when other international carriers are used.  CANTV has complied with the quality
and service mandates under the Agreement.

     Under the Agreement, CANTV and CONATEL agreed to develop measures and
corresponding quality and service level mandates for certain services where
specific mandates are not currently provided in the Agreement.  The Agreement
contemplated that these matters were to be agreed upon during the first quarter
of 2000.  Some of the measures developed included:  (i) customer satisfaction,
(ii) time to complete a call, (iii) billing effectiveness and (iv) operator
service.  To develop the customer satisfaction measure, the Agreement
contemplated that both CANTV and CONATEL would designate an expert to jointly
develop a customer satisfaction survey from which a customer satisfaction
mandate would be developed.  The time to complete a call refers to the time that
passes between the moment that the last digit is dialed and the answer tone is
received.  In accordance with the Agreement, CANTV and CONATEL performed
measurements during the first quarter of 2000, to agree on the establishment of
the new annual measurement to be used based on actual results allowing for a
monthly deviation.  The Agreement also contemplated that service access in areas
where CANTV did not provide services would be measured based on the percentage
of pending service orders in those areas as of December 31, 1999.  In the event
that CANTV was unable to provide service to these areas, other operators would
be allowed to offer their services as long as they used comparable technology to
CANTV's. CANTV was able to provide service to all these areas during year 2000.
The Agreement also contemplated that both CANTV and CONATEL would perform
several operator service measurements during the first quarter of 2000 and
develop a new annual measurement.  CONATEL retained inspection rights during the
first quarter of 2000 to survey and adjust, as needed, these quality measures.
All of these studies have been completed except for customer satisfaction and
time to complete a call, which are still in progress as of the end of the first
quarter of 2001.  CONATEL has not yet agreed on a consistent statistical
measurement methodology for customer satisfaction.

                                      47
<PAGE>

     The following table sets forth CANTV"s actual expansion, modernization and
quality improvement results through 2000:

<TABLE>
<CAPTION>
                                           1996          1997           1998           1999          2000
                                    ------------------------------------------------------------------------
<S>                                     <C>           <C>            <C>             <C>           <C>
Expansion and modernization:/(1)/
New digital lines for expansion           247,226       171,844        148,285             N/A           N/A
Modernization of lines                     30,530        41,000         82,000          87,620           N/A
Total lines for expansion and
  modernization                           277,756       212,844        230,285          87,620           N/A
Total public telephones/(2)/               56,409        70,012         75,097          80,033        85,016
Total lines installed/(2)/              3,208,977     3,403,521      3,551,706       3,546,538     3,074,506
Quality improvement:
Dial tone delay/(3)/                         99.1%         99.0%          99.2%           99.3%         99.5%
Call completion/(4)/
  Local                                      62.9%         64.3%          67.3%           68.7%         97.7%
  Domestic long distance                     51.6%         52.5%          55.6%           57.5%         96.7%
  International long distance                48.6%         49.9%          60.7%           60.3%         98.1%
Operator assistance (seconds):
  Domestic long distance                      3.9           4.1            3.5             2.1           2.9
  Directory assistance/(5)/                   4.9           4.0            N/A             3.9           3.8
  International long distance                 4.4           3.3            3.6             2.4           2.8
  Repair answer/(6)/                          4.6           3.8            4.5             3.4           2.3
Trouble reports and repair time:
  Trouble reports per 100 lines/(7)/          3.7           3.5            3.0             2.5           2.0
  Repaired in 24 hours                       53.0%         60.5%          68.8%           70.7%         86.2%
  Repaired in 48 hours                       80.0%         83.9%          89.9%           89.6%         96.9%
  Repaired in 72 hours                       90.0%         92.7%          93.1%           91.7%          N/A
Installation interval
  (within-days)/(8)/                          N/A           N/A            N/A             N/A            29
Billing:
  Accuracy (with error)                       0.9%          0.8%           0.5%            1.0%          0.3%
  Time from providing service
  to bill (days)/(9)/                          19            21             22              19           N/A

Customer satisfaction
 (percent satisfied):/(10)/
 Public telephones                           80.4%         70.1%          69.6%           72.3%          N/A
 Residential                                 87.7%         89.8%          91.5%           88.2%          N/A
 Non-residential                             90.2%         88.2%          88.5%           83.2%          N/A
</TABLE>
_____________________________
(1)  During 1999, CANTV completed the expansion and modernization requirements
     by using excess digital capacity, consequently no new digital lines for
     expansion were installed. The Agreement didn't establish expansion and
     modernization requirements.

(2)  Does not show details of decreases or increases resulting from the
     relocation or retirement of analog lines.

(3)  Percentage of initiated calls that received dial tone within 3 seconds
     during the busiest hour of the day.

(4)  Percentage of completed calls, which were appropriately dialed and
     connected.

(5)  Statistics for 1998 are not available due to problems experienced in
     connection with the upgrade and testing of the Company's new directory
     assistance platform in Caracas and Barquisimeto. The Company has formally
     notified CONATEL of the problems encountered and inability to measure
     compliance with the mandate.

(6)  Average time in seconds for repair operators to answer customer calls
     reporting problems with their telephones.

(7)  Monthly reported failures divided by number of lines in service at month-
     end, multiplied by 100. In 1999, the Company installed a mechanized repair
     tracking system, which improved its ability to identify trouble reports and
     repair times.

(8)  Initially percentage of service requests completed. The standard for
     measurement was never agreed with CONATEL and accordingly no statistics are
     available until 1999. The Agreement eliminates this quality service mandate
     and introduces mandates for installation interval.

(9)  Days from the moment when the call is made to the billing day, per 100
     bills. The Agreement substitutes this mandate with a 99.5% accuracy
     requirement and a requirement that 95.0% of billings be completed within
     less than 45 days for domestic and international long distance outgoing
     calls.

                                       48
<PAGE>

(10) As measured by customer opinion surveys conducted by third parties. The
     lower customer satisfaction results obtained from the 1999 customer survey
     compared to the 1998 survey are primarily attributable to differences in
     survey design and methodology. The survey design and methodology was not
     completely reviewed and approved by CONATEL as part of the Government's
     review of service quality mandate during 2000. For this reason the customer
     satisfaction mandate did not apply for 2000.

         The Company did not meet certain Concession mandates relating to call
completion rates in 1998 and 1999 due to the Concession's definition of an
uncompleted call. Under the Concession, a call was not completed if a line was
busy or a person did not answer. Under the Agreement all calls are considered
completed unless there is a technical failure. In 1998, the Company failed to
meet the Concession's customer satisfaction requirement for users of public
telephones. The Company started to develop with CONATEL an objective measure of
customer satisfaction for users of public telephones such as the percentage of
public telephones in service, which was no longer applicable under the
Agreement. Since 1995, the Company has failed to meet the Concession's
requirement that a specified percentage of new lines be installed within a
specified number of days from request. The standard for measurement of this
mandate was never agreed with CONATEL and accordingly no comparable results are
available. The Company also failed to meet certain repair time requirements
under the Concession in 1994 through 1997. In 1998, 1999 and 2000 the Company
met all repair time requirements. In addition, in 1994 the Company failed to
satisfy the billing statement improvement mandate of the Concession, as well as
certain provisions dealing with treatment of third party equipment providers. As
a result of a 1996 inventory of public telephones, the Company determined that
the number of public telephone lines in service was 8,591 less than the number
on its records at June 30, 1996. Due to this shortfall, the Company only had
52,031 public telephone lines installed at December 31, 1996, representing just
over 80% of the Concession's requirement of 65,000.

         The failure by the Company to meet the Concession's mandates may result
in sanctions, including the possible imposition of fines of up to a maximum
amount of 1% of CANTV's billings and, if the failure exceeds 20% of the relevant
requirement, revocation of the Concession. The Agreement establishes that if
CONATEL detects noncompliance with the established quality and service mandates,
it must notify CANTV which in turn must present a corrective plan within fifteen
days after receiving formal notification and correct the noncompliance within
the following quarter unless otherwise justified to CONATEL. Failure to comply
with the corrective plan may lead to a penalty equivalent to 50% of the basic
rent charged to affected customers in the most recent month and must be credited
directly to the customers' accounts within the next two months. The penalty will
be calculated for each parameter or measurement per line per month that has not
been complied with. CONATEL will also verify compliance with annual goals. See
"-- Assignment, Extension and Termination of the Concession." As of December 31,
2000, the Company was in full compliance with the Agreement mandates, which had
replaced the quality and service mandates under the Concession. The actual
results for 2000 were submitted to CONATEL on February 14, 2001. As of April 30,
2001, CONATEL has not promulgated quality and service mandates regulations to
apply to CANTV under the New Telecommunications Law.

Rate Regime

         Prior to February 2000, when CANTV entered into the Agreement with
CONATEL, CANTV's rates were regulated under the Concession. The Concession had
provided for a "price-cap" mechanism to set and adjust rates on a quarterly
basis throughout each calendar year. The price-cap mechanism was designed to
vary quarterly based on the WPI. Although in principle tariffs were to be
adjusted to reflect inflation in the preceding quarter, tariffs were, in
practice, generally calculated based upon rates of inflation during the second
preceding quarter. The delay was due to the time period required to calculate
the inflation rate during a specific quarter. Accordingly, in many instances
tariffs were implemented based on inflation levels relating to periods ending as
much as six months preceding their implementation date.

                                       49
<PAGE>

         The increase in CANTV's tariffs did not, in all cases, fully offset the
effects of inflation used in preparing the Company's financial statements since
the rate of inflation used in preparing the Company's financial statements is
based on the more commonly accepted Consumer Price Index which, at times,
significantly exceeded the rate of inflation as measured by the Wholesale Price
Index. Further, the price-cap mechanism was not always implemented as described
in the Concession. CONATEL sometimes delayed the approval of rate increases, or
did not approve the full tariff increases allowed by the Concession's price-cap
mechanism. In other cases the Company decided not to implement the full increase
authorized for competitive or other reasons. In 1998, all four tariff increases
were approved with minimal delay. In the first three quarters of 1998, CANTV did
not increase domestic long distance rates by the full amount permitted based on
competitive pricing strategies. In 1999, CANTV received authorization for a rate
increase effective January 1, 1999 and in March 1999, CONATEL approved a tariff
increase, which became effective on April 30, 1999. At the request of CONATEL,
CANTV agreed not to implement the rate increase permitted pursuant to this
authorization for basic residential rent. During 2000, two tariffs increases
went into effect in accordance with the Agreement.

         The following table sets forth the increases in the CPI, the WPI and
the Company's tariffs based upon this price-cap mechanism from 1996 through
1999:

<TABLE>
<CAPTION>
                                                            % Increase
                         ----------------------------------------------------------------------------------
                                       Consumer                   Wholesale             CANTV's Weighted
                     Year             Price Index                 Price Index            Average Tariffs
                  ----------    -------------------------    -----------------------  ---------------------
                  <S>           <C>                          <C>                      <C>
                     1996               103.2                       105.8                      89.0
                     1997                37.6                        17.3                      25.5
                     1998                29.9                        23.3                      12.3
                     1999                20.0                        13.6                       8.1
</TABLE>

         Under the Agreement, the adjustment mechanism was based on devaluation
rates and as a result comparisons with earlier years are not meaningful.

         In addition to the price-cap mechanism, the Concession contemplated the
implementation of a rate rebalancing program designed to allow CANTV to
eliminate the subsidy provided by its long distance services to basic rent
charges for residential customers. The program was intended to permit CANTV to
offer competitive pricing for its international and domestic long distance
services by the end of 2000. The Concession contemplated the implementation of
certain specific rate rebalancing steps each quarter commencing in the first
quarter of 1994.

         Due to the economic conditions existing in Venezuela since 1994, as
well as other factors, rate rebalancing did not take place as contemplated by
the Concession. On September 9, 1996, CANTV entered into the Rebalancing
Agreement with the Ministry, which was intended to achieve the level of rate
rebalancing originally contemplated by the Concession. Under this Rebalancing
Agreement, effective January 1, 1997, CANTV was allowed to accelerate rate
rebalancing. Prices for domestic and international long distance services were
allowed to be reduced through 2000 and prices for local services were allowed to
be increased. Due to further delays in tariff approvals, CANTV did not achieve
the full rebalancing goals permitted under the Rebalancing Agreement. The
Agreement reached in February 2000 allowed CANTV to achieve further rebalancing
of its tariffs in 2000 consistent with the general rebalancing objectives of the
Concession. The tariffs as stipulated in the Agreement and detailed below
substantially reduce subsidies to local services, while bringing domestic and
international long distance tariffs more in line with general industry
benchmarks. See "-- The Agreement."

         In 1998, CANTV negotiated the implementation of its EAS program with
CONATEL and in the fourth quarter of 1998, the Company successfully launched EAS
in certain parts of Venezuela. EAS migrates certain domestic long distance
traffic to local area service, permitting CANTV to effectively

                                       50
<PAGE>

achieve additional rate rebalancing while providing the opportunity to shift
revenue to the local service category that is less vulnerable to competition and
elasticity. The Company's fourth quarter 1998 tariff increase included an
additional 11.0% nominal rate increase, 4.6% in real terms, to compensate for
the introduction of EAS.

         In February 2000, CONATEL and the Company entered into the Agreement,
allowing CANTV to increase rates in 2000. During 2000, two tariff increases went
into effect on March 23, 2000 and June 16, 2000. See "-- The Agreement."

The Agreement

         Under the Agreement, CANTV was permitted to make an adjustments to its
tariffs effective March 23, 2000 and June 16, 2000. The tariffs provided for
under the Agreement were effective until March 10, 2001 if CANTV and CONATEL
were not to reach an agreement on the tariffs which were to apply after November
27, 2000. During 2000, CANTV and CONATEL did not reach an agreement on tariffs
to apply after November 27, 2000. On February 19, 2001, pursuant to the New
Telecommunications Law, CANTV reached an agreement with CONATEL on tariffs
effective March 10, 2001 and a price-cap to be used to adjust rates CANTV
charges during 2001. See "-- Proposed Regulation of Tariffs."

         The Agreement was entered into by CANTV and CONATEL following CONATEL's
denial of the tariff increase permitted under the Concession following CANTV's
last tariff increase under the Concession effective April 30, 1999. Newly
appointed representatives of CONATEL had expressed their disagreement with the
Concession's price-cap mechanism and informally took the position that since
CANTV failed to satisfy certain of the Concession's service mandates, it should
not be entitled to rate increases. In essence, CONATEL linked rate increases
permitted under the Concession to the fulfillment of the Concession service
mandates. The Company believes that such a link was not contemplated in the
Concession. As a result, on July 12, 1999, CANTV took the first step in
instituting a breach of contract action and damage claim by starting a
preliminary administrative procedure before the Attorney General of the
Republic. CANTV temporarily suspended the procedure in September 1999 when CANTV
and CONATEL signed a letter of understanding that named two independent
international telecommunications experts to evaluate and recommend appropriate
tariff and quality standards and methodologies for Venezuela after comparison
with similar information for twelve other countries. As set forth in the letter
of understanding, the experts presented their recommendations to CANTV and
CONATEL. Following receipt of the recommendation of experts, which were
nonbinding, both entities entered into the Agreement, which provided for revised
tariffs. See "-- Network Expansion, Modernization and Quality Improvement
Requirements."

         The Agreement introduced seven residential service plans in
substitution for the basic, intermediate and premium plans previously in effect.
Customers were switched automatically from their existing calling plans to the
new plans under the Agreement. Additionally, customers were able to switch twice
without cost among calling plans within one year. These plans, on average,
increased the tariffs of the plans they were replacing by 11% and also called
for a reduction of free minutes. Free minutes were reduced to 40, 65 and 90
minutes compared to 60, 100 and 150 minutes included in the old plans. The
Agreement introduced a prepaid plan for clients with lower purchasing power. The
prepaid plan provides attractive tariffs established at a minimum of Bs. 10,000
for two months and Bs. 60.32 charge per minute on local usage. A new premium
public telephony plan is available in hotels and higher income level areas. The
new tariffs also included a special plan for Internet users with basic rent at
Bs. 40,220, per month, 2,500 free minutes, and a charge per minute on local
usage, which decreased with increases in usage.

                                       51
<PAGE>

         Under the Agreement, tariffs on Plans D and E could be modified by
CANTV without the authorization or approval of CONATEL up to a maximum monthly
basic rent of U.S.$80. The only requirement was to publish changes during three
consecutive days in two national papers at least a month before their effective
application. CANTV could also offer additional plans, but in no instance could
the basic rent exceed U.S.$80.

         The Agreement advanced the rebalancing process between long distance
tariffs and local tariffs, by reducing outgoing international long distance
weighted average rates by approximately 35%. Under the terms of the Agreement,
outgoing international long distance rates were decreased in some cases by 68%,
depending on the country. Domestic long distance rates were combined into one
nationwide plan with a weighted average of U.S.$0.1875 per minute.

         The Agreement provided an extraordinary adjustment mechanism for
certain of CANTV's tariffs in the event that actual exchange rates, as defined
on the Agreement, deviated materially from the agreed projected exchange rates
set forth in the Agreement. If the variance in exchange rates exceeded certain
pre-determined amounts, the Agreement allowed CANTV to adjust its tariffs to
partially account for this variance subject to a maximum cumulative adjustment
in certain cases subject to approval by CONATEL. The agreed projected exchange
rate at November 30, 2000 was Bs. 729.00 per U.S.$1.00. During 2000, the rates
measured at the end of each month agreed with the projected rates under the
Agreement and no extraordinary adjustments were necessary.

         The Agreement also allowed CANTV to provide discounts on its domestic
long distance and international long distance rates subject to certain
limitations.

Proposed Regulation of Tariffs

         CANTV will be subject to tariff regulation under the new regulatory
framework as the established operator in the telecommunications market in
Venezuela. On February 19, 2001 pursuant to the New Telecommunications Law,
CONATEL established the maximum tariffs that are applicable effective March 10,
2001 during 2001 and a new price-cap system that replaced the tariff adjustment
mechanism provided under the Agreement. The first tariff increase is effective
from March 10, 2001 through June 30, 2001 and the second tariff increase will be
effective on July 1, 2001. The new price-cap system will apply to the rates
CANTV charges during 2001. CONATEL has not established a tariff system to apply
to CANTV after 2001. The principal effect of the new price-cap system as applied
to CANTV is to increase local rates for residential and commercial customers by
approximately 5% and to increase charges for certain public telecommunications
services by approximately 14%, in each case subject to adjustment as described
below. Domestic and international long distance rates remain unchanged.

         Under the new price-cap system applicable for 2001, the maximum tariffs
may be adjusted upwards or downwards based on a formula tied to the WPI and the
rate of devaluation ("ROD") in the Bolivar with a higher weight given to the
cumulative percentage change in the WPI. The price-cap formula is used to
calculate a compound index of adjustment ("ICA") based on the cumulative
percentage change in the WPI and the ROD over a given measurement period from
projected rates. The price-cap system provides for an upward or downward
adjustment to the established tariffs based on deviations of 2.5% above or 2.5%
below projected monthly estimates of the ICA. CANTV may apply for an upward
adjustment to the established rates up to the excess percent that the ICA is
greater than 2.5% above the projected ICA. CONATEL may request a downward
adjustment to the established tariffs by the excess percent that the ICA is less
than 2.5% below the projected ICA. Where the actual ICA deviates in excess of
7.5% from the projected ICA, CONATEL is required to revise the price-cap
formula. Upon an adjustment to the tariffs, the projected ICA is also adjusted
for subsequent adjustments of the tariffs under the price-cap.

                                       52
<PAGE>

     The following table sets forth information regarding the Company's rates
for each component of residential and non-residential local service, domestic
and international long distance calls, and public telephone service effective
from March 23, 2000:

<TABLE>
<CAPTION>
                                                                    Tariffs               Maximum Tariffs
                                        Tariffs Effective       Effective from            Effective from            Maximum
                                         from March 23,         June 16, 2000             March 10, 2001            Tariffs
                                         2000 through               through                  through             Effective from
                                       June 15, 2000 /(1)/     March 10, 2001/(1)/      June 30, 2001 /(2)/       July 1, 2001
                                       -------------------     -------------------      -------------------       ------------
<S>                                   <C>                      <C>                      <C>                       <C>
Residential Service
-------------------
Installation
  Primary line                               43,746.46              46,294.73                47,195.64              48,931.82
  Secondary line                             12,861.37              13,610.55                13,111.66              13,593.99
Subscription
  With equipment /(7)/                       67,982.66              71,942.68                      N/A                    N/A
  Without equipment                          44,442.36              47,031.15                47,946.39              49,710.19
Monthly Rent
  Primary line
     Plan A                                    4,752.3               5,028.88                 5,126.74               5,315.34
     Plan B                                   7,291.20               7,715.55                 7,865.70               8,155.05
     Plan C                                   8,200.65               8,677.92                 8,846.80               9,172.24
     Plan D /(3)/                            13,404.20              13,404.20                14,271.42              14,271.42
     Plan E /(3)/                            18,095.67              18,095.67                18,860.02              18,860.02
     Plan F                                  40,212.60              42,555.00                43,383.13              44,979.07
  Secondary line /(7)/                          360.91                 360.91                      N/A                    N/A
Local usage (per minute) /(4)/
     Plan A                                      29.56                  31.28                    31.89                  33.06
     Plan B                                      20.91                  22.13                    22.56                  23.39
     Plan C                                      19.10                  20.21                    20.60                  21.36
     Plan D /(3)/                                18.77                  18.77                    18.77                  18.77
     Plan E /(3)/                                17.09                  17.09                    17.09                  17.09
     Plan F                                       6.70                   7.09                     7.09                   7.09
     Wireline Prepaid                            60.32                  63.83                    63.83                  63.83
Non-residential Services
------------------------
Installation
  Primary line                               47,373.32              50,132.84                51,108.44              52,988.56
  Secondary line                             15,855.63              16,779.22                16,164.19              16,758.82
Subscription
  With equipment /(7)/                      110,990.51             117,455.75                      N/A                    N/A
  Without equipment                          87,450.21              92,544.22                94,345.16              97,815.83
Monthly rent
  Primary line                               14,074.41              14,894.25                15,184.10              15,742.67
  Secondary line                              1,741.74               1,843.20                 1,879.07               1,946.19
  Local usage (per minute) /(5)/                 25.07                  26.53                    27.05                  28.04
Domestic Long Distance /(6)/
----------------------------
  Residential and non-residential               118.99                 118.99                   128.63                 128.63
International Long Distance /(6)/               523.85                 523.85                   523.85                 523.85
---------------------------------
Public Telephone Service /(6)/
------------------------------
  Local Call                                     20.91                  22.13                    25.25                  25.25
  Domestic Long Distance                        118.99                 118.99                   128.63                 128.63
  Premium                                        42.22                  44.68                    45.55                  47.23
</TABLE>

______________________________________
 (1)   In nominal bolivars.
 (2)   In nominal bolivars. Includes the maximum tariffs to be applied according
       to the maximum price cap approved by CONATEL
 (3)   CANTV is permitted to modify Plans D and E and create new plans subject
       to a maximum monthly rent of Bs. 45,000.00 and 46,655.41.
 (4)   Figures represent usage in excess of free minutes.
 (5)   Non-residential customers do not receive free impulses.
 (6)   Charge per minute.
 (7)   During 2001, these tariffs are not subject to regulation.

                                       53
<PAGE>

     Under the new tariffs established by CONATEL applicable to the rates CANTV
charges effective March 10, 2001, certain calling residential plans were
modified from the changes introduced by the Agreement. The following table sets
the plans differences among the two years:


<TABLE>
<CAPTION>
                                                           Residential service
                                     ---------------------------------------------------------------
                                            Under the 2000                 Under 2001 tariffs
                                               Agreement                        resolution
                                     -----------------------------   -------------------------------
                                                        (free minutes per month)
<S>                                        <C>                               <C>
Plan A - Adjusted Plan                             40                                50
Plan B - Discrete Plan                             65                                65
Plan C - Moderate Plan                             90                                90
Plan D - Efficient Plan                           360                               360
Plan E - Large Plan                               600                               600
Plan F - Free Plan                               2500                            Unlimited
</TABLE>


     The tariffs applicable to Plans D and E may be changed by CANTV without
the approval of CONATEL up to a maximum monthly basic rent of Bs. 45,000.00
(effective on June 30, 2001) and Bs. 46,655.41 (effective on July 1, 2001).  In
order to increase tariffs on Plans D and E, CANTV is required to publish notice
of such changes in applicable tariffs for a period of fifteen consecutive days
in two national newspapers at least a month in advance of the effective day of
such tariff increases.

     The following table sets forth information concerning the Company's rates
for wireless services, expressed in nominal bolivars, effective since November
15, 1999:


<TABLE>
<CAPTION>
                                                             Tariff effective since
             Wireless Telephone Service                         November 15, 1999
             -------------------------------              ----------------------------
             <S>                                          <C>
             Postpaid  /(1)/
             Activation fee                                               --
             Basic monthly service fee                                26,945
             Usage
             Peak hour (per minute)                                      202
             Off-peak hour (per minute)                                  169
             Prepaid  /(2)/
             Peak hour (per minute)                                      335
             Off-peak hour (per minute)                                  110
</TABLE>
         _________________
         (1)  Weighted average of 13 plans offered by Movilnet effective
              November 15, 1999.
         (2)  Weighted average of 2 plans offered by Movilnet effective November
              15, 1999.

Competitive Framework


     The Concession contains various provisions designed to introduce
competition in the provision of telecommunications services.  The Concession
provides that CANTV has the right to provide switched, fixed telephone services
in accordance with technological advances in basic telephony, local, national
and international, on an exclusive basis until November 27, 2000, except in
limited circumstances. For example, the Ministry had been permitted to grant
concessions for basic telephone services to third parties before November 27,
2000 to (i) serve population centers with 5,000 or fewer inhabitants if CANTV
was not providing telephone services in such areas and did not contemplate doing
so and (ii) serve population centers with more than 5,000 inhabitants if CANTV
had not installed an automatic switching center within a specified period or the
Ministry determined that CANTV had materially failed to meet the

                                       54
<PAGE>

Concession's network expansion, modernization or service quality terms for two
consecutive years, and believed that such action would markedly improve the
existing situation.

     In December 1996, Infonet was granted a rural concession to provide
multiple services, except domestic and international long distance services, to
population centers with 5,000 or fewer inhabitants in eight western states of
Venezuela. Infonet has also installed GSM digital fixed wireless and cellular
services in rural areas in western Venezuela and has also expanded its services
into large population areas. In January 1998, two additional companies were
granted multiple services concessions. Digitel was granted a concession to
provide services in seven central states and Digicel was granted a concession to
provide services in six eastern states. Infonet and Digitel are providing
digital fixed wireless and cellular services and both have expanded their
services into larger population areas where they compete directly with services
provided by Movilnet and indirectly with services provided by CANTV.  The
Concession also contemplates that the Government would be permitted to grant
other concessions in non-basic telecommunications services, including packet-
switched data transmission, public telephones, telex services, rural services,
private telecommunications networks and value-added services.

     Among the primary objectives of the New Telecommunications Law is the
provision of an up-to-date regulatory framework for the newly open
telecommunications sector and offer customers the benefits of a competitive
environment. The New Telecommunications Law respects all previously conferred
rights and duties, including obligations under interconnection agreements among
operators, and provides for the deregulation of tariffs and an equitable fiscal
regime. Under the New Telecommunications Law, telecommunications services will
be offered on a competitive basis, and universal and public service obligations
would be shared by telecommunications service providers as determined by
CONATEL. The New Telecommunications Law also adopts a new tax regime applicable
to all telecommunications service providers on the basis of annual revenues.
These taxes replaced the former annual tax and concession fee of 5.5% for
wireline and 10.0% for wireless services. See "-- Concession Fee." The New
Telecommunications Law includes provisions that provide for mandatory
interconnections using cost-based charges to stimulate the commencement of
effective competition, eliminate cross subsidies and promote self-regulation of
the sector. It also contemplates rights of way guarantees, number portability
and long distance operator pre-subscription. The New Telecommunications Law
provides for the creation of a universal fund, a public service fund and a
research and training fund. See "-- Regulation and the Concession" and "--Recent
Amendments to the Regulatory Framework."

     CONATEL divided the regulated services among basic or local service
providers, domestic long distance providers and international long distance
providers, allowing several providers to operate in all three-service areas.
With the opening of the telecommunications market to competition in Venezuela,
CANTV is subject to competition in all areas of its business.  Several companies
have completed the process of applying for administrative licenses and
concessions on various services.

Basic Telephone Services

     Basic telephone services include fixed local services and domestic long
distance and international long distance services.  As of April 30, 2001,
companies such as Telcel, Genesis Telecom, Entel Chile, Millicom, Digicel and
Digitel had obtained concessions from CONATEL to provide wireless basic
telephone services. As of April 30, 2001, companies such as Convergence
Communications and Veninfotel had obtained administrative licenses from CONATEL
to provide fixed local telephone services and domestic and international long
distance services. New Global Telecom has obtained an administrative license to
provide domestic and international long distance services.

     The Company, like most Latin American telephone companies, also competes in
international telephone services with a number of alternative services including
calling cards, the rerouting of calls by

                                       55
<PAGE>

other international operators, leased private line networks for large
telecommunications providers and "call-back" services (despite call-back
services being illegal in Venezuela). As in many other countries, the costs of
local telephone service in Venezuela were historically subsidized by revenues
from international services, thereby causing the price of international services
to remain significantly above their cost. The Company believes that as of April
30, 2001 its rates for international long distance services are competitive with
those of other international service providers. During 2000, the Company
introduced two international long distance plans referred to as frequent country
and preferred country, which provide lower international long distance rates and
are expected to yield increased call volume.

     CANTV is currently evaluating the impact of the new market entrants on its
market share for basic telephone services.  As of April 30, 2001, the Company
believes that any loss of market share during 2001 attributable to the entry of
competitors into the market for basic telephone services is not likely to have a
material impact on CANTV's financial condition or results of operations.

Public Telephone Services

     As of April 30, 2001, CANTV was the only provider of public telephone
service in Venezuela. Under the Regulations for Basic Telephony Services, fixed
local service operators will be required to install a number of public
telephones equal to at least 3% of their lines in use.

Wireless Telephone Services

     The Company faces competition in wireless services from Telcel, and
recently from Digitel. Telcel, which is majority owned by BellSouth Corporation,
began its operations one year earlier than Movilnet and Digitel began its
operation in 1999. Movilnet's market share was approximately 40%, 38% and 36% at
December 31, 1998, 1999 and 2000, respectively. The Company estimates that
Telcel's market share was approximately 60% at December 31, 1998, 62% at
December 31, 1999 and 60% at December 31, 2000. Digitel's market share was not
significant during 1999, and was approximately 3% at December 31, 2000.

     Beginning in November 2000, the Government started the auction of
frequencies for WLL services. Thirteen qualified bidders were announced by
CONATEL. Five regions were defined and three permits in each region were
auctioned. CANTV was not permitted by CONATEL to participate in the WLL auction.
Telcel and Genesis Telecom, C.A. are two of the companies awarded concessions
for wireless services. Additionally, companies with existing facilities in
Venezuela have fulfilled requirements to obtain operator licenses in basic fixed
telephone service based on the new regulations. Convergence Communications,
Veninfotel and Telcel have obtained operator licenses to provide local, domestic
and international long distance services. New Global Telecom has an operator
license to provide domestic and international long distance services. The
following table summarizes the WLL auction results:


<TABLE>
<CAPTION>
                                               Wireless Local Loop (WLL) auction (1)
----------------------------------------------------------------------------------------------------------------------------------
                          Capital Region        Andean Region         Central Region        South-East Region        West Region
                        ------------------   -------------------   --------------------   ---------------------    ---------------
<S>                      <C>                    <C>                   <C>                   <C>                  <C>
Granted to
 Frequency A                      Telcel               Telcel               Deferred                   Telcel             Telcel
 Frequency B             Genesis Telecom      Genesis Telecom                 Telcel          Genesis Telecom    Genesis Telecom
 Frequency C                 Entel Chile             Millicom        Genesis Telecom                  Digicel            Digitel

Auction close price
 (U.S.$):
 Frequency A                   2,500,000            1,500,000               Deferred                  800,000          1,000,000
 Frequency B                   3,800,000              860,000              4,300,000                  560,000            400,000
 Frequency C                   1,500,000              800,000              1,200,000                  300,000            720,000
</TABLE>

___________________________
(1) Information source CONATEL

                                       56
<PAGE>

     CONATEL had intended to auction concessions for frequency to provide Local
Multipoint Distribution Services ("LMDS") in five regions of Venezuela.  LMDS is
a fixed wireless service that offers a broad band access and fast data
transmission.  On April 2, 2001, CONATEL temporarily suspended the auction
process for LMDS and a new date for the LMDS auction has not been announced.  It
is anticipated that this auction will have the same structure of the WLL auction
process, by defining five regions.

Other Services

     There are other data transmission service providers in the market.  The
Company had an estimated market share of approximately 70.0% in data
transmission services as of December 31, 2000.  CANTV Servicios is among the two
largest Internet service providers in Venezuela and at December 31, 2000 had an
estimated market share of approximately 47.0%. The major competitor of CANTV
Servicios for Internet-related services is Telcel through its subsidiary, T-Net.

     Competition in services provided by the Company may arise from a variety of
new entrants, including telecommunications services providers from other
countries.  Such competitors will be able to provide telecommunications services
either through newly installed facilities and networks or through facilities and
networks of existing providers. As of April 30, 2001, after the opening of the
telecommunications market to competition, the Venezuelan Telecommunications
market is composed of one integrated service provider, namely CANTV; wireless
service providers, such as Movilnet, Telcel, Digitel and Infonet; wireless fixed
service providers, such as Telcel, Genesis Telecom, Entel Chile, Millicom,
Digitel and Digicel; data transmission service providers, such as ImpSat,
Compsat, Bantel, NetUno, Viptel, BellCanada International and Texcom; ISPs, such
as CANTV Servicios, T-Net, Etheron, AOL, UOL and Eldish; paging operators, such
as Skytel, Telemensajes Metropolitanos, Radio Contacto and TeleKontacto;
trunking service providers, such as Americatel, Radio Movil Digital and
Conmovil; and cable TV operators, such as SuperCable, Cabletel and Intercable,
including DirectTV via satellite transmission. These telecommunications services
providers and other market entrants may establish customer relationships, as
well as other capabilities and resources to expand their current service
offerings. The Company believes that its competitors will target large clients,
top tier commercial customers and high-income residential customers.

     The scope of increased competition and any corresponding adverse effect on
the Company's results will depend on a variety of factors.  Among such factors
are the business strategies and financial and technical capabilities of
potential competitors, prevailing market conditions and the effectiveness of the
Company's efforts to face the increased competition.  Increased competition will
further change the environment in which the Company operates.  Competition will
require the increased development of a competitive culture, including greater
customer care, differentiated services, continuous introduction of innovative
technologies, competitive cost positioning and operational efficiencies.  The
Company believes, however, that its existing network, market share, quality and
range of services position it to operate effectively in a competitive
environment.

Concession and Other Fees

     The Concession required that CANTV pay the Government and CONATEL,
respectively, an annual tax and an annual concession fee equal to 5.0% and 0.5%,
respectively, of the billings for all basic switched telephone services and
other telephone services provided by CANTV.  In December 1998, the Company
reached an agreement with CONATEL over payments due from the Company for the
years 1991 through 1996.  The Company then paid all outstanding amounts owed to
CONATEL in full.

                                      57
<PAGE>

     The New Telecommunications Law provides for taxes calculated on the basis
of annual revenues to be paid to the Government as follows: a 2.3% activity tax,
a 0.5% tax to cover CONATEL's activities, a 0.5% tax for spectrum allocation,
1.0% to create the Universal Service Fund and 0.5% to create the
Telecommunications Training and Development Fund. In addition to the taxes
previously described, cellular providers are subject to a cellular supplemental
tax starting at 4.5% of annual revenues in the year 2000 and decreasing 1.0% per
annum up to 2005 when the cellular supplemental tax will be eliminated.  These
taxes would replace the current annual tax and concession fee of 5.5% for
wireline and 10.0% for wireless services. As a consequence, cellular providers
are subject to several taxes starting at 9.3% of annual revenues in the year
2001 and decreasing by 1.0% per annum until 2005. Beginning in 2006, the
cellular supplemental tax of 0.5% will be eliminated and the annual concession
fee for cellular services providers will be 4.8% of billings. These taxes became
effective on January 1, 2001.

     The Concession provides that, without the prior authorization of CONATEL,
CANTV may not transfer or assign, in whole or in part, the concession granted
thereby or the obligation to fulfill such concession.  It further provides that
the control of CANTV may not be assigned or transferred without the approval of
the Ministry.  In case of war, rebellion or other circumstances constituting a
serious threat to national defense and security, the Government may replace
CANTV as the holder of the Concession and take possession of the assets,
equipment, facilities and accounting records of CANTV.  In such an event, the
Government is required to restore all assets, equipment, facilities and records
at the end of the period during which such circumstances occurred and provide
CANTV compensation for those damages imputable to the Government for which CANTV
could demonstrate as having resulted directly from such action.

     The Concession is for 35 years ending in 2026, and is extendible for an
additional period of 20 years subject to the approval by the Ministry and
satisfactory performance by CANTV of its obligations under the Concession. The
Concession may be revoked and terminated before its scheduled expiration date in
the event of a material breach of the Concession by CANTV, as determined by
CONATEL, including (i) the assignment or transfer of the Concession, in whole or
in part, without the prior authorization of the Ministry, (ii) the engagement by
CANTV in practices obstructing or restricting free competition in those areas
open to competition, (iii) the complete or partial interruption of services
provided by CANTV, except in the case of a local or national catastrophe or with
the Ministry's authorization, (iv) the failure to pay the concession fee or
annual taxes specified in the Concession, (v) the liquidation or bankruptcy of
CANTV, (vi) the failure to renew or the lapse of the surety bond delivered by
CANTV under the Concession and (vii) the failure to meet, on an annual basis,
80% of any of the modernization and expansion goals specified in the Concession,
without the prior authorization of the Ministry.  The Concession provides that
if termination occurs pursuant to any of the above circumstances, CANTV will be
required to indemnify the Government in an amount equivalent to 5% of CANTV's
revenues for the most recent fiscal year for which audited financial statements
are available upon notification by the Government.

     Upon any termination of the Concession, all of CANTV's real estate,
equipment, structures and facilities assets allocated to the rendering of
services under the Concession would be forfeited to the Government in exchange
for a payment equal to the book value of such assets without depreciation or
amortization as recorded on the books used by CANTV for income tax purposes.
The gross and depreciated values of CANTV's assets at December 31, 2000 on such
basis, was approximately Bs. 836.5 billion and Bs. 591.3 billion, respectively.

     In addition to revocation, CONATEL has the power to impose sanctions on
CANTV for certain violations of the Concession.  Sanctions may include public
censure or a fine of up to a maximum amount of 1% of CANTV's billings for the
most recent fiscal year for which audited financial statements are available.
Violations that may lead to sanctions, in addition to those mentioned above for
termination, include (i) failure to give customers equal treatment, (ii)
assignment or transfer of goods and equipment

                                      58
<PAGE>

used in telecommunications services without prior authorization of the Ministry,
(iii) failure to prevent unauthorized installations of equipment that result in
damage to the telecommunications network, (iv) installation of faulty, obsolete
or unauthorized telecommunications equipment, (v) performance of unauthorized
telecommunications services, (vi) charges to customers in excess of the approved
tariffs, (vii) obstruction of inspections ordered by CONATEL, (viii) violation
of labor laws or the applicable union contract and (ix) failure to present or
comply with a proper numbering plan.

