SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                     ------

                                  F O R M 10-K

[ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

                   For the Fiscal Year Ended December 31, 1997

                                       OR

[   ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

              For the Transition Period From _________ to ________

                          Commission File No. 333-26055

                               CCPR SERVICES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                                13-3120943
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

110 East 59th Street, New York, New York                            10022
----------------------------------------                          ----------
(Address of principal executive offices)                          (Zip Code)

                                 (212) 906-8481
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

                                   ----------

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

                                      NONE

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

                     10% Senior Subordinated Notes due 2007
                     --------------------------------------
                                (Title of Class)

<PAGE>

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. [ X ] Yes [   ] No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of March 20, 1998, there were 1,400 shares of the  Registrant's  common stock
outstanding.  The Registrant is an indirect wholly-owned  subsidiary of CoreComm
Incorporated, and there is no market for the Registrant's common stock.

The Registrant  meets the conditions set forth in General  Instructions  I(1)(a)
and  I(1)(b) of Form 10-K and is filing  this form with the  reduced  disclosure
format pursuant to General Instructions I(2)(b) and I(2)(c).



         "Safe Harbor" Statement under the Private Securities Litigation
                               Reform Act of 1995:


     Certain statements contained herein constitute "forward-looking statements"
as that term is defined under the Private  Securities  Litigation  Reform Act of
1995. When used herein, the words, "believe,"  "anticipate," "should," "intend,"
"plan