Surety Bond

     The Company has delivered, as required by the Concession, a surety bond to
the Government to guarantee the performance of its obligations under the
Concession.  The bond must be renewed every two years during the term of the
Concession, including any extensions thereof.

Other

     The Concession also requires that CANTV implement a public telephony
program in population centers having 5,000 or fewer inhabitants without
telephone service, including providing for the annual installation of at least
one public telephone in each of at least twenty such population centers.  Under
the Regulations for Basic Telephony Services, fixed local service operators will
be required to install a number of public telephones equal to at least 3% of
their lines in use.  The Telecommunications Regulations require that the Company
annually publish printed telephone directories that include all non-private
customer listings, that the directories are made available annually to all
telephone service customers and that a classified directory is provided.

Additional Concessions

     The Cellular Concession was granted to Movilnet in May 1992 and has an
initial term of 20 years.  Subject to certain conditions, the Cellular
Concession is renewable for another 20-year term.  The Cellular Concession gives
Movilnet the right to interconnect with CANTV's basic network and required the
payment to CONATEL of an annual concession fee equal to 10% of billings. The New
Telecommunications Law eliminated the annual cellular concession fee and
established that cellular services providers are subject to several supplemental
taxes starting at 9.3% of annual revenues in the year 2001 and decreasing by
1.0% per annum until 2005. Beginning in 2006, the cellular supplemental tax of
0.5% will be eliminated and the annual concession fee for cellular services
providers will be 4.8% of billings. The Cellular Concession requires that
Movilnet expand and digitalize the cellular network, improve the quality and
productivity of cellular services when technically, materially and economically
feasible as well as provide certain rural, public and emergency services.
Compliance with the requirements of the Cellular Concession is monitored by
CONATEL.  Movilnet expects to exceed demand and quality of service requirements
mandated by the Cellular Concession and all non-market-based Cellular Concession
obligations such as rural service, emergency service and public phone service.
Movilnet has fully complied with all concession mandates.

     Movilnet may set the tariffs it charges its customers for wireless services
within minimum and maximum limits set by CONATEL.  Within such limits, the
Company may create different tariff plans, including incentives and promotional
programs.  In December 1998, new rate limits were established by CONATEL,
pursuant to a request by the wireless operators. In November 15, 1999 CONATEL
approved new tariffs for Movilnet.

     Pursuant to regulations relating to the operation of cellular telephony,
CANTV and Movilnet must operate separately.  Each company must maintain
independent personnel, management, accounting and marketing departments, among
other requirements.

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<PAGE>

     The majority of the Company's value added services are provided directly by
the Company's wholly owned subsidiary, CANTV Servicios, under a concession, the
"Value Added Services Concession."  On October 5, 1995 CONATEL granted to CANTV
Servicios the Value Added Services Concession, which has an initial term of 10
years.  The Value Added Services Concession is renewable for another 10-year
term subject to certain conditions.  The Value added Services Concession granted
CANTV Servicios the right to offer voice-mail services nationwide.  The Value
Added Services Concession has been expanded to allow CANTV Servicios to offer
additional services such as Internet access.  The Value Added Concession also
requires the payment to CONATEL of an annual concession fee equal to 5% of the
revenues.

     CANTV Servicios also offers fax and voice-mail with alert messages to
pagers and cellular telephones, enhanced fax, computer network management and
professional services including outsourcing of telecommunications networks.  The
Value-Added Concession was recently expanded to include Virtual Private
Networks, access to extranets and intranets, electronic banking, video
conferencing and fax over Internet Protocol.  CANTV Servicios is a full Internet
Service Provider.

     In accordance with the Concession, services provided pursuant to the
Cellular and Value-Added Concessions may not be subsidized by CANTV.

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Item 5.   Operating and Financial Review and Prospects

Introduction

Basis of Financial Data

     The information in this section should be read in conjunction with the
Audited Financial Statements of the Company and Notes thereto included elsewhere
in this Form 20-F.

     The Company prepares its financial statements in bolivars in conformity
with Venezuelan GAAP, which differs in certain important respects from U.S.
GAAP.  Note 25 to the Audited Financial Statements provides a description of the
principal differences between Venezuelan GAAP and U.S. GAAP as they relate to
the Company and a reconciliation to U.S. GAAP of net income for the years ended
December 31, 1998, 1999 and 2000 and total stockholders' equity at December 31,
1999 and 2000.

     In accordance with Venezuelan GAAP, the Company's consolidated financial
statements are presented on a constant bolivar basis.  Accordingly, except where
otherwise indicated, the consolidated financial data have been presented in
constant bolivars as of December 31, 2000 to reflect inflation in Venezuela
using the Consumer Price Index.  References to variations in average real rates
over periods within this section are based on adjustments made in accordance
with movements in the Consumer Price Index.  Until 1999 tariffs were adjusted by
the Government, in accordance with movements in the Wholesale Price Index which,
at times, has been substantially below the CPI.  In 2000, tariffs were adjusted
pursuant to the terms of an agreement between CANTV and CONATEL.  Beginning on
March 10, 2001, tariffs will be adjusted based on projected inflation based on
the WPI and projected exchange devaluations of the bolivar against the U.S.
dollar.  See "Item. 4.  Information of the Company -- Regulatory Environment --
Regulation of the Concession -- Proposed Regulation of Tariffs."  Although the
restatement of nominal bolivar amounts into constant bolivars lessens the
distorting effect that an inflationary environment has on comparisons of
financial statements over time, such restatement does not wholly eliminate these
distortions, and evaluation of period to period trends may be difficult.  See
"Introduction" and Note 4(b) to the Audited Financial Statements.

Significant Developments in Venezuela's Economy

     Substantially all of the Company's business is conducted in Venezuela. The
economic activity in Venezuela showed improved results during the year 2000,
which evidences that the economy is in a recovery stage, following the recession
experienced during the second half of 1998 and all of 1999. The increase in
Venezuela's gross domestic product is partly due to the adoption of a fiscal
policy with the stated objective to reduce or eliminate taxes on consumption and
increase activity in the oil sector, which is a significant part of Venezuela's
economy.

     The Company's financial condition and results of operations are
significantly impacted by changes in Venezuela's gross domestic product, the
rate of inflation and the value of the bolivar compared to the U.S. dollar and
other foreign currencies.  The petroleum industry is the principal source of
Government revenues and foreign exchange receipts.  As a result, fluctuations in
the international petroleum market strongly influence the Venezuelan economy.
In 1999 and 2000, international oil prices had an important rebound as compared
to 1998. In addition in November 2000, the "Enabling Law" was submitted.  This
law authorizes President Chavez to enact certain laws by decree. President
Chavez has indicated that he plans to enact as many as twenty different laws
relating to various financial, economic and social matters with four of such
laws expected to be enacted by June 2001.  Despite a mitigation of the political
uncertainties that had negatively affected Venezuela's economy during 1999,
economic and social uncertainty persisted and further moderated economic growth
in Venezuela during 2000.

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     Venezuela's gross domestic product decreased by 0.7% in 1998 and by 7.2% in
1999 and grew by 3.4% in 2000. The non-oil gross domestic product decreased by
0.8% in 1998, 4.9% in 1999 and grew by 2.7% in 2000. Although foreign private
investment increased in the oil and telecommunications sectors, national private
investment experienced a strong contraction during 2000.

     Inflation in Venezuela as measured by the CPI was 103.2%, 37.6%, 29.9%,
20.0% and 13.4% during 1996, 1997, 1998, 1999 and 2000, respectively. Inflation
as measured by the WPI was 105.8%, 17.3%, 23.3%, 13.6% and 15.8% during these
same years, respectively. CANTV tariffs are subject to a price-cap mechanism
using inflation rates based on the WPI and devaluation rates, in order to
maintain the value of the tariffs in real terms.

     Devaluation of the bolivar against the U.S. dollar was 11.9%, 14.9% and
7.8% for the years ended December 31, 1998, 1999 and 2000, respectively.  The
devaluation of the bolivar against the U.S. dollar and other foreign currencies
resulted in net exchange losses for the Company of Bs. 53.6 billion, Bs. 33.7
billion and Bs. 2.6 billion for the years ended December 31, 1998, 1999 and
2000, respectively. Net exchange losses are included in the financing cost, net
caption in the consolidated statements of operations in Note 17 to the Audited
Financial Statements and represent the additional bolivars the Company requires
to settle its U.S. dollar and other foreign currency denominated net
liabilities.  These U.S. dollar and other foreign currency denominated net
liabilities are set forth in Note 7 to the Audited Financial Statements.
Despite continued devaluations of the bolivar against the U.S. dollar, the
bolivar remains overvalued relative to the U.S. dollar, which will have the
negative effect of reducing demand for domestic products both abroad and in
Venezuela.  This situation explains the dynamism in the demand for imports
despite the moderate  expansion of the economic activity. In the event of a
future strong decline in the value of the bolivar relative to the U.S. dollar
and other foreign currencies as it occurred during the period from 1998 to 1999,
the Company's results of operations and stockholders' equity could be adversely
impacted by additional exchange losses.  See "Item 3.  Key Information" and
"Item 11.  Quantitative and Qualitative Disclosures About Market Risk."

Significant Developments in the Company's Business

     The information in this section should be read in connection with "Item 4.
Information on the Company."

     In general, the Company has increased employee productivity, realigned
operations by key customer groups and improved network planning and design.  The
Company has also made substantial progress on its network expansion and
modernization program. The number of access lines in service consistently
increased up to December 31, 1998.  However, due to the implementation of
stricter collection policies, the Company permanently disconnected an aggregate
of approximately 1,281,000 lines from 1998 to 2000.  The lines, which have been
permanently removed, are being reassigned to new customers on the basis of
credit checks.  Access lines in service totaled 2.6 million at December 31,
2000.

     The number of cellular subscribers increased, from approximately 1,181,000
at December 31, 1999 to approximately 1,706,000 at December 31, 2000.  The
number of Internet subscribers and related users also grew, from 86,671 and
167,048, respectively, at December 31, 1999 to 113,226 and 283,065,
respectively, at December 31, 2000.

     To achieve profitable growth and continue to reduce costs and improve
productivity, the Company has implemented strict procurement and cost
containment programs.  In 2000, the Company continued refining its customer
focus units, emphasizing quality and efficient service in order to promote a
customer-oriented service culture.  The Company uses improvements in customer
service and technological infrastructure to market its services more effectively
and increase revenues and

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<PAGE>

profitability. These improvements focus on efficiently meeting customer needs
while optimizing productivity, and are expected to position the Company for the
current competitive environment following the termination of the Company's
exclusivity period under the Concession in November 2000.

     The Company's strategy is to increase market penetration and continue to
broaden its product portfolio by offering an array of fixed, wireless, data
transmission, Internet and value-added services.  The Company seeks to capture
the largest share of high growth markets by providing packages of services that
maximize and leverage its existing infrastructure, by continuing to expand
capacity and modernize its wireline, wireless and Internet networks, and by
seeking to improve its service offerings through innovative value-added
services.

     Despite achievements obtained by the Company in recent years in collection,
growth of the Company's wireline operations were negatively impacted, mainly
during year 1998, by an uncollectible accounts receivable problem arising
primarily from the deterioration in the Venezuelan macroeconomic environment and
weaknesses in the Company's collection and credit policies.  In response, the
Company developed and launched an aggressive collection program that included a
tightening of its credit policies and strict procedures requiring temporary and
permanent disconnection of customer lines for nonpayment.  During 1999, CANTV
made over 3.0 million temporary disconnections and permanently removed 453,507
residential and commercial lines.  During 2000, CANTV made approximately over
2.4 million temporary disconnections and permanently removed 337,614 residential
and commercial lines.   Permanently removed lines are being aggressively
reassigned to new customers following upfront credit history checks.  To address
the problem, the Company also implemented a stronger system of controls and
reorganized the collection function by assigning responsibility for collections
to the business unit leaders and incorporating collection performance standards
into their compensation packages.  CANTV also made personnel changes and
provided intensive training to all collections personnel.  During 2000, the
Company's uncollectible provision was Bs. 76.5 billion compared to Bs. 114.7
billion in 1999.  The Company's provision for uncollectibles represents 5.9% and
4.2% of total operating revenues at December 31, 1999 and 2000, respectively.

     In December, the Company announced an employee reduction plan based on an
analysis of its administrative cost structure, which resulted in a special one-
time charge of  Bs. 110.4 billion.  See "-- Years Ended December 31, 1999 and
2000 -- Special Charge."

Regulatory Environment

     The information in this section should be read in conjunction with "Item 4.
Information on the Company -- Regulatory Framework."

     In February 2000, CANTV entered into the Agreement with CONATEL with
respect to the rate structures and previously regulated services under the
Concession including rate rebalancing and service level mandates.  The Agreement
superseded the Concession with respect to subject matter specifically referred
to therein and the Concession continues to control as to subject matter not
specifically covered by the Agreement. The tariffs provided for under the
Agreement were effective until March 10, 2001 if CANTV and CONATEL were not to
reach an agreement on the tariffs which were to apply after November 27, 2000.
During 2000, CANTV and CONATEL did not reach an agreement on tariffs to apply
after November 27, 2000.  On February 19, 2001, pursuant to the New
Telecommunications Law, CONATEL established the maximum tariffs that are
applicable effective March 10, 2007 during 2007 and a new price-cap system that
replaced the tariff adjustment mechanism provided under the Agreement.  The
first tariff increase is effective from March 10, 2001 through June 30, 2001 and
the second tariff increase will be effective on July 1, 2001.  See "Item 4.
Information on the Company -- Regulatory Framework -- Regulation and the
Concession."

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<PAGE>

     The Agreement was arrived at following the delays in tariff approvals in
1999 and the commencement of a preliminary proceeding in contemplation of a
legal action by CANTV against the Government for breach of the Concession. The
Agreement concluded a mandated eighth year review required under the Concession
and resolved the differences outstanding between CANTV and CONATEL relating to
the definition of goals and measures of service mandates and methodologies. In
effect, the Agreement retained for the Company the most significant rights
provided for under the Concession. The Agreement included: (i) a significant
rebalancing between long distance tariffs and local tariffs, and between non-
residential and residential tariffs; (ii) a definitive ruling on tariffs and
adjustments based on an agreed projected devaluation of the bolivar against the
U.S. dollar during 2000; (iii) quality and service mandates including the
elimination of the service expansion mandate and the introduction of a new 80%
digitalization mandate; (iv) the introduction of new tariff plans including a
fixed prepaid plan and optional plans which CANTV may introduce without
CONATEL's prior approval and which, in the case of certain optional plans, CANTV
may offer with higher basic rent and free minutes up to a U.S.$80 maximum; and
(v) CANTV's agreement to refrain from taking any action, judicial or
administrative, as a result of the failure by the Government to approve tariffs
during 1999, provided that the Government met the terms and obligations pursuant
to the Agreement.

     Prior to entering into the Agreement with CONATEL relating to rates for
2000, CANTV's rates were regulated under the Concession.  The Concession
provided for a "price-cap" mechanism to set and adjust rates on a quarterly
basis throughout each calendar year.  The price-cap mechanism was designed to
vary quarterly based on the WPI.  Although in principle tariffs were to be
adjusted to reflect inflation of preceding quarter, tariffs were, in practice,
generally calculated based upon rates of inflation during the second preceding
quarter.  The delay was due to the time period required by CONATEL to calculate
the inflation rate during a specific quarter.  Accordingly, in many instances
tariffs were implemented based on inflation levels relating to periods ending as
much as six months preceding their implementation date.

     The increase in CANTV's tariffs did not, in all cases, fully offset the
effects of inflation used in preparing the Company's financial statements since
the rate of inflation used in preparing the Company's financial statements is
based on the more commonly accepted CPI which, at times, significantly exceeded
the rate of inflation as measured by the WPI.  Further, the price-cap mechanism
was not always implemented as described in the Concession.  CONATEL sometimes
delayed the approval of rate increases or did not allow the full tariff
increases allowed by the Concession's price-cap mechanism.  In other cases, the
Company decided not to fully implement the increase authorized for competitive
or other reasons.  In 1998, all four tariff increases were approved with minimal
delay.  In the first three quarters of 1998, CANTV did not increase domestic
long distance rates by the full amount permitted based on competitive pricing
strategies.  In 1999, CANTV received authorization for a rate increase effective
January 1, 1999 and in March 1999, CONATEL approved a tariff increase, which
became effective on April 30, 1999.  At the request of CONATEL, CANTV agreed not
to implement the rate increase permitted pursuant to this authorization for
basic residential rent. CANTV was unable to obtain approval to increase its
tariffs as stipulated in the Concession following CANTV's rate increase
effective April 30, 1999.  In February 2000, CONATEL and the Company entered
into the Agreement which allowed CANTV to increase rates in 2000.  The first
tariff increase became effective March 23, 2000 and the second tariff increase
became effective on June 16, 2000.  The Agreement is more fully described under
"Item 4. Information on the Company -- Regulation and the Concession -- The
Agreement."

     The Agreement advanced the rebalancing process, between long distance
tariffs and local tariffs, by reducing outgoing international long distance
weighted average rates by approximately 35%.  Under the terms of the Agreement,
outgoing international long distance rates were decreased in some cases by 68%,
depending on the country.  Domestic long distance rates were combined into one
nationwide plan with a weighted average rate of U.S.$0.1875 per minute.

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<PAGE>

     The Agreement provided for an extraordinary adjustment mechanism for
certain of CANTV's tariffs in the event that actual exchange rates, as defined
in the Agreement, deviate materially from the agreed projected exchange rates
set forth in the Agreement.  Under the Agreement, the variance between projected
exchange rates and actual exchange rates was measured at the end of each month.
If such variance in exchange rates exceeded a predetermined percentage, CANTV
could adjust its tariffs to partially account for this variance subject to a
maximum cumulative adjustment.  CONATEL was required to authorize and approve
all extraordinary adjustments.  The Agreement also allowed CANTV to provide
discounts on its domestic long distance and international long distance rates
subject to certain limitations. During 2000, the rates measured at the end of
each month agreed with the projected rates under the Agreement and no
extraordinary adjustments were necessary.

     The New Telecommunications Law enacted on June 12, 2000, provides the
general legal framework for the provision and regulation of telecommunications
services in Venezuela with the stated objectives of establishing a new
competitive regulatory framework, fostering efficiency and fair competition
among telecommunications service providers, developing and modernizing the
telecommunications systems, and at the same time obtaining and establishing
universal service objectives.  The New Telecommunications Law respects all
previously conferred rights and duties, including obligations under
interconnection agreements among operators, and provides for the deregulation of
tariffs and an equitable fiscal regime. See "Item 4. Information on the Company
-- Recent Amendments to the Regulatory Framework."

     The New Telecommunications Law establishes CONATEL as an independent
regulatory body charged with overseeing the implementation of regulations
pursuant to the established framework for a new competitive market.  The New
Telecommunications Law considers telecommunications services to be an economic
activity that affects the public interest, which may be provided by the private
sector on a competitive basis subject to regulations.  The New
Telecommunications Law includes a requirement for universal and public service
obligations to be shared by telecommunications service providers.  Under the new
tariff structure providers are free to set their own rates except where due to
insufficient competition, certain telecommunications services must be subject to
tariffs regulation.  In this case CONATEL may subject any telecommunications
service to price regulation through the application of a price-cap.  CONATEL has
determined that CANTV, as an established operator of certain telecommunications
services and will be subject to tariff regulation under a price-cap during 2001.

     On February 19, 2001 pursuant to the New Telecommunications Law, CONATEL
established the maximum tariffs that are applicable effective March 10, 2001
during 2001 and a new price-cap system that replaced the tariff adjustment
mechanism provided under the Agreement.  The first tariff increase is effective
from March 10, 2001 through June 30, 2001 and the second tariff increase will be
effective on July 1, 2001.  The new price-cap system will apply to the rates
CANTV charges during 2001.  CONATEL has not established a tariff system to apply
to CANTV after 2001. The principal effect of the new price-cap system as applied
to CANTV is to increase local rates for residential and commercial customers by
approximately 5% and to increase charges for certain public telecommunications
services by approximately 14% in each case subject to adjustment. Domestic and
international long distance rates remain unchanged. See "Item 4. Regulatory
Framework  --  Proposed Regulation of Tariffs."

     The New Telecommunications Law and the Regulations for Basic Telephony
Services provide additional obligations for operators, such as, the installation
of a new signaling system for interconnections based on the SS7 protocol and the
installation of the minimum equivalent of 3% of lines in use, in public
telephones. Also, as the established operator, CANTV is also subject to more
demanding interconnection  requirements, and may be subject to greater universal
service obligations and quality and service standards to be determined under the
new regulatory framework.

                                      65
<PAGE>

Summary of Operations

     The Company provides substantially all of its services in Venezuela and
substantially all of its operating revenues are derived from Venezuelan
domiciled customers and from settlements with international carriers for calls
completed in Venezuela.  The Company's operating revenues are derived from
domestic telephone services, including public telephones and rural telephone
services, and from international telephone services, wireless services,
directory information services, Internet access, data transmission, and other
value-added services.

     Local and domestic long distance services generate the largest portion of
the Company's operating revenues, representing 59.9%, 56.3% and 57.2% of the
Company's total operating revenues for the years ended December 31, 1998, 1999
and 2000, respectively.  Revenues from local and domestic long distance services
depend on the number of access lines in service, utilization of the network as
measured by minutes of use or by seconds of use, the rates charged by the
Company to its customers and the number and availability of public telephones.
Revenue from public telephones is generated primarily by utilization measured by
minutes of usage.

     International long distance services generated 13.0%, 9.4% and 7.0% of the
Company's total operating revenues for the years ended December 31, 1998, 1999
and 2000, respectively.  International long distance revenues are generated by
outbound traffic billed to the consumer market at local regulated rates and the
settlement with international carriers for traffic to/from Venezuela from/to
foreign countries at rates, which are subject to the approval of the local
regulator and the respective foreign agency.  Revenues are generally collected
by the originating carrier and shared with the terminating carrier through
international agreements.  Revenues from international long distance services
depend on the volume of traffic, the rates charged by the Company to its
customers and the settlement rates agreed with each foreign carrier.  In recent
years, certain international operators, including operators in the United
States, have reduced settlement rates.  In 1997, the United States Federal
Communications Commission adopted a regulation named "report and order" that has
significantly reduced international long distance telephone rates by setting
new, lower benchmarks in international settlement rates.  This order took effect
on January 1, 1998.  The current accounting rate between the United States and
Venezuela is U.S.$0.38, a decrease from U.S.$0.54 at year-end 2000.

     The following table sets forth the Company's negotiated accounting rates
with U.S. international carriers for the period 2000 through early 2001:

                                                 Rate
                  Period                       in U.S.$
          -----------------------              --------
          January to June 2000                   0.54
          July to December 2000                  0.46
          January 2001                           0.38

     Due to the current imbalance between the Company's outgoing and incoming
international call volumes, the reduction in settlement rates paid to the
Company has had, and may continue to have, a negative effect on the Company's
revenues from international long distance services.  See "Item 4. Information on
the Company."

     Revenues from other wireline-related services consist of interconnection
facilities charges, data transmission services, including VPN, VSAT and Frame
Relay, late payment charges, reconnect fees and miscellaneous charges.

     Revenues from wireless services comprised 17.9%, 23.6% and 25.6% of the
Company's total operating revenues for the years ended December 31, 1998, 1999
and 2000, respectively.  Revenues from

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<PAGE>

wireless services consist primarily of charges paid to the Company for calls
terminating on its network (interconnection revenue), monthly service fees,
usage charges, revenues from equipment sales, and activation fees. Revenues from
wireless services depend on the number of cellular subscribers, utilization of
the network as measured by minutes of use and rates charged by the Company to
its customers. Usage charges are based on a "calling party pays" principle under
which the Company's wireless customers are charged only for calls they
originate. The Company charges a usage fee to non-wireless customers accessing
the Company's wireless network.

     Revenues from other telecommunications-related services primarily include
Internet-related services and directory information services.  Internet-related
services include Internet access via dial-up or dedicated channels and network
administration outsourcing.  The Company earns directory information services
revenues from sales of advertising space in its printed White Pages and Yellow
Pages, sales of information from its database, and electronic dissemination of
information.  Revenue is recognized based on the point-of-publication method.

     The Company's operating expenses consist of provision for uncollectibles,
operations, maintenance and repairs, administrative expenses, depreciation and
amortization, and concession and other operating taxes. Additionally, operating
expenses include a nonrecurring charge for 1999 and 2000 and a special charge
for 2000.

     The provision for uncollectibles is an estimate that reflects the
anticipated loss due to uncollectible accounts receivable.  The provision for
uncollectibles comprised 13.2%, 5.9% and 4.2% of the Company's total operating
revenues for the years ended December 31, 1998, 1999, and 2000, respectively.
During 1998, the Company increased its provision for uncollectibles as a result
of the Company's aggressive actions to identify and correct deficiencies in its
credit and collection processes.

     The Company's operations, maintenance, repairs and administrative expenses
represented 36.8%, 44.3% and 47.2% of the Company's operating revenues for the
years ended December 31, 1998, 1999 and 2000, respectively.  The Company's
operations, maintenance, repairs and administrative expenses for the year ended
December 31, 2000 are comprised of salaries (17.6%), labor benefits (31.1%),
contractors (19.1%), materials (10.0%) and other expenses (22.2%). Such expenses
depend on the number of employees, changes in wages and benefits negotiated in
collective bargaining agreements, pension plan assumptions, employee
productivity and procurement efficiencies together with other factors.  As a
result of productivity improvements, the Company has been able to reduce the
number of its employees, from 15,751 at December 31, 1998 to 13,952 at December
31, 2000, while simultaneously expanding its business.  At April 30, 2001 the
Company had 10,166 employees.

     During 2000, CANTV decreased its workforce by approximately 775 employees
as a result of a workforce reduction program, granting employees an incentive to
voluntarily retire prior to their anticipated retirement date and the
elimination of certain positions due to technological, operational and
administrative efficiencies.  Employees of CANTV's subsidiaries decreased their
combined work force by approximately 71 employees despite the growth of the
wireless and Internet business. The Company entered into a new labor agreement
on September 3, 1999, valid until June 17, 2001, with FETRATEL.  See "Item 4.
Information on the Company -- Employees."

     On December 29, 2000, the Company announced its intention to consolidate,
centralize and eliminate certain operating and administrative positions during
the first quarter of 2001 through a formal program.  As a result of this
program, the Company terminated 3,752 employees as of January 2001. Employees
terminated under this program received additional severance benefits based on
the number of years of service with CANTV from 30 to 90 basic monthly salary
payments.  The effect of this program on the Company's pension and other
retirement benefits liability will be recognized when it occurs.  Currently, the
Company is evaluating the impact of the reduction in employees on its pension
liability.

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Employees who were eligible for early retirement received a six to twelve-month
basic salary severance payment in addition to a 25% increase in their monthly
pension. See "Item 4. Information on the Company -- Employees."

     Depreciation and amortization expense recognizes utilization of the
Company's telecommunications network and other long-lived assets.  Depreciation
expense is dependent on the book value of telecommunications plant and equipment
and other assets as well as the periods used to depreciate and amortize such
assets.

     Concession and other operating taxes consist primarily of amounts due to
the Government under the various concession agreements.  The amount of
concession and other taxes is generally assessed based on a percentage of
billings.  See "Item 4.  Information on the Company -- Regulatory Framework."

     Other income (expense), net consists of net foreign exchange losses, gains
or losses from net monetary position, interest income and interest expense.
Foreign exchange losses represent the impact of devaluation of the bolivar on
the Company's net holdings of net monetary liabilities denominated in U.S.
dollars and other foreign currencies.  During 2000, the Company sustained a
foreign exchange loss because the Bolivar devaluated 7.8% against the U.S.
dollar and increased in value 3.5% against the Japanese yen.  The Company had at
December 31, 2000 a net position in foreign currency of U.S.$130 million, which
includes U.S.$80 million liabilities denominated in Japanese yen.  The gain
(loss) from net monetary position represents the gain or loss resulting from a
monetary denominated net liability or net asset position during an inflationary
period.

     The income tax provision is determined in accordance with Venezuelan income
tax regulations.  Under these regulations, the Company is subject to tax on its
net taxable income calculated on a historical cost basis with an adjustment for
inflation with respect to the Company's non-monetary assets and liabilities, net
of stockholders' equity.  Venezuelan income tax currently is calculated at a
maximum rate of 34% of taxable income.  The Venezuelan legislation provided an
investment tax credit of up to 20% on the amount of new investments through
December 31, 1999 in fixed assets that have not been used previously in the
country.  Unused investment tax credits can be carried forward up to three
economic periods from the year when each arose.  While the Venezuelan tax code
did not expressly classify telecommunications services as industrial,
management, based on advice of the Company's internal and external local
counsel, and recent case law believes the Company qualifies for the investment
tax credit ("ITC").  The Venezuelan Income Tax Law (the "Income Tax Law")
authorizes the carry forward of  non-compensated losses up to three years
subsequent to the period in which they were incurred.  The business asset tax
results from applying a 1% rate to the net average amount of non-monetary assets
adjusted for inflation and monetary assets devalued for inflation.  The amount
payable is the higher amount of the business asset tax and the income tax for
the period.  In case of tax losses, such tax can be carried forward up to three
subsequent years from the period in which such tax originated.

     On October 22, 1999, the Government published a Partial Reform to the
Income Tax Law.  The Amendment to the Income Tax Law included provisions to tax
worldwide income earned by individuals or companies residing or domiciled in
Venezuela. The current Venezuelan Tax Law expressly  classify telecommunications
activities as industrial. Taxes paid abroad may be credited.  Dividends will be
subject to tax up to a maximum rate of 34%.  Tax losses resulting from inflation
adjustments may be carried forward up to one year.  Companies may take a tax
credit equal to 10% of salary payments to new hires.  Pursuant to the new law,
the ITC rate was reduced to 10%.  This regulation became effective January 1,
2000.  See Note 18 to the Audited Financial Statements.  A convention for the
avoidance of double taxation (the "Tax Treaty") between the United States and
Venezuela also became effective on January 1, 2000.

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     In the normal course of business and as limited by applicable debt
agreements, the Company enters into transactions with certain of its
stockholders and their respective affiliates. Transactions with related parties
are subject to conditions similar to transactions with independent third
parties. See Note 19 to the Audited Financial Statements and "Item 7. Major
Shareholders and Related Party Transactions."

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<PAGE>

Key Data for the Years Ended December 31, 1998, 1999 and 2000

     The following table sets forth key data of the Company for the years ended
December 31, 1998, 1999 and 2000, and presents each amount as a percentage
change from the prior year:

<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                             ------------------------------------------------------------------------------------
                                                                                       %                                  %
                                                                                   increase                           increase
                                                                                   (decrease)                         (decrease)
                                                                                   from prior                         from prior
                                                 1998             1999                year             2000              year
                                             ------------     ------------        ------------      -----------      -------------
<S>                                          <C>              <C>                 <C>               <C>              <C>
Lines:
   Lines installed                              3,550,706        3,546,538            (0.1)           3,074,506         (13.3)
   Percent digital                                     66%              69%              -                   80%          N/A
Access lines in service:
-----------------------
   Residential                                  1,859,073        1,870,859             0.6            1,892,801           1.2
   Commercial                                     681,761          634,969            (6.9)             627,785          (1.1)
   Public telephones                               75,097           80,033             6.6               85,016           6.2
                                                ---------        ---------                            ---------
                                                2,615,931        2,585,861            (1.1)           2,605,602           0.8

Utilization ratio                                      76%              75%              -                   87%          N/A
Access lines per 100 inhabitants                     11.2             10.8            (3.6)                10.7          (0.9)
Access lines per CANTV employee                       199              218             9.5                  235           7.8

Call Volume /(1)/:
Local:
-----
   Residential                                      7,282            7,702             5.8                7,799           1.3
   Commercial                                       5,724            5,936             3.7                6,314           6.4
                                                ---------        ---------                            ---------
                                                   13,006           13,638             4.9               14,113           3.5
Domestic long distance:
----------------------
   Residential                                      1,135              881           (22.4)                 889           0.9
   Commercial                                       1,533            1,285           (16.2)               1,414          10.0
                                                ---------        ---------                            ---------
                                                    2,668            2,166           (18.8)               2,303           6.3
International:
-------------
   Incoming minutes                                   302              312             3.3                  367          17.6
   Outgoing minutes                                   165              163            (1.2)                 188          15.3
   Net settlement minutes                             137              149             8.8                  179          20.1
   Incoming/outgoing ratio                           1.83             1.91               -                 1.95           N/A
   Outgoing minutes charged to customers              171              160            (6.4)                 192          20.0

Total Employees:
   CANTV                                           13,151           11,851            (9.9)              11,076          (6.5)
   Other                                            2,600            2,918            12.2                2,876          (1.4)
                                                ---------        ---------                            ---------
                                                   15,751           14,769            (6.2)              13,952

Wireless Services:
Wireless subscribers:
--------------------
   Postpaid                                       371,347          314,933           (15.2)             207,134         (34.2)
   Prepaid                                        267,760          866,340           223.6            1,498,856          73.0
                                                ---------        ---------                            ---------
                                                  639,107        1,181,273            84.8            1,705,990          44.4

Percent digital:
   Handset                                             72%              97%           34.7                   99%          2.1
   Voice path                                          45%              61%           35.6                   67%          9.8
Average wireless subscribers                      506,991          910,190            79.5            1,443,632          58.6
Minutes of use /(1)/                                  945            1,325            40.2                1,854          39.9
% Penetration  /(2)/                                  2.8%             4.9%              -                  7.0%          N/A
Average Monthly Revenue per User ("ARPU")              64               53           (17.2)                  38         (28.3)
 /(3)/

Financial Statistics:
   Average interest rates                            8.87%            8.26%           (6.9)                9.07%          9.8
   Average outstanding borrowings (in million     343,244          378,858            10.4              391,237           3.3
   of constant bolivars)
   Net monetary liability (asset) position
   (in million of constant bolivars)              180,089          (11,866)         (105.8)              39,097        (429.5)
   Net foreign currency liability (asset)             547              136           (75.1)                (130)       (195.6)
   position (millions of U.S.$)

Economic Statistics:
   Increase in the CPI                                 30%              20%          (33.3)                  13%        (35.0)
   Increase in the WPI                                 22%              14%          (36.4)                  16%         14.3
   Exchange rate at the end of year                565.00           649.25            14.9               700.00           7.8
</TABLE>

__________________________

(1) Represents billed minutes of use, excluding free minutes included in certain
    of the Company's tariff plans, in millions of minutes.
(2) Customers per total population.
(3) In U.S. dollars.

                                       70
<PAGE>

Results of Operations for the Years Ended December 31, 1998, 1999 and 2000

     The following table sets forth the results of operations of the Company for
the years ended December 31, 1998, 1999 and 2000, expressed in millions of
constant bolivars as of December 31, 2000, and presents each amount as a
percentage of total operating revenues, and as a percentage change from the
prior year:

<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                 ---------------------------------------------------------------------------------------------------
                                                        (millions of bolivars, except per share and per ADS data)
                                 ---------------------------------------------------------------------------------------------------
                                            1998                          1999                                 2000
                                 --------------------------  ------------------------------------ ----------------------------------
                                                                                         %                                  %
                                                  % of                    % of        increase                 % of       increase
                                                  total                   total       (decrease)              total      (decrease)
                                                 operating               operating    from prior             operating   from prior
                                        Bs.      revenues       Bs.      revenues       year         Bs.     revenues       year
                                 ------------- ------------  ---------- -----------  ------------ --------- ------------ -----------
<S>                              <C>           <C>           <C>        <C>          <C>          <C>       <C>          <C>
Operating revenues:
Local usage                            266,459     13.8       303,506      15.6         13.9       333,900      18.3         10.1
Domestic long distance usage           383,407     19.8       310,996      16.0        (18.9)      285,017      15.5         (8.4)
Basic rent/(1)/                        387,063     20.0       362,673      18.6         (6.3)      316,152      17.3        (12.8)
Public telephones                      123,271      6.4       119,680       6.2         (2.9)      108,655       6.0         (9.2)
                                     ---------    -----     ---------     -----                  ---------     -----
 Local and domestic long distance    1,160,200     60.0     1,096,855      56.4         (5.5)    1,043,724      57.2         (4.8)
International long distance            204,049     10.5       151,027       7.8        (26.0)       99,107       5.4        (34.4)
Net settlements                         47.693      2.5        31,780       1.6        (33.4)       29,373       1.6         (7.6)
                                     ---------    -----     ---------     -----                  ---------     -----
International long distance            251,742     13.0       182,807       9.4        (27.4)      128,480       7.0        (29.7)
Other wireline-related
 services/(2)/                         142,214      7.2       162,450       8.3         14.2       139,749       7.7        (14.0)
                                     ---------    -----     ---------     -----                  ---------     -----
 Total wireline services             1,554,156     80.2     1,442,112      74.1         (7.2)    1,311,953      71.9         (9.0)
Wireless services                      347,196     17.9       460,714      23.6         32.8       466,993      25.6          1.4
Other telecommunications-related
 services /(3)/                         36,833      1.9        43,856       2.3         19.1        46,186       2.5          5.3
                                     ---------    -----     ---------     -----                  ---------     -----
 Total operating revenues            1,938,185    100.0     1,946,682     100.0          0.5     1,825,132     100.0         (6.2)
Operating expenses:
Provision for uncollectibles           254,799     13.2       114,682       5.9        (55.0)       76,512       4.2        (33.3)
Operations, maintenance, repairs
 and administrative                    713,802     36.8       862,460      44.3         20.8       861,562      47.2         (0.1)
Depreciation and amortization          599,844     31.0       666,635      34.3         11.1       616,714      33.8         (7.5)
Concession and other taxes             144,392      7.4       140,193       7.2         (2.9)      138,394       7.6         (1.3)
Special charge /(4)/                         -      N/A             -       N/A          N/A       110,390       6.0          N/A
Nonrecurring charge                          -      N/A         4,085       0.2          N/A           632         -        (84.5)
                                     ---------    -----     ---------     -----                  ---------     -----
 Total operating expenses            1,712,837     88.4     1,788,055      91.9          4.4     1,804,204      98.8          0.9
Operating income                       225,348     11.6       158,627       8.1        (29.6)       20,928       1.1        (86.8)
Other income (expense), net:
Exchange losses, net                   (53,572)    (2.7)      (33,732)     (1.7)       (37.0)       (2,645)     (0.1)       (92.2)
Gain (loss) from net monetary
 position                               45,512      2.3        (6,626)     (0.3)      (114.6)      (15,844)     (0.9)       139.1
Interest income                         21,636      1.7        25,323       1.3         17.0        29,738       1.6         17.4
Interest expense                       (54,679)    (2.8)      (45,825)     (2.4)       (16.2)      (42,597)     (2.3)        (7.0)
Gain from indexation of tax units        8,442      0.4        12,579       0.6         49.0             -         -          N/A
                                     ---------    -----     ---------     -----                  ---------     -----
 Financing benefit (cost), net         (32,661)    (1.7)      (48,281)     (2.5)        47.8       (31,348)     (1.7)        35.1
 Other income, net                       3,595      0.3         6,331       0.3         76.1        (3,827)     (0.2)      (160.4)
                                     ---------    -----     ---------     -----                  ---------     -----
  Total other income (expense),
   net                                 (29,066)    (1.4)      (41,950)     (2.2)        44.3       (35,175)     (1.9)       (16.2)
                                     ---------    -----     ---------     -----                  ---------     -----
Income (loss) before income
 taxes and cumulative effect of
 accounting change, net of tax         196,282     10.2       116,677       6.0        (40.6)      (14,247)     (0.8)      (112.2)
Income tax provision                     1,327      0.1        15,487       0.8      1,067.1        35,428       1.9        128.8
                                     ---------    -----     ---------     -----                  ---------     -----
Income (loss) before cumulative
 effect of accounting change,
 net of tax                            194,955     10.1       101,190       5.2        (48.1)      (49,675)     (2.7)      (149.1)
                                     ---------    -----     ---------     -----                  ---------     -----
Cumulative effect of accounting
 change, net of tax                          -        -             -       N/A          N/A       (40,518)     (2.2)         N/A
                                     ---------    -----     ---------     -----                  ---------     -----
Net income (loss)                      194,955     10.1       101,190       5.2        (48.1)      (90,193)     (4.9)      (189.1)
                                     =========    =====     =========     =====                  =========     =====
</TABLE>

                                       71
<PAGE>

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                      ----------------------------------------------------------------------------------------------
                                                         (millions of bolivars, except per share and per ADS data)
                                      ----------------------------------------------------------------------------------------------
                                          1998                                1999                                2000
                                      ------------------------  -----------------------------------  -------------------------------
                                                                                          %                                    %
                                                % of total               % of total    increase              % of total    increase
                                                 operating               operating    (decrease)              operating   (decrease)
                                                 revenues                 revenues    from prior              revenues    from prior
                                        Bs.                      Bs.                     year           Bs.                  year
                                     ---------  ------------  ----------  ---------- ------------ ----------- ---------  -----------
<S>                                   <C>      <C>             <C>        <C>          <C>         <C>        <C>         <C>
Operating income per share              225.35       N/A          158.64       N/A         (29.6)       21.98      N/A        (86.1)
Operating income per ADS              1,577.44       N/A        1,110.50       N/A         (29.6)      153.89      N/A        (86.1)
 Income (loss) per share before
  cumulative effect of accounting
  change                                194.96       N/A          101.20       N/A         (48.1)      (52.18)     N/A       (151.6)
 Income (loss) per ADS before
  cumulative effect of accounting
  change                              1,364.72       N/A          708.40       N/A         (48.1)     (365.26)     N/A       (151.6)
Net income (loss) per share             194.96       N/A          100.00       N/A         (48.1)      (90.00)     N/A       (193.6)
Net income (loss) per ADS             1,326.61       N/A          700.00       N/A         (48.1)     (630.00)     N/A       (193.6)
Basic net income (loss) per share       194.96       N/A          100.00       N/A         (48.1)      (90.00)     N/A       (193.6)
/(5)/
Basic net income (loss) per ADS/(5)/  1,326.61       N/A          700.00       N/A         (48.1)     (630.00)     N/A       (193.6)
</TABLE>

_____________________________

(1) Includes installation and subscription charges.
(2) Includes special services and interconnection facilities charges.
(3) Includes value-added services, primarily Internet access, and directory
    publishing fees.
(4) Workforce reduction program (see additional information in "--Year Ended
    December 31, 1999 and 2000 -- Special Charge").
(5) As of December 31, 2000 there were no common stock equivalents having a
    dilutive effect on net income per share data.

                                       72
<PAGE>

Years Ended December 31, 1999 and 2000

Operating Revenues

     Consolidated net operating revenues decreased by Bs. 121.6 billion (6.2%)
in 2000 to Bs. 1,825.1 billion compared with Bs. 1,946.7 billion reported in
1999.  Normalizing 1999 results for the change in accounting treatment of
subscriber right fees, which are upfront fees paid by customers when services
are activated, and prepaid services, operating revenues decreased by Bs. 94.1
billion (4.9%) when compared to 1999. This decrease was due, in part, to the
Company's pricing and rate rebalancing strategy and significant reductions in
wireline domestic long distance and international long distance rates during
2000. These real rate decreases spurred higher commercial call volumes but did
not offset the decline in prices.

Operating Volumes

     The total number of access lines in service increased by 19,741 (0.8%) to
2,605,602 at December 31, 2000, from 2,585,861 at December 31, 1999. The
increase reflects the success of the prepaid platform combined with fewer
permanent disconnections.  In 2000, CANTV permanently disconnected approximately
337,614 residential and commercial lines.  During 2000, residential access lines
increased 1.2% and commercial access lines decreased 1.1%.  The number of public
telephones in service increased by 6.2% during this same period.

     Local minutes of use carried by the Company's network increased by 475
million (3.5%) to 14,113 million minutes for the year ended December 31, 2000,
from 13,638 million minutes for the year ended December 31, 1999. Residential
minutes of use increased slightly by 97 million (1.3%) to 7,799 million from
7,702 million minutes for the years ended December 31, 2000 and 1999,
respectively. Commercial minutes of use increased by 378 million (6.4%) to 6,314
million from 5,936 million minutes, for the years ended December 31, 2000 and
1999, respectively. The growth in commercial minutes occurred throughout 2000,
reflecting a healthier commercial customer base. Also, part of this volume
increase was attributable to higher demand for Internet service. The growth in
Internet usage resulted in the sale of approximately 76,900 additional
residential and commercial access lines to existing customers, compared to
approximately, 17,498 lines during the same period in 1999. The introduction of
value-added services, such as voicemail, which increased network utilization,
also contributed to the increase in minutes of use.

     Domestic long distance minutes increased by 137 million (6.3%) to 2,303
million during 2000 from 2,166 million during 1999.  Residential minutes of use
slightly increased by 8 million (0.9%) to 889 million from 881 million for the
years ended December 31, 2000 and 1999, respectively, as a result of the new
tariff structure which went into effect during the second quarter of 2000. The
new rate structure eliminated one of the off-peak hour rate plans. To stimulate
residential usage the Company introduced, in November 2000, a special flat rate
national long distance plan where the customer pays a fee of Bs. 7,500 per month
and is allowed unlimited long distance calls placed between certain hours. This
plan attracted approximately 89,000 customers and generated 35 million minutes
by the end of December 2000. Commercial minutes of use increased by 129 million
(10.0%) to 1,414 million from 1,285 million for the years ended December 31,
2000 and 1999, respectively.  In the commercial market usage volumes increased
due to substantially the same drivers that increased local usage volumes, such
as enhanced services and as the increases in economic growth. In addition,
decreases in real rates for commercial usage also helped spur higher usage.

     International minutes billed locally to customers in Venezuela increased by
32 million (20.0%) to 192 million for 2000 as compared to 160 million for 1999.
This increase occurred in both consumer markets;  the residential sector grew by
32.0% and the commercial sector grew by 9.4%.  Domestic long

                                       73
<PAGE>

distance and international long distance rates were significantly reduced during
2000 contributing to the growth in call volume. In 2000, net settlement minutes
with international carriers increased by 30 million (20.1%) to 179 million from
149 million in 1999. Factors contributing to this volume growth include
competitive pricing by international carriers, which are able to offer their
customers customized packages combined with lower settlement rates that the
carrier must pay the Company for terminating traffic on our network. In
addition, the Company has entered into agreements with certain large carriers in
which the settlement rate is reduced based on volume. The incoming minutes of
use to outgoing minutes of use ratio, for the year 2000, increased to 1.95 as
compared to 1.91 for 1999.

Local Usage

     Local usage revenues increased by Bs. 30.4 billion (10.1%) to Bs. 333.9
billion in 2000 compared to Bs. 303.5 billion in 1999.  This increase was
primarily attributable to a 3.5% increase in residential and commercial local
call volumes combined with a real rate increase of 3.9%. Commercial and
residential minutes of use increased 6.4% and 1.3%, respectively, in 2000
compared to the same prior year period. Minutes of use per commercial line
increased by 11.7% during the same period, reflecting increased demand for
Internet services and the effect of a real rate decrease of 3.7%. Total
residential billed minutes of use remained relatively flat during 2000 compared
with 1999 primarily as a result of an increase in the number of customers
migrating to the 2,500 free minutes per month plan targeting Internet customers.
In addition, a real rate increase in local usage of 11.3% and the introduction
of the prepaid wireline platform in the fourth quarter of 2000 contributed to
this trend. As of the end of 2000, there were approximately 138,000 prepaid
residential lines. The prepaid customer segment is generally a lower-usage
consumer.

Domestic Long Distance Usage

     Revenues from domestic long distance usage decreased by Bs. 26.0 billion
(8.4%) to Bs. 285.0 billion in 2000 from Bs. 311.0 billion in 1999.  This
decline was due to a real rate decrease of 12.4% offset by a call volume
increase of 6.3%. In nominal terms, rates increased 2.0% in 2000 compared to
1999.

     Total domestic long distance volume increased to 2,303 million minutes at
the end of December 31, 2000 compared to December 31, 1999. Commercial customers
fueled this growth by generating 129 million minutes of use (10.0%) more than in
1999, resulting in an increase of 15.6% in the  average minute per commercial
line. Residential minutes of use remained relatively flat during 2000 primarily
as a result of the new tariff structure, which went into effect during the
second quarter of 2000. The new rate structure eliminated one of the most
economical plans as well as one of the off-peak hour rate plans. To stimulate
residential usage the Company introduced, in November 2000, a special flat rate
national long distance plan where the customer pays a fee of Bs. 7,500 per month
and is allowed unlimited long distance calls placed between certain hours.
Approximately 89,000 customers enrolled in this plan which generated 35 million
minutes, or Bs. 0.5 billion, at the end of December 2000.

Basic Rent

     Basic rent revenues include the basic monthly flat fee and installation
charges.  These revenues decreased by Bs. 46.5 billion (12.8%) to Bs. 316.2
billion in 2000 compared to Bs. 362.7 billion in 1999.  The decrease was
primarily the result of a reduction of Bs. 32.4 billion (64.7%) in the
installation charges to Bs. 17.7 billion in 2000 from Bs. 50.1 billion in 1999,
largely due to a decline of 21.2% in lines installed during 2000 compared 1999.
The basic monthly flat fee decreased by Bs. 14.2 billion (4.5%) in 2000 to Bs.
298.4 billion compared to Bs. 312.6 billion in 1999.  This decrease is
attributable to a 0.4% decrease of the average access lines in service and  4.7%
decrease in basic monthly flat fee real rates.

                                       74
<PAGE>

     Subscription right fees, which are upfront fees paid by the consumers when
service is activated,  were previously recognized as revenues. The opening of
the telecommunications market provides the consumer with a choice of service
provider and the subscriber fee may be refundable.  To better align itself with
the industry practice, the Company now recognizes upfront fees as a liability on
the Company's balance sheet, and has restated all fiscal quarters for 2000 to
reflect this change. At December 31, 2000 the cumulative effect of such change,
net of tax was Bs. 34.7 billion.

Public Telephones

     Despite the 6.2% increase in the total number of public telephone units,
net revenues from public telephones decreased by Bs. 11.0 billion (9.2%) to Bs.
108.7 billion in 2000 compared to Bs. 119.7 billion in 1999. Local and long
distance minutes of use decreased 1.1% and 11.8%, respectively, in 2000 as
compared to 1999. Weighted average real rates increased by 14.4% for local usage
while for domestic long distance weighted average real rates decreased by 8.4%.
The growth of wireless communications continues to reduce usage of public
telephones.

     The Company had previously recognized the sales of prepaid public telephone
cards as revenue at the time of sale.  To better align itself with industry
practice and due to the availability of a much improved public telephone
monitoring system and database, the Company now recognizes such revenue based on
card usage and has restated all fiscal quarters for 2000 to reflect this change.

International Long Distance

     Total international long distance revenues decreased by Bs. 54.3 billion
(29.7%) to Bs. 128.5 billion in 2000 compared to Bs. 182.8 billion recorded in
1999. Revenues from customer charges billed locally decreased by Bs. 51.9
billion (34.4%) to Bs. 99.1 billion in 2000 from Bs. 151.0 billion recorded in
1999. This decline is attributable to tariff decreases of 41.7% and 32.7% in
real and nominal terms, respectively, partially offset by a volume increase of
20.0%.

     Settlement revenue with international carriers decreased by Bs. 2.4 billion
(7.6%) in 2000 to Bs. 29.4 billion compared to Bs. 31.8 billion recorded in
1999.  This decrease was the result of a real rate decrease of 20.8% partially
offset by a volume increase of 20.1%. Factors contributing to incoming traffic
growth include competitive pricing by international carriers as well as lower
settlement rates. The ratio of incoming minutes of use to outgoing minutes of
use, for the year ended December 31, 2000, increased to 1.95 times compared to
1.91 times for 1999. Factors contributing to incoming traffic growth include
more aggressive pricing by international carriers as well as lower settlement
rates.

     The Company's largest international traffic route is between Venezuela and
North America (the United States, Mexico and Canada), which represented 59.4%
and 63.6% of the minutes recorded in 2000 and 1999, respectively.  The
settlement rates for international traffic between the United States and
Venezuela decreased to U.S.$0.38 per minute during 2000 from U.S.$0.64 per
minute in 1999.

Other Wireline-Related Services

     Other wireline-related service revenues, which include data services,
interconnection facilities charges, reconnection fees, late payment charges and
miscellaneous charges, decreased by Bs. 22.8 billion (14.0%) to Bs. 139.7
billion in 2000 compared to Bs. 162.5 billion in 1999. Revenues from data
transmission services, including Frame Relay, VPN and VSAT services, decreased
by Bs. 14.8 billion (14.0%) in 2000 to Bs. 90.6 billion compared to Bs. 105.4
billion in 1999. The decline in revenues were a result of the Company strategy
of promoting its packet switching data network, which is more efficient and
economic to both the customer and the Company. This strategy produced a 30%
revenue increase in data services, in real terms, which was more than offset by
significant revenue declines in analog and

                                       75
<PAGE>

dedicated circuits. Interconnection revenues declined Bs. 10.2 billion (61.5%)
to 6.4 billion in 2000 compared to Bs. 16.6 billion in 1999 due to a reduction
in the fees that the Company receives from wireless operators. This decrease was
stipulated in the interconnection agreement between Telcel and CANTV. Other
miscellaneous charges increased by Bs. 3.0 billion (7.4%) to Bs. 42.6 billion
compared to Bs. 39.6 billion in 1999 due to growth in vertical services and a
facility rental settlement with a competitor. This increase was partially offset
by the decision not to charge late payment fees to permanently disconnected
customers due to the low probability of collecting these charges.

Wireless Services

     Wireless service revenues increased by Bs. 6.3 billion (1.4%) to Bs. 467.0
billion compared to Bs. 460.7 billion recorded in 1999, reflecting continued
growth in the prepaid customer base.

     Growth of 44.4% in the wireless customer base was primarily driven by the
continued success of prepaid services during 2000. Handset sales declined to Bs.
26.7 billion (78.0%) during 2000 compared to 1999 as a result of the Company's
decision to outsource sales of handsets to authorized sales agents.  In 2000,
prepaid subscribers increased by 73.0%, reaching a total of 1,498,856 customers
at December 31, 2000, compared to 866,340 prepaid customers at December 31,
1999.  Postpaid customers decreased by 34.2% to 207,134 at December 31, 2000
compared to 314,933 at December 31, 1999 due to customer migration to more
economical prepaid plans.

     As a result of the expansion of the customer base, overall penetration,
defined as the number of customers as a percentage of the total population,
improved from 4.9% at December 31, 1999 to 7.0% at December 31, 2000. Partially
offsetting the impact of customer growth is declining monthly revenue per
customer due to the expansion in lower-usage customer segments through prepaid
wireless service offerings and the introduction of more economical postpaid
plans, including billing per second. The introduction of the prepaid service has
generated a reduction in the Average Monthly Revenue per User ("ARPU") to
U.S.$38 at December 31, 2000 compared to U.S.$53 at December 31, 1999.

     The postpaid customers migration to more economical plans contributed to a
weighted average real rate decrease in the basic monthly fee and peak hour usage
rate of 14.9% and 1.7%, respectively, at December 31, 2000.

     The decline in access revenue was offset by an increase in airtime revenue
of Bs. 57.0 billion (45.7%) and higher interconnection revenue of Bs. 25.2
billion (15.2%) resulting from an increase of 39.9% in total minutes as the
customer base increased.

     The minutes of use per postpaid customer increased 31% over 1999 due to the
migration of low usage customers to more economical prepaid plans while minutes
of use per prepaid customer decreased by 4.3% in 2000.  Generally prepaid plans
are subscribed by users with fewer financial resources than other customer
groups.

Other Telecommunications-Related Services

     Revenues from other telecommunications-related services, including Internet
services and directory publications, increased by Bs. 2.3 billion (5.3%) to Bs.
46.2 billion in 2000 from Bs. 43.9 billion in 1999.

     Internet revenues increased by Bs. 3.9 billion (24.2%) to Bs. 20.0 billion
in 2000 from Bs. 16.1 billion in 1999, due to a 30.6% increase in the subscriber
base, which reached 113,226 at year-end 2000. The subscriber base increase was
due to effective promotional campaigns, improved connectivity and attractive
pricing. During 2000, the Company offered customers a flat rate plan and the
added facility of

                                       76
<PAGE>

using the Company's prepaid card to access the Internet. Additionally, the
number of users grew in 2000 by 116,017 (69.5%) as compared to 1999. This growth
was attained in spite of the Company's stricter credit policies.

     Revenues from directory service, decreased by Bs. 1.6 billion (5.6%) to Bs.
26.1 billion in 2000 as a result of real decreases.

Operating Expenses

     Total operating expenses increased by Bs. 16.1 billion (0.9%) to Bs.
1,804.2 billion in 2000 compared to Bs. 1,788.1 in 1999. This increase was due
to a special charge recorded in December 2000 related to workforce reduction.
See "-- Special Charge." The increase was partially offset by a decrease in
operating expenditures, depreciation and amortization and provision for
uncollectibles.

     Operations, maintenance, repairs and administrative expenses decreased by
0.1% in 2000 to Bs. 861.6 billion compared to Bs. 862.5 billion in 1999.  The
decrease was mainly attributable to a 33.3% decrease in the provision for
uncollectibles, lower inventory costs of approximately 30.0% relating to the
outsourcing of handset sales, combined with a Bs. 21.0 billion decrease in
pension expense as a result of revised actuarial assumptions.  Almost entirely
offsetting these decreases were greater commissions paid to authorized agents
associated with higher cellular customer additions.

     Depreciation and amortization expense decreased by Bs. 49.9 billion (7.5%)
to Bs. 616.7 billion in 2000 from Bs. 666.6 billion in 1999.  This decrease was
due to a portion of the Company's wireline network assets reaching their useful
life and the increase in the useful life of a portion of the cellular real
estate infrastructure.

     The provision for uncollectibles decreased by Bs. 38.2 billion (33.3%) to
Bs. 76.5 billion in 2000 from Bs. 114.7 billion in 1999.  The decrease in
uncollectible expenses reflects improvements in CANTV's collections as
management continues to focus on the application of strong credit policies.  As
a result, approximately 337,614 residential and commercial lines were
permanently disconnected during 2000.

     Concession and other taxes decreased by Bs. 1.8 billion (1.3%) to Bs. 138.4
billion in 2000 compared to Bs. 140.2 billion in 1999, mainly due to lower
revenues.

     During December 1999, massive floods impacted Venezuela.  The flooding
caused serious damage to homes and businesses, leaving them without basic
services such as water, power and phone services. In 1999, the Company made an
initial financial assessment only on central offices and public telephone plants
and calculated the damage to be approximately Bs. 4.1 billion recorded as a
non-recurring charge. In October 2000, the Company received the final payment of
the total compensation based on actual damages caused by the floods of Bs. 8.0
billion. Despite the magnitude of the floods endured, the Company does not
believe this natural disaster will have a material impact on its financial
results.

Special Charge

     On December 29, 2000 the Company announced that it would record a special
one-time charge of Bs. 110.4 billion related to a workforce reduction program.
This program, which only covers wireline employees, was implemented to eliminate
non-strategic activities and associated costs after a thorough review of
business processes that were not consistent with CANTV's competitive and growth
objectives. The program ended on January 19, 2001 and as a result 3,752
employees were terminated. The functions that were eliminated were, for the most
part, administrative in nature. The Company fully expects that

                                       77
<PAGE>

labor and non-labor related savings associated with this head-count reduction
will provide the Company with a cost structure that can meet competitive pricing
pressures as a new era of full competition begins. See Note 22 to the Audited
Financial Statements.

     Any effect to the Company's pension and other postretirement benefits
liability associated with this employee separation program will be recognized
when it occurs. Presently, the Company is evaluating the impact of the head-
count reduction on the Company's pension liability.

Other Income (Expense), Net

     Total other income (expense), net totaled Bs. 35.2 billion net expense for
2000 compared to Bs. 42.0 billion net expenses for 1999.  This increase was
primarily due to an increase in the loss from monetary position partially offset
by lower net exchange losses.

     Non-cash inflation loss totaled Bs. 15.8 billion at December 31, 2000.
During 1999, the non-cash inflation loss totaled Bs. 6.6 billion. The Bs. 9.2
billion increase in loss is primarily due to changes in the Company's monetary
position, which increased from an average net asset position in 1999 of Bs.
107.5 billion to Bs. 234.0 billion (117.5%) in 2000 due to the Company's strong
liquid position. This non-cash inflation loss was partially mitigated by a
generally lower inflation of 13.4% in 2000 compared to an inflation rate of
20.0% experienced in 1999.

     Exchange loss, net decreased by Bs. 31.1 billion to Bs. 2.6 at December 31,
2000 compared to Bs. 33.7 billion at December 31, 1999. The decrease is related
to CANTV's Japanese yen-denominated debt and due to the appreciation of the
bolivar against the Japanese yen combined with higher dollar denominated
temporary investments. Additionally the average foreign currency denominated net
monetary asset position during 2000 increased, primarily as a result of higher
cash balances and temporary investments. This increase was partially offset by a
lower devaluation rate of 7.8% as compared to 14.9% in 1999. The Company's
average net monetary position increased from a net liability position in 1999 of
U.S.$236 million to a net asset position of U.S.$45 million in 2000.

     Interest income increased by Bs. 4.4 billion (17.4%) to Bs. 29.7 billion
for 2000 from Bs. 25.3 billion for 1999, due to higher average investments made
during 2000 of Bs. 353.3 billion compared to Bs. 306.0 billion in 1999 slightly
offset by lower interest rates earned by the Company during 2000.

     Interest expense decreased by Bs. 3.2 billion (7.0%) to Bs. 42.6 billion in
2000 compared to Bs. 45.8 billion in 1999. This decrease was primarily the
result of a reduction in the Company's debt of Bs. 51 billion in 2000 partially
offset by a higher average interest rates during 2000 of 9.07% compared to 8.26%
in 1999.

Income Taxes

     The Company's income tax provision increased by Bs. 19.9 billion to Bs.
35.4 billion at December 31, 2000 compared to Bs. 15.5 billion at December 31,
1999. The increase reflects the 2000 reduction of investment tax credit
percentage from 20% to 10% in 2000 and lower capital expenditures.

Cumulative Effect of Accounting Change, Net of Tax

     The Company reviewed its revenue recognition polices for prepaid services
and subscriber right fees and changed the way it was accounting for these
services. Subscriber right fees, which are upfront fees paid by consumers when
service is activated, will be classified as a liability on the Company's balance
sheet. The Company believes that the opening of the telecommunications market to
competition where consumers will have a choice of carrier requires a change in
the way of subscriber rights fees. At

                                       78
<PAGE>

December 31, 2000 the cumulative effect of such change, net of tax, was Bs. 34.7
billion. In line with industry practices and much improved monitoring systems,
prepaid card sales will be recognized as revenue when the customer utilizes the
service rather than when the card is sold. The cumulative effect accounting of
this change related to both the prepaid public telephone card and the prepaid
cellular cards, net of tax was Bs. 5.8 billion.

Years Ended December 31, 1998 and 1999

Operating Revenues

     Consolidated net operating revenues increased by Bs. 8.5 billion (0.5%) in
1999 to Bs. 1,946.7 billion compared with Bs. 1,937.2 billion reported in 1998.
This increase was due to growth in wireless communications services, local usage
and data transmission and Internet revenues, which partially offset revenue
declines resulting from tariff approval delays during the third and fourth
quarter of 1999, lower access lines in service, and lower international prices.
The delay in tariff approvals negatively impacted revenues by approximately Bs.
43.7 billion in 1999.

Operating Volumes

     The total number of access lines in service decreased by 30,070 (1.1%) to
2,585,861 at December 31, 1999, from 2,615,931 at December 31, 1998. The decline
reflects the permanent disconnection of lines resulting from CANTV's emphasis on
customer treatment and collections. In 1999, CANTV permanently disconnected
approximately 453,900 residential and commercial lines. During 1999, residential
access lines increased 0.6% and commercial access lines decreased 6.9%. The
number of public telephones in service increased by 6.6% during this same
period.

     Local minutes of use carried by the Company's local switched network
increased by 632 million (4.9%) to 13,638 million minutes for the year ended
December 31, 1999, from 13,006 million minutes for the year ended December 31,
1998. Residential minutes of use increased by 420 million (5.8%) to 7,702
million from 7,282 million minutes for the years ended December 31, 1999 and
1998, respectively. Commercial minutes of use increased by 212 million (3.7%) to
5,936 million from 5,724 million minutes, for years ended December 31, 1999 and
1998, respectively. Part of this volume growth was attributable to the
implementation of EAS during the fourth quarter of 1998. Approximately 397
million minutes of use were shifted from domestic long distance to local usage
during the year 1999. Other factors contributing to this volume growth were
tariff approval delays and the implementation of a system in September 1999 that
minimizes traffic loss by allowing temporarily disconnected customers the
ability to receive incoming calls. Internet usage and enhanced services, such as
personal secretary or voicemail services also contributed to the volume growth.

     Domestic long distance minutes decreased by 502 million (18.8%) to 2,166
million during 1999 from 2,668 million during 1998. Residential minutes of use
decreased by 254 million (22.4%) to 881 million from 1,135 million for the years
ended December 31, 1999 and 1998, respectively. Commercial minutes of use
decreased by 248 million (16.2%) to 1,285 million from 1,533 million for the
years ended December 31, 1999 and 1998, respectively. This decline is primarily
attributable to the implementation of EAS. Approximately 397 million minutes
shifted from domestic long distance to local usage in the year ended December
31, 1999.

     International minutes billed locally to customers in Venezuela decreased by
11 million (6.4%) to 160 million for 1999 as compared to 171 million for 1998.
This decrease occurred in both consumer markets, the commercial sector declined
by 8.1% while residential sector decreased by 4.7%. The weakness in the
Venezuelan economy has contributed to the decline in the calling volume. In
1999, net settlement minutes with international carriers increased by 12 million
(8.8%) to 149 million from 137

                                       79
<PAGE>

million in 1998. The incoming minutes of use to outgoing minutes of use ratio,
for the year ended December 31, 1999, increased to 1.91 as compared to 1.83 for
1998.

Local Usage

     Local usage revenues increased by Bs. 37.0 billion (13.9%) to Bs. 303.5
billion in 1999 compared to Bs. 266.5 billion in 1998.  This increase primarily
is attributable to a 4.9% increase in residential and commercial local calling
volumes combined with a real rate increase of 5.4%.  In addition, during the
fourth quarter of 1998, CANTV began implementing EAS in certain parts of
Venezuela, which further contributed to the local usage volume increase.

Domestic Long Distance Usage

     Revenues from domestic long distance usage decreased by Bs. 72.4 billion
(18.9%) to Bs. 311.0 billion in 1999 from Bs. 383.4 billion in 1998.  This
decline is due to volume is attributable to the implementation of EAS during the
fourth quarter of 1998.  In nominal terms, rates increased 22.4% year over year.

Basic Rent

     Basic rent revenues decreased by Bs. 24.3 billion (6.3%) to Bs. 362.7
billion in 1999 compared to Bs. 387.0 billion in 1998.  The decrease was
primarily generated by a reduction of Bs. 16.9 billion (25.2%) in the
installation and subscriber right charges to Bs. 50.1 billion in 1999 from Bs.
67.0 billion in 1998.  Installation and subscriber right fees decreased by 9.8%
in real terms during 1999.  The monthly flat fee decreased by Bs. 7.4 billion
(2.3%) in 1999 to Bs. 312.6 billion compared to Bs. 320.0 billion in 1998.  This
decrease is attributable to a 2.4% decrease of the number of access lines
partially offset by a 1.6% rate increase.

Public Telephones

     Despite the increase in the total number of public telephone units in
service and gross card sales of 6.6% and 9.0%, respectively, net revenues from
public telephones decreased by Bs. 3.6 billion (2.9%) to Bs. 119.7 billion in
1999 compared to Bs. 123.3 billion in 1998 due to increased access fees paid to
cellular service providers.  Increased calling volumes drove this increase in
access fees between CANTV's public telephone and cellular telephones, which grew
by 58.0% in 1999.

International Long Distance

     Total international long distance revenues decreased by Bs. 68.9 billion
(27.4%) to Bs. 182.8 billion compared to Bs. 251.7 billion recorded in 1998.
Revenues from customer charges billed locally decreased by Bs. 53.0 billion
(26.0%) to Bs. 151.0 billion in 1999 from Bs. 204.1 billion recorded in 1998.
This decline is attributable to lower rates combined with a volume decrease of
6.4%.  Tariffs decreased by 18.3% and 1.4% in real and nominal terms,
respectively.


     Settlement revenue with international carriers decreased by Bs. 15.9
billion (33.4%) in 1999 to Bs. 31.8 billion compared to Bs. 47.7 billion
recorded in 1998.  This variance was the result of a real rate decrease of 43.2%
partially offset by a volume increase of 8.8%.  Both years contain revenue
adjustments relating to actual traffic settlements, as well as the contra-
revenue associated with payments to foreign service-provider companies in
accordance with contractual revenue-sharing agreements.  The ratio of incoming
minutes of use to outgoing minutes of use, for the year ended December 31, 1999
increased to 1.91 times compared to 1.83 times for 1998.

                                       80
<PAGE>

     The Company's largest international traffic route is between Venezuela and
North America (the United States, Mexico and Canada), which represented 63.6%
and 67.1% of the minutes recorded in 1999 and 1998, respectively.

Other Wireline-Related Services

     Other wireline-related service revenues increased by Bs. 20.3 billion
(14.2%) to Bs. 162.5 billion in 1999 compared to Bs. 142.2 billion in 1998.
Revenues from data transmission services, including Frame Relay, VPN and VSAT
services increased by Bs. 31.3 billion (42.3%) in 1999 to Bs. 105.4 billion
compared to Bs. 74.1 billion in 1998.  This increase is due to a 19.9% volume
growth combined with a weighted average real rate increase of 34.9%.
Interconnection facilities charges decreased by Bs. 5.9 billion (26.2%) due
primarily to a reduction of access fees received from cellular services
providers in connection with a decrease of interconnection lines.  Other
miscellaneous charges decreased by  Bs. 3.6 billion (8.3%) to Bs. 39.6 billion
compared to Bs. 43.2 billion in 1998.  In September 1998, CANTV made a decision
not to charge late payment fees to permanently disconnected customers due to the
low probability of collecting these charges.  Telex service revenues decreased
by Bs. 1.6 billion (65.7%) to Bs. 0.9 billion in 1999 from Bs. 2.5 billion in
1998.

Wireless Services

     Wireless service revenues increased by Bs. 113.5 billion (32.8%) to Bs.
460.7 billion compared to Bs. 346.1 billion recorded in 1998, reflecting
continued strong growth in the prepaid customer base.

     Growth of 84.8% in the wireless customer base was primarily driven by the
success of prepaid services during 1999.  In 1999, prepaid subscribers increased
by 223.6%, reaching a total of 866,340 customers at December 31,1999, compared
to 267,760 prepaid customers at December 31, 1998.  Postpaid customers decreased
by 15.2% to 314,933 at December 31, 1999 compared to 371,347 at December 31,
1998.

     As a result of the expansion of the customer base, overall penetration,
defined as the number of customers as a percentage of the total population,
improved from 2.8% at December 31, 1998 to 4.9% at December 31, 1999.  The
growth in the prepaid customer segment primarily reflects the higher demand for
affordable wireless communications as well as effective promotional campaigns
which contributed to a 40.2% increase in 1999 total minutes of use over 1998.
Also contributing to the revenue growth were real rate increases in the basic
monthly fee and peak hour usage of 7.8% and 9.0%, respectively, during 1999.
The introduction of the prepaid service has generated a reduction in the ARPU to
U.S.$53 at December 31, 1999 compared to U.S.$64 at December 31, 1998.  Minutes
of use per customer decreased by 21.9% in 1999, to 121 minutes per month from
155 minutes in 1998.

Other Telecommunications-Related Services

     Revenues from other telecommunications-related services, including Internet
services and directory publications, increased by Bs. 7.0 billion (19.1%) to Bs.
43.8 billion in 1999 from Bs. 36.8 billion in 1998.  Internet revenues increased
by Bs. 7.7 billion (91.5%) to Bs. 16.1 billion in 1999 due to a 78.2% increase
in the subscriber base which reached 86,671 at year-end 1999.

Operating Expenses

     Total operating expenses increased by Bs. 76.1 billion (4.3%) to Bs.
1,788.1 billion in 1999 compared to Bs. 1,712.8 in 1998.  This modest increase
was principally the result of a significantly higher operating expenditures and
depreciation and amortization offset by a lower provision for uncollectibles.

                                      81
<PAGE>

     Operations, maintenance, repairs and administrative expenses increased by
20.6% in 1999 to Bs. 862.5 billion compared to Bs. 713.8 billion in 1998.  The
increase is attributable to the increased wireless and Internet operating
expenses necessary to support the rapid growth in the customer base and service
offerings of these high growth businesses.  Expenses include higher marketing
expenses for new advertising campaigns, expanded sales promotions and increased
customer service costs.  CANTV employee separation costs of approximately Bs.
55.6 billion and real salary adjustments granted to union employees, through the
collective bargaining agreement signed in July 1999, also contributed to the
increase.  These increases in expenses were partially offset by reduced wireline
contractors and network maintenance expenses.

     Depreciation and amortization expense increased by Bs. 66.8 billion (11.1%)
to Bs. 666.6 billion in 1999 from Bs. 599.8 billion in 1998.  The increase was
due primarily to Company's ongoing program to expand and digitalize the wireless
network as well as the modernization of the wireline network.

     The provision for uncollectibles decreased by Bs. 140.2 billion (55.0%) to
Bs. 114.7 billion in 1999 from Bs. 254.8 billion in 1998.  The decrease in
uncollectible expenses reflects improvements in CANTV's collections as
management continues to focus on the application of strong credit policies and
improved working capital management. As a result, approximately 453,507 customer
lines, were permanently disconnected during 1999.

     Concession and other taxes decreased by Bs. 4.2 billion (2.9%) to Bs. 140.2
billion in 1999 compared to Bs. 144.4 billion in 1998, mainly due to lower
revenues.

     During December 1999, massive floods impacted Venezuela.  Based on the
information available at the time and the limited access to the impacted areas,
a one-time charge of Bs. 4.1 billion was recorded to cover possible losses.  In
October 2000, the Company received the final payment of the total compensation
related to the damages caused by the floods of Bs. 8.0 billion. Despite the
magnitude of the floods endured, the Company does not believe this natural
disaster will have a material impact on its financial results.

Other Income (Expense), Net

     Total other income (expense), net totaled Bs. 42.0 billion net expense for
1999 compared to Bs. 29.1 billion net expenses for 1998.  This increase was
primarily due to an increase in the loss from net monetary position partially
offset by lower net exchange losses.

     Non-cash inflation loss totaled Bs. 6.6 billion at December 31, 1999.
During 1998, the non-cash inflation gain totaled Bs. 45.5 billion.  This
variance represents a Bs. 52.1 billion loss primarily due to the change in the
Company's monetary position, which changed from an average net liability
position in 1998 to a net asset position for most of 1999 due to the Company's
strong liquid position.  This non-cash inflation loss was partially mitigated by
1999's generally lower inflation of 20.0% compared to 29.9% experienced in 1998.

     Exchange loss, net decreased by Bs. 19.9 billion to Bs. 33.7 at December
31, 1999 compared to Bs. 53.6 billion at December 31, 1998.  The lower loss
results from CANTV's reduction of its net debt position, which was partially
offset by an increase in the devaluation rate to 14.9% as compared to 11.9% in
1998.  The Company's average foreign currency denominated net monetary liability
position decreased by U.S.$216 million in 1999 from U.S.$557 million in 1998.

     Interest income decreased by Bs. 3.7 billion (5.7%) to Bs. 25.3 billion for
1999 from Bs. 21.6 billion for 1998, due to slightly lower interest rates earned
by the Company during 1999.

                                      82
<PAGE>

     Interest expense decreased by Bs. 8.9 billion (16.2%) to Bs. 45.8 billion
in 1999 compared to Bs. 54.7 billion in 1998.  This decrease is primarily
generated by a reduction of the Company's debt of Bs. 53.3 billion in 1999 and
lower interest rates on the Company's debt obligations during 1999 of 8.3%
compared to 8.9% in 1998.

     During 1999, gain from the indexation of tax units increased by Bs. 4.2
billion (49.0%) to Bs. 12.6 billion from Bs. 8.4 billion in 1998 reflecting the
inflation gain on the Company's tax credits based on a Government change in the
tax unit value to Bs. 9,600 from Bs. 7,400 at year-end 1998.

Income Taxes

     The Company's income tax provision increased by Bs. 14.2 billion to Bs.
15.5 billion at December 31, 1999 compared to Bs. 1.3 billion at December 31,
1998.  The increase reflects the 1999 reduction of investment tax credits
resulting from lower capital expenditures, which more than offset the reduction
in taxable income.

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<PAGE>

Financial Condition, Liquidity and Capital Resources

          The following table summarizes cash flow data for the Company for the
years ended December 31, 1998, 1999, and 2000:

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                           ---------------------------------------------------------------------------
                                                     1998/(1)/         1999/(1)/          2000/(1)/        2000 /(2)/
                                                 --------------       -----------      -------------      ------------
<S>                                        <C>                        <C>              <C>                <C>
Cash and temporary investments
   Beginning of the year                          Bs. 165,687        Bs.   155,360      Bs.  366,478       U.S.$   524
                                                     --------            ---------         ---------            ------

Operating activities:
--------------------
Net income (loss)                                     194,955              101,190           (90,193)             (129)
Adjustments to reconcile net income
   to net cash provided by
   operating activities                               862,703              821,675           862,623             1,232
Changes in current assets and
      liabilities                                    (319,450)             (10,537)          108,641               155
Changes in non-current assets and
   liabilities                                         (5,503)             (11,781)            3,893                 6
   Net cash provided by operating                    --------            ---------         ---------            ------
      activities                                      732,705              900,547           884,964             1,264
                                                     --------            ---------         ---------            ------
Investing activities:
--------------------
Capital expenditures, net of disposals               (555,824)            (397,907)         (325,272)             (465)
                                                     --------            ---------         ---------            ------
   Net cash used in investing activities             (555,824)            (397,907)         (325,272)             (465)
                                                     --------            ---------         ---------            ------

Financing activities:
--------------------
Proceeds from borrowings                              225,059                    -            30,660                44
Payments of debt                                     (174,204)             (39,510)          (52,211)              (75)
Dividend payments                                    (198,271)            (184,219)          (64,136)              (92)
Share repurchase                                            -               (3,040)         (213,836)             (305)
                                                     --------            ---------         ---------            ------
   Net cash used in financing activities             (147,416)            (226,769)         (299,523)             (428)
                                                     --------            ---------         ---------            ------

Increase in cash and temporary
   investments before loss in purchasing
   power of cash and temporary investments             29,465              275,871           260,169               371
Loss in purchasing power of cash and
   temporary investments                              (39,792)             (64,753)          (47,990)              (68)
                                                     --------            ---------         ---------            ------
Increase (decrease) in cash and
 temporary Investments                                (10,327)             211,118           212,179               303
                                                     --------            ---------         ---------            ------
Cash and temporary investments
   end of the year                                    155,360              366,478           578,657               827
                                                     ========            =========         =========            ======
</TABLE>
___________________________

(1)   Bolivar amounts are in millions of constant bolivars as of December 31,
      2000.
(2)   Bolivar amounts have been translated into millions of U.S. dollars, solely
      for the convenience of the reader, at the rate of Bs. 700.00 = U.S.$1.00,
      the Daily Exchange Rate on December 31, 2000. See "Item 3. Key
      Information--Selected Financial Data -- Exchange Rates."

Years Ended December 31, 1999 and 2000

          Free cash flow (net cash provided by operating activities minus
capital expenditures) increased by Bs. 57.1 billion to Bs. 559.7 billion as
compared to the same period a year ago. This increase was primarily due to
improved working capital management combined with lower capital expenditures.

          Net cash provided by operating activities decreased Bs. 15.5 billion
(1.7%) to Bs. 885.0 billion for the year ended December 31, 2000 from Bs. 900.5
billion for the year ended December 31, 1999,

                                      84
<PAGE>

primarily due to a decrease of the inventory levels by Bs. 28.2 billion (65.6%)
offset by a decrease of the provision for uncollectibles accounts.

     Capital expenditures decreased by Bs. 72.6 (18.2%) to Bs. 325.3 billion in
2000 compared to Bs. 397.9 billion in 1999.  During 2000, the Company reduced
its investment program.  The reduction in capital expenditures in 2000 from
prior years was primarily due to the smaller incremental capital investments
made to optimize existing plant facilities compared to greater investments made
in plant facilities in prior years.  Capital expenditures in 2000 were also
affected by the continued reduction in the price of new technologies.  Capital
expenditures made during the period were for the expansion and continued
modernization of its wireline network and expansion of its wireless and Internet
platforms. The Company funded these expenditures with internally generated
funds.  See "Item 4. Information on the Company -- Domestic Telephone Services -
- International Long Distance Services -- Wireless Services -- Other
Telecommunications-Related Services."

     Net cash used in financing activities increased by Bs. 72.7 billion (32.1%)
to Bs. 299.5 billion in 2000 compared to Bs. 226.8 billion in 1999.  Net cash
used in financing activities allocated Bs. 213.8 billion to the share repurchase
program at December 31, 2000, Bs. 64.1 billion to dividend payments and Bs. 52.2
billion to debt payments and funded with internally generated funds.

Years Ended December 31, 1998 and 1999

     Free cash flow increased by Bs. 325.8 billion to Bs. 502.6 billion as
compared to the same period a year ago.  This increase was primarily due to
improved working capital management combined with lower capital expenditures.

     Net cash provided by operating activities increased Bs. 167.9 billion
(22.9%) to Bs. 900.5 billion for the year ended December 31, 1999 from Bs. 732.7
billion for the year ended December 31, 1998, primarily due by an improvement of
the provision for uncollectibles accounts, a decrease of the inventory levels
and to lower operating expenses.

     Capital expenditures decreased by Bs. 157.9 (28.4%) to Bs. 397.9 billion in
1999 compared to Bs. 555.8 billion in 1998.  During 1999, the Company reduced
its capital investment program.  Capital expenditures made during the period
were for the continued modernization of its wireline network and the expansion
of both its wireless and Internet platforms. The Company funded these
expenditures with internally generated funds.  See "Item 4. Information on the
Company -- Domestic Telephone Services -- International Long Distance Services -
- Wireless Services -- Other Telecommunications-Related Services."

     Net cash used in financing activities increased by Bs. 79.3 billion (53.8%)
to Bs. 226.8 billion in 1999 compared to Bs. 147.4 billion in 1998.  Net cash
used in financing activities was mainly allocated as follows, Bs. 39.5 billion
in debt payments, Bs. 184.2 billion in dividend payments, and Bs. 3.1 billion in
the share repurchase program at December 31, 1999.  Debt service and dividend
payments were covered with internally generated funds.

Research and Development

     The Company, through its business units, performs multiple market studies
to develop new products and services and to remain competitive. Additionally,
the Company upgrades its systems to adapt the network to the new technological
requirements of new products and services.  These activities are not classified
as research and development expenses by the Company. The Company conducts no
other research and development activities.

                                      85
<PAGE>

Liquidity and Capital Resources

     As of December 31, 2000, the Company's current assets totaled Bs. 1,076.2
billion, an increase of Bs. 48.1 billion (4.7%) compared to Bs. 1,028.1 billion
at December 31, 1999.  The Company's current liabilities totaled Bs. 780.1
billion at December 31, 2000, an increase of Bs. 163.2 billion (26.5%) compared
to Bs. 616.9 billion at December 31, 1999.  As a result, the Company's working
capital ratio decreased slightly to 1.4 at December 31, 2000, from 1.7 at
December 31, 1999. The management believes that the present Company's working
capital is sufficient to meet its actual requirements.

     Accounts receivable from Government entities decreased by Bs. 34.7 billion
(25.2%) during the year, to Bs. 102.8 billion at December 31, 2000 from Bs.
137.5 billion at December 31, 1999.  CANTV has strengthened and restructured its
Government collections group, and is coordinating efforts with appropriate
Government entities in order to facilitate the collection of current and future
Government receivables.  The amounts that Government pays for telecommunications
services are limited by its annual budgets.  On November 3, 1999, the Venezuelan
Congress passed a law authorizing the issuance of bonds to refinance external
and internal debts, as well as other past-due obligations.  The amount of bonds
set aside for payment of debts owed CANTV as of December 31, 1998, under such
legislation amounted to Bs. 63.2 billion.  During 2000, CANTV received a payment
of Bs. 34,089 related to the Government's bond issuance. The Company still faces
uncertainty regarding the timing of collections from Government entities.  See
"Item 3. Key Information -- Risk Factors," "Item 4.  Information on the Company
-- Billing" "and Note 9 to the Audited Financial Statements.

     During 2000, the Company reduced its total debt obligations by Bs. 51.3
billion (11.5%).  As of December 31, 2000, the Company's outstanding
indebtedness totaled Bs. 396.9 billion, with Bs. 55.5 billion classified as
short-term, as compared to total debt of Bs. 448.2 billion with Bs. 60.7 billion
classified as short-term at December 31, 1999.  The Company continues to
maintain a strong capital structure as evidenced by a 12.5% debt-to-equity
position at December 31, 2000.  Management believes that this capital structure
will enable the Company to confront the potential impact of a deterioration in
the Venezuelan economic outlook. The currently outstanding debt of the Company
is mainly denominated in dollars with some debt denominated in Japanese yen.  As
of December 31, 2000, the principal amount of short term debt outstanding was
Bs. 55.490 million and the principal amount of long term debt outstanding was
Bs. 341.370 million.  The total debt of the Company is comprised of bank loans
denominated in foreign currency and bolivars.  At December 31, 2000, the debt
denominated in foreign currency had maturity dates between 2 and 9 years and
average interest rates between 5.9% and 12.4%.  At December 31, 2000, the debt
denominated in bolivars had with maturity dates between 1 and 10 years and
average interest rates between 10.4% and 27.8%.  The notes payable in U.S.
dollars have maturity dates between 2 and 4 years and average interest rates
between 7.0% and 8.9%.  See "Item 11.  Quantitative and Qualitative Disclosures
About Market Risk."

     On June 7, 1996, CANTV entered into an agreement with the International
Finance Corporation (IFC Facility). Pursuant to the IFC Facility, CANTV obtained
loan commitments of U.S.$261 million, of which U.S.$175 million was disbursed.
Of the amount disbursed, U.S.$75 million was used in CANTV's modernization and
expansion program as mandated by the Concession and for certain other capital
expenditures.  The remaining U.S.$100 million represents the conversion of
certain debt outstanding into longer term debt.  In March 1998, CANTV paid
U.S.$150 million of the debt outstanding under the IFC Facility with the
proceeds from the sale of variable interest rate notes issued by CANTV Finance
Ltd., a wholly-owned subsidiary of CANTV, which are unconditionally and
irrevocably guaranteed as to payment of principal and interest by CANTV.  The
principal on the remaining loan is payable as a single payment of U.S.$25
million in 2005.  The interest rate on this loan is based on LIBOR plus a margin
of 1.35% up to 1.75% and an additional amount of up to 3% based on CANTV's
annual net income equivalent in U.S. dollars.

                                      86
<PAGE>

     Under the IFC Facility, CANTV may pay dividends only if it is current with
respect to its semi-annual payments.  In addition, CANTV is required to meet
certain financial ratios, including a long-term debt-to-equity ratio, a current
ratio and a fixed charge coverage ratio, each as defined by the agreement. CANTV
was in compliance with these covenants as of December 31, 2000.

     Movilnet has a line of credit of Bs. 5,131 million at December 31, 2000
with AB Svensk Exporkredit, which is guaranteed by CANTV, and the Swedish Export
Credits Guarantee Board (E.K.N.).  The interest rate on this line of credit is
based on LIBOR plus 0.25% divided by 0.95%, and matures in 2002.  Movilnet paid
financing insurance premiums to E.K.N. of Bs. 4,316 million. These premiums are
recorded as deferred charges and are being amortized over 102 months, under the
terms of the loan agreement.  As of December 31, 2000 and 1999, accumulated
amortization amounts were Bs. 3,434 million and Bs. 2,927 million, respectively.
Under this line of credit, the operating assets of Movilnet cannot be pledged in
connection with any present or future debt that could have a significant impact
on the capacity of Movilnet to comply with its obligations; and the obligation
of the lender to grant and maintain the line of credit will terminate if the
applicable laws and regulations are amended to make such agreements illegal.

     At December 31, 2000 Movilnet's loans from the International Finance
Corporation (IFC) were  Bs. 56,438 million. The interest rates on these loans
are based on LIBOR rate at six months plus 1.75% and 2%, and matures in 2005 and
2007.  Under these agreements, Movilnet may pay dividends provided it is current
with its semiannual payments and in compliance with certain financial ratios
including a long-term debt ratio.  As of December 31, 2000, Movilnet was in
compliance with all of the covenants under this loan agreement.

     During 2000, the Company continued generating strong cash flows due to
strong working capital management combined with lower capital expenditures.
While there is no assurance that current liquidity levels can be maintained in
the future, operating cash inflows are expected to continue to be strong based
on the Company's growth strategies and continued demand for telecommunications
services in Venezuela.

     The Company has met its liquidity requirements in recent years with cash
flows from operations and proceeds from borrowings.  The Company mainly uses the
borrowings for the purchase of equipment through supplier financing
arrangements.  During 2000, the Company acquired new borrowings of Bs. 42
billion to acquire fixed assets according to the investment plans.  The Company
expects to meet its capital requirements from internal funds and short-term bank
loans in the near term.  Based on market conditions, the Company will consider a
number of financing options to meet its capital requirements for the long term
including bank loans and equity and debt issuances.

     The Company has significant capital expenditures and net liabilities
denominated in U.S. dollars and other foreign currencies and expects this to
continue in the future.  The expansion and modernization of the Company's
telecommunications network and the introduction of new services since
privatization have required significant capital expenditures, which have totaled
over U.S.$4.7 billion from January 1, 1992 to December 31, 2000, based on
nominal bolivars converted to U.S. dollars on the basis of average exchange
rates during each year in the relevant period.  These capital expenditures and
improvements have been financed through operating cash flows and debt in U.S.
dollars and Japanese yen.  At December 31, 2000, the Company had net U.S. dollar
and other foreign currency-denominated assets totaling U.S.$130 million.
Reductions in the value of the bolivar against the U.S. dollar and other foreign
currencies have severely affected the business and results of operations of the
Company in the past and may continue to do so in the future.  Although the
Company continually reviews opportunities to minimize its exposure to
devaluation, the Company currently does not engage in hedging activities, as
there is no substantial organized market for financial instruments and
derivatives in Venezuela. If the

                                      87
<PAGE>

value of the bolivar relative to the U.S. dollar and other foreign currencies
were to continue to decline as it did during the period from 1997 to 2000, the
Company's results of operations and stockholders' equity could be adversely
impacted by additional exchange losses. See "Item 3. Key information" and "Item
11. Quantitative and Qualitative Disclosures About Market Risk." The Company
currently has a foreign currency debt reduction plan in order to reduce an
adverse impact due to a strong devaluation.

     The Company's capital expenditures for 2001 are estimated to be U.S.$518
million, with approximately U.S.$394 million dedicated to the wireline business,
U.S.$100 million to the wireless business and U.S.$14 million to Internet and
directory information services and contingencies for U.S.$10 million.  The
capital expenditure program for 2001 maintains similar expenditures compared to
2000.  The Company is prepared to reduce this further if economic conditions
warrant.  Capital expenditures are expected to drop to lower levels in the 2001
to 2004 planning periods.  Based on its current working capital surplus, the
Company believes that it will generate sufficient internal resources to fund
anticipated capital expenditures.

     The Venezuelan Commercial Code, Capital Markets Law and some regulations
issued by the Comision Nacional de Valores ("CNV") regulate the Company's
ability to pay dividends.  In addition, some of the Company's debt agreements
provide for certain restrictions, which limit the ability of the Company to pay
cash dividends.  See Note 16 to the Audited Financial Statements.  The
Commercial Code establishes that dividends shall be paid solely out of "liquid
and collected earnings," and the Capital Markets Law mandates that the Company
distribute every year among its shareholders not less than 50% of its net annual
income, assessed on a non-consolidated basis and without reflecting its share in
the net income of its subsidiaries.  Companies may exceed the minimum income
limit established by the Capital Markets Law and declare dividends in excess of
net annual income.  For example, CANTV obtained net losses of Bs. 90.193 billion
for 2000, there was no income for 2000 dividend payment purposes.  However, at
the general shareholders' meeting held on March 27, 2001 the Company declared
cash dividends to shareholders of record as April 6, 2001, from liquid and
collected earnings of prior years of Bs. 63 per share and Bs. 441 per ADS.  The
Capital Markets Law also provides that at least 25% of such 50% shall be paid to
the shareholders in cash dividends.  However, should the Company have
accumulated losses, any net income shall initially be applied to offset such
deficit.  Until 1996, net income for this purpose was computed as the lesser of
(i) net income according to historical figures or (ii) net income according to
inflation adjusted figures.  However, in May 1997, the CNV modified its
regulations and provided that inflation adjusted net income would be the sole
basis for the calculation of dividend payments.  The requirements of the Capital
Markets Law are subject to the provisions of the Commercial Code, that is,
dividends shall always be paid out of "liquid and collected earnings."

     In October 1998, a new Capital Markets Law was passed.  One of the
principal changes is that dividends must be declared in a shareholders' assembly
during which the shareholders determine the amount, form, and frequency of the
dividend payment, and that dividend policies must be stated in the company's By-
laws.  The CNV cannot exempt a company with publicly traded securities from
paying the minimum dividends required by the Capital Markets Law.  See Note 16
to the Audited Financial Statements for a discussion of additional changes under
the new law.

Recently Issued Accounting Pronouncements

     The Securities and Exchange Commission (SEC) (the "Commission") issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101"), in December 1999. SAB 101 summarizes the SEC staff's views in
applying U.S. GAAP to revenue recognition in financial statements, and
establishes the criteria and attributes to recognize revenues. The Company
believes that its revenue recognition policy is accordance with SAB 101. See
Note 4(i) to the Audited Financial Statements.

                                      88
<PAGE>

     The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes a new model for
accounting and reporting standards for derivatives and hedging activities. The
Company currently does not engage in hedging activities as there is no
substantial market for financial instruments and derivatives in Venezuela and,
therefore, is not required to adopt SFAS 133. See Note 26(f) to the Audited
Financial Statements.

Cautionary Statement Regarding Forward-Looking Statements

     The Company has made forward-looking statements in this Form 20-F based on
the Company's estimates and assumptions which are subject to certain risks and
uncertainties.  These forward-looking statements include information concerning
possible or assumed future results of operations of the Company.  For each of
these statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the U.S. Private Securities Litigation
Reform Act of 1995.  The future results of the Company could be affected by
subsequent events and could differ materially from those expressed in the
forward-looking statements depending on a variety of factors discussed in "Item
5. Operating and Financial Review and Prospects" and elsewhere in this Annual
Report on Form 20-F, including factors set forth under the caption "Risk
Factors."  If future events and actual performance differ from the Company's
assumptions, the actual results could vary significantly from the performance
projected in the forward-looking statements.

                                      89
<PAGE>

Item 6.   Directors, Senior Management and Employees

Directors

     CANTV is managed by its Board of Directors which, in accordance with its
By-laws, consists of the President of CANTV and eight principal directors, each
of whom will have an alternate to act in his or her absence.  The members of the
Board of Directors are elected at the annual shareholder meeting.  Until January
1, 2001, the President and the four principal directors, who comprise a majority
of the Board of Directors, were elected by VenWorld, as the holder of the Class
A Shares, and two principal directors were elected by the Government, as the
holder of the Class B Shares.  After January 1, 2001, VenWorld, as the holder of
the Class A Shares, no longer has special voting rights and votes, together with
all other holders of equity capital of CANTV, to elect any director not elected
by the Government or holders of Class C Shares voting as separate classes.
Also, after January 1, 2001, the Government has the right to elect one principal
director subject to the Government continuing to own at least one Class B Share.
Holders of Class C Shares have had and will continue to have the right, voting
as a separate class, to elect two directors and will continue to have such right
provided such shares represent at least 8% of CANTV's share capital and will
have the right to elect at least one director provided such shares represent at
least 3% but less than 8% of the equity share capital of CANTV.  Holders of
Class D Shares have the right, voting together with all other holders of the
equity capital of CANTV, to elect any director not elected by the Government or
holders of Class C Shares voting as separate classes.  Accordingly, after
January 1, 2001, holders of all shares voting as single class will be entitled
to elect (a) the President and the four principal directors which holders of
Class A Shares had been entitled to elect; (b) one of the two principal
directors which the Government as holder of Class B Shares had been entitled to
elect; and (c) up to two additional principal directors depending on whether
Class C Shares represent less than 8% or 3% of the equity capital of CANTV as
described above and an additional one principal director if the Government
ceases to own any Class B Shares.  The Government has indicated its intention to
retain at least one Class B Share.

     In addition according to recently adopted regulation by the CNV holders of
Class A Shares and holders of Class D Share may be entitled to proportional
representation on the Board of Directors provided such holders represent at
least 20% of CANTV's share capital and meet certain other conditions.  The
entire Board of Directors, and their respective alternates, are elected
annually, and serve until a successor is elected and takes office.  Directors
may be removed and replaced in the same manner they were designated prior to the
end of their term by the same class or classes of stockholders who designated
them as directors.  Until a vacancy is filled, the respective alternate fills
temporary and permanent absences of the principal director.  CANTV's By-laws
require that the Board of Directors meet at least once every three months.  A
quorum at any meeting of the Board of Directors is five members.

                                      90
<PAGE>

     CANTV's current directors are:

<TABLE>
<CAPTION>
                                                                Current Term        Current Position And Present
           Name                         First Appointed             Ends         Principal Occupation or Employment
--------------------------------------------------------       --------------   ------------------------------------
<S>                                     <C>                    <C>              <C>
Elected by all shares voting as a
single class:

President-
    Gustavo Roosen                            June 1995          March 2002      President, Chairman and Chief Executive
                                                                                 Officer, CANTV

Alternate President-
    Kathleen Hishinuma                       March 2000          March 2002      Senior Vice President - Marketing,
                                                                                 Network Services Group,
                                                                                 Verizon Communications Inc.

Directors-
    Vicente Llatas                           March 2000          March 2002      Executive Vice President and Chief
                                                                                 Operating Officer, CANTV

    Fares F. Salloum                         March 1998          March 2002      President International - The Americas,
                                                                                 Verizon Communications Inc.

    Alfred C. Giammarino                     March 2001          March 2002      Senior Vice President & CFO, -
                                                                                 Information Services and International,
                                                                                 Verizon Communications Inc.

    Richard Bulger                         January 2001          March 2002      President,
                                                                                 C.A. Electricidad de Caracas

    Jose Manuel Santero Munoz                March 1999          March 2002      General Director - Mergers &
                                                                                 Acquisitions, Telefonica Data Corp.

Alternate Directors-
    Howard M. Svigals                        March 2001          March 2002      Group Vice President - Finance
                                                                                 International - The Americas,
                                                                                 Verizon Communications Inc.

    Luis Esteban Palacios                 December 1991          March 2002      Palacios, Ortega & Asociados, Partner

    Ruben G. Perlmutter                      March 2001          March 2002      Associate General Counsel - Americas,
                                                                                 Verizon Communications Inc.

    Steve P. Clancy                          March 2001          March 2002      Executive Vice President Finance,
                                                                                 C.A. Electricidad de Caracas

    Arminio Borjas                           March 2001          March 2002      Mendoza, Palacios, Acedo, Borjas &
                                                                                 Asociados, Partner

Elected by the Government
  as holder of Class B Shares:

Director-
    Alberto Maman                            March 2001          March 2002      Engineering Consultant of
                                                                                 Telecommunications
Alternate Director-
    Cesar Quintini Rosales                   March 2001          March 2002      Engineering and Management
                                                                                 Consultant
</TABLE>
                                      91
<PAGE>

<TABLE>
<CAPTION>
                                                                Current Term        Current Position And Present
           Name                         First Appointed             Ends         Principal Occupation or Employment
--------------------------------------------------------       --------------   ------------------------------------
<S>                                     <C>                    <C>              <C>
Elected by CANTV Employees
  and Retirees as holders of Class
  C Shares:

Directors-
    Yelitza Garcia                           March 2001          March 2002      Coordinator to CANTV's Retirees
    Ubaldo Suniaga                           March 2000          March 2002      Technician in Telecommunications,
                                                                                 CANTV
Alternate Directors-
    Luis Parra                               March 2001          March 2002      General Secretary of FETRAJUPTEL
    Carmelo Marquez                          March 2001          March 2002      Human Resources Analyst, CANTV
</TABLE>

Executive Officers

          Until January 1, 2001, the President of CANTV was selected by
VenWorld, as the holder of the Class A Shares. After January 1, 2001, holders of
all shares voting as a single class will be entitled to elect the President. All
other executive officers of CANTV are appointed by the Board of Directors and
hold office at the discretion of the Board.

          The Company's current executive officers are:

<TABLE>
<CAPTION>
                                                                                         Current Position
           Name                                     Position                               Held Since
-----------------------------    -------------------------------------------------    --------------------
<S>                              <C>                                                   <C>
Gustavo Roosen                   President, Chairman and     June 1995                      June 1995
                                 Chief Executive Officer, CANTV

Vicente Llatas                   Executive Vice President and Chief Operating               May 1998
                                 Officer

Bernardo Fischer /(1)/           General Manager, Communications and External               January 2001
                                 Relations

Arnaldo Slavick /(1)/            General Manager, Planning                                  October 2000

Francisco Palma/ (1)/            General Manager, General Counsel                           February 2001

Regulo Carpio                    General Manager, Information Systems                       September 1999

Kathleen de lzaguirre            General Manager, Network                                   March 1998

Luis de Leon                     General Manager, Shared Services                           July 1994

Eloina Perez Di Giacomo/(2)/     General Manager, Regulatory Affairs                        April 2000

Pedro Gonzalez                   General Manager, Human Resources                           June 1998

Armando Yanes                    General Manager, Chief Financial Officer                   July 2000

Miguel Benatuil                  President, CANTV Servicios                                 April 1997

Guillermo Olaizola               President, Movilnet                                        January 1996
</TABLE>

________________

(1)  Acting Generalanager in charge.
(2)  Ms. Eloina Perez has been acting as General Manager, Regulatory Affairs
     since April 2000 and was formally appointed in January 2001.

          Set forth below is additional biographical information concerning
certain Company's directors and executive officers:

          Gustavo Roosen, President, Chairman and Chief Executive Officer,
CANTV. Mr. Roosen has been the President, Chairman and Chief Executive Officer
since June 1995. He was President of Petroleos de Venezuela S.A. from 1992 to
March 1994. He has served as President of the Junta Interventora del Banco
Latino (the Government-created committee charged with reorganizing Banco

                                      92
<PAGE>

Latino) since March 1994, Special Commissioner for the Reform of the National
Financial System since April 1994 and has served and continues to serve on the
boards of directors of many Venezuelan companies, including Envases Venezolanos,
S.A.

     Kathleen K. Hishinuma, Senior Vice President - Marketing, Verizon's Network
Services Group.  Ms. Hishinuma was Vice President - International Business
Services and Support of GTE Corporation from October 1997 through June 2000.
Prior thereto, Ms. Hishinuma was area President for GTE Wireless - Hawaii, a
position she held since 1996.

     Vicente Llatas, Executive Vice President and Chief Operating Officer,
CANTV.  Mr. Llatas has been Executive Vice President and Chief Operating Officer
since May 1998. Currently, Mr. Llatas serves as president of the Venezuelan-
Japanese Chamber of Commerce and is a member of the Engineering Association.  He
is also a member of the Board of Directors of the Venezuelan-Spanish Chamber of
Commerce, and of the Venezuelan Executive Association (AVEX). He became Vice
President of Bitumenes Orinoco, S.A. (BITOR), a subsidiary of Petroleos de
Venezuela, S.A., in 1988.  He was appointed Trading and Supply Coordinator of
Petroleos de Venezuela S.A., in 1990.  In 1994, he was appointed Vice President
of Lagoven, a subsidiary of Petroleos de Venezuela, S.A., and in September 1997
became President of Lagoven until accepting his current position at CANTV.

     Fares F. Salloum, President - International, The Americas, Verizon.  Mr.
Salloum has held his current position since July 2000.  Mr. Salloum has been
Chairman of the Board of Directors and Chief Executive Officer of Grupo
Iusacell, S.A. de C.V. since August 2000, is Chairman of the Board of Directors
of VenWorld, and also serves as a member of the Board of Directors of Telus
Corporation, Compania Dominicana de Telefonos, (CODETEL), Puerto Rico Telephone
Company and CTI Holdings, S.A.  Prior thereto Mr. Salloum was senior Vice
President - International Operations for GTE Corporation beginning in June 1997.
From 1995 until June 1997 he served as Executive Vice President - Communication
Services for BC Telecom, Inc.

     Alfred C. Giammarino, Senior Vice President and Chief Financial Officer -
Information Services and International, Verizon. Previously, he had served as
Senior Vice President-International Finance, Planning and Business Development
for GTE since July 1998. Prior thereto, he had served as Vice President-
International Finance and Planning since 1997 and prior thereto, as Vice
President-Finance since 1995.  Mr. Giammarino is a member of the board of
directors of the Puerto Rico Telephone Company, Grupo: Iusacel, S.A. de C.V., a
NYSE-listed Verizon affiliate and Mexican cellular company, CTI Holdings, S.A.
and FLAG Telecom (UK).

     Richard A. Bulger, Vice President, AES Corporation.  He has served as the
President of C.A. La Electricidad de Caracas, a Venezuelan subsidiary of AES
Corporation since June 2000. Prior thereto Mr. Bulger served as President of AES
Soul from October 1998 to June 2000. Mr. Bulger joined AES Corporation in
December of 1997 and prior thereto he was a director with Price Waterhouse LLP.

     Jose Manuel Santero Munoz, General Director - Mergers & Acquisitions of
Telefonica Data Corp. Since joining Telefonica Data Corp. he was appointed as
General Director of Control and Analysis of Investments. Currently, he is a
member of the board of directors of Venworld, Telefonica Data Brasil Holding,
MediaWays and European Telecom International. Prior to joining Telefonica Data
Corp., Mr. Santero was affiliated with McKinsey.

     Howard M. Svigals, Group Vice President, Finance-International, The
Americas, Verizon. Before assuming his current position, Mr. Svigals was Vice
President - Finance & Planning, responsible for providing financial and planning
support for GTE's international activities.  Mr. Svigals began his career with
GTE in 1977. From 1977 to 1989, he held various positions including Director -
Strategic Financial Plan Development for Telephone Operations; Director -
Capital Markets for GTE; and Vice

                                      93
<PAGE>

President and General Manager of GTE Finance Corp. From 1989 to 1995, Mr.
Svigals held various positions in GTE Spacenet Corp., including that of Vice
President and General Manager. In December 1994, Svigals was named Vice
President - Planning and Development for GTE Wireless. Mr. Svigals also serves
on the Board of Directors of the Puerto Rico Telephone Company; Grupo IUSACELL,
S.A. de C.V., and CTI Holdings, S.A.

     Luis Esteban Palacios W, Partner, Palacios, Ortega & Asociados.  Mr.
Palacios is currently Director of Scout Foundation, alternate Director of Banco
Mercantil C.A. and VenWorld and legal advisor to IBM in Venezuela among others.
Mr. Palacios has held several positions as legal counsel, including subsecretary
to the Board of Directors of the Colegio de Abogados del Distrito Federal and
President of Montepio de Abogados de Venezuela.

     Ruben G. Perlmutter, Associate General Counsel, Americas, Verizon.  Mr.
Perlmutter has held his current position since September 2000. From February
1997 through April 2001, Mr. Perlmutter served as an Executive Officer of Grupo
Iusacell, S.A. de C.V., as Senior Vice President, Mergers & Acquisitions, and
General Counsel from May 2000 through May 2001, and as Vice President, Mergers &
Acquisitions, and General Counsel from February 1997 through April 2000. From
November 1993 until February 1997, Mr. Perlmutter was employed by Bell Atlantic
Network Services, Inc. in its mergers and acquisitions legal group based in
Philadelphia, PA. Mr. Perlmutter is an alternate member of the Board of
Directors of each of Grupo Iusacell, S.A. de C.V., CANTV and VenWorld.  He is
the Secretary of the Board of Directors of VenWorld and an Alternate Secretary
of the Board of Directors of Grupo Iusacell, S.A. de C.V.

     Steve P. Clancy, Chief Financial Officer of C.A. La Electricidad de Caracas
(EDC) and Corporacion EDC, C.A. (CEDC), both subsidiaries of  The AES
Corporation. He is a member of the board of directors of EDC and CEDC, as well
as serving as director of several other subsidiaries and affiliates of The AES
Corporation. Since joining The AES Corporation in 1998, Mr. Clancy has worked in
areas of finance and new business development in South America and the United
States of America. Prior to joining The AES Corporation, Mr. Clancy was a Senior
Manager in the accounting firm Deloitte and Touche in Washington, DC. Mr. Clancy
is a 1987 graduate of San Diego State University.

     Arminio Borjas, Partner, Mendoza, Palacias, Acedo, Borjas & Asociados.
Prior to his current position, Mr. Borjas taught law at the Universidad Catolica
Andres Bello.

     Alberto Maman, Engineer and Consultant.  Prior to serving at CANTV's Board
of Directors, Mr. Marman was Director of Planning at INELECTRA from 1992 until
1998.  Prior thereto he served as consultant to CONATEL from 1991 to 1992 and a
consultant to the Government in connection with the privatization of CANTV from
1989 until 1991.

     Cesar Quintini Rosales, Engineer and Consultant.  Mr. Quintinio has been a
consultant to various Venezuelan private and government entities, including the
Ministry of Energy and Mines and C.A. Energia Electrica de Venezuela.  Mr.
Quintini is a member of the Board of Directors of C.A. Energia Electrica de
Venezuela and C.A. Energia Electrica de la Costa Oriental.

     Bernardo Fisher, General Manager, External Relations (in charge). Mr.
Fisher has served as General Manager of CANTV (in charge) since January 2001.
Prior to that time, Mr. Fisher served as External Communication Manager of CANTV
since 1992. Mr. Fisher also worked in various positions at El Nacional, a
leading Venezuela daily newspaper. Mr. Fisher received a Bachelor of Arts degree
in Communications from Universidad Catolica Andres Bello in Venezuela in 1976.

     Arnaldo Slavick, General Manager, Planning (in charge). Mr. Slavick has
served as General Manager of CANTV (in charge) since October 2000. Prior to that
time, Mr. Slavick served as Planning

                                      94
<PAGE>

Manager of CANTV since 1997. Prior to that time, Mr. Slavick served as Assistant
Project Manager at Andersen Consulting Puerto Rico since 1994 to 1996. He also
served in various positions at Baker & McKenzie and the Company in their
respective offices in Venezuela and the UK.

     Francisco Palma, General Manager, General Counsel (in charge). Mr. Palma
has served as General Manager of CANTV, General Counsel (in charge) since
February 2001.  Mr. Palma serves at Baker & McKenzie as International Partner
since 1979.  Prior thereto, Mr. Palma worked as Director of Administration at
Envases Venezolanos from 1973 to 1975; and from 1966 to 1973 as Counsel &
Industrial Relation Manager at Union Carbide of Venezuela.

     Regulo Carpio, General Manager, Information Systems. Mr. Carpio has served
as General Manager of CANTV, Information Systems since September 1999.  Prior
thereto, Mr. Carpio served as Manager, CANTV 2000 Project since January 1998.
From 1985 to 1989 he served as Consultant for Krygier, Morales y Asociados
(former representation of Arthur Andersen) and from 1989 to 1994 also served as
Systems Manager at Industrias Savoy.

     Kathleen de Izaguirre, General Manager, Network.  Ms. Izaguirre has served
as General Manager of CANTV, Network, since March 1998.  Prior to such time, Ms.
Izaguirre served as Executive Vice President, Planning and Technology and
Corporate Realignment, since June 1997 and as Executive Vice President, Planning
and Technology since July 1996.  She has also occupied various managerial
positions at CANTV and Venezolana de Cementos C.A.

     Luis de Leon, General Manager, Shared Services.  Mr. de Leon has served as
General Manager of CANTV, Shared Services, since July 1994.  Prior thereto, he
served at Cerveceria Polar C.A., a brewery and beer distribution company
incorporated in Venezuela, as Director of Human Resources from 1992 to 1994 and
Director of Operations, from 1986 to 1992.

     Eloina Perez Di Giacomo, General Manager, Regulatory Affairs.  Mrs. Perez
has served as General Manager of CANTV, Regulatory Affairs, since April 2000.
Prior to that time, she served as a consultant for Movilnet, as a legal
consultant to the Ministry of the Secretary of Presidency (1996) and as a legal
consultant to CORDIPLAN.  Additionally, she served as a legal consultant to the
Ministry of Transportation and Communications from 1991 to 1993.

     Pedro Gonzalez, General Manager, Human Resources.  Mr. Gonzalez has served
as General Manager of CANTV, Human Resources, since June 1998.  Prior to that
time, he served as Vice President of Human Resources for Movilnet since December
1995.  From 1992 to 1995, he served as the Vice President of Human Resources for
United Distillers of Venezuela, and from 1978 to 1992 as Human Resources Manager
for Warner Lambert in both Venezuela and Argentina.

     Armando R. Yanes, General Manager, Chief Financial Officer.  Mr. Yanes was
appointed General Manager of CANTV, Chief Financial Officer in July 2000. Prior
to that time he served in various capacities at GTE since 1976. From 1995 to
2000 Mr. Yanes served as Chief Financial Officer in GTE China and from 1993 to
1995 as Controller in Compania de Telefonos del Interior (CTI) in Argentina. He
also served as Director - Budget, Plans & Analysis and Corporate Controller in
GTE Data Services, as Manager - Corporate Audit in GTE Service Corporation.

     Miguel Benatuil, President, CANTV Servicios.  Mr. Benatuil was appointed
President of CANTV Servicios in April 1997.  Since 1983 to 1997 he founded and
managed Infotrol a high-tech enterprise serving the telecommunication and
security markets.  Prior to such time, he founded and managed AETI, a Venezuelan
supplier company of data communication systems for industrial applications from
1978 to 1983.

                                      95
<PAGE>

     Guillermo Olaizola, President, Movilnet.  Mr. Olaizola has served as
President of Movilnet since January 1996.  Prior to that, he founded and served
as President of the following companies:  Logramsa S.A., GlobalNet C.A.,
OpenLink C.A. and TRUEnet C.A., which are engaged in telecommunications related
businesses and Fonomet C.A., which is engaged in the design and manufacture of
metal parts for the electronics industry.  He has also served on the Board of
Directors of CAFADAE, AFETEL, CANAEMTE, FUNDAVAC and FARMATODO.

Compensation

     For the year ended December 31, 2000, the aggregate amount of compensation
paid by the Company to all principal directors, alternate directors and
executive officers was Bs. 1,818 million (U.S.$2.7 million), and the aggregate
amount accrued by the Company to provide pension, retirement or similar benefits
for executive officers, pursuant to existing plans, was Bs. 660.5 million
(U.S.$1.0 million).

Board practices

     The Audit Committee is responsible for assisting in the appointment of
independent auditors to be elected by the annual general meeting of shareholders
and review the scope of external audit services.  The Audit Committee also
provides support to the Board of Directors of CANTV in supervising the correct
application of generally accepted accounting principles, reviewing compliance
with internal control systems, reviewing the annual and semi-annual financial
statements of CANTV and maintaining the integrity of the preparation of
individual and consolidated audits. The members of the Audit Committee are
Messrs. Roosen, Salloum, Svigals, Burgler, Perlmutter, Giammarino and Santero.

Employees

     At December 31, the Company had 15,751, 14,769 and 13,952 employees for the
years 1998, 1999 and 2000, respectively. At April 30, 2001 the Company has
10,166 employees. The company workforce has decreased 3,996 employees from
17,948 from 1996 to 2000 and, primarily as a result of the CANTV workforce
reduction program of January 2001, workforce has decrease 3,786 employees from
December 2000 to April 2001. Non-CANTV employees experienced a smaller decrease
in light of the growth of the Company's wireless and Internet businesses.  In
total, the total number of employees of the Company dropped 5.5% in 2000
compared to 1999.  CANTV had 235 access lines in service per employee at
December 31, 2000, compared to 151 at December 31, 1996.  At April 30, 2001,
CANTV had 361 access lines in service per employee.

     On December 29, 2000 the Company announced a workforce reduction program.
This program was implemented  after a thorough review of business processes to
eliminate non-strategic activities and associated costs in order to improve the
operational and administrative efficiency of the Company. This program resulted
in a special one-time charge of Bs. 110.4 billion included as current accrued
employee benefits and recognized as a special charge in the Company's results of
operation. The program ended on January 19, 2001. Employees affected by this
program received additional severance benefits based on the number of years of
service with CANTV ranging from 30 to 90 basic monthly salary payments.
Employees who were eligible for early retirement received a six-month basic
salary severance payment in addition to a 25% increase in their monthly pension.
As a result of this program, the Company terminated approximately 3,752
employees (approximately 34.0% of CANTV's work force). Any potential effect in
pension and post-retirement benefits associated with this employee reduction
program will be recognized when they occur.  Presently, the Company is
evaluating the impact of the head-count reduction on the Company's pension and
other post-retirement benefits liability.

                                      96
<PAGE>

     At December 31, 2000, approximately 39.2% of CANTV's employees were members
of one of the 28 unions which deal directly with the Company or through
FETRATEL, compared to approximately 99.9% at privatization.  Since
privatization, the Company has experienced work stoppages from time to time of
various durations and levels of participation.  These work stoppages have not
had a material effect on the Company's results of operations.  The most recent
stoppage occurred in connection with contract negotiations when approximately
1,500 of CANTV's workers undertook a 23-day strike in March 1997.  In April
1997, the Government suspended the strike and convened an arbitration panel to
establish a new collective bargaining agreement.  This agreement expired
effective on June 18, 1999.  On September 3, 1999, the Company signed a new
bargaining agreement valid through June 17, 2001.  This agreement contains
various innovative provisions including variable compensation based on the
operational performance of the Company.  The agreement also established a 20%
base salary increase retroactive to June 18, 1999, a Bs. 30,000 weekly salary
increase to all union workers on June 18, 2000, and merit increases in June 2000
and 2001.  Annual profit sharing increased from 110 days to 120 days of salary
and the vacation bonus was increased from 45 days to 48 days.  Moreover, the
agreement modified the obligatory years of service for post-retirement benefits
to 23 years for employees covered after June 1997.  The option to select lump-
sum benefit payments instead of the benefits derived from the retirement program
was also established by this agreement.

     The new collective bargaining agreement provides job security benefits to
employees who have worked for the Company for at least 30 months and were hired
during the period from June 18, 1997 to September 3, 1999. Other employees may
receive similar job security benefits provided they have met certain minimum
service requirements.  Positions may be terminated for just cause.  Venezuelan
law requires that employers pay a severance package to those employees
terminated for just cause.  Effective June 19, 1997, the Venezuelan Congress
enacted a partial amendment to the labor law regarding employee severance
benefits.  Under the new system the retroactive payment was eliminated and
double severance payments applicable to those workers who are dismissed without
just cause were limited.  See Note 4(k) to the Audited Financial Statements.

     CANTV has three pension plans: normal, deferred and special.  The normal
pension plan is available to workers meeting certain age and/or service
criteria.  The deferred pension plan is applicable to those workers that the
Company retains beyond the time of normal retirement.  The special pension plan
is available to certain workers who have completed at least 20 years of service
(14 years for people employed as of June 23, 1995) and who CANTV dismisses
without just cause.  The Company also provides various other benefits to its
employees.

     The Caldera administration passed the Ley del Subsistema de Pensiones, a
partial reform of the Social Security System regarding pensions (the "Pension
Reform").  This law was partially reformed by a recent Statute "Law of Partial
Reform of the Decree N 426," published on January 23, 2001, which postpones the
effective date from January 1, 2001 to January 1, 2002. The Pension Reform is
intended to provide income following retirement and in the case of disability,
as well as provide survivor benefits and funeral assistance.  The Pension Reform
establishes a contributory pension plan for all employees based on a
contribution of approximately 12% to 13% of each employee's salary.  When the
Pension Reform becomes effective, the Company will be required to contribute 75%
of the amount for each employee, with each employee contributing the remaining
25%. The contributions made by the Company and employees will be invested in
private pension funds established under the Pension Reform, and in a public
pension fund.

     In connection with the privatization of CANTV in 1991, the Government,
through the Venezuelan Investment Fund, transferred 110 million of the Company's
Class C Shares, representing 11.0% of the equity share capital of CANTV, to
certain employee trusts ("Employee Trusts").  Eligible employees and retirees
were offered the right to purchase up to 100 million Class C Shares from the
Employee Trusts pursuant to a stock purchase program by paying nominal Bs.
286.0488 per Class C

                                      97
<PAGE>

Share in full in cash or through a non-interest bearing installment payment plan
through salary deductions over a period of up to 12 years (the "1991 Installment
Plan"). The Company does not finance or administer the acquisition of shares by
employees. Any balance due at the end of such period not paid by salary
deductions or pension payment deductions is forgiven, provided that all previous
installment payments have been made. The proceeds from the sale of such Class C
Shares, after deduction of any fees, dividends or distributions, are paid to the
Venezuelan Investment Fund.

     Based upon the number of Class D Shares that were sold in the Initial
Public Offering, the Venezuelan Investment Fund announced its intention to offer
Class C Shares, representing 9% of the equity share capital of CANTV, for
subscription by employees and retirees of CANTV at the bolivar equivalent of one
seventh of the price per ADS in the Initial Public Offering.  In August 1998,
eligible employees and retirees were offered the right to purchase up to 90
million New Class C Shares from the Employee Trusts pursuant to a stock purchase
program ("Stock Purchase Program") established by the Venezuelan Investment
Fund.  In accordance with the Stock Purchase Program, 25% of the 90 million New
Class C Shares were reserved for retirees of CANTV and 75% of the shares were
reserved for active employees of the Company based on employee base salary and
length of employment at August 1996, with no employee eligible for more than
15,000 New Class C Shares.  Under the Stock Purchase Program, eligible employees
were offered a non-interest bearing installment payment plan to purchase the New
Class C Shares through salary deductions over a period up to 12 years, with the
purchase price to be paid in full at the end of this period.  Those employees
still paying for Class C Shares under the 1991 installment plan are granted a
grace period under the Stock Purchase Plan until all prior Class C Shares have
been paid in full.  At that time, salary deductions for the New Class C Shares
purchased will begin, provided that an established percentage of the Class C
Shares have not been sold by the employee or retiree.  If the Class C Shares are
sold, an accelerated payment plan will apply.  In accordance with the Stock
Purchase Plan, dividends paid by CANTV prior to payment in full for the New
Class C Shares are distributed with 50% paid to the Class C shareholder and 50%
applied to the shareholder's unpaid balance of the New Class C Shares.

Share ownership

     As of April 30, 2001, the members of the Board of Directors and executive
officers of CANTV as a group owned an aggregate of 97,346 shares, representing
0.01% of the CANTV's shares issued and outstanding at such date.

Item 7.   Major Shareholders and Related Party Transactions

Major Shareholders

     Until December 1991, CANTV operated under the control of the Government
which owned 100% of the Company's equity share capital.  In December 1991, the
Government, through the Venezuelan Investment Fund, sold 40% of the equity share
capital of CANTV to VenWorld for approximately U.S.$1.885 billion, and provided
for the transfer of 11% of the equity share capital of CANTV to the Employee
Trusts.  In late 1996, the Government sold 348,100,000 additional shares,
representing 34.8% of the Company's equity share capital, in an initial public
offering. Currently, the Government holds the Class B Shares of CANTV and
retains the right to appoint one director to the Board of Directors of CANTV.
Also, the Government, acting through CONATEL, regulates the activities of the
Company.  See "Item 4.  Information on the Company -- Regulatory Framework."
The following table sets forth certain information concerning ownership of the
equity capital shares outstanding of CANTV as of December 31, 2000 and April 30,
2001:

                                      98
<PAGE>

<TABLE>
<CAPTION>
                                                                   At December 31, 2000                  At April 30, 2001
                                                             --------------------------------    --------------------------------
                                                                Number of         Ownership         Number of         Ownership
                                                  Class          Shares          Percentage          Shares          Percentage
                                               -----------   ---------------   --------------    ---------------   --------------
<S>                                            <C>           <C>               <C>               <C>               <C>
VenWorld                                            A          400,000,000         43.19%          400,000,000          43.19%
Venezuelan Investment Fund (1)                      B           51,900,000          5.60%           51,900,000           5.60%
Company employees and retirees (1)(2)               C          101,981,800         11.01%          100,291,773          10.83%
Verizon Communications Inc. (formerly GTE
 Corporation) (3)(4)                                D           32,945,829          3.56%           32,945,829           3.56%

Brandes Investment Partners, L.P.                   D          109,153,023         11.79%          107,319,499          11.59%
Others (4)                                          D          230,056,733         24.85%          233,580,284          25.23%

                                                             ---------------                     ---------------
                                                               926,037,385                         926,037,385
                                                             ===============                     ===============
</TABLE>
______________________________

(1)  In August 1998, the Venezuelan Investment Fund transferred 90 million Class
     B Shares (representing 9% of the equity share capital of CANTV) to the
     Employee Trusts as New Class C Shares for subscription by employees and
     retirees of CANTV, as provided for at the time of the Initial Public
     Offering.
(2)  Class C Shares held directly or through the Employee Trusts.
(3)  Verizon, acting through its indirect wholly-owned subsidiary, GTE
     Venezuelan Telephone Incorporated ("GTE"), purchased 7,823,200 ADSs, for an
     aggregate purchase price of approximately U.S.$190 million, in the Initial
     Public Offering and in transactions consummated following the completion of
     the Initial Public Offering. In December 1998, GTE exchanged 3,116,653 ADSs
     for 7,728,307 shares in VenWorld held by a trust administered by Banco
     Mercantil, C.A., S.A.C.A. (Banco Universal) Fiduciary. As of December 31,
     2000, GTE owns ADSs representing an aggregate of 32,945,829 Class D Shares,
     and owns 57.8% of the equity share capital of VenWorld.
(4)  Includes Class D Shares held by The Bank of New York as depositary for
     American Depositary Receipts of CANTV, each of which represents seven Class
     D Shares.

          As of December 31, 2000 the Company estimates that 52,756,720 ADSs
were held in the United States representing approximately 89.17% of total Class
D Shares outstanding. The number of record holders of its Class D Shares (or of
ADSs representing its Class D Shares) in the United States was 70 at December
31, 2000.

     VenWorld is a corporation organized under the laws of Venezuela by a
private consortium of companies, including subsidiaries of Verizon (57.8%),
Telefonica de Espana (16.0%), AES Corporation (16.0%) and AT&T Corporation
(5.0%). The remaining 5.2% of the equity share capital of VenWorld is owned by
Banco Mercantil, C.A., S.A.C.A. and approximately 180 beneficiaries of a trust
established by the bank when one of its affiliates, an original shareholder of
VenWorld, liquidated in 1995. This trust is in the process of dissolution. As of
April 15, 2001, 131 shareholders representing 4,140,146 VenWorld shares (or 3.6%
of the equity share capital of VenWorld), had exercised their right to withdraw
from the trust.

          Under VenWorld's By-laws, Participants in the Consortium have the
right to have VenWorld redeem all or a part of their shares in VenWorld in
exchange for CANTV Class A Shares. On May 8, 2001, AT&T exercised its right to
have its 5% stake in VenWorld redeemed. On May 15, 2001, Electricidad de Caracas
announced in the Venezuelan press that it has solicited the redemption of its
16% stake in VenWorld. A VenWorld shareholder must offer to sell the CANTV
shares to be received in exchange for the redeemable shares of VenWorld to the
remaining Participants in the Corsortium before exercising its right of
redemption at a selling price equal to 95% of the average ADR closing price
during the eight consecutive trading day period following the ninth day after
the filing of a solicitation for redemption pursuant to VenWorld By-laws.
Remaining Participants in the Consortium are entitled to buy the CANTV's shares
exchangeable for the redeemable shares in proportion to their relative ownership
in VenWorld or, alternatively, one member may purchase all redeemable shares if
other members choose not to purchase any redeemable shares. As of April 30,
2001, the number of CANTV's shares exchangeable

                                      99
<PAGE>

for the redeemable shares of AT&T and Electricidad de Caracas combined represent
approximately 9% of the capital stock of CANTV. Remaining Participants in the
Consortium are required to announce their intention to purchase the CANTV shares
exchangeable for the redeemable shares of VenWorld within 30 days from the date
of the solicitation for redemption. If no Participants in the Consortium
purchase the CANTV Class A Shares received upon redemption of VenWorld Shares,
these shares become CANTV Class D Shares when they are sold to the public.

     The Employee Trusts were established to facilitate the sale of Class C
Shares pursuant to a stock purchase program established for certain employees
and retirees of the Company.

     In August 1998, eligible employees and retirees were offered the right to
purchase up to 90 million New Class C Shares from the Employee Trusts pursuant
to a Stock Purchase Program established by the Venezuelan Investment Fund.  In
accordance with the Stock Purchase Program, 25% of the 90 million New Class C
Shares were reserved for retirees of CANTV and 75% of the shares were reserved
for active employees of the Company based on the employee's base salary and
length of employment at August 1996, with no employee eligible for more than
15,000 New Class C Shares.  Under the Stock Purchase Program, eligible employees
were offered a non-interest bearing installment payment plan to purchase the New
Class C Shares through salary deductions over a period up to 12 years, with the
purchase price to be paid in full at the end of this period.  Those employees
still paying for Class C Shares under the 1991 Installment Plan are granted a
grace period under the Stock Purchase Plan until all prior Class C Shares have
been paid in full.  At that time, salary deductions for the New Class C Shares
purchased will begin, provided that an established percentage of the Class C
shares have not been sold by the employee or retiree.  If the Class C Shares are
sold, an accelerated payment plan will apply.  In accordance with the Stock
Purchase Plan, dividends paid by CANTV prior to payment in full for the New
Class C Shares are distributed with 50% paid to the Class C shareholder and 50%
applied to the shareholder's unpaid balance of the New Class C Shares.

     Between November 1999 and September 2000, the Company implemented two share
repurchase programs.  As a result of these programs, the Company acquired
73,962,616 of the outstanding shares (equivalent to 10,566,088 ADSs) of CANTV,
representing approximately 7.4% of the total number of CANTV shares outstanding
on October 31, 1999 for approximately Bs. 210 billion (U.S.$300 million at the
Daily Exchange Rate on December 31, 2000).  The weighted average price for these
purchases was Bs. 2,839 per share, equivalent U.S.$28.39 per ADS, based on Daily
Exchange Rates at December 31, 2000.  These repurchased shares were canceled on
December 5, 2000.

     The Capital Markets Law limits each repurchase program to six months and
requires publication of a maximum repurchase price per share and a maximum
number of shares to be repurchased.

     On November 16, 1999 an extraordinary shareholders' assembly authorized a
share repurchase program for up to 50,000,000 of CANTV's outstanding Class C
Shares and Class D Shares, which terminated on April 18, 2000 (the "1999
Repurchase Program").  The 1999 Repurchase Program specified a maximum
repurchase price of Bs. 3,696 per share or up to U.S.$40 per ADS and a maximum
volume of up to 5% of the outstanding shares.  Under the 1999 Repurchase Program
the Company acquired 35,775,957 Class D Shares (5,110,851 ADS) at a weighted
average price of Bs. 2,794 per share, equivalent to U.S.$29.39 per ADS.  No
Class C Shares were repurchased.

     On March 31, 2000 an extraordinary shareholders' assembly authorized a new
share repurchase program for 50,000,000 of CANTV's outstanding Class C Shares
and Class D Shares, for the period of April 1, 2000 to September 18, 2000 (the
"2000 Repurchase Program'').   The 2000 Repurchase Program specified a maximum
purchase price of Bs. 4,871 per share or up to U.S.$50 per ADS and a maximum
volume of up to 5% of the outstanding shares (10% when combined with shares
repurchased under the 1999 Repurchase Program).  Under the 2000 repurchase
program the Company acquired 20,846,931

                                      100
<PAGE>

Class D Shares (2,978,133 ADSs) and 17,339,728 Class C Shares at a weighted
average price of Bs. 2,710 per share, equivalent to U.S.$27.50 per ADS.

     As part of the 1999 Repurchase Program, Class C shareholders were permitted
to offer for sale to the Company a portion of the shares purchased either at the
time of privatization (11%) or at the Initial Public Offering (9%) during the
period from February 25, 2000, through March 14, 2000.  During this time period,
Class C shareholders offered over 28 million Class C Shares to the Company.  The
Company did not purchase these shares under 1999 Repurchase Program. Under the
2000 Repurchase Program, the Company purchased 17 million of the 28 million of
the Class C Shares offered. See Note 16 to the Audited Financial Statements.

Related Party Transactions

     In the ordinary course of its business, the Company engages in a variety of
transactions with members of VenWorld and their respective affiliates.
Inventories, supplies, plant and equipment of Bs. 33.9 billion, Bs. 26.8 billion
and Bs. 22.3 billion for the years ended December 31, 1998, 1999 and 2000,
respectively, and Bs. 87.0 million at April 30, 2001 were purchased from
affiliates of VenWorld's stockholders. These same affiliates provided technical
and administrative services to the Company at a total cost of Bs. 7.5 billion,
Bs. 22.6 billion, and Bs. 18.8 billion for the years ended December 31, 1998,
1999 and 2000, respectively and Bs. 8.3 billion at April 30, 2001. Net operating
revenues of Bs. 15.5 billion, Bs. 11.5 billion and Bs. 21.2 billion, were
recognized for the years ended December 31, 1998, 1999 and 2000, respectively,
with respect to the settlement of international telephone traffic with
affiliates. The Company has recorded net payables to Verizon and AT&T affiliates
for all such transactions of Bs. 8.5 billion and Bs. 1.2 billion, respectively,
at December 31, 1999 and Bs. 21.0 billion and Bs. 0.8 billion, respectively, at
December 31, 2000 and Bs. 16 billion and Bs. 1.0 billion, respectively, at April
30, 2001.

     During 1996, Movilnet received a long-term loan of U.S.$17 million from
CANTV for use primarily in the expansion plan corresponding to 1997. This amount
is divided into two loans: the "A" loan of U.S.$6.29 million and the "B" loan of
U.S.$10.71 million.  Both loans bear an interest rate at the six month average
LIBOR rate, plus a financial margin. These loans are being amortized in semi-
annual from 1998 through 2003.

     In April 1998, Movilnet obtained from CANTV, a long-term loan of Bs. 18,500
million , which was utilized to pay short-term trade debt.  This loan was going
to be amortized in 12 monthly installments beginning April 2000. In December
1999, the term of the loan was changed to 5 years to be amortized with a single
payment in April 2004 with no interest payments due during the first year of the
term of the loan. The maximum interest rate that CANTV may collect to Movilnet
is calculated on a quarterly basis at the interest rate applied to ninety-day
loan operations by the three major banks in number of deposits.

     In December 1999, Movilnet obtained a line of credit from CANTV amounting
to U.S.$100 million, which was used for the investment plan financing for year
2000. Such line of credit bears interest based on market interest rates. In
December 1999, Movilnet used U.S.$95 million, of this line of credit. This loan
has a five-year term maturity and will be amortized with one payment in 2004
with no interest payments due during the first year of the term of the loan.

     In December 1999, Movilnet issued two promissory notes to CANTV for Bs.
9,264 million and Bs. 3,964 million, respectively. Such promissory notes bear
interest calculated on a quarterly basis at the interest rate applied to ninety-
day loan operations by the three major Venezuelan banks in number of deposits.
These promissory notes have a five-year term maturity and will be amortized with
one payment in 2004 with no interest payments due during the first year of the
term of the loan.

Interest of Experts and Counsel

     Not applicable.

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<PAGE>

Item 8.   Financial Information

Consolidated Financial Information

     See "Item 19.  Financial Statement and Exhibits" for a list of financial
statements filed under  Item 18.

Other Financial Information

Legal Proceedings

     The Company is involved in numerous administrative and judicial
proceedings. The majority of these legal proceedings have been filed by former
employees requesting additional severance benefits. Based on the opinion of its
external legal counsel handling these proceedings, management considers that the
majority of these actions will be resolved in the Company's favor. Nevertheless,
management believes that the Company has recorded adequate reserves as of
December 31, 2000 for all such matters. There are no legal pending proceedings,
other than ordinary routine litigation incidental to the Company's business,
which are material to the Company.

     In May 2000, the Supreme Court of Justice rendered a judgment against CANTV
concluding that retirement of a number of former employees was unlawful. In
September 2000, a lower court following the Supreme Court's judgment ordered
CANTV to rehire about 140 former employees. The Company is presently appealing
this decision, and evaluating the impact of this sentence on the financial
statements of the Company if such sentence prevails.

     On July 7, 2000, CANTV was fined Bs. 1.8 billion (U.S.$2.7 million) by the
Superintendent of Promotion and Protection of Free Competition ("Pro-
Competencia"). Pro-Competencia claims that CANTV has abused its dominant
position in the market to favor its subsidiary CANTV Servicios. In August 2000,
CANTV filed an action of nullity in the First Court of Appeals in Administrative
Matters. See Note 20(c) to the Audited Financial Statements.

Dividend Policy

     The Venezuelan Commercial Code, Capital Markets Law and some regulations
issued by the CNV regulate the Company's ability to pay dividends.  In addition,
some of the Company's debt agreements provide for certain restrictions, which
limit the ability of the Company to pay cash dividends.  See "Item 5.  Operating
and Financial Review and Prospects -- Liquidity and Capital Resources," "Item
10. Additional Information -- Memorandum and Articles of Association --
Dividends," and Note 16 to the Audited Financial Statements.

Subsequent Events

Workforce Reduction

     On December 29, 2000 the Company announced a workforce reduction program.
This program was implemented after a thorough review of business processes to
eliminate non-strategic activities and associated costs in order to improve the
operational and administrative efficiency of the Company. This program resulted
in a special one-time charge of Bs. 110.4 billion included as current accrued
employee benefits and recognized as a special charge in the Company's results of
operation. The program ended on January 19, 2001. As a result of this program,
the Company terminated approximately 3,752 employees (approximately 34.0% of
CANTV's work force). See "Item 4. Information on the Company -- Workforce
Reduction."

                                      102
<PAGE>

Item 9.   The Offer and Listing

Offer and Listing Details

     Not applicable.

Plan of Distribution

     Not applicable.

Trading Markets

     Following the Initial Public Offering of the Company's Class D Shares on
November 22, 1996, the Company's Class D stock began trading on the Caracas
Stock Exchange, the smaller Maracaibo Stock Exchange, and the Electronic Stock
Exchange in Venezuela.  Following the Initial Public Offering, ADSs, each
representing 7 Class D Shares, began trading on the New York Stock Exchange.
The Bank of New York is acting as Depositary in connection with the ADSs.

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     The table below sets forth, for the periods indicated, the reported high
and low sale prices for the Class D Shares on the Caracas Stock Exchange:

                                            Caracas Stock Exchange
                                ----------------------------------------------
                                  High              Low            Average
                                 (Bs.)             (Bs.)        Trading Volume
                                --------          --------      --------------
Annual highs and lows
   1996                         1,911.00          1,648.00          216,039
   1997                         3,500.00          1,845.00          156,078
   1998                         3,185.00            880.00          127,637
   1999                         2,640.00          1,200.00          129,968
   2000                         2,750.00          1,571.00          155,888

Quarterly highs and lows
1999
   1st quarter                  1,600.00          1,200.00           85,913
   2nd quarter                  2,640.00          1,400.00          202,325
   3rd quarter                  2,505.00          1,700.00          128,568
   4th quarter                  2,501.00          1,935.00          103,066
2000
   1st quarter                  3,620.00          2,213.00          176,815
   2nd quarter                  3,100.00          2,250.00          340,369
   3rd quarter                  2,750.00          2,050.00           58,716
   4th quarter                  2,485.00          1,571.00           47,653

Monthly highs and lows
2000
   July                         2,725.00          2,460.00           49,972
   August                       2,465.00          2,050.00           36,766
   September                    2,750.00          2,350.00           89,207
   October                      2,485.00          1,825.00           33,263
   November                     2,100.00          1,571.00           37,385
   December                     2,150.00          1,600.00           74,906

2001
   January                      2,700.00          1,930.00           91,373
   February                     2,460.00          2,090.00           40,118
   March                        2,300.00          1,925.00           76,284
   April                        2,400.00          1,920.00           56,228

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     The table sets forth, for the periods indicated, the reported annual high
and low sale prices for the ADSs on the New York Stock Exchange:

                                           New York Stock Exchange
                                 ---------------------------------------------
                                  High              Low            Average
                                 (U.S.$)          (U.S.$)       Trading Volume
                                 -------          -------       --------------
Annual highs and lows
   1996                          28- 1/8          24-7/8            977,165
   1997                          44-13/20         27-1/4            346,879
   1998                          42-15/16         10-1/8            482,539
   1999                          31               14-3/4            236,424
   2000                          39               15-9/16           190,143

1999
   1st quarter                   18-1/5           14-3/4            211,431
   2nd quarter                   31               17                311,789
   3rd quarter                   28               19-15/16          197,453
   4th quarter                   27-3/16          21-3/4            225,023

2000
   1st quarter                   39               24-3/16           298,324
   2nd quarter                   32-1/2           23-1/4            184,887
   3rd quarter                   28-5/16          20-3/4            166,184
   4th quarter                   25-1/4           15-9/16           111,176
Monthly highs and lows
2000
   July                          28-5/16          24-11/16          159,458
   August                        25-1/16          20-3/4            195,613
   September                     27-15/16         23-3/8            144,545
   October                       25-1/4           17-15/16          118,818
   November                      21-1/8           15-9/16            98,805
   December                      21-3/4           15-7/8            115,760

2001
   January                       26-11/16         18-7/8            173,548
   February                      24-3/5           20-1/2            153,705
   March                         22-19/20         18-9/10           134,932
   April                         24-3/20          18-1/4            155,755

Selling Shareholders

     Not applicable.

Dilution

     Not applicable.

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<PAGE>

Item 10.  Additional Information

Share Capital

     Not applicable.

Memorandum and Articles of Association

     For information relating to the provisions of CANTV's By-laws, as currently
in effect, and of Venezuelan law, see CANTV's Registration Statement on Form F-1
(Registration No. 333-5840), which we are hereby incorporating by reference into
this Annual Report.

Organization and Register

     CANTV is a company incorporated ("compania anonima") under the laws of
Venezuela.  It is registered in the First Registry of Commerce of the Federal
District and State of Miranda under file number 405.  CANTV is domiciled in the
city of Caracas, Venezuela.

Corporate Governance

     CANTV is governed by a Board of Directors and the Stockholders' Assembly.
Their powers are defined by the Venezuelan Commercial Code and by CANTV's By-
laws.

     The Board of Directors authorizes any contracts which may be necessary in
the pursuit of the Company's objectives.  It also lays down the policies for the
preparation of the Company's plans, programs, budgets and employee compensation
policies, recommends the amount of dividends to be submitted to stockholders for
consideration, approves business and accounting reports for submission to
stockholders' meetings, recommends and establishes administrative policies and
creates such management and/or consulting committees as it deems advisable in
the interests of the Company.  The Board of Directors consists of nine
Directors, each of them having an alternate.  The members of the Board of
Directors are designated at the Stockholders' Assembly.

     The Stockholders' Assembly appoints and removes the members of the Board of
Directors, discusses, authorizes the sale of corporate assets, authorizes any
increase in the capital stock of the Company, declares dividends to be
distributed to stockholders, authorizes amendments to the By-laws, approves or
modifies the balance sheet submitted by the Board of Directors, with a review of
the statutory auditor's report.  The Stockholders' Assembly must be convened
annually within three months following the end of each fiscal year of the
Company, and may also be convened on extraordinary occasions.

     Several additional corporate governance provisions applicable to CANTV are
summarized below.

Objectives and Purposes

     Article 2 of CANTV's By-laws states that the purpose of the Company is to
administer, provide, develop and operate local telephone and national and
international long distance telephone services; national and international
telex; radio telephone, and cellular telephone services; value-added services;
telephotography, data transmission, means for transmitting television and radio
broadcasting programs, supply of telegraphic channels and any other
telecommunications service; possess telecommunications equipment and facilities;
adopt and exploit new services determined by technical advances in
telecommunications; issue bonds and obligations in accordance with legal
requirements; execute agreements or enter into arrangements with foreign
governments or companies on everything related to

                                      106
<PAGE>

the activities of the Company; participate in associations, institutes or
international groups devoted to the improvement of telecommunications or to
scientific and technology research; participate in international agencies
organizations engaged in telecommunications; and, promote and create companies
to perform activities related to and connected with those constituting the
corporate purpose. CANTV may also carry out all commercial acts directly or
indirectly related to its corporate purpose.

Directors

     The By-laws provide that resolutions of the Board of Directors shall be
passed by an absolute majority vote of the Directors in attendance who are not
prohibited by law to vote on the subject matter of the meeting.

     The By-laws also provide that the Company must refrain from entering into
any transaction that is related to or involves (i) any person or entity directly
or indirectly controlling the Company or any stockholder or affiliate of such a
person or entity, (ii) any stockholder holding shares representing more than 1%
of the capital stock of the Company or any affiliate of such a stockholder or
(iii) any Director of the Company or an entity in which a Director has a direct
or indirect interest, unless any such transaction is made upon terms as
favorable to the Company as those it could obtain from a non-related third
party.   Any transaction entered into in contravention of these provisions of
the By-laws is not enforceable against the Company, and the Directors taking
part in such a transaction may be deemed to have incurred a material fault that
may result in their removal.

     Under Venezuelan law, CANTV's Board of Directors owe a duty of loyalty and
care to CANTV.  They must exercise the standard of care of a prudent and
diligent businessman and bear the burden of proving they did so if their actions
are contested.  The Board of Directors must consider the interests of CANTV's
shareholders and its workers and, to some extent, the public interest. Those
Directors who violate their duties may be held jointly and severally liable for
any resulting damages, unless their actions were validly approved by resolution
at a stockholders' meeting. Furthermore, a member of the Board of Directors may
not receive a loan from CANTV unless approved by the Board of Directors, and may
not vote or deliberate on a matter that concerns ratification of his own acts or
in which he has a material interest. See "Item 6. Directors, Senior Management
and Employees" for further information about the Board of Directors.

     Under the By-laws, the Directors do not have the power to vote on
compensation matters relating to directors including benefits, retirements
benefits based on age-limit requirements. Directors may not establish
shareholding requirements to qualify as director. CANTV's By-laws require
Directors with proven experience, executive capacity, and competence to manage
the operations of the Company.

Shares

     The share capital of CANTV consists of four classes of shares, designated
as Class A, Class B Class C and Class D.

     Class A Shares are owned by VenWorld, a company incorporated under the laws
of Venezuela by a private consortium of companies and 57.8%-owned by a
subsidiary of Verizon.  Any transfer of Class A Shares to any person or entity
that is not a part of the consortium of companies and individuals which comprise
VenWorld, or to any affiliated company wholly owned or controlled by these
companies, will cause such transferred shares to be automatically converted into
an equal number of Class D Shares upon such transfer.

     Class B Shares may be owned by the Government and other Venezuelan public
sector entities.  The transfer of Class B Shares to a private sector person or
entity will cause such transferred shares to be

                                      107
<PAGE>

automatically converted into an equal number of Class D Shares upon transfer of
the shares, except upon transfer to employees or retirees of CANTV which causes
such transferred shares to be automatically converted into an equal number of
Class C Shares upon such transfer.

     Class C Shares may be owned only by employees of the Company, retirees,
companies 100%-owned by such employees or retirees and whose sole corporate
purpose is the acquisition and ownership of such shares, trusts and benefit
plans established for such employees or retirees, former Company employees who
elect to retain their Class C Shares upon termination of employment, Company
employees, former employees' or retirees' former spouses who receive Class C
Shares through partition of marital property, and Company employees', former
employees' or retirees' heirs who receive Class C Shares in succession. Any
transfer of Class C Shares to any person or entity other than those listed in
the previous sentence, will cause such transferred shares to be automatically
converted to Class D Shares.

     Class D Shares are not subject to any restrictions in the By-laws relating
to ownership or transfer.

     Share certificates are numbered and may include any number of shares.  The
certificates indicate the class of shares they represent, bear the seal of the
Company and are signed by two Directors.  Record holders of ordinary shares are
registered in CANTV's share register, which is administered on behalf of the
Company by Banco Venezolano de Credito, S.A.C.A., as transfer agent and
registrar in Venezuela.  The Depositary in the United States acts as transfer
agent and registrar in respect of holders of ADSs.

Dividends

     The Venezuelan Capital Markets Law provides that dividends must be declared
in a stockholders' assembly during which the stockholders determine the amount,
form and frequency of the dividend payment, and that dividend policies must be
stated in the company's By-laws.

     The Venezuelan Commercial Code establishes that dividends must be paid
solely out of "liquid and collected earnings," and the Capital Markets Law
mandates that the Company distribute every year among its shareholders not less
than 50% of its of its net annual income, assessed on a non-consolidated basis
and without reflecting its share in the net income of its subsidiaries.
Likewise, the Capital Markets Law provides that at least 25% of such 50% shall
be paid to shareholders in cash dividends.  However, should the Company have
accumulated losses, any net income shall initially be applied to offset such
deficit.  Regulations by the CNV provide that inflation adjusted net income is
the sole basis for the calculation of dividend payments.  The CNV cannot exempt
a company with publicly traded securities from paying the minimum dividends
required by the Capital Markets Law.

Voting Rights

     The By-laws state that each share of CANTV, regardless of class
designation, is entitled to one vote on all matters submitted for the approval
for CANTV's stockholders at a Stockholders' Assembly.  In general, matters
submitted to a vote at a Stockholders' Assembly will be adopted only if a
majority of the holders of the shares present at such Assembly vote in favor of
such matters.  The quorum and majority established in the By-laws are applicable
even in situations where the Venezuelan Commercial Code requires a greater
quorum or majority.

     However, the By-laws also require a vote of holders of the majority of the
Class B Shares for decisions concerning, among others, the dissolution of CANTV,
mergers or other extraordinary corporate transactions, the reimbursement or
reduction of the capital of CANTV and authorization for the sale of CANTV's
assets.

                                      108
<PAGE>

     A vote of holders of a majority of the Class B Shares is also required to
amend the By-laws in relation to corporate purpose, classification of share
capital and the rights accorded to the classes of capital shares, stockholders'
meeting, notices and quorum requirements, composition of the Board of Directors
and Board of Directors' meetings, notices and quorum requirements, provisions
related to the approval of transactions by the Board of Directors and provisions
requiring the approval of a certain classes of shares.

Stockholders' Assembly

     Ordinary Stockholders' Assemblies must take place within 3 months after the
end of each fiscal year.  Any other general stockholders' meeting is an
extraordinary Stockholders' Assembly and may be called by the Board of
Directors, the two statutory auditors, who are appointed by the Stockholders'
Assembly together with two alternate statutory auditors for a term of one year,
or stockholders representing at least 20% of the equity share capital of CANTV.
The quorum required for either an ordinary or extraordinary Stockholders'
Assembly consists of shares representing at least 50% of the votes of the equity
share capital or, in the case of a meeting convened solely for the purpose of
election or removal of directors, shares representing at least 50% of the votes
of the equity share capital entitled to vote with respect to such directors.

     Ordinary Stockholders' Assemblies are called to consider the annual report
of CANTV and its financial statements, elect the Board of Directors and the two
principal Statutory Auditors and their alternates, declare dividends and to
consider any other matter that may be properly presented to the meeting.

     In order to be entitled to participate and vote at the meeting, a
shareholder must be registered in the share register on the meeting date, and
must also have notified the Company no later than on the third day before the
meeting date that he or she wishes to attend the meeting. Instead of voting in
person at the meeting, shareholders in North America may vote their shares by
proxy by signing and returning the proxy card mailed to them in advance of the
meeting. A notice of the meeting, an agenda describing the items to be voted on
at the meeting, and a short form annual report accompany the proxy card. As a
foreign private issuer, the Company is not required to file a proxy statement
under U.S. securities law. The proxy voting process for the Company's
shareholders in North America is substantially similar to the process utilized
by publicly held companies incorporated in the United States.

     Amendments to the Company's By-laws must be effected by an absolute
majority vote of the Stockholders' Assembly.  Amendments to the By-laws relating
to specified issues require a vote of a majority of holders of Class B Shares.
See "Voting Rights."

Change in Control

     There are no provisions in the By-laws that would have an effect of
delaying, deferring or preventing a change in control of CANTV and that would
only operate with respect to a merger, acquisition or corporate restructuring
involving it or any of its subsidiaries.

Disclosure of Share Holdings

     CANTV's By-laws do not require shareholders to disclose their share
holdings.

Material Contracts

     Not applicable.

                                      109
<PAGE>

Exchange Controls

     There are currently no restrictions under Venezuelan law on export or
import of capital including foreign exchange controls, restrictions on payments
or remittance of dividends.  However, due to Venezuela's macroeconomic
condition, the Government has imposed exchange controls on foreign exchange
transactions and fixed the exchange rate during certain periods.

     On June 27, 1994, the Government established certain foreign currency
exchange controls and soon thereafter fixed the official bolivar/U.S. dollar
exchange rate.  The rate was originally fixed as Bs. 170.00 per U.S. dollar and
was adjusted to Bs. 290.00 per U.S. dollar in December 1995.  These controls,
together with economic conditions in Venezuela, forced the Company to seek to
restructure its debt obligations in 1995.  Such controls also limited the
ability of foreign investors to repatriate capital and of Venezuelan companies
to remit dividends in shares of Venezuelan companies represented by ADSs, ADRs,
Global Depositary Shares or Global Depositary Receipts.  These controls were
removed on April 22, 1996.  Since July 1996, the Central Bank of Venezuela has
intervened to maintain the exchange rate between 7.5% above and 7.5% below the
reference rate.  The reference rate was originally set at Bs. 470.00 per U.S.
dollar and is adjusted from time to time to account for projected inflation.  On
January 14, 1998, the reference rate was reset to Bs. 508.50 per U.S. dollar and
the Central Bank of Venezuela announced that it would adjust the reference rate
by 1.16% to 1.28% monthly.  Under this policy, the reference rate was Bs. 686.54
per U.S. dollar at December 31, 1999 and Bs. 700.00 per U.S. dollar at December
31, 2000.

Venezuelan Tax Considerations

     The following summarizes the principal Venezuelan tax consequences under
Venezuelan law of the purchase, ownership and disposition of ADSs and Class D
Shares and receipt of dividends thereon by persons (including corporations) who
are non-residents of Venezuela.  This summary is based on current Venezuelan tax
law and is for general information only.

     As used herein, the term Venezuelan "non-resident" refers to an individual
whose physical permanence in Venezuela does not exceed more than 180 days during
a calendar year or the immediately preceding calendar year; whereas the term
"non-domiciled" refers to legal entity which is neither domiciled nor organized
in Venezuela.  If a non-domiciled entity creates a permanent establishment in
Venezuela, such permanent establishment will be considered a Venezuelan
domiciled taxpayer subject to Venezuelan taxation on worldwide income only in
respect to those items of income that are attributable thereto.

     In general, and as discussed below, all income derived from an investment
in ADSs is considered Venezuelan foreign-source income, as such being taxable
only to resident individuals and domiciled entities that are taxed on worldwide
income; whereas non-resident individuals and non-domiciled entities are not
subject to taxation in Venezuela.  Income derived from Class D Shares is
considered Venezuelan local-source income, taxable to any taxpayer, regardless
of its residence or domicile, except as otherwise provided by applicable treaty.

Taxation of Dividends

     Under a new regime covering taxation of dividends introduced in the 1999
Venezuelan Income Tax Law, dividend income received from CANTV with respect to
Class D Shares is not subject to Venezuelan income tax or withholding tax with
respect to distributions arising out of earnings and profits for periods
commencing on or prior December 31, 2000.  All dividends arising out of either
accumulated or current earnings and profits for periods commencing on or after
January 1, 2001 and which are paid in

                                      110
<PAGE>

cash with respect to Class D Shares are considered Venezuelan local-source
income. As such, the dividend payment will subject to a withholding tax at the
rate of 34% at the time of payment, as well as filing obligations for the
shareholder, regardless of its residence or domicile. In the case of non-
Venezuelan persons, the 34% withholding rate may be further reduced or even
eliminated by applicable treaty. Subject to the applicable treaty, stock
dividends paid in stock with respect to Class D Shares will be subject to an
income tax withholding at the rate of 34% at the time that such stock is
disposed by the shareholder.

     For purposes of determining the taxable base in the distribution of
dividends applicable only to resident individuals and domiciled entities and
except as otherwise provided by applicable treaty, the term "taxable dividend"
for holders of Class D Shares represents any distribution of property made by a
corporate entity to its shareholders or partners attributable to the amount by
which total accumulated earnings and profits exceeds the net taxable income of
such corporate entity for economic periods commencing on or after January 1,
2001.  Under various income tax treaties entered into by Venezuela and other
contracting states, the term "dividend" usually means a distribution of property
made by a corporation to its shareholders out of either accumulated or current
earnings and profits.

     Income derived from either accumulated or current earnings and profits for
periods closing after January 1, 2001 with respect to the ADSs (whether in cash
or in stock) will be treated as Venezuelan foreign-source income on the ADSs,
taxable only to resident individuals and domiciled entities who are taxed on
worldwide income; whereas non-resident individuals and non-domiciled entities
are not subject to any taxation in Venezuela with respect to the ADSs.

Disposition of ADSs

     Capital gains from the sale or other disposition of ADSs including
exchanges of ADSs for Class D Shares are considered Venezuelan foreign-source
income, taxable only to resident individuals and domiciled entities who are
taxed on worldwide income; whereas non-resident individuals and non-domiciled
entities are not subject to taxation in Venezuela regardless of the location
where such transactions take place.  As described below, however, a disposition
of Class D Shares effected regardless of residence or domicile, through a
Venezuelan stock exchange (which would include a disposition by a broker/agent
on behalf of an ADS holder) will be subject to a 1% Venezuelan withholding tax
on the gross amount realized from the sale.  Taxable income from the disposition
of Class D Shares by resident individuals or domiciled entities is subject to
Venezuelan progressive income tax rates.

Disposition of Class D Shares

     Capital gains obtained from the sale or other disposition (other than
through a Venezuelan stock exchange) of Class D Shares (or rights to subscribe
for Class D Shares) will be considered Venezuelan local source income, and
subject to income tax withholding, unless otherwise provided by an applicable
treaty, at the rate of 3% in the case of resident individuals, 34% in the case
of non-resident individuals, 5% in the case of entities, regardless of their
domicile condition.  Capital gains obtained by a resident individual or a
domiciled entity will be subject to Venezuelan income taxes on a net basis and
according to progressive rates, whereas, and unless otherwise provided by
applicable treaty, capital gains obtained by a non-resident individual or by a
non-domiciled entity, from the sale or other disposition (other than through a
Venezuelan stock exchange) of Class D Shares (or rights to subscribe for Class D
Shares) will be subject to Venezuelan income taxes at the maximum flat rate of
34% over gross proceeds, or at applicable corporate rates, respectively.
Taxpayers are subject to year's end return filing obligations, regardless of the
shareholder's residence or domicile.

     Sales or other dispositions made through a domestic stock market are
subject to a 1% income tax withholding on the gross proceeds.  Only holders of
Class D Shares with taxable capital gains realized

                                      111
<PAGE>

other than through a domestic stock market will be required to file a Venezuelan
income tax return, and will be able to claim a refund for taxes withheld in
excess of the tax due with respect to such gains.

     The amount of gain from the sale or other disposition of Class D Shares (or
rights to subscribe for Class D Shares) other than through a Venezuelan stock
exchange, is represented by the excess of the amount realized by the shareholder
over its own tax basis in such Class D Shares (or rights to subscribe for Class
D Shares) sold or otherwise disposed of.  In general, a shareholder's tax basis
in a Class D Share will be represented by its cost of acquisition, whereas, a
holder's basis in a share received upon exercise of a right to subscribe for a
Class D Share would be represented by the sum of the exercise price paid and the
tax basis in such right.  If a Class D Share were to be received as a stock
dividend after January 1, 2000, the tax basis for such share would be zero.

Dividend Indebtedness Vouchers

     The eventual distribution by CANTV of dividend indebtedness vouchers and
the payment by CANTV of the principal amount of such vouchers will not be
subject to Venezuelan income tax or withholding with respect to dividends
arising out of either accumulated or current earnings and profits for periods
commencing prior to December 31, 2000.  However, the eventual distribution by
CANTV of dividend indebtedness vouchers with respect to dividends arising out of
either accumulated or current earnings and profits for periods commencing on or
after January 1, 2001 with respect to Class D Shares will be taxable to the
recipient.  Because under the Venezuelan Income Tax Law dividends are taxed on a
cash basis, it is only at the moment CANTV pays or credits into account the
dividend that it will become subject to the same tax analysis referred to
previously relating to the distribution of dividends.

     Moreover, interest paid by CANTV on the vouchers with respect to Class D
Shares will be treated as local source income, thus taxable in Venezuela to all
individuals and entities regardless of domicile, subject to applicable treaty
covering non-resident individuals or non-domiciled entities.  The payment of
interest will be subject to income tax withholding at the effective rate of
32.3% in the case of non-Venezuelan persons and subject to applicable treaty;
and at the rate of 3% and 5% in the case of resident individuals and domiciled
entities, respectively.

     Capital gains from the sale or other disposition of a voucher with respect
to Class D Shares will be considered Venezuelan local-source income, although
not subject to income tax withholding.  Capital gains, calculated as the excess
of the proceeds of the sale over the principal amount of the voucher, obtained
by a resident individual or a domiciled entity will be subject to Venezuelan
income taxes on a net basis and according to progressive rates, whereas and
unless otherwise provided by an applicable treaty, capital gains obtained by a
non-resident individual or non-resident entity, from the sale or other
disposition of a voucher with respect to Class D shares will be subject to
Venezuelan income taxes at the maximum flat rate of 34% over gross proceeds, or
the applicable corporate rates, respectively.

     Subject to applicable treaty, non-residents individuals and non-domiciled
entities receiving interest or realizing gains from the sale or other
disposition of vouchers generally are required to comply with the ordinary
annual filing requirements for residents.

Estate and Gift Tax

     The acquisition of ADSs through inheritance or gift by either a resident or
non-resident from a non-resident is not subject to Venezuelan estate,
inheritance or gift tax. The acquisition of ADSs through bequest or gift from a
resident of Venezuela are subject to Venezuelan estate and gift tax. Venezuelan
estate and gift tax rates are progressive and vary according to the kindred
level between the recipient and between the decedent and the donor; as the case
may be.

                                      112
<PAGE>

     The acquisition of Class D Shares (or rights to acquire Class D Shares)
through bequest or gift is subject to Venezuelan estate and gift tax, regardless
of the residence of the decedent or of the donor.  The rate of Venezuelan estate
or gift tax imposed on a transfer generally depends on the value of the bequest
or gift and on the kindred level between the beneficiary and the decedent or the
donor, as the case may be.  The beneficiary of a bequest or gift is responsible
and liable for the payment of the estate or the gift tax.  In addition, the
donor and the donee are jointly and severally responsible for the payment of the
gift tax.

Other Taxes

     There are no Venezuelan stamp, issue, registration or similar taxes or
duties payable by holders of ADSs or Class D Shares (or rights to subscribe for
Class D Shares).  Other than the taxes discussed above, no other Venezuelan
transfer taxes are applicable to the transfer of ADSs or Class D Shares (or
rights to subscribe for Class D Shares), including deposits and withdrawals of
Class D Shares to or from the ADR facility.

United States Federal Income Taxation

     The following is a summary of the principal United States federal income
tax consequences under present law of an investment in the ADSs or in the Class
D Shares.  This summary applies only to investors that hold the ADSs or Class D
Shares as capital assets and that have the U.S. dollar as their functional
currency.  The summary is not intended as tax advice to any particular investor,
some of which (investors, such as banks, insurance companies, dealers, traders
who elect to mark to market, tax-exempt entities, persons holding an ADS or
Class D Share as part of a straddle, hedging, conversion or constructive sale
transaction and holders of 10% or more of the voting shares of CANTV), may be
subject to special tax treatment.  The Company believes, and the discussion
therefore assumes that it is not and will not become a passive foreign
investment company for United States federal income tax purposes.

     As used here, the term "U.S. holder" means a beneficial owner of ADSs or
Class D Shares that is (i) a United States citizen or resident, (ii) a domestic
corporation or partnership, (iii) a trust subject to the control of a U.S.
person and the primary supervision of a U.S. court or (iv) an estate the income
of which is subject to United States federal income taxation regardless of its
source.  The term "non-U.S. holder" refers to any other holder of ADSs or Class
D Shares.  Holders of ADSs (or ADRs evidencing ADSs) generally will be treated
as the owners of the Class D Shares represented by those ADSs (or ADRs
evidencing ADSs).

U.S.-Venezuela Income Tax Treaty

     The United States and Venezuela have concluded an income tax treaty, which
entered into force on December 30, 1999.  U.S. holders who are eligible for the
benefits of this income tax treaty will generally be subject to Venezuelan
source withholding tax on dividends at a maximum rate of 15% (or a lower rate in
the case of certain persons that own more than 10% of the Company's voting
stock) and will generally not be subject to Venezuelan income or withholding tax
on gains from the disposition of Class D Shares or ADSs.  However, the
determination as to whether a U.S. person is eligible for the benefits of the
income tax treaty is very complex.  In particular, a U.S. person that owns Class
D Shares that is not subject to income tax in the United States (such as a
partnership or other pass-through entity) or that has, or is deemed to have a
permanent establishment in Venezuela also may not be eligible for the benefits
of the treaty in respect of taxes on income from, or proceeds from the sale or
ADSs and Class D Shares.  U.S. holders are urged to consult their own tax
advisors about eligibility for benefits under U.S.-Venezuela income tax treaty.

                                      113
<PAGE>

Dividends and Other Distributions

     Dividends paid with respect to the ADSs or Class D Shares generally will be
included in the gross income of a U.S. holder as ordinary income (to the extent
paid out of current or accumulated earnings and profits, as determined under
U.S. federal income tax principles) when the dividends are received by the
Depositary.  The dividends generally stet be foreign source income.  The
dividends will not be eligible for the dividends-received deduction allowed to
corporations.  Dividends paid in Venezuelan bolivars will be included in income
as a U.S. dollar amount based on the exchange rate in effect on the date of
receipt (which, in the case of ADSs, will be the date of receipt by the
Depositary).  A U.S. holder will have a basis in the bolivars received equal to
their U.S. dollar value on the date of receipt.  Any gain or loss recognized on
a subsequent sale or conversion of the bolivars for a different amount generally
will be United States source ordinary income or loss.

     Distributions to U.S. holders of additional Class D Shares or rights to
subscribe for Class D Shares generally should not be subject to federal income
tax.  However, such distributions could be taxable depending on the nature of a
particular distribution.  A U.S. holder's tax basis in the Class D Shares or
rights that are not subject to U.S. federal income tax when received generally
is determined by allocating the U.S. holder's basis in its ADSs between the ADSs
and the Class D Shares or rights on the basis of the relative fair market values
of each, except that in the case of rights whose fair market value is less than
15% of the fair market value of the Class D Shares with respect to which the
rights are distributed, the basis of the rights is zero unless the shareholder
elects to make such an allocation.

     A non-U.S. holder generally will not be subject to United States federal
income tax on dividends paid by CANTV with respect to the ADSs or Class D Shares
unless such income is effectively connected with the conduct by the non-U.S.
holder in a trade or business in the United States.

Capital Gains

     U.S. holders will recognize capital gain or loss upon the sale or other
disposition of ADSs or Class D Shares (or rights to subscribe for Class D
Shares) held by the U.S. holder or the Depositary in an amount equal to the
difference between such U.S. holder's basis in the ADSs, Class D Shares or
rights, as the case may be, and the amount realized on such sale or other
disposition.  Gain and loss recognized by a U.S. holder generally will be
treated as United States source income.  Consequently, in the case of a
disposition of Class D Shares or ADSs that in either case is subject to
Venezuelan tax, the U.S. holder may not be able to use the foreign tax credit
for Venezuelan tax imposed on the gain unless it can apply the credit against
U.S. tax due on other income from foreign sources in the appropriate foreign tax
credit category, or, alternatively, it may take a deduction for such Venezuelan
tax.

     U.S. holders will not recognize gain or loss on deposits or withdrawals of
Class D Shares in exchange for ADSs or on the exercise of subscription rights.
If subscription rights expire unexercised, a U.S. holder that has allocated
basis to such rights received as a dividend will not recognize a loss but must
reallocate such basis to the remaining ADSs or Class D Shares held.

     A non-U.S. holder of ADSs or Class D Shares will not be subject to United
States federal income tax on gain from the sale or other disposition of ADSs or
Class D Shares unless (i) such gain is effectively connected with the conduct of
a trade or business within the United States; or (ii) the non-U.S. holder is an
individual who is present in the United States for at least 183 days during the
taxable year of the disposition, and certain other conditions are met.

                                      114
<PAGE>

Dividend Indebtedness Vouchers

     Depending upon their terms when issued, dividend indebtedness vouchers
issued by CANTV should be treated as debt instruments for United States federal
income tax purposes.  A U.S. holder likely will be required to include in gross
income as a dividend the fair market value of a dividend indebtedness voucher
distributed with respect to the Class D Shares when the voucher is received
(which, in the case of ADSs, will be the date of receipt by the Depositary).
The amount included and the holder's initial tax basis in the voucher will be
the U.S. dollar market value of the voucher on the date of receipt.

     The voucher may be treated as issued with original issue discount ("OID")
in an amount equal to the difference between the total bolivar payments to be
received on the voucher and the bolivar market value of the voucher when
received.  A U.S. holder will be required to include such OID in gross income on
a constant yield to maturity basis during the period from the receipt of the
voucher to the stated maturity date of the voucher, even though no cash
distributions will be received during that period.  A U.S. holder's basis in the
voucher will be increased by undistributed OID included in income.  A U.S.
holder may recognize foreign currency gain or loss upon the retirement of the
voucher or the sale or other disposition of the voucher and on any subsequent
sale or conversion of the bolivars received.  Such gain or loss generally will
be United States source ordinary income or loss.  Gain or loss on the sale or
other disposition of the voucher in excess of foreign currency gain or loss
generally will be capital gain or loss.

     U.S. holders should consult their tax advisors concerning the United States
federal income tax consequences of the receipt, ownership and disposition of
dividend indebtedness vouchers.

Information Reporting and Backup Withholding

     Dividends in respect of the ADSs or Class D Shares paid to non-corporate
U.S. holders and the proceeds from the sale, exchange, or redemption of the ADSs
or Class D Shares paid to non-corporate U.S. holders may be reported to the
United States Internal Revenue Service.  A 31% backup withholding tax also may
apply to amounts paid to such holders unless they provide an accurate taxpayer
identification number or otherwise establish a basis for exemption.  Payments of
dividends and the proceeds from the sale or other disposition of ADSs or Class D
Shares made outside the United States to non-U.S. holders generally are not
subject to information reporting and backup withholding, provided that, in the
case of proceeds from a sale or disposition, the broker through which such
payments are received fulfills certain requirements.  In addition, non-U.S.
holders may be required to provide certification of foreign status.  The amount
of any backup withholding from a payment to a holder will be allowed as a credit
against the holder's United States federal income tax liability.

Dividends and Paying Agents

     Not applicable.

Statement by Experts

     Not applicable.

                                      115
<PAGE>

Documents on Display

     CANTV is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended.  In accordance with these requirements, CANTV
files annual reports and other information to the Securities and Exchange
Commission (the "Commission"). These materials, including this Form 20-F and the
exhibits thereto, may be inspected and copied at the Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, New York, New York 10048.  Copies of
the materials may be obtained from the Public Reference Room of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.  The
public may obtain information on the operation of the Commission's Public
Reference Room by calling the Commission in the United States at 1-800-SEC-0330.
The Commission also maintains a web site at http://www.sec.gov that contains
                                            ------------------
reports, proxy statements and other information regarding registrants that file
electronically with the Commission.  Form 20-F reports and some of the other
information submitted by CANTV to the Commission may be accessed through this
web site.

Subsidiary Information

     Not applicable.

Item 11.  Quantitative and Qualitative Disclosures About Market Risk

     The Company is exposed to market risk, including changes in interest rates
and foreign currency exchange rates.  The Company does not use derivative
financial instruments in its investment portfolio.  The Company places its
investments with high quality European, U.S. and/or Latin American issuers and,
by policy, limits the amount of credit exposure to any one issuer.  The Company
is averse to principal loss and ensures the safety and preservation of its
invested funds by limiting default risk, market risk and reinvestment by
investing with European, U.S. and/or Latin American issuers that are guaranteed
by wholly-owned foreign companies with high credit quality securities.

     The Company mitigates default risk by investing in highly liquid U.S.
dollar short-term investments, primarily certificates of deposit and commercial
paper, which have maturities of three months or less.  The Company does not
expect any material loss with respect to its investment portfolio.

     The majority of the Company's indebtedness is denominated in foreign
currencies, primarily in U.S. dollars and Japanese yen, which exposes the
Company to market risk associated with changes in exchange and interest rates.
The Company's policy is to manage interest rate risk through the use of a
combination of fixed and variable rate debt.  Presently the Company has not
signed any hedge contract against foreign currency exposures, but keeps cash
reserves in U.S. dollars and Japanese yen as a natural hedge to meet financing
obligations.

     The carrying amounts of cash and short-term investments, and short-term and
long-term debt approximate their fair values.  The fair value was determined by
quoted market prices.

                                      116
<PAGE>

     The table below presents principal amounts by year of maturity and the
related weighted average interest rates for the Company's investment portfolio
and debt obligations at December 31, 2000 (in million of bolivars, translated at
the Daily Exchange Rate on December 31, 2000):

<TABLE>
<CAPTION>
                                    Weighted
                                    Average
                                    Interest                                         Year of Maturity
                                      Rate          2001        2002         2003        2004        2005      Thereafter    Total
                                   ----------    ---------   ---------   -----------   --------   ----------   ----------   -------
<S>                                <C>           <C>         <C>         <C>           <C>        <C>          <C>            <C>
Investment portfolio:
--------------------
U.S. dollars
   Certificates of deposit               6.33%       5,630          --            --         --         --           --        5,630
   Commercial paper                      6.70%     498,555          --            --         --         --           --      498,555
Japanese yen
   Certificates of deposit               0.25%      18,402          --            --         --         --           --       18,402

Bolivars
   Certificates of deposit              13.37%       6,030          --            --         --         --           --        6,030
   Overnight deposits                    3.51%       5,436          --            --         --         --           --        5,436
   Long-term Government bonds           12.87%      63,511          --            --         --         --           --       63,511
                                                 ---------   ---------   -----------   --------   --------   ----------   ----------
Total                                              597,564          --            --         --         --           --      597,564
                                                 =========   =========   ===========   ========   ========   ==========   ==========

Debt Obligations:
----------------
U.S. dollars
   Fixed rate
   ----------
   Guaranteed notes                      9.06%          --      69,894            --     70,000         --           --      139,894
   Bank loans                            6.78%       1,648       1,485           584         --         --           --        3,717
   Notes payable to suppliers            7.00%       1,317       1,034            --         --         --           --        2,351

   Variable rate
   -------------
   Notes                                 8.19%      24,500      31,500        19,250         --         --           --       75,250
   IFC loans                             9.62%      10,063      10,063        10,063     10,063     27,563        6,123       73,938
   Bank loans                            7.49%       4,573       2,564            --         --         --           --        7,137

Japanese yen
   Fixed rate
   ----------
   Bank loans                            5.80%       6,610       6,610         6,610      6,610      6,610       23,132       56,182

Bolivars
   Fixed rate
   ----------
   Bank loans                           23.50%          --          --            --         --     15,873           --       15,873

   Variable rate
   -------------
   Bank loans                           20.52%       6,779         692         1,265        998      7,580        5,204       22,518
                                                 ---------   ---------   -----------   --------   --------   ----------   ----------
Total                                               55,490     123,842        37,772     87,671     57,626       34,459      396,860
                                                 =========   =========   ===========   ========   ========   ==========   ==========
</TABLE>

Item 12.  Description of Securities Other than Equity Securities

     Not applicable.

                                      117
<PAGE>

                                    PART II


Item 13.  Defaults, Dividend Arrearages and Delinquencies

     Due to adverse economic factors in Venezuela, including recession, high
inflation, devaluation and the imposition of exchange controls in June 1994, the
Company was unable to make payments on U.S.$525 million of its outstanding bank
debt and U.S.$21 million of its obligations with certain vendors.  On August 25,
1995, the Company and a bank advisory committee entered into a refinancing
agreement (the "Refinancing Agreement"), relating to such U.S.$525 million of
its outstanding debt and certain of the Company's vendors entered into similar
agreements extending the payment terms for existing obligations. The revised
terms included no forgiveness of principal or interest.  The Company prepaid all
amounts outstanding under the Refinancing Agreement during 1996 and 1997.


Item 14.  Material Modifications to the Rights of Security Holders and Use of
Proceeds

     Not applicable.


Item 15.  (Reserved)

     Not applicable.


Item 16.  (Reserved)

     Not applicable.

                                      118
<PAGE>

                                   PART III

Item 17.  Financial Statements

     Not applicable.


Item 18.  Financial Statements

     See Item 19 (a for a list of financial statements filed under Item 18).


Item 19.  Financial Statements and Exhibits

(a)  Financial Statements

<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
<S>                                                                                                      <C>
Index.................................................................................................    F-1
Report of Independent Public Accountants..............................................................    F-2
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1999 and 2000............    F-3
Consolidated Balance Sheets as of December 31, 1999 and 2000..........................................    F-4
Consolidated Statements of Changes in Stockholders' Equity for the Years
 Ended December 31, 1998, 1999 and 2000...............................................................    F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1999 and 2000............    F-6
Notes to the Audited Consolidated Financial Statements for the Years
 Ended December 31, 1998, 1999 and 2000...............................................................    F-7
</TABLE>


(b)  Exhibits


None.

                                      119
<PAGE>

         COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV) AND
                                 SUBSIDIARIES

              INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999 and 2000, and
             for the years ended December 31, 1998, 1999 and 2000

<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
<S>                                                                                                      <C>
Report of Independent Public Accountants............................................................      F-2
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1999
      and 2000......................................................................................      F-3
Consolidated Balance Sheets as of December 31, 1999 and 2000........................................      F-4
Consolidated Statements of Changes in Stockholders' Equity for the Years
      Ended December 31, 1998, 1999 and 2000........................................................      F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
      1998, 1999 and 2000...........................................................................      F-6
Notes to the Consolidated Financial Statements for the Years
      Ended December 31, 1998, 1999 and 2000........................................................      F-7
</TABLE>

                                      F-1
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
Compania Anonima Nacional
Telefonos de Venezuela (CANTV):

We have audited the accompanying consolidated balance sheets of Compania Anonima
Nacional Telefonos de Venezuela (a telecommunications corporation established in
Venezuela) ("CANTV" or the "Company") and subsidiaries as of December 31, 1999
and 2000, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the years ended December 31, 1998, 1999
and 2000, expressed in Venezuelan bolivars. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits 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 consolidated financial
statements. An audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated 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 Compania Anonima
Nacional Telefonos de Venezuela (CANTV) and subsidiaries as of December 31, 1999
and 2000 and the results of their operations and their cash flows for the years
ended December 31, 1998, 1999 and 2000, in conformity with generally accepted
accounting principles in Venezuela.

Also, in our opinion, the amounts in the accompanying financial statements
translated into U.S. dollars have been computed on the basis set forth in Note
3.

As discussed in Note 4 to the consolidated financial statements, effective
January 1, 2000, the Company changed its revenue recognition policies.

Accounting practices used by the Company in preparing the accompanying financial
statements conform with generally accepted accounting principles in Venezuela,
but do not conform with accounting principles generally accepted in the United
States. A description of these differences and a reconciliation of consolidated
net income and stockholders' equity to United States generally accepted
accounting principles are set forth in Note 25.

Piernavieja, Porta, Cachafeiro y Asociados
Member firm of Arthur Andersen


Francisco Cachafeiro Arias
Certified Public Accountant No 9298
C.N.V. No C-642

January 26, 2001

                                      F-2
<PAGE>

      (Translation of financial statements originally issued in Spanish)

   COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV) AND SUBSIDIARIES
   -------------------------------------------------------------------------

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     -------------------------------------
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
             ----------------------------------------------------
    (Adjusted for inflation and expressed in millions of constant bolivars
as of December 31, 2000, and millions of  U.S. dollars, except per share and per
                                 ADS amounts)

<TABLE>
<CAPTION>
                                                                             1998         1999         2000         2000
                                                                              Bs.          Bs.          Bs.        U.S.$
                                                                         ----------    ----------   ----------   --------
<S>                                                                      <C>           <C>          <C>          <C>
OPERATING REVENUES:
  Local and domestic long distance usage                                    649,866       614,502      618,917        884
  Basic rent                                                                387,063       362,673      316,152        452
  Public telephones                                                         123,271       119,680      108,655        155
                                                                         ----------    ----------   ----------   --------
    Local and domestic long distance                                      1,160,200     1,096,855    1,043,724      1,491
  International long distance                                               204,049       151,027       99,107        142
  Net settlements                                                            47,693        31,780       29,373         42
                                                                         ----------    ----------   ----------   --------
    International long distance                                             251,742       182,807      128,480        184
  Other wireline-related services                                           142,214       162,450      139,749        199
                                                                         ----------    ----------   ----------   --------
    Total wireline services                                               1,554,156     1,442,112    1,311,953      1,874
  Wireless services                                                         347,196       460,714      466,993        667
  Other telecommunications-related services                                  36,833        43,856       46,186         66
                                                                         ----------    ----------   ----------   --------
    Total operating revenues                                              1,938,185     1,946,682    1,825,132      2,607
                                                                         ----------    ----------   ----------   --------

OPERATING EXPENSES:
  Operations, maintenance, repairs and administrative                       968,602       977,142      938,074      1,340
  Depreciation and amortization                                             599,844       666,635      616,714        881
  Concession and other taxes                                                144,392       140,193      138,394        197
  Special charge                                                                  -             -      110,390        158
  Nonrecurring charges                                                            -         4,085          632          1
                                                                         ----------    ----------   ----------   --------
    Total operating expenses                                              1,712,838     1,788,055    1,804,204      2,577
                                                                         ----------    ----------   ----------   --------
    Operating income                                                        225,347       158,627       20,928         30
                                                                         ----------    ----------   ----------   --------

OTHER (EXPENSE) INCOME, NET:
  Financing cost, net                                                       (32,661)      (48,281)     (31,348)       (45)
  Other income (expense), net                                                 3,596         6,331       (3,827)        (5)
                                                                         ----------    ----------   ----------   --------
    Total other expense, net                                                (29,065)      (41,950)     (35,175)       (50)
                                                                         ----------    ----------   ----------   --------
    Income (loss) before income tax and cumulative
     effect of accounting change, net of tax                                196,282       116,677      (14,247)       (20)
INCOME TAX                                                                    1,327        15,487       35,428         51
                                                                         ----------    ----------   ----------   --------
   Income (loss) before cumulative effect of
      accounting change, net of tax                                         194,955       101,190      (49,675)       (71)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET
 OF TAX                                                                           -             -      (40,518)       (58)
                                                                         ----------    ----------   ----------   --------
   Net income (loss)                                                        194,955       101,190      (90,193)      (129)
                                                                         ==========    ==========   ==========   ========

   Earnings (loss) per share before cumulative effect, net of tax               195           101          (52)     (0.08)
   Cumulative effect of accounting change, net of tax per share                   -             -          (43)     (0.06)
                                                                         ----------    ----------   ----------   --------
Earnings (loss) per share                                                       195           101          (95)     (0.14)
                                                                         ----------    ----------   ----------   --------
Earnings (loss) per ADS (based on 7 shares per ADS)                           1,365           709         (663)     (0.95)
                                                                         ==========    ==========   ==========   ========
Average shares outstanding (in millions)                                      1,000           999          952        952
                                                                         ==========    ==========   ==========   ========
</TABLE>


 The accompanying notes are an integral part of these consolidated statements.

                                      F-3
<PAGE>

      (Translation of financial statements originally issued in Spanish)

   COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV) AND SUBSIDIARIES
   -------------------------------------------------------------------------

         CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1999 AND 2000
         ------------------------------------------------------------
    (Adjusted for inflation and expressed in millions of constant bolivars
            as of December 31, 2000, and millions of U.S. dollars)

<TABLE>
<CAPTION>
                                                                       1999           2000          2000
                                                                        Bs.            Bs.          U.S.$
                                                                    ----------     ----------    ----------
<S>                                                                 <C>            <C>           <C>
ASSETS
------

CURRENT ASSETS:
 Cash and temporary investments                                        366,478        578,657           827
 Accounts receivable, net                                              460,833        347,496           496
 Accounts receivable from Venezuelan Government entities               137,483        102,775           147
 Inventories and supplies, net                                          49,229         33,302            48
 Other current assets                                                   14,062         13,981            19
                                                                    ----------     ----------    ----------
       Total current assets                                          1,028,085      1,076,211         1,537

Property, plant and equipment, net                                   3,535,274      3,253,902         4,648
Cellular concession, net                                                98,367         95,333           136
Other assets                                                           255,120        216,637           311
                                                                    ----------     ----------    ----------
       Total assets                                                  4,916,846      4,642,083         6,632
                                                                    ==========     ==========    ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
 Short-term debt                                                        60,709         55,490            79
 Accounts payable                                                      296,423        275,447           394
 Employee severance benefits, net                                       10,040          8,850            13
 Accrued employee benefits                                              38,200        154,129           220
 Other current liabilities                                             211,534        286,143           409
                                                                    ----------     ----------    ----------
       Total current liabilities                                       616,906        780,059         1,115

LONG-TERM LIABILITIES:
 Long-term debt                                                        387,476        341,370           488
 Pension and postretirement benefit obligations                        371,293        345,886           494
                                                                    ----------     ----------    ----------
       Total liabilities                                             1,375,675      1,467,315         2,097

STOCKHOLDERS' EQUITY                                                 3,541,171      3,174,768         4,535
                                                                    ----------     ----------    ----------
       Total liabilities and stockholders' equity                    4,916,846      4,642,083         6,632
                                                                    ==========     ==========    ==========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-4
<PAGE>

      (Translation of financial statements originally issued in Spanish)

  COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV) AND SUBSIDIARIES
  -------------------------------------------------------------------------

          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
          ----------------------------------------------------------
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
             ----------------------------------------------------

 (Adjusted for inflation and expressed in millions of constant bolivars as of
                              December 31, 2000)


<TABLE>
<CAPTION>
                                                         Capital Stock
                                             -----------------------------------------
                                                                                        Additional
                                              Historical    Inflation                    Paid-in      Retained
                                                 Cost      Adjustment         Total      Capital      Earnings
                                             -----------   ----------      -----------  ----------   ---------
<S>                                          <C>           <C>             <C>          <C>          <C>
Balance as of December 31, 1997                  36,902     1,420,800      1,457,702      18,127      2,151,991
   Net income                                      --           --            --            --          194,955
   Dividends declared                              --           --            --            --         (198,271)
   Change in cumulative translation
      Adjustment                                   --           --            --            --            --
                                             ----------    ----------     ----------    --------     ----------
Balance as of December 31, 1998                  36,902     1,420,800      1,457,702      18,127      2,148,675
   Accumulated postretirement benefits
      obligations                                  --           --            --            --         (174,624)
   Net income                                      --           --            --            --          101,190
   Dividends declared                              --           --            --            --         (184,219)
   Repurchased shares                               (45)       (1,718)        (1,763)       --           (1,277)
   Change in cumulative translation
      Adjustment                                   --           --            --            --            --
                                             ----------    ----------     ----------    --------     ----------
Balance as of December 31, 1999                  36,857     1,419,082      1,455,939      18,127      1,889,745
   Net loss                                        --           --            --            --          (90,193)
   Dividends declared                              --           --            --            --          (64,136)
   Repurchased shares                            (2,684)     (103,060)      (105,744)       --         (108,092)
   Change in cumulative translation
      Adjustment                                   --           --            --            --            --
                                             ----------    ----------     ----------    --------     ----------
Balance as of December 31, 2000                  34,173     1,316,022      1,350,195      18,127      1,627,324
                                             ==========    ==========     ==========    ========     ==========


<CAPTION>

                                                          Cumulative         Total
                                               Legal      Translation    Stockholders'
                                              Reserve     Adjustment         Equity
                                           ------------  ------------   ---------------
<S>                                          <C>         <C>            <C>
Balance as of December 31, 1997                145,774       26,254         3,799,848
   Net income                                    --            --             194,955
   Dividends declared                            --            --            (198,271)
   Change in cumulative translation
      Adjustment                                 --           2,890             2,890
                                           -----------   ----------     -------------
Balance as of December 31, 1998                145,774       29,144         3,799,422
   Accumulated postretirement benefits
      obligations                                --            --            (174,624)
   Net income                                    --            --             101,190
   Dividends declared                            --            --            (184,219)
   Repurchased shares                            --            --              (3,040)
   Change in cumulative translation
      Adjustment                                 --           2,442             2,442
                                           -----------   ----------     -------------
Balance as of December 31, 1999                145,774       31,586         3,541,171
   Net loss                                      --            --             (90,193)
   Dividends declared                            --            --             (64,136)
   Repurchased shares                            --            --            (213,836)
   Change in cumulative translation
      Adjustment                                 --           1,762             1,762
                                           -----------   ----------     -------------
Balance as of December 31, 2000                145,774       33,348         3,174,768
                                           ===========   ==========     =============
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

                                      F-5
<PAGE>

      (Translation of financial statements originally issued in Spanish)

COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV) AND SUBSIDIARIES
-------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
             ----------------------------------------------------
    (Adjusted for inflation and expressed in millions of constant bolivars
            as of December 31, 2000, and millions of U.S. dollars)


<TABLE>
<CAPTION>
                                                                          1998         1999         2000        2000
                                                                           Bs.          Bs.          Bs.        U.S.$
                                                                      ----------------------------------------------
<S>                                                                   <C>             <C>          <C>          <C>
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES:
 Net income (loss)                                                       194,955      101,190      (90,193)     (129)
   Adjustments to reconcile net income (loss) to net cash provided
     by operating activities:
      (Gain) loss from net monetary position                             (45,512)       6,626       15,844        23
      Exchange loss, net                                                  53,572       33,732        2,645         4
      Depreciation and amortization                                      599,844      666,635      616,714       881
      Special charge                                                           -            -      110,390       158
      Cumulative effect of accounting change, net of tax                       -            -       40,518        58
      Provision for doubtful accounts                                    254,799      114,682       76,512       109

   Changes in current assets and liabilities:
     Accounts receivable                                                (360,788)    (153,058)     (14,424)      (21)
     Accounts receivable from Venezuelan Government entities             (15,698)     (45,901)      19,469        28
     Inventories and supplies, net                                       (37,600)      43,010       14,798        21
     Other current assets                                                    914        9,433         (668)       (1)
     Accounts payable                                                     48,605      118,734       33,678        48
     Accrued employee benefits, net                                       12,689       21,817       13,290        19
     Other current liabilities                                            32,428       (4,572)      42,498        61
                                                                      ----------    ---------    ---------   -------
                                                                         738,208      912,328      881,071     1,259
   Changes in non-current assets and liabilities:
     Other assets                                                        (39,403)     (18,338)      29,300        42
     Pension and postretirement benefits obligations                      33,900        6,557      (25,407)      (36)
                                                                      ----------    ---------    ---------   -------
      Net cash provided by operating activities                          732,705      900,547      884,964     1,265
                                                                      ----------    ---------    ---------   -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
 Capital expenditures, net of disposals                                 (555,824)    (397,907)    (325,272)     (465)
                                                                      ----------    ---------    ---------   -------
      Net cash used in investing activities                             (555,824)    (397,907)    (325,272)     (465)
                                                                      ----------    ---------    ---------   -------
CASH FLOWS USED IN FINANCING ACTIVITIES:
 Proceeds from borrowings                                                225,059            -       30,660        44
 Payments of debt                                                       (174,204)     (39,510)     (52,211)      (75)
 Dividend payments                                                      (198,271)    (184,219)     (64,136)      (92)
 Repurchase shares                                                             -       (3,040)    (213,836)     (305)
                                                                      ----------    ---------    ---------   -------
      Net cash used in financing activities                             (147,416)    (226,769)    (299,523)     (428)
                                                                      ----------    ---------    ---------   -------
      Increase in cash and temporary investments before
         loss in purchasing power of cash and temporary investments       29,465      275,871      260,169       372

LOSS IN PURCHASING POWER OF CASH AND TEMPORARY INVESTMENTS               (39,792)     (64,753)     (47,990)      (69)
                                                                      ----------    ---------    ---------   -------
      (Decrease) increase in cash and temporary investments              (10,327)     211,118      212,179       303

CASH AND TEMPORARY INVESTMENTS:
 Beginning of year                                                       165,687      155,360      366,478       524
                                                                      ----------    ---------    ---------   -------
 End of year                                                             155,360      366,478      578,657       827
                                                                      ==========    =========    =========   =======
SUPPLEMENTAL INFORMATION:
 Cash paid during the year for:
   Interest                                                               42,525       38,205       43,444        62
                                                                      ==========    =========    =========   =======
   Taxes                                                                  97,582       95,521      115,643       165
                                                                      ==========    =========    =========   =======
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-6
<PAGE>

      (Translation of financial statements originally issued in Spanish)

           COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV)
            --------------------------------------------------------
                               AND SUBSIDIARIES
                               ----------------

                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                ----------------------------------------------
   (Amounts are adjusted for inflation and expressed in millions of constant
         bolivars as of December 31, 2000, unless otherwise indicated)



1.   EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH:
     -----------------------------------------------

The consolidated financial statements were originally issued in Spanish and
translated into English.

2.   COMPANY BACKGROUND AND CONCESSION AGREEMENT:
     --------------------------------------------

Compania Anonima Nacional Telefonos de Venezuela (CANTV or the Company) is one
of the primary providers of telecommunications services in Venezuela, and is the
owner of a nationwide basic telecommunications network through which it provides
not only national and international fixed switched telephone service but also
private networks, data, public telephone, rural and telex services. In addition,
through its subsidiaries, CANTV provides other telecommunications-related
services including wireless communications, Internet access and telephone
directories.

CANTV entered into a Concession Agreement (the Concession) with the Government
of Venezuela (the Government) in 1991 to provide national and international
telecommunications services, for the purpose of guaranteeing high quality
service, modernizing and expanding the local network, introducing progressive
rate rebalancing and establishing a framework for the introduction of
competition. November 2000 marked the opening of the telecommunications market
with the entrance of new competitors (See Note 20 - Commitments and
contingencies).

Significant terms of the Concession are as follows:
---------------------------------------------------

a.   The Concession establishes a special privilege regime of limited
     concurrence, through which the Government guarantees CANTV to be the
     exclusive provider of fixed switched telephone services, including local,
     national and international access until November 27, 2000. Beginning on
     that date, any party who has obtained the corresponding administrative
     concession will be able to provide basic telecommunication services in the
     country (See Note 5 - Regulation).

b.   The Concession is for 35 years ending in 2026, and is extendible for an
     additional period of 20 years subject to the approval by the Ministry of
     Infrastructure, previously the Ministry of Transportation and
     Communications (the Ministry), and satisfactory performance by the Company
     of its obligations under the Concession.

c.   The Company is required to pay a total of 5.5% of services billed annually
     to the Government for telecommunications tax and concession rights. Such
     amount is included in the accompanying consolidated statements of
     operations as Concession and other taxes.

                                      F-7
<PAGE>

d.   The Concession requires the Company to expand, modernize and improve the
     quality of its telephone network as well as to meet prescribed service
     quality targets. The Concession mandates include national and regional
     expansion and modernization targets as well as annual and cumulative
     targets (See Note 20 - Commitments and contingencies).

e.   The Concession specifies various penalties which may be imposed on CANTV
     for negligent or intentional violation of Concession provisions, including
     a fine of up to 1% of services billed and/or revocation and termination of
     the Concession. Penalties assessed against CANTV through December 31, 2000,
     have not been material.

Eight Year Review Agreement
---------------------------

On February 21, 2000, CANTV and the Comision Nacional de Telecomunicaciones
(CONATEL) signed the Eight Year Review Agreement (the Agreement), effective
until December 21, 2000. The Agreement included the review of the concession
regarding quality service, tariffs framework, commercialization of new services
and reduction in the expansion targets (See Note 5 - Regulation and Note 20 -
Commitments and contingencies).

3.   CONVENIENCE TRANSLATION OF BOLIVARS INTO U.S. DOLLAR AMOUNTS:
     -------------------------------------------------------------

Unless otherwise noted, all financial information in these financial statements
has been stated in constant bolivars based upon the bolivar's purchasing power
as of December 31, 2000.  Bolivar amounts have been translated into U.S. dollar
amounts, solely for the convenience of the reader, at a rate of Bs. 700 to
U.S.$1, the exchange rate reported by the Central Bank of Venezuela as of
December 31, 1999.  The translation of amounts expressed in constant bolivars as
of a specified date by the then prevailing exchange rate may result in the
presentation of dollar amounts that differ from the dollar amounts that would
have been obtained by translating constant bolivars as of another specified
date, particularly in periods of high inflation with no corresponding
devaluation, such as has occurred in Venezuela.

Such translation should not be construed as a representation that the bolivar
amounts have been, could have been, or could in the future be converted into
U.S. dollars at this or any other rate of exchange.

4.   SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES:
     ----------------------------------------------------------

a.   Basis of presentation
     ---------------------

The consolidated financial statements have been prepared in accordance with
Venezuelan generally accepted accounting principles (Venezuelan GAAP). On
specific matters not addressed by Venezuelan accounting pronouncements,
International Accounting Standards (IAS) should be applied, if not, Mexican
standards apply, and lastly United States of America Generally Accepted
Accounting Principles (U.S. GAAP).

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles in Venezuela requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates.

                                      F-8
<PAGE>

b. Adjustment for inflation
   ------------------------

The Company's consolidated financial statements are expressed on a constant
bolivar basis as of December 31, 2000, in accordance with the Venezuelan
Statement of Accounting Principles Number 10 "Standards for the Preparation of
Financial Statements Adjusted for Inflation" (DPC 10) and its amendments issued
by the Venezuelan Federation of Public Accountants.

During December 2000, the Venezuelan Federation of Public Accountants issued a
new DPC 10 (revised and comprehensive), which supersedes DPC 10 issued in 1991
and its three amendments, as well as the Technical Publications number 14 and
19. The main changes of this statement pertain to presentation and not
methodology. This statement becomes effective for financial statements covering
periods after December 31, 2000. Early adoption is permitted. CANTV will adopt
this statement in 2001.

The amounts disclosed in the consolidated financial statements have been
adjusted to reflect the bolivar's purchasing power at December 31, 2000 based on
the Consumer Price Index (CPI) for the metropolitan area of Caracas as published
by the Central Bank of Venezuela (BCV). Until December 31, 1999, the base year
utilized to calculate the relative change in the CPI was 1984. Effective January
2000, based on international recommendations, the Company changed the base year
to 1997 in order to improve the meaningfulness and quality of this indicator as
a measurement of the changes in the Venezuelan economy.

The most representative indexes published by the BCV used in the preparation of
the inflation adjusted financial statements are as follows (1997 base):


                                 1998               1999               2000
                             ------------       ------------       ------------

End of year                   151.28823          181.58866          205.97793
Average for year              135.78224          167.78597          194.97653

Each caption in the accompanying consolidated financial statements has been
presented on the basis of the CPI at December 31, 2000, as follows:

i.   Monetary assets and liabilities (cash and temporary investments,
     receivables, other assets and most liabilities) as of December 31, 2000,
     have not been adjusted for the effect of inflation since they already
     represent their inflation adjusted value at that date. The balances as of
     December 31, 1999, have been adjusted based upon the relative change in the
     CPI between that date and the CPI at December 31, 2000.

ii.  Non-monetary assets (principally inventories and supplies, property, plant
     and equipment, the cellular concession and certain other assets) and
     stockholders' equity have been updated based upon the relative change in
     the CPI between the time the assets and equity were acquired or contributed
     and the CPI at December 31, 2000.

iii. The non-monetary liability for pension and other postretirement benefit
     obligations and its related expense, are recorded based on actuarial
     calculations (See Note 15 - Retirement benefits).

iv.  Monetary revenues and expenses have been updated based upon the change in
     the CPI from the month in which the transaction was recorded and the CPI at
     December 31, 2000.

v.   Non-monetary expenses (primarily depreciation and amortization) are based
     upon the values of the corresponding assets (primarily property, plant and
     equipment) in the accompanying

                                      F-9
<PAGE>

     consolidated balance sheets (See (ii) above).

vi.  The inflation (loss) gain is attributable to the Company's net monetary
     asset or liability position in an inflationary period and has been set
     forth as (loss) gain from net monetary position as part of the Financing
     cost, net caption in the accompanying consolidated statements of operations
     (See Note 17 - Financing cost, net).

c. Consolidation principles
   ------------------------

The consolidated financial statements include CANTV and all of its majority-
owned subsidiaries. All significant intercompany balances and transactions among
the companies have been eliminated.

d. Cash and temporary investments
   ------------------------------

Cash and temporary investments include short-term, highly liquid investments,
which have original maturities of three months or less. The loss in the
purchasing power of cash and temporary investments due to inflation is reflected
as a separate caption in the statements of cash flows.

e. Inventories and supplies, net
   -----------------------------

Inventories and supplies are presented at cost, net of reserves. Certain
inventories and supplies whose original cost per unit does not exceed the
equivalent in bolivars of U.S.$500 are expensed when purchased.

f. Depreciation and amortization
   -----------------------------

Depreciation and amortization are calculated using the straight-line method
based on the estimated useful lives of the fixed assets and based on the
amortization period assigned to the intangible assets. The costs of other
intangible assets (See Note 11 - Other assets) and the cost of the cellular
concession (See Note 6 - Cellular concession) are amortized over the expected
periods benefited, not to exceed 20 and 40 years, respectively. Amortization
expense was Bs. 32,413, Bs. 40,370 and Bs. 10,071 for the years ended December
31, 1998, 1999 and 2000, respectively. Accumulated amortization was Bs. 216,688
and Bs. 226,759 at December 31, 1999 and 2000, respectively.

In 2000, the Company reviewed and updated the depreciable lives of certain
assets, including civil works and buildings, towers and shelters related to
wireless operations, and changed the useful lives from 7 to 20 years. This
change in the estimation did not have a significant impact in the Company's
financial statements.

g. Computer software
   -----------------

The costs of certain purchased computer software and systems for internal use
are capitalized and classified as intangible assets. In 1999, the Company
reviewed and updated its policy to amortize certain computer software and set
useful lives from 3 to 5 years. This change did not have a significant impact in
the Company's financial statements. Internal-use software is defined as software
which is acquired, internally developed, or modified solely to meet the internal
needs of the Company; and for which, during the software's development or
modification, no substantive plan exists or is being developed by the Company to
market the software externally. Regular maintenance and modifications to
existing software are expensed when incurred.

                                      F-10
<PAGE>

h.   Impairment in Long-lived assets
     -------------------------------

The Company evaluates the impairment of long-lived assets, including intangible
assets, based on the projection of undiscounted cash flows whenever events or
changes in circumstances indicate that the carrying amounts of such assets may
not be recoverable. In the event such cash flows are not expected to be
sufficient to recover the recorded value of the assets, the assets are written
down to their estimated fair values. Under current circumstances, no adjustment
for impairment in the carrying value of the long-lived assets has been recorded.

i.   Revenue recognition
     -------------------

Revenues for wireline and wireless services are recognized in the period in
which the services are provided. Unbilled revenues of Bs. 122,229 and Bs.
128,508 are included in accounts receivable as of December 31, 1999 and 2000,
respectively. Revenues from settlement of traffic with international
telecommunications carriers are recognized on a net basis and are based on
estimates of traffic volume and rates. Advertising revenues and related
telephone directory printing costs are recognized upon publication of the
directories. The Company presents as deferred income, included in the other
current liabilities caption, those amounts of billed services, which have not
been rendered yet, such as submarine cable usage, basic rent for
telecommunications services and telephone directories (See Note 14 - Other
current liabilities).

The Securities and Exchange Commission (SEC) issued "Staff Accounting Bulletin
101 (SAB 101), Revenue Recognition in Financial Statements", in December 1999.
SAB 101 summarizes the SEC staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements, and
establishes the criteria and attributes to recognize revenues. The Company
believes that its revenue recognition policies are in accordance with SAB 101.

During 2000, the Company reviewed its revenue recognition polices for prepaid
services and subscriber right fees and changed the way it was accounting for
these services. Subscriber right fees, which are upfront fees paid by consumers
when service is activated, will be classified as a liability on the Company's
balance sheet. The cumulative effect of this change, net of tax was Bs. 34,700.
Other changes to revenue recognition were also made and the cumulative effect of
this change related to revenue, net of tax was Bs. 5,800.

The Company does not believe that this change in the way it recognizes these
services will materially impact its results of operations on an ongoing basis.

j.   Income tax
     ----------

The income tax is calculated based upon taxable income which is different from
the income before tax. Venezuelan tax legislation does not permit consolidation
of results of subsidiaries for tax purposes. Investment tax credits for plant
and equipment reduce the income tax during the year in which such assets are
placed in service. Investment tax credits as well as fiscal losses except those
from the tax inflation adjustment, are permitted to be carried forward for 3
years. Venezuelan tax regulations also provide for a corporate asset alternative
minimum tax based on inflation adjusted net assets (See Note 18 - Income tax).

                                      F-11
<PAGE>

k.   Employee severance benefits and other benefits
     ----------------------------------------------

Employee severance benefits are calculated and recorded in accordance with the
Venezuelan labor law and the Company's current collective bargaining agreement.

Under the current labor law, employees earn a severance indemnity equal to 5
days salary per month, up to a total of 60 days per year of service. Labor
indemnities are earned once an employee has completed 3 months of continuous
service. Beginning with the second year of service, the employees earn an
additional 2 days salary for each year of service (or fraction of a year greater
than six months), cumulative up to a maximum of 30 days salary. Severance
benefits must be funded and deposited monthly in either an individual trust or a
severance fund, or accrued in an employer's accounting records, as specified in
writing by each employee.

In the case of unjustified or involuntary termination, employees have the right
to an additional indemnification payment of one month salary per year of service
up to a maximum of 150 days' current salary. Furthermore, in the case of
involuntary termination the law established the payment of an additional
severance benefit of up to a maximum of 90 days' current salary based on length
of employment.

Additionally, the Venezuelan labor law requires a mandatory annual profit
sharing distribution to all employees. CANTV made distributions equal to 120
days salary for the years ended December 31, 1998, 1999 and 2000 totaling Bs.
42,208, Bs. 43,082 and Bs. 45,741, respectively.

l.   Pension plan and other postretirement benefits
     ----------------------------------------------

The noncontributory pension plan benefits are accrued based on actuarial
estimates. The real discount rate and real rate of compensation increase used to
develop the projected benefit obligation were 7% and 2%, respectively (See Note
15 - Retirement benefits).

Until 1998, postretirement benefits relating to health care expenses were
recorded as operating expenses on a pay-as-you-go basis. In 1999, the Company
recorded postretirement health care costs based on actuarial estimates as
required by International Accounting Standard 19 (IAS 19). The accumulated
postretirement benefit obligation, as of December 31, 1998, was recognized on an
immediate basis affecting retained earnings. This adoption did not have a
material impact on 2000 or 1999 results.

m.   Foreign currency denominated transactions
     -----------------------------------------

Foreign currency denominated transactions are recorded at the bolivar exchange
rate as of the transaction date. The outstanding balances of foreign currency
denominated assets and liabilities are translated into bolivars using the
exchange rate at the balance sheet date, which was Bs. 649.25 and Bs. 700 per
U.S. dollar as of December 31, 1999 and 2000, respectively (See Note 7 -
Balances in foreign currency). Any exchange gain or loss from the translation of
these balances and transactions is reflected as exchange loss, net in the
Financing cost, net caption in the accompanying consolidated statements of
operations (See Note 17 - Financing cost, net).

n.   Legal reserve
     -------------

The Company and each of its subsidiaries are required under the Venezuelan
Commercial Code and their Corporate By-laws to transfer at least 5% of each
year's net income to a legal reserve until such reserve equals at least 10% of
capital stock.

                                      F-12
<PAGE>

o.   (Loss) earnings per share
     -------------------------

(Loss) earnings per share are based on 1,000,000,000; 999,897,508 and
951,961,030 of average common shares outstanding at December 31, 1998, 1999 and
2000, respectively.

p.   Recently issued accounting pronouncements
     -----------------------------------------

In November 2000, the International Accounting Standards Committee issued
International Accounting Standard No. 39 (IAS 39), "Financial Instruments:
Recognition and measurement". This standard establishes accounting and reporting
standards requiring that every derivative instrument be recorded in the balance
sheet as either an asset or liability measured at its fair value. It also
addresses all financial instruments and covers topics such as classification of
financial assets, measurement of non-derivative financial instruments,
recognition and derecognition, and impairment.

IAS 39 is effective for fiscal years beginning after January 1, 2001. Early
adoption is permitted. IAS 39 cannot be applied retroactively, and upon
adoption, it is not anticipated that IAS 39 will have a significant impact on
the Company's results of operations or financial position.

5.   REGULATION:
     -----------

CANTV's services and tariffs are regulated by the rules established in the
Concession agreement, the Organic Telecommunications Law of 2000 and its
Regulations, as well as the Agreement (See Note 2 - Company background and
concession agreement).

The Organic Telecommunications Law along with the Regulations, provide the
general legal framework for the regulation of telecommunications services in
Venezuela. Under the Organic Telecommunications Law, suppliers of public
telecommunications services, such as the Company, must operate under concessions
granted by the Government, which acts through the Ministry.

CONATEL is a regulatory body under the direction of the Ministry, created to
supervise telecommunications services in Venezuela and recommend the granting of
concessions, licenses and administrative authorizations as well as the approval
of tariffs and collection taxes. Also, it shall promote investments in
telecommunications, technological innovation, and free competition.

a.   Tariffs
     -------

Before CANTV entered into the Agreement with CONATEL, CANTV's rates were
regulated under the Concession, through a "price-cap" and a "rate rebalancing"
mechanism that promoted operating efficiency and allowed for progressive tariff
adjustments. The price-cap varied directly with the Wholesale Price Index (WPI)
published by the BCV, which permitted the Company, with the approval of the
Ministry, to raise tariffs on a quarterly basis to keep pace with WPI. Generally
a three to six month delay existed between the date the WPI was published for a
particular quarter and its actual effect on new tariffs.

CANTV's third and fourth quarter 1999 tariff increases were not approved by
CONATEL. According to statements given to the press by CONATEL, the Company was
in noncompliance with the Concession with regards to service quality targets.
These statements did not have legal bases.

                                      F-13
<PAGE>

During 2000, the Agreement established two tariffs adjustments which went into
effect on March 23 and June 6, 2000.

The tariff framework to be applied beginning on January 1, 2001, is being
defined according to the new regulations related to the opening of the fixed
switched telecommunications market currently under discussion by a public
hearing process.

b.   Organic Telecommunications Law
     ------------------------------

On June 12, 2000, the Venezuelan Government issued the Organic
Telecommunications Law, which provides the guidelines of the total opening of
the telecommunications sector for existing and new operators after November
2000. This Law replaces the 1940 Organic Telecommunications Law and it is the
result of several years of consultation between the private and public sector.
Some of the most important aspects of the Telecommunications Law are as follows:

i.   Establishes specific regulations related to interconnection, universal
     service, spectrum, administrative concessions, networks, taxes, penalties,
     consumer rights and operator's responsibilities.

ii.  Defines telecommunications as an activity of general interest rather than
     as a public service, as provided by the former law.

iii. Operator's freedom to set rates is specified, establishing controls only in
     cases where dominant control is evidenced and in cases of insufficient
     competition. In this case it also anticipated the possibility of
     establishing isometrics regulations to guarantee competition.

c.   Telecommunications regulations
     ------------------------------

On November 24, 2000, the Regulations for Basic Telephony Services,
Interconnection and Administrative Concessions were issued and represent the
legal framework for the market opening of telecommunication services in
Venezuela.

The most significant aspects of these Regulations include the rules for granting
concessions, which provide administrative capabilities and include specific
attributes to specific services granted by CONATEL. The concessions will be
granted shortly after a request has been made, since they are not subject to
open bidding and only entail collection of established requirements. The
concessions that do not require spectrum, such as subscription to cable
television or fiber optic telephony, are free of duties.

Additionally, spectrum concessions will be granted through public offering, in
certain cases direct adjudication will be granted. Value added services require,
only notification by the operator, except for Internet services.

                                      F-14
<PAGE>

Interconnection regulations change the structure on how to establish the charges
that the carriers pay between them for interconnection to a cost-base structure.
It also requires the submission of quarterly information by separate accounts
and before the third quarter of 2001, carriers must establish accounting systems
indicating costs generated by interconnection and the allocation criteria.

6.   CELLULAR CONCESSION:
     --------------------

On May 19, 1992, the Company purchased one of two cellular concessions from the
Government for Bs. 123,250 (Bs. 5,388 on an historical cost basis) and
established Telecomunicaciones Movilnet, C.A. (Movilnet). The amount paid for
the cellular concession is being amortized over 40 years.

The cellular concession requires the payment of an annual concession fee of 10%
of services billed. For the years ended December 31, 1998, 1999 and 2000, the
expense relative to this concept included in the consolidated statements of
operations were Bs. 26,437, Bs. 33,201 and Bs. 38,596, respectively. The
cellular concession requires that Movilnet expand the cellular network, improve
the quality of cellular services when technically feasible, and provide certain
rural, public and emergency services. Management believes Movilnet is in
compliance with these requirements as of December 31, 2000.

7.   BALANCES IN FOREIGN CURRENCY:
     -----------------------------

The Company has assets and liabilities denominated in U.S. dollars and Japanese
yen as of December 31, as follows (in millions of U.S. dollars):


                                                             1999      2000
                                                             ----      ----

Cash and temporary investments                                509       743
Accounts receivable, net                                       26        28
Other assets and advances to suppliers                         35        36
Accounts payable                                             (128)     (165)
Short and long-term debt                                     (578)     (512)
                                                             ----      ----
Net (liability) asset position in foreign currency           (136)      130
                                                             ====      ====

8.   ACCOUNTS RECEIVABLE:
     --------------------

The Company's accounts receivable balances (other than Venezuelan Government
entities) are as follows:

                                                           1999         2000
                                                          -------      -------

Subscribers                                               507,324      379,572
Net settlements                                            14,312       16,371
Other                                                      27,466       15,693
                                                          -------      -------
                                                          549,102      411,636
Less: Allowance for doubtful accounts                     (88,269)     (64,140)
                                                          -------      -------
                                                          460,833      347,496
                                                          =======      =======

                                      F-15
<PAGE>

9.   ACCOUNTS RECEIVABLE FROM VENEZUELAN GOVERNMENT ENTITIES:
     --------------------------------------------------------

The Company's largest customer is the Venezuelan public sector, including the
Government, its agencies and enterprises, and the Venezuelan states and
municipalities (collectively, Government entities). Government entities
generated approximately 9% of the Company's revenues during each of the years
ended December 31, 2000, 1999 and 1998, respectively.

The following table sets forth the aging of accounts receivable from Government
entities as of December 31:
                                                    1999              2000
Year of Service                                    -------           -------
---------------

2000                                                     -            55,129
1999                                                68,973            28,810
1998 and prior                                      68,510            18,836
                                                   -------           -------
                                                   137,483           102,775
                                                   =======           =======

The changes in accounts receivable from Government entities are as follows:

                                                    1999               2000
                                                   --------          --------

Balance at beginning of year                        114,113           137,483
Billings                                            166,423           168,074
Collections                                        (120,522)         (187,543)
Loss from exposure to inflation                     (22,531)          (15,239)
                                                   --------          --------
Balance at end of year                              137,483           102,775
                                                   ========          ========

The amounts that Government entities can pay for telecommunications services are
established in annual budgets, which are not based upon actual usage during such
year. As a result of these budgeting processes and for other macroeconomic
reasons, a number of Government entities have not paid the Company in full for
telecommunications services received. In addition, as a result of inflation and
devaluation, the value of these balances has decreased.

Although the Company has, in the case of certain Government entities, reduced
the number of lines available, there can be no assurance that Government
entities will not continue to use telecommunications services in excess of the
amounts that can be paid, that the Company will not continue to experience
significant delays in collecting receivables from Government entities or that
inflation and devaluation will not continue to decrease the value of these
receivables to the Company. Failure by Government entities to pay the amounts
owed to the Company or the amounts to be billed in the future, has had, and will
continue to have, an adverse effect on the profitability of the Company.

On November 3, 1999 the Congress approved a law authorizing the issuance of
bonds to refinance external and internal debts, as well as other past - due
obligations. The amount of bonds set aside for payment of debts owed CANTV as of
December 31, 1998, under such legislation amounted to Bs. 63,218. During 2000,
the Government assigned Bs. 37,000 to CANTV. In December 2000, CANTV received a
payment of Bs. 34,089 related to the bond issuance. Government's budget for year
2001 includes the issuance and placement of bonds for the payment of basic
services.

                                      F-16
<PAGE>

CANTV's Management believes all amounts from Government entities will be
collected either in cash and/or through Government bonds.

10.  PROPERTY, PLANT AND EQUIPMENT, NET:
     ----------------------------------

Property, plant and equipment, net as of December 31, is comprised as follows:

                                               1999                  2000
                                             ----------            ----------

Plant                                         8,402,419             8,157,590
Buildings and facilities                        988,436             1,024,682
Furniture and equipment                         677,931               692,809
Vehicles                                         78,984                70,567
Land                                             38,467                38,430
                                             ----------            ----------
                                             10,186,237             9,984,078
Less: Accumulated depreciation               (6,751,419)           (6,792,550)
                                             ----------            ----------
                                              3,434,818             3,191,528
Construction work in progress                   100,456                62,374
                                             ----------            ----------
                                              3,535,274             3,253,902
                                             ==========            ==========

The average useful lives for the different classes of property, plant and
equipment are as follows:
                                                                Average useful
                                                               lives (in years)
                                                               ----------------

Plant                                                               3 to 33
Buildings and facilities                                            5 to 25
Furniture and equipment                                             3 to  7
Vehicles                                                               3

Property, plant and equipment includes capitalized direct labor and allocated
overhead costs, as well as materials used in connection with construction work
in progress. Capitalized direct labor and allocated overhead costs totaled Bs.
85,157, Bs. 78,529 and Bs. 63,704 for the years ended December 31, 1998, 1999
and 2000, respectively. Maintenance and repair costs are expensed when incurred
while major improvements and renovations are capitalized.

11.  OTHER ASSETS:
     -------------

Other assets as of December 31, are comprised as follows:

                                                           1999       2000
                                                          -------    -------

Software and other intangible assets, net                 173,982    139,295
Prepaid taxes                                              17,818     14,338
Investment in INTELSAT                                     25,533     25,110
Class C stock and other                                    37,787     37,894
                                                          -------    -------
                                                          255,120    216,637
                                                          =======    =======

Software and other intangible assets include the cost of computer software and
systems for internal use, net of accumulated amortization (See Note 4(g) -
Summary of significant accounting principles and policies - Computer software)
and the cost of usage rights of satellites and submarine cables, which are

                                      F-17
<PAGE>

amortized over periods ranging from 7 to 10 years based upon the terms of
contracts granting usage rights.

Prepaid taxes include taxes assessed on the inflation adjusted value of fixed
assets. In 1991, the Venezuelan Income Tax Law was revised to incorporate new
provisions. Under this new law, companies were required to pay an initial tax
equal to 3% of the inflation adjusted value of fixed assets. This initial tax
was paid prior to 1996 and has been deferred and is being amortized over the
estimated useful lives of the related assets.

The investment in INTELSAT represents the Company's participation in the
International Satellite Telecommunications Organization. The Company accounts
for this investment using the equity method. The functional currency of INTELSAT
is the U.S. dollar.

In 1993, the Company purchased 1% of its capital stock, for Bs. 49,704. The
stock is being distributed to employees as part of an incentive plan. All the
employees of the Company are eligible. The Company charges the related cost to
expense in the year employees earn the award and the stock is issued to
employees the following year. At December 31, 1999 and 2000, 8,723,339 and
9,228,583 shares were available for distribution to employees under this plan.

12.  LONG-TERM DEBT:
     ---------------

Long-term debt as of December 31, is comprised of the following:

<TABLE>
<CAPTION>
                                                                          1999                 2000
                                                                    ----------------      --------------
<S>                                                                 <C>                   <C>
Notes in U.S. dollars at interest rates of 8.88% and 9.25%
 maturing in 2002 and 2004, respectively.                                147,123              139,894

Notes in U.S. dollars at interest rates of six-month LIBOR
 plus a margin between 1.35% and 1.75%, (averaging 7.50% and
 8.19% at December 31, 1999 and 2000, respectively),
 maturing through 2003.                                                  101,262               75,250

Bank loans in Japanese yen at a fixed interest rate of
 5.80%, and in U.S. dollars at interest rates of six-month
 LIBOR plus a margin between 0.25% and 0.75% (averaging
 5.88% and 5.93% at December 31, 1999 and 2000,
 respectively), maturing through 2009.                                    83,288               61,905

IFC loans in U.S. dollars at variable interest rates:
 a. At six-month LIBOR plus a margin of 1.75%, (averaging 6.79%
    and 8.87% at December 31, 1999 and 2000, respectively),
    maturing through 2005.                                                44,187               35,000

 b. At six-month LIBOR plus a margin of 2.00%, (averaging 7.04%
    and 8.22% at December 31, 1999 and 2000, respectively),
    maturing through 2007.                                                25,776               21,438

 c. At six-month LIBOR plus a margin between 3.00% and 6.00%
    (averaging 11.06% and 12.36% at December 31, 1999 and
    2000, respectively), maturing through 2005.                           18,411               17,500
</TABLE>

                                      F-18
<PAGE>

<TABLE>
<CAPTION>
                                                                          1999                 2000
                                                                    ----------------      --------------
<S>                                                                 <C>                   <C>
Supplier loans in U.S. dollars at interest rates of
 six-month LIBOR plus a margin of 0.25% to 0.50% (averaging
 6.35% and 6.75% at December 31, 1999 and 2000,
 respectively), maturing through 2002.                                     9,589                5,131

Notes payable to suppliers in U.S. dollars at fixed interest
 rates (averaging 7.45% and 7.00% at December 31, 1999 and
 2000, respectively), maturing through 2002.                               5,774                2,351

Banks loan in bolivars bearing interest at the average
 lending rate of the four major banks in Venezuela (30.95%
 and 27.84% at December 31, 1999 and 2000, respectively),
 maturing through 2003.                                                    7,150                3,768

Bank loans in bolivars at a fixed interest rate of 22.81% at
 December 31, 2000, maturing through 2010.                                     -               29,873

Bank loans in bolivars at various interest rates (averaging
 10.47% at December 31, 1999), maturing through 2000.                        237                    -
                                                                    ----------------      --------------
                                                                         442,797              392,110
Less: Current maturities                                                 (55,321)             (50,740)
                                                                    ----------------      --------------
                                                                         387,476              341,370
                                                                    ================      ==============
</TABLE>

On June 7, 1996, the Company entered into an agreement with the International
Finance Corporation (IFC Facility). Pursuant to the IFC Facility, the Company
obtained loan commitments aggregating up to U.S.$261 million, of which U.S.$175
million was disbursed. Of the amount disbursed, U.S.$75 million was used in the
Company's modernization and expansion program as mandated by the Concession and
for certain other capital expenditures. The remaining U.S.$100 million
represents the conversion of certain debt outstanding under a Bank Refinancing
Agreement into longer term debt. In March 1998, the Company paid U.S.$150
million of the debt outstanding under the IFC Facility with the proceeds from
the sale of variable interest rate notes issued by CANTV Finance Ltd., a wholly-
owned subsidiary of the Company, which are unconditionally and irrevocably
guaranteed as to payment of principal and interest by CANTV. The principal on
the remaining loan is payable as a single payment of U.S.$25 million in 2005.
The interest rate on this loan is based on LIBOR plus a margin and an additional
amount of up to 3% based on the Company's annual net income equivalent in U.S.
dollars.

Pursuant to the IFC Facility, the Company may pay dividends only if it is
current with respect to its semi-annual payments. In addition, the Company is
required to meet certain financial ratios, including a long-term debt-to-equity
ratio, a current ratio and a fixed charge coverage ratio, each as defined by the
agreement. The Company has complied with these covenants as of December 31,
2000.

In 1997, Movilnet signed an agreement with the IFC for two loans totaling
U.S.$95 million, which were disbursed during 1998. The proceeds of these loans
were used for expansion and modernization of the cellular network.

In September 2000, the Company issued discount promissory notes of Bs. 28,000
denominated in bolivars with a maturity of 5 years. The promissory notes were
placed at a 44% discount and an annual fixed

                                      F-19
<PAGE>

interest rate of 23.50%. The discount is amortized using the effective rate
method. At December 31, 2000 the balance of these notes, presented net of the
unamortized discount, was Bs. 15,873. Additionally, two loan agreements were
signed with local banks for Bs. 7,000 each one, with maturities between 1 and 5
years.

Estimated payments of long-term debt are: Bs. 50,740 in 2001, Bs. 123,842 in
2002, Bs. 37,772 in 2003, Bs. 87,671 in 2004, and Bs. 92,085 thereafter,
translated into bolivars at the exchange rate at December 31, 2000.

13.  SHORT-TERM DEBT:
     ----------------

Short-term debt is as follows:

<TABLE>
<CAPTION>
                                                                                1999               2000
                                                                           --------------     --------------
<S>                                                                        <C>                <C>
Bank loans in bolivars at various interest rates (averaging
  20.22% and 11.04% at December 31, 1999 and 2000, respectively)                5,388              4,750

Current maturities of long-term debt                                           55,321             50,740
                                                                           --------------     --------------
                                                                               60,709             55,490
                                                                           ==============     ==============
</TABLE>

14.  OTHER CURRENT LIABILITIES:
     --------------------------

Other current liabilities as of December 31, are comprised of the following:

<TABLE>
<CAPTION>
                                                                                1999               2000
                                                                           --------------     --------------
<S>                                                                        <C>                <C>
Concession tax                                                                 98,572            101,236
Subscriber rights                                                                   -             59,864
Deferred income                                                                40,185             46,777
Accrued liabilities                                                            18,146             22,822
Income, value added and other taxes                                            12,982             16,098
Interest payable                                                               11,411             11,282
Legal claims                                                                   10,313             10,512
Technical and administrative services due to affiliates of
 VenWorld stockholders                                                          7,722              6,519
Other                                                                          12,203             11,033
                                                                           --------------     --------------
                                                                              211,534            286,143
                                                                           ==============     ==============
</TABLE>

15.  RETIREMENT BENEFITS:
     --------------------

Pension plan
------------

The Company sponsors a noncontributory pension plan for its employees. The
benefits to be paid under the plan are based on years of service rendered and
the employee's final salary. At December 31, 1999 and 2000, the Company has
funded Bs. 72,095 and Bs. 117,106, respectively, in a trust for this purpose.

                                      F-20
<PAGE>

The components of pension expense for the year ended December 31 are as follows:

<TABLE>
<CAPTION>
                                                                        1998          1999          2000
                                                                     ----------    ----------    ----------
<S>                                                                  <C>           <C>           <C>
Benefits earned during the year                                          13,840        16,398        15,069
Interest cost on projected benefit obligation                            21,096        24,933        19,793
Other, net                                                                6,274         7,854        (7,083)
                                                                     ----------    ----------    ----------
                                                                         41,210        49,185        27,779
                                                                     ==========    ==========    ==========
</TABLE>

The accrued pension obligation as of December 31, is as follows:

<TABLE>
<CAPTION>
                                                                                1999                2000
                                                                            -----------          ----------
<S>                                                                         <C>                  <C>
Accumulated benefit obligation                                                  396,553             264,110
                                                                            ===========          ==========

 Projected benefit obligation                                                   440,583             292,785
Funded amount                                                                   (83,072)           (117,266)
Unrecognized transition obligation                                               (7,362)             (6,132)
 Unrecognized net losses                                                       (233,761)            (71,467)
Unrecognized prior service cost                                                  86,475              77,075
                                                                            -----------          ----------
  Pension obligations (including current portion of Bs. 8,039 and
  Bs. 7,087 respectively)                                                       202,863             174,995
                                                                            ===========          ==========
</TABLE>

Assumptions used to develop the projected benefit obligation are as follows:

                    Discount rate                              7%
                    Expected return on assets                  5%
                    Rate of compensation increase              2%

These assumptions represent estimates of real interest rates and compensation
increases rather than nominal rates. The unrecognized transition obligation is
being amortized over 20 years.

In 1998, the Company reviewed and updated its actuarial assumptions for employee
turnover and the rate of inflation to reflect actual experience. These changes
reduced pension expense by Bs. 34,485. During 2000, CANTV reviewed again the
assumption for the rate of inflation, which reduced pension expense by Bs.
23,318.

Postretirement benefits other than pensions
-------------------------------------------

In 1999, the Company recorded postretirement benefit obligations based on
actuarial estimates. Benefit payments are based on the average medical claims
per retiree for 1998.

                                      F-21
<PAGE>

The components of postretirement benefit expense for the years ended at December
31, are as follows:

<TABLE>
<CAPTION>
                                                                       1999             2000
                                                                    ----------       ----------
<S>                                                                 <C>              <C>
Benefits earned during the year                                          3,168            3,496
Interest on accumulated postretirement benefit obligations              11,757           13,918
Other                                                                        -              854
                                                                    ----------       ----------
                                                                        14,925           18,268
                                                                    ==========       ==========
</TABLE>

The accrued postretirement benefit obligation is as follows:

The accrued postretirement benefit obligation attributable to:

<TABLE>
<CAPTION>
                                                                       1999             2000
                                                                    ----------       ----------
<S>                                                                 <C>              <C>
Active employees                                                        54,203           78,443
Retirees                                                               152,359          167,783
                                                                    ----------       ----------
Total accumulated postretirement benefit obligation                    206,562          246,226
Unrecognized net losses                                                (29,848)         (65,802)
                                                                    ----------       ----------
Accrued postretirement benefit (including current
  portion of Bs. 245 and Bs. 2,446, respectively)                      176,714          180,424
                                                                    ==========       ==========
</TABLE>

Assumptions used to develop the accumulated postretirement benefit obligation
are as follows:

                    Discount rate                        7%
                    Medical cost trend rate              2%

These assumptions represent estimates of real interest rates and medical cost
trend rate increases rather than nominal rates. The unrecognized transition
obligation is being amortized over 11 years.

Defined contribution plan
-------------------------

The Company has a defined contribution plan (Special Economic Protection Plan
for Eligible Retirees) to supplement the current pension benefits of retirees as
of August 15, 1995. Contributions are allocated to retirees based upon their
age, pension income and other existing benefits. At December 31, 2000, the
Company has funded Bs. 16,180 for this Plan. The Company is not required to
increase the funding of this Plan.

16.  STOCKHOLDERS' EQUITY:
     ---------------------

Dividends
---------

The Venezuelan Commercial Code, Capital Markets Law and some regulations issued
by the Comision Nacional de Valores (CNV), regulate the ability of the Company
to pay dividends. In addition, some of the Company's debt agreements provide for
certain restrictions which limit the ability of the Company to pay cash
dividends (See Note 12 - Long-term debt). The Commercial Code establishes that
dividends shall be paid solely out of "liquid and collected earnings", and the
Capital Markets Law mandates that the Company distribute every year among its
shareholders not less than 50% of its net annual income, assessed on a non-
consolidated basis and without reflecting its share in the net income of its
subsidiaries. Likewise, the Capital Markets Law provides that at least 25% of
such 50% shall be paid to the shareholders in cash dividends. However, should
the Company have accumulated losses, any net income

                                      F-22
<PAGE>

shall initially be applied to offset such deficit. Until 1996, net income for
this purpose was computed as the lesser of (i) net income according to
historical figures or (ii) net income according to inflation adjusted figures.
However, in May 1997, the CNV modified its regulations and provided that
inflation adjusted net income would be the sole basis for the calculation of
dividend payments. The requirements of the Capital Markets Law are subject to
the provisions of the Commercial Code, that is, dividends shall always be paid
out of "liquid and collected earnings."

In October 1998, a new Capital Markets Law was passed. One of the principal
changes is that dividends must be declared in a shareholders' assembly during
which the shareholders determine the amount, form and frequency of the dividend
payment and that dividend policies must be stated in the Company's By-laws. The
CNV cannot exempt a company with publicly traded securities from paying the
minimum dividends required by the Capital Markets Law.

On March 30, 1999, the Company's shareholders approved the incorporation of the
Capital Markets Law into the Company's By-laws.

On November 16, 1999 an extraordinary shareholders' assembly declared an
extraordinary cash dividend of Bs. 100 per share. On December 3, 1999, this
dividend was paid.

On March 31, 2000, an ordinary shareholders' assembly declared a cash dividend
of Bs. 60 per share and Bs. 420 per ADS, to shareholders of record as of April
11, 2000. This dividend was paid on April 28, 2000.

Capital stock
-------------

Capital stock is represented by 998,700,100 and 926,037,385 shares at December
31, 1999 and 2000, respectively, as follows:

<TABLE>
<CAPTION>
                                                                 Participation       Number of shares
                 Stockholder                         Class             %              (in thousands)
----------------------------------------------    ----------     -------------       ----------------
<S>                                               <C>            <C>                 <C>
VenWorld Telecom C.A. (VenWorld)                       A             43.19                 400,000
Fondo de Inversiones de Venezuela (FIV)                B              5.60                  51,900
Employee Trusts and Employees                          C             11.01                 101,981
Public Shareholders                                    D             40.20                 372,156
                                                                 -------------        ----------------
                                                                    100.00                 926,037
                                                                 =============        ================
</TABLE>

VenWorld is a private consortium of companies led by Verizon Communications Inc.
(formerly GTE Corporation), and originally included T.I. Telefonica
Internacional de Espana, S.A.; C.A. La Electricidad de Caracas, S.A.C.A.;
Consorcio Inversionista Mercantil (CIMA), C.A. S.A.C.A. and AT&T International,
Inc. (AT&T) (Participants in the Consortium).

On June 30, 2000 GTE Corporation and Bell Atlantic Corporation completed their
merger, and the combined company began doing business as Verizon Communications
Inc. (Verizon).

During 2000, VenWorld could have transferred or encumbered the Class A shares if
it continued to own directly, and free from all encumbrances, at least 20% of
the capital stock of the Company. After January 1, 2001 any Class A shares
transferred to any person other than VenWorld or its wholly-owned subsidiaries
and affiliates controlled by any of the partners of the Participants in the
Consortium, will be automatically converted into an equal number of Class D
shares. VenWorld has the right to elect the

                                      F-23
<PAGE>

CANTV President and four members of the Board of Directors of the Company until
January 1, 2001. No Class A shares were transferred during 2000.

Class B shares may only be owned by Venezuelan Government entities. The transfer
of Class B shares to any non-public sector individual or entity will cause the
shares to be automatically converted to Class D shares, except if the shares are
transferred to a CANTV employee or retiree, in which case the shares will be
converted to Class C shares. Class B stockholders have the right to elect two
members of the Board of Directors of the Company until January 1, 2001.
Thereafter, they may elect only one member. A majority of holders of Class A and
B shares is required to approve a number of corporate actions, including certain
amendments to the By-laws.

Class C shares may be owned only by employees, retirees, former employees and
heirs and spouses of employees or retirees of CANTV and its subsidiaries. Any
Class C shares transferred to any other individual or entity will be
automatically converted to Class D shares. Holders of Class C shares have the
right, voting as a separate class, to elect two members of the Board of
Directors provided such Class C shares represent at least 8% of the capital
stock of CANTV and the right to elect one member provided that such shares
represent at least 3% of the capital stock of CANTV.

Class D shares are comprised of the conversion of Class A, B and C shares as
described above or capital increases. There are no restrictions on the ownership
or transfer of Class D shares. Holders of Class D shares will have the right to
elect, in conjunction with the other stockholders, any members of the Board of
Directors, at the time the Class A, B and C stockholders lose the right to
designate them according to CANTV's By-laws.

In November 1996, the Government sold 348.1 million shares representing 34.8% of
CANTV's capital stock in a global public offering. The Company's Class D shares
are traded on the Caracas Stock Exchange. They are also traded on the New York
Stock Exchange in the form of American Depository Shares (ADS), each
representing 7 Class D shares.

Repurchase program
------------------

On November 16, 1999 an extraordinary shareholder's assembly authorized a share
repurchase program for up to 50,000,000 of shares. As required under Venezuelan
Law, the program specifies a maximum repurchase price of Bs. 3,696 per share or
up to U.S.$40 per ADS. As of December 31, 1999, CANTV had acquired 1,229,900
shares at an average price of Bs. 2,472 per share, equivalent U.S.$23.5 per ADS.

On March 31, 2000, an ordinary shareholders' assembly approved a new share
repurchase program that authorized the Company to repurchase up to 50,000,000 of
shares. As required under Venezuelan Law, the program specified a maximum
repurchase price of Bs. 4,871 per share or up to U.S.$50 per ADS.

During 2000, CANTV acquired 72,732,716 shares related to both repurchase
programs at an average price of Bs. 2,940 per share, equivalent U.S.$28.39 per
ADS.

                                      F-24
<PAGE>

17.  FINANCING COST, NET:
     -------------------

Financing cost, net for the years ended December 31 is as follows:

<TABLE>
<CAPTION>
                                                         1998                 1999                2000
                                                  -----------------     ---------------     ---------------
<S>                                               <C>                   <C>                 <C>
Interest income                                              21,636              25,323              29,738
Interest expense                                            (54,679)            (45,825)            (42,597)
Exchange loss, net                                          (53,572)            (33,732)             (2,645)
Gain (loss) from net monetary position                       45,512              (6,626)            (15,844)
Gain from indexation of tax units                             8,442              12,579                   -
                                                  -----------------     ---------------     ---------------
                                                            (32,661)            (48,281)            (31,348)
                                                  =================     ===============     ===============
</TABLE>

The net exchange loss reflects the loss resulting from adjusting the Company's
net liabilities denominated in foreign currencies (principally U.S. dollars and
Japanese yen) into bolivars at the exchange rates as of December 31, 1999 and
2000 (See Note 7 - Balances in foreign currency). The Central Bank of Venezuela
has the explicit policy to intervene to maintain the exchange rate within 7.5%
(above or below) of the reference rate, which has been set by the Central Bank
of Venezuela and is adjusted to account for projected inflation on a monthly
basis. The devaluation of the bolivar against the U.S. dollar was 12%, 15% and
8% for the years ended December 31, 1998, 1999 and 2000, respectively.

The (loss) gain from net monetary position reflects the gain or loss from
holding net monetary assets or liabilities in a period of inflation, which was
30%, 20%, and 13% for the years ended December 31, 1998, 1999 and 2000,
respectively.

18.  INCOME TAX:
     ----------

In accordance with Venezuelan tax regulations, the Company is taxed on its net
income on an historical cost basis plus a tax inflation adjustment on the
Company's non-monetary assets and liabilities, net of stockholders' equity. This
tax inflation adjustment differs from the book inflation adjustment, which is
non-taxable.

The Income Tax Law also authorizes a tax credit for new investments in property,
plant and equipment. Any portion of the credit that is not used may be carried
forward to the subsequent three years. As of December 31, 2000, CANTV does not
have any carryforward tax credits. However, its Movilnet subsidiary has Bs.
22,937 and Bs. 24,970 from 1999 and 2000 of new investment tax credits that can
be carried forward until 2002 and 2003, respectively.

A reconciliation of the statutory income tax provision to the effective tax
provision is as follows:

<TABLE>
<CAPTION>
                                                                      1998              1999               2000
                                                                 -------------     --------------     -------------
<S>                                                              <C>               <C>                <C>
Income (loss) before income taxes and cumulative effect
 of accounting change, net of tax                                      196,282            116,677           (14,247)
Statutory income tax rate                                                   34%                34%               34%
                                                                 -------------     --------------     -------------
    Tax expense at statutory income tax rate                            66,736             39,670                 -

Non-taxable book inflation adjustment                                  112,898            142,973           142,772
Utilization of investment tax credits                                  (78,127)           (51,781)          (29,696)
Tax inflation adjustment                                               (81,858)          (105,418)         (112,611)
Other                                                                  (18,322)            (9,957)           34,963
                                                                 -------------     --------------     -------------
    Income tax                                                           1,327             15,487            35,428
                                                                 =============     ==============     =============
</TABLE>

                                      F-25
<PAGE>

The caption other for 2000 includes the unrecognized deferred tax effect
comprised mainly by the provision for the work force reduction (See Note 22 -
Work force reduction program). For 1999 and 1998, this caption includes an
existing tax provision recorded in 1998 and 1997.

On October 22, 1999, the National Government published the Partial Amendment to
the Income Tax Law. The most significant changes effective from periods
beginning after the publication of the Law, are as follows:

a.   Implementation of a price transfer regime for imports and exports of goods
     and services between related companies.

b.   Losses from adjustment for inflation will be carried forward up to one
     period.

c.   Investment tax credits for fixed assets for industrial companies of 10% of
     the amount of new investments and to be applied for five years from the
     effective date of the Amended Law.

Additionally, the Amendment to the Income Tax Law includes some regulations
which will be effective January 1, 2001, as follows:

a.   A new regime which taxes worldwide income applied to income obtained abroad
     by individuals or companies residing or domiciled in Venezuela. It allows a
     credit for income taxes paid abroad.

b.   A proportional tax on dividends will be introduced based on the excess
     between book and tax net income. This excess will be taxed at 34% and that
     amount proportionally applied to the dividends to be paid.

19.  TRANSACTIONS WITH RELATED PARTIES:
     ---------------------------------

Transactions with related parties are subject to conditions similar to
transactions with independent third parties. In the normal course of business
and as limited by applicable debt agreements, the Company enters into
transactions with certain of its stockholders and their respective affiliates.
In addition, the Government has significant influence over the Company's
tariffs, regulation, labor contracts and other matters. The Government is also a
major customer of the Company (See Note 9 - Accounts receivable from Venezuelan
Government entities).

Inventories, supplies and plant and equipment of Bs. 26,848 and Bs. 22,301 for
the years ended December 31, 1999 and 2000, respectively, were purchased from
affiliates of VenWorld's stockholders. These same affiliates provided technical
and administrative services to the Company at a total cost of Bs. 7,540, Bs.
22,624 and Bs. 18,784 for the years ended December 31, 1998, 1999 and 2000,
respectively. Net operating revenues of Bs. 15,536, Bs. 11,530 and Bs. 21,192
were recognized for the years ended December 31, 1998, 1999 and 2000,
respectively, with respect to the settlement of international telephone traffic
with affiliates. At December 31, 1999, the Company has recorded payables to
Verizon and AT&T affiliates for all such transactions of Bs. 8,546 and Bs.
1,151, respectively, and at December 31, 2000, Bs. 21,001 and Bs. 800,
respectively.

                                      F-26
<PAGE>

20.  COMMITMENTS AND CONTINGENCIES:
     -----------------------------

The Company has the following commitments and contingencies:

a.   Capital expenditures
     --------------------

CANTV's capital expenditures for 2001 are currently estimated at Bs. 362,600
(U.S.$518 million). The funding for these capital expenditures is expected to be
generated by internal cash flows.

b.   Operating leases
     ----------------

The Company leases buildings under operating leases for periods of one year or
less. Lease agreements generally include automatic extension clauses for equal
terms, unless written termination notification is provided.

c.   Litigation
     ----------

The Company is involved in numerous administrative and judicial proceedings.
The majority of these legal proceedings have been filed by former employees
requesting additional severance benefits.  Based on the opinion of its external
legal counsel handling these proceedings, management considers that the majority
of these actions will be resolved in the Company's favor.  Nevertheless,
management believes that the Company has recorded adequate reserves as of
December 31, 2000 for all such matters.  There are no legal pending proceedings,
other than ordinary routine litigation incidental to the Company's business,
which are material to the Company.

In May 2000, the Supreme Court of Justice rendered a judgment against CANTV
concluding that retirement of a number of former employees was unlawful. In
September 2000, a lower court following the Supreme Court's judgment ordered
CANTV to rehire about 140 former employees. The Company is presently appealing
this decision, and evaluating the impact of this sentence on the financial
statements of the Company if such sentence prevails.

On July 7, 2000, CANTV was fined Bs. 1.8 billion (U.S.$2.7 million) by the
Superintendent of Promotion and Protection of Free Competition ("Pro-
Competencia"). Pro-Competencia claims that CANTV has abused its dominant
position in the market to favor its subsidiary CANTV Servicios.  In August 2000,
CANTV filed an action of nullity in the First Court of Appeals in Administrative
Matters. See Note 20(c) to the Audited Financial Statements.

d.   Concession mandates
     -------------------

The Concession requires the Company to carry out a plan of network expansion and
modernization based on the construction of a specified minimum number of new
digital lines, the modernization of analog lines and the installation of public
telephones. In addition, the Company is required to meet certain quality and
service targets.

The agreement (See Note 2 - Company background and concession agreement)
included the reduction in the expansion targets and considers an accelerated
modernization program to meet an annual target of eighty percent digitalization
by the end of year 2000. No target was set related to the expansion of new
digital lines. The expansion and digitalization mandates were effective until
December 31, 2000.

The guidelines for the market opening in Venezuela (See Note 5 - Regulation)
include certain quality and service standards with minimum and maximum targets,
which are the base for the preparation of the

                                      F-27
<PAGE>

quality service regulations that will be effective for all basic services
operators.

e.   Competition
     -----------

Pursuant to the Concession, prior to November 27, 2000, the Company was the sole
provider of switched, fixed local, domestic, and international long distance
services throughout Venezuela, except in population centers with 5,000 or fewer
habitants if CANTV was not providing basic telephone services in such areas and
did not contemplate doing so within two years.

In December 1996, the Ministry exercised its authority under this provision to
grant a rural concession to Infonet Redes de Informacion C.A. (Infonet) to
provide multi-services, except national and international long distance
services, on population centers with 5,000 or fewer inhabitants in eight western
states of Venezuela. Additionally, multi-service concessions were granted in
January 1998 to Corporacion Digitel, C.A. (Digitel) and Consorcio ELCA, C.A. for
the central and eastern regions of Venezuela, respectively. Both Infonet and
Digitel have started operations.

With the recently issued new Telecommunications Law, CONATEL established the
basic regulatory framework. The new regulations issued on November 24, 2000 (See
Note 5 - Regulation) have the objective of creating an appropriate environment
for new entrants and allow for effective competition and regulate the sector's
opening rules, basic telephony and interconnection.

Beginning in November 2000, CONATEL has formally started the auction of
frequencies for Wireless Local Loop (WLL) services. Thirteen qualified bidders
have been announced by CONATEL. Five regions were defined and three permits in
each region were auctioned. Telcel BellSouth and Genesis are two of the
companies granted with a concession.

Additionally, companies with existing facilities in Venezuela have fulfilled the
requirements to obtain an operator license in basic fixed telephone service
based on the new regulations approved. Convergence Communications, Veninfotel
and Telcel BellSouth have obtained licenses to operate in local, domestic and
international long distance. New Global Telecom has a license for domestic and
international long distance.

21.  MARKET RISK:
     -----------

The carrying amounts of cash and short-term investments, trade receivables and
payables, and short-term and long-term debt approximate their fair values. The
fair value was determined by quoted market prices.

The Company is exposed to market risk, including changes in interest rates and
foreign currency exchange rates.

The Company does not use derivative financial instruments in its investment
portfolio. The Company places its investments with the highest quality United
States of America (US) issuers and, by policy, limits the amount of credit
exposure to any one issuer. The Company is averse to principal loss and ensures
the safety and preservation of its invested funds by limiting default risk,
market risk, and reinvestment by investing with US issuers that are guaranteed
by wholly-owned foreign companies with the safest and highest credit quality
securities.

The Company mitigates default risk by investing in highly liquid U.S. dollar
short-term investments, primarily certificates of deposit and investment grade
commercial paper, which have maturities of three months or less. The Company
does not expect any material loss with respect to its investment portfolio.

                                      F-28
<PAGE>

The majority of the Company's indebtedness is denominated in foreign currencies,
primarily in U.S. dollars and Japanese yen, which exposes the Company to market
risk associated with changes in exchange and interest rates. The Company's
policy is to manage interest rate risk through the use of a combination of fixed
and variable rate debt. Presently the Company does not hedge against foreign
currency exposures, but keeps cash reserves in U.S. dollars and Japanese yens to
meet financing obligations.

22.  WORK FORCE REDUCTION PROGRAM:
     -----------------------------

The Company has implemented a work force reduction program, granting employees
an incentive to retire prior to their anticipated retirement date, in order to
improve the efficiency of the operation and administration of the Company. This
expense amounted to Bs. 8,918, Bs. 55.016 and Bs. 29,880 for the years ended
December 31, 1998, 1999 and 2000, respectively, and is included in operating
expenses in the accompanying consolidated statements of operations.

Special charge
--------------

On December 29, 2000, the Company announced its intention to consolidate,
centralize and eliminate certain operating and administrative positions during
the first quarter of 2001, through a formal program. This program established an
expected reduction of approximately 4,000 employees. The Company recorded during
the last quarter of 2000 a provision of Bs. 110,390 included as current accrued
employee benefits and was recognized as a special charge in the consolidated
statements of operations. As a result of this program, in January 2001, 3,752
employees were separated of their functions.

Any curtailment effect associated with this employees separation program will be
recognized when it occurs. Presently, the Company is evaluating the impact of
the headcount reduction on the Company's pension liability.

23.  NATURAL CATASTROPHE:
     --------------------

On December 15, 1999 heavy rains devastated the northern coastal areas of
Venezuela which caused serious flooding. The areas most affected were the states
of Vargas, Miranda, Falcon and parts of Caracas. The flooding caused serious
damage to homes and businesses, leaving them without basic services such as
water, power and phone services. In addition, the roadway infrastructure in
those areas was considerably impaired and CANTV encountered limitations in
making on-site visits to determine the full extent of damage to its facilities,
and thus, the total financial impact. However, CANTV was able to detect that in
the state of Vargas, some of its central offices and most of the public
telephones received considerable damage. Based on this limited knowledge, the
Company made a financial assessment only on those central offices and public
telephone plant and had calculated the damage to be approximately Bs. 4,085. On
October 2000, the Company received the final payment compensation of Bs. 7,964.
This operation did not have additional significant impact in the financial
statements of the Company, and was reflected in the consolidated statements of
operations as a nonrecurring charge.

24.  CONSOLIDATED FINANCIAL STATEMENT RECLASSIFICATIONS:
     ---------------------------------------------------

Certain amounts from the December 31, 1998 and 1999 consolidated financial
statements have been reclassified for comparison purposes.

                                      F-29
<PAGE>

25.  SUMMARY OF DIFFERENCES BETWEEN U.S. GAAP AND VENEZUELAN GAAP:
     -------------------------------------------------------------

The Company's consolidated financial statements are prepared in accordance with
Venezuelan GAAP. In many respects, Venezuelan and U.S. GAAP are similar;
however, there are some significant differences that affect how certain
transactions are reported.

The primary differences between U.S. GAAP and Venezuelan GAAP that apply to the
Company are as follows:

a.   Restatement for inflation
     -------------------------

Venezuela has experienced significant inflation in recent years and follows
general price level accounting as prescribed in DPC 10 (See Note 4(b) - Summary
of significant accounting principles and policies).

In most circumstances U.S. GAAP does not allow for the restatement of financial
statements for general price level changes. For U.S. GAAP purposes, account
balances and transactions are stated in the units of currency of the period when
the transactions originated. This accounting model is commonly known as the
historical cost basis of accounting. However, because the economy of Venezuela
has experienced periods of significant inflation in the recent past, the use of
financial statements restated for general price level changes is consistent with
the requirements of the SEC rules and with the methodology described in
Statement of Financial Accounting Standards No. 89, "Financial Reporting and
Changing Prices" (SFAS 89). The U.S. GAAP reconciliations presented herein do
not, therefore, exclude the effect of the general price level accounting as
prescribed in DPC 10.

b.   Accounting for taxation
     -----------------------

Venezuelan GAAP is consistent with the accounting principles set forth in the
now superseded U.S. Accounting Principles Board Opinion No. 11, "Accounting for
Income Taxes" (APB 11). Venezuelan GAAP requires that deferred taxes be provided
at the tax rates prevailing at the time of the provision. In addition, the
provision for deferred taxes is not adjusted to take into account subsequent
changes to the statutory rates of taxation.

In 1992, the Financial Accounting Standards Board (FASB) in the United States
adopted Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS 109). This standard requires that deferred tax assets and
liabilities be established for the tax consequences of "temporary differences"
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities. Under SFAS 109, the effect on deferred taxes
of a change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are provided for deferred tax assets when
realization is not assured.

Additional disclosures required by SFAS 109 are presented in Note 26(c) -
Additional financial statements disclosures required by U.S. GAAP.

c.   Accounting for postretirement benefits other than pensions
     ----------------------------------------------------------

Until 1998, postretirement medical benefits were recorded as operating expenses
when claims were filed and the Company did not fund its obligation related to
this plan. U.S. GAAP requires the expected costs of these benefits to be
recognized systematically over employees' service periods. In 1999, the

                                      F-30
<PAGE>

Company adopted International Accounting Standard 19 (IAS 19) and will recognize
postretirement benefits other than pension systematically over employee's
service period (See Note 4(l) - Summary of significant accounting principles and
policies). As permitted under IAS 19 the accumulated postretirement benefits
obligation, as of December 31, 1998, was recognized as an adjustment to
beginning retained earnings, therefore, this item will no longer be a difference
between U.S. and Venezuelan GAAP.

d.   Employee severance benefits
     ---------------------------

In accordance with Venezuelan GAAP, employee severance benefits are reflected as
the absolute amount earned in accordance with the Venezuelan labor law. (See
Note 4(k) - Summary of significant accounting principles and policies). U.S.
GAAP permits but does not require these types of liabilities to be accrued based
on actuarial estimates, in accordance with Statement of Financial Accounting
Standard No. 87, "Employers' Accounting for Pensions." (SFAS 87) For U.S. GAAP
purposes, the Company has chosen to reflect the liability based on actuarial
assumptions at its discounted value. In addition, in accordance with SFAS 89,
under U.S. GAAP this item is treated as a nonmonetary liability while under
Venezuelan GAAP it was considered a monetary liability until 1997.

In June 1997, the Venezuelan Congress enacted an amendment to the labor law
regarding severance benefits (See Note 4(k) - Summary of significant accounting
principles and policies). As a result of the amendment to the labor law, these
employee severance benefits are treated as a defined contribution plan and
discounting is no longer applicable. Also, under SFAS 89, employee severance
benefits became a monetary item for U.S. GAAP purposes due to its defined
contribution plan nature.

e.   Capitalized interest
     --------------------

In accordance with Venezuelan GAAP, in its inflation adjusted financial
statements, the Company does not capitalize interest costs incurred in
connection with the construction of major capital projects. Under U.S. GAAP, the
amount of interest incurred in connection with the construction of these
projects is reflected in inflation adjusted financial statements. The amount
capitalized is calculated by applying the composite weighted average interest
rates of outstanding borrowings to construction work in process balances during
each applicable period. Capitalized interest is included in property, plant and
equipment and depreciated over the lives of the related assets.

f.   Treasury stock
     --------------

As discussed in Note 11 - Other assets, 1% of the shares, or 10,000,000 shares,
issued at privatization were purchased by the Company from the Government to be
distributed to employees in the form of awards. The Company's cost of these
shares is recorded in Other assets. U.S. GAAP for publicly traded entities
reflects these shares as treasury stock.

g.   Earnings per share
     ------------------

In 1997, the FASB adopted Statement of Financial Accounting Standard No. 128,
"Earnings per Share" (SFAS 128). This statement establishes standards for
computing and presenting earnings per share (EPS) as it applies to entities with
publicly held common stock. It replaces the presentation of primary and fully
diluted EPS with a presentation of basic and diluted EPS. It requires dual
presentation of basic and diluted EPS for all entities with complex capital
structure.

                                      F-31
<PAGE>

h.   Reconciliation of Venezuelan GAAP to U.S. GAAP
     ----------------------------------------------

     The approximate effects on net income and net stockholders' equity of
     restating CANTV's audited consolidated financial statements for 1998, 1999,
     and 2000 in accordance with U.S. GAAP is set forth below (in millions of
     bolivars, except per share data):


<TABLE>
<CAPTION>
                                                                              1998             1999           2000
                                                                           ----------      -----------     ----------
<S>                                                                        <C>             <C>             <C>
Net income (loss) under Venezuelan GAAP                                       194,955          101,190        (90,193)
U.S. GAAP adjustments for:
  Capitalized interest                                                          6,763           10,130         10,275
  Provision for postretirement benefits                                       (13,310)               -              -
Deferred income taxes:
  Benefit                                                                       6,528           72,258         57,710
  Gain (loss) from net monetary position                                       22,324            6,358         (3,983)
                                                                           ----------      -----------     ----------
                                                                               28,852           78,616         53,727
                                                                           ----------      -----------     ----------
Approximate net income (loss) under U.S. GAAP                                 217,260          189,936        (26,191)
                                                                           ==========      ===========     ==========
Approximate net income (loss) per share under U.S.
  GAAP                                                                         219.09           191.42         (27.73)
                                                                           ==========      ===========     ==========
Approximate net income (loss) per ADS
  (based on 7 shares per ADS)                                                1,533.65         1,339.94        (194.14)
                                                                           ==========      ===========     ==========
Average number of shares outstanding under
  U.S. GAAP (in thousands)                                                    991,633          992,229        944.378
                                                                           ==========      ===========     ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                                               1999           2000
                                                                                           -----------     ----------
<S>                                                                                        <C>             <C>
Total stockholders' equity under Venezuelan GAAP                                             3,541,171      3,174,768
U.S. GAAP adjustments for:
  Capitalized interest                                                                          69,032         79,307
  Treasury stock                                                                               (35,837)       (35,837)
  Deferred income taxes:
    (Provision) benefit                                                                        (51,014)         6,696
    Gain from net monetary position                                                             58,609         54,626
                                                                                           -----------     ----------
                                                                                                 7,595         61,322
                                                                                           -----------     ----------
Total stockholders' equity under U.S. GAAP                                                   3,581,961      3,279,560
                                                                                           ===========     ==========
</TABLE>

The following represents a reconciliation of equity at December 31, 1999 to
December 31, 2000 based on amounts determined in accordance with U.S. GAAP:

<TABLE>
<S>                                                                                          <C>
Stockholders' equity under U.S. GAAP at December 31, 1999                                    3,581,961
Approximate net income under U.S. GAAP                                                         (26,191)
Dividends declared and paid                                                                    (64,136)
Repurchased shares                                                                            (213,836)
Change in cumulative translation adjustment                                                      1,762
                                                                                           -----------
Stockholders' equity under U.S. GAAP at December 31, 2000                                    3,279,560
                                                                                           ===========
</TABLE>

The above reconciliations include all material differences between Venezuelan
GAAP and U.S. GAAP.

                                      F-32
<PAGE>

26.  ADDITIONAL FINANCIAL STATEMENT DISCLOSURES REQUIRED BY U.S. GAAP:
     -----------------------------------------------------------------

a.   Postretirement benefits other than pensions
     -------------------------------------------

The Company sponsors a postretirement health care benefit plan for retired
telephone company employees. As mentioned in Note 25(c) - Summary of differences
between U.S. GAAP and Venezuelan GAAP, until 1998, the Company did not fund its
obligation related to this plan. The Company's U.S. GAAP net income for the year
ended December 31, 1998 and stockholders' equity as of December 31, 1998 reflect
the application of Statement of Financial Accounting Standard No. 106
"Employers' Accounting for Postretirement Benefits other than Pensions" (SFAS
106) on a delayed recognition basis effective January 1, 1995, as permitted by
this statement.

The postretirement benefit cost for 1998 is as follows:
                                                                      1998
                                                                   ---------
Benefits earned during the year                                        3,281
Interest on accumulated postretirement benefit obligations            11,624
Amortization of transition obligation                                  8,705
                                                                   ---------
                                                                      23,610
Expense recorded by Company                                          (10,300)
                                                                   ---------
Additional expense under U.S. GAAP                                    13,310
                                                                   =========

The accrued postretirement benefit obligation at December 31 is as follows:


Accumulated postretirement benefit obligation attributable to:

                                                                      1998
                                                                   ---------
Retirees                                                             126,714
Fully eligible active plan participants                               47,909
                                                                  ----------
Total accumulated postretirement benefit obligation                  174,623
Unrecognized transition obligation                                   (56,267)
Unrecognized losses                                                  (68,952)
                                                                  ----------
Accrued postretirement benefit                                        49,404
                                                                  ==========

b.   Disclosures about pensions and other postretirement benefits
     ------------------------------------------------------------

In February 1998, the FASB issued Statement of Financial Accounting Standard No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits"
(SFAS 132) which revises employer disclosure requirements for pension and other
retiree benefits but does not change the measurement or recognition of pension
or other postretirement benefit plan.

                                      F-33
<PAGE>

The following tables provide a reconciliation of the changes in the plans
benefit obligations and fair value of plan assets for the years ending December
31, 1999 and 2000, and a statement of funded status as of December 1999 and
2000:


<TABLE>
<CAPTION>
                                                           Pension Benefits                     Other Benefits
                                                       ---------------------------        ---------------------------
                                                          1999              2000             1999              2000
                                                       ---------         ---------        ---------         ---------
<S>                                                    <C>               <C>              <C>               <C>
Reconciliation of benefit obligation:

Benefit obligation at January 1                          361,442           440,583          174,623           206,562
   Service cost                                           16,398            15,069            3,168             3,496
   Interest cost                                          24,933            19,793           11,757            13,918
   Benefits payments                                     (10,150)          (14,433)         (12,834)          (14,558)
   Actuarial  loss (gain)                                 47,960          (168,227)          29,848            36,808
                                                       ---------         ---------        ---------         ---------

Benefit obligation at December 31                        440,583           292,785          206,562           246,226
                                                       =========         =========        =========         =========

Reconciliation of fair value of plan assets:

Fair value of plan assets at January 1                    38,916            83,072                -                 -
   Contributions                                          44,034            53,124                -                 -
   Benefit payments                                       (8,857)          (14,433)               -                 -
   Actual return on plan assets                            8,979            (4,497)               -                 -
                                                       ---------         ---------        ---------         ---------
Fair value of plan assets at December 31                  83,072           117,266                -                 -
                                                       =========         =========        =========         =========

Funded status:

Funded status at December 31                             357,511           175,519          206,562           246,226
   Unrecognized transition obligation                     (7,362)           (6,132)               -                 -
   Unrecognized prior service cost                        86,475            77,075                -                 -
   Unrecognized net loss                                (233,761)          (71,467)         (29,848)          (65,802)
                                                       ---------         ---------        ---------         ---------

Net amount recognized                                    202,863           174,995          176,714           180,424
                                                       =========         =========        =========         =========
</TABLE>

For benefits other than pensions a one-percentage-point change in the assumed
health care cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                                    1% Point Increase              1% Point Decrease
                                                                -------------------------     --------------------------
                                                                    1999           2000           1999            2000
                                                                ----------     ----------     ----------      ----------
<S>                                                             <C>            <C>            <C>             <C>
Effect on total of service and interest cost components              1,553          2,416         (1,331)         (2,000)
Effect on postretirement benefit obligation as of
 December 31                                                        23,999         28,901        (20,193)        (24,271)
</TABLE>

                                      F-34
<PAGE>

The following table provides the components of net periodic benefit cost for the
plans for the years ending December 31, 1999 and 2000:


<TABLE>
<CAPTION>
                                                           Pension Benefits                 Other Benefits
                                                        ------------------------        -------------------------
                                                          1999            2000            1999            2000
                                                        --------        --------        ---------       ---------
<S>                                                     <C>             <C>             <C>             <C>
Components of net periodic benefit cost:

Service cost                                              16,398          15,069            3,168           3,496
Interest cost                                             24,933          19,793           11,757          13,918
Expected return on assets                                      -          (3,857)               -               -
Amortization of:
  Transition obligation                                    1,230           1,230                -               -
  Prior service cost                                      (9,399)         (9,399)               -               -
  Net loss                                                16,023           4,943                -             854
                                                        --------        --------        ---------       ---------
Net periodic benefit cost                                 49,185          27,779           14,925          18,268
                                                        ========        ========        =========       =========
</TABLE>

The assumptions used in the measurement of the Company's benefit obligation are
shown in the following table:

<TABLE>
<CAPTION>
                                                             Pension Benefits                Other Benefits
                                                          ---------------------            ---------------------
                                                           1999           2000              1999           2000
                                                          -------        ------            ------         ------
<S>                                                       <C>            <C>               <C>            <C>
Weighted-average assumptions as of December 31:

Discount rate                                                7%             7%                7%             7%
Expected return on assets                                    5%             5%                5%             5%
Rate of compensation increase                                2%             2%                2%             2%
</TABLE>

These assumptions represent estimates of real rates of interest, compensation
increases and  health care cost trend rate increases rather than nominal rates.


c.   Income and other taxes
     ----------------------

The provision (benefit) for income taxes for the years ended December 31, in
accordance with SFAS 109 is as follows:

<TABLE>
<CAPTION>
                                               1998                       1999                       2000
                                             ---------                  ---------                  ---------
<S>                                          <C>                        <C>                        <C>
Current                                          1,327                     15,487                     35,428
Deferred                                        (6,528)                   (72,258)                   (57,710)
                                             ---------                  ---------                  ---------
                                                (5,201)                   (56,771)                   (22,282)
                                             =========                  =========                  =========
</TABLE>

                                      F-35
<PAGE>

The components of deferred income tax liabilities (assets) for the years ended
December 31 are as follows:


<TABLE>
<CAPTION>
                                                                 1999                    2000
                                                        ---------------------    --------------------
<S>                                                     <C>                      <C>
Current deferred income taxes:
   Allowance for doubtful accounts                                    (27,479)                (19,276)
   Concession tax                                                     (33,514)                (34,421)
   Amounts payable to shareholders                                     (2,626)                 (2,216)
   Early retirement program                                            (1,628)                (40,885)
   Accounts not deductible until paid                                  (5,457)                 (7,757)
   Investment tax credits                                             (40,946)                (47,907)
   Other (not individually significant)                                (5,049)                 (4,047)
                                                        ---------------------    --------------------
         Total                                                       (116,699)               (156,509)
Non current deferred income taxes:
   Capitalized labor, interest and related overhead                   238,161                 216,029
   Pension expense                                                    (68,973)                (59,498)
   Postretirement benefit expense                                     (60,084)                (61,344)
                                                        ---------------------    --------------------
         Total                                                        109,104                  95,187
                                                        ---------------------    --------------------
Total deferred income taxes                                            (7,595)                (61,322)
                                                        =====================    ====================
</TABLE>

Total income taxes are different than the amount which would be computed by
applying the statutory income tax rate to income before income taxes.  The major
reasons for this difference are as follows:

<TABLE>
<CAPTION>
                                                               1998         %          1999         %         2000          %
                                                            -----------  --------   ----------    ------   ----------   ----------
<S>                                                         <C>         <C>       <C>          <C>         <C>        <C>
Income (loss) before income taxes and
   cumulative effect of accounting change, net of tax
                                                                212,059                133,165                 (7,955)
Statutory income tax rate                                            34%                    34%                    34%
                                                            -----------             ----------             ----------
Tax provision at statutory income tax rate                       72,100      34.0       45,276      34.0       (2,705)        34.0
Non taxable book inflation adjustment                           104,532      49.3      137,365     103.2      140,602     (1,767.5)
Utilization of investment tax credits                           (78,127)    (36.8)     (51,781)    (38.8)     (13,723)       172.5
Tax inflation adjustment                                        (81,858)    (38.6)    (105,418)    (79.2)    (112,611)     1,415.6
Deferred tax benefit                                             (6,528)     (3.1)     (72,258)    (54.3)     (57,710)       725.5
Other                                                           (15,320)     (7.3)      (9,955)     (7.5)      23,865       (300.0)
                                                            -----------  --------   ----------    ------   ----------   ----------
                                                                 (5,201)     (2.5)     (56,771)    (42.6)     (22,282)       280.1
                                                            ===========  ========   ==========    ======   ==========   ==========
</TABLE>

d. Comprehensive income
   --------------------

The FASB enacted Statement of Financial Accounting Standard No. 130 "Reporting
Comprehensive Income" (SFAS 130) for financial statements issued after December
15, 1997.  SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in the financial statements. Included in
comprehensive income is the translation adjustment from the investment in
Intelsat, which effect is considered immaterial for CANTV's financial
statements.

e. Segment reporting
   -----------------

The Company manages its operations in two main business segments: wireline and
wireless services. The Company's reportable segments are strategic business
units that offer different products and services in the telecommunications and
related services industry. They are managed separately because each business
requires different technology and marketing strategies. The wireline services
segment provides

                                      F-36
<PAGE>

domestic telephone services, international long distance services and other
telecommunications-related services. The wireless services segment provides
nationwide cellular mobile telephone services.

The accounting policies of the segments are the same as those described in the
Note 4(i) - Summary of significant accounting principles and policies.
Intersegment sales are accounted for as if the sales were to third parties at
current market prices. The Company evaluates performance based on profit or loss
from operations before income taxes not including nonrecurring gains and losses
and foreign exchange gains and losses.

As is described in Note 9 - Accounts receivable from Venezuelan Government
entities, the Government is a major customer of the wireline services segment.

Segment results for the years ended December 31, 1998, 1997 and 2000 were as
follows:

<TABLE>
<CAPTION>
                                                           1998                  1999                 2000
                                                    ------------------    ------------------    -----------------
  <S>                                               <C>                   <C>                   <C>
  Wireline services:
    Revenues
      Local and domestic long distance usage                   663,489               630,232              630,602
      Basic rent                                               387,063               362,671              316,729
      Public telephones                                        123,271               117,882              107,076
                                                    ------------------    ------------------    -----------------
       Local and domestic long distance                      1,173,823             1,110,785            1,054,407

      International long distance                              204,049               151,122               99,247
      Net settlements                                           47,693                31,779               29,372
                                                    ------------------    ------------------    -----------------
       International long distance                             251,742               182,901              128,619
       Other wireline-related services                         203,002               254,412              225,241
                                                    ------------------    ------------------    -----------------
   Total revenues                                            1,628,567             1,548,098            1,408,267
                                                    ==================    ==================    =================

   Intersegment revenues                                       (74,411)             (105,989)             (96,317)

   Operating income                                            161,639               125,877               (6,567)
                                                    ==================    ==================    =================
   Depreciation and amortization                               536,029               575,877              528,159
                                                    ==================    ==================    =================

   Capital expenditures                                        351,668               213,790              221,529
                                                    ==================    ==================    =================

   Total assets                                              9,254,277             9,465,026            9,126,460
                                                    ==================    ==================    =================
</TABLE>

                                      F-37
<PAGE>

<TABLE>
<CAPTION>
                                                           1998                 1999                 2000
                                                    ------------------   ------------------   ------------------
<S>                                                 <C>                  <C>                  <C>
Wireless services:

  Revenues
     Access                                                     99,828              116,822               65,067
     Usage                                                     159,588              215,486              314,922
     Equipment sales                                            29,921               48,598               18,005
                                                    ------------------   ------------------   ------------------
Total revenues                                                 289,337              380,906              397,994
                                                    ==================   ==================   ==================

Intersegment revenues                                           57,858               79,811              (69,000)

Operating income                                                68,836               44,733               44,656
                                                    ==================   ==================   ==================

Depreciation and amortization                                   61,869               86,427               81,920
                                                    ==================   ==================   ==================

Capital expenditures                                           203,844              169,588               97,350
                                                    ==================   ==================   ==================

Total assets                                                   628,104              784,016              877,911
                                                    ==================   ==================   ==================
</TABLE>

The reconciliations of segment revenues, operating income and assets are as
follows:

Reconciliation of reportable segment revenues:

<TABLE>
<CAPTION>
                                                           1998                  1999                  2000
                                                    ------------------    ------------------    ------------------
<S>                                                 <C>                   <C>                   <C>
 Reportable segments                                         1,917,904             1,929,004             1,806,261
 Other telecommunications-related services                      36,833                43,856                46,186
 Elimination of intersegment revenues                          (16,552)              (26,178)              (27,315)
                                                    ------------------    ------------------    ------------------

    Total operating revenues                                 1,938,185             1,946,682             1,825,132
                                                    ==================    ==================    ==================
</TABLE>

Reconciliation of reportable segment operating income:


<TABLE>
<CAPTION>
                                                           1998                  1999                  2000
                                                    ------------------    ------------------    ------------------
<S>                                                <C>                    <C>                   <C>
 Reportable segments                                           230,475               170,610                38,089
 Other telecommunications-related services                      (6,344)              (11,236)              (17,229)
 Elimination of intersegment operating income                    1,216                  (747)                   68
                                                    ------------------    ------------------    ------------------

    Total operating income                                     225,347               158,627                20,928
                                                    ==================    ==================    ==================
</TABLE>

Reconciliation of reportable segment assets:

<TABLE>
<CAPTION>
                                                           1998                 1999                 2000
                                                    ------------------   ------------------   ------------------
<S>                                                 <C>                  <C>                  <C>
 Reportable segments                                         9,882,381           10,249,042           10,004,371
 Other telecommunications-related services                      19,981               37,651               42,081
                                                    ------------------   ------------------   ------------------

    Total assets                                             9,902,362           10,286,693           10,046,452
                                                    ==================   ==================   ==================
</TABLE>

                                      F-38
<PAGE>

f. Accounting for Derivative Instruments and Hedging Activities
   ------------------------------------------------------------

The Statement of Financial Accounting Standard No. 133 "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) establishes a new
model for accounting and reporting standards for derivatives and hedging
activities.  The Company currently does not engage in hedging activities and has
no derivative instruments as there is no substantial organized market for
financial instruments and derivatives in Venezuela. Management believes adoption
of SFAS 133 will not have a material impact on CANTV's financial statements.

                                      F-39
<PAGE>

                                  SIGNATURES


     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                    COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA
                    (CANTV)



                    By:    \s\ Armando Yanes
                       -----------------------------------------------------
                       Name:  Armando Yanes
                       Title: General Manager, Chief Financial Officer


  May 25, 2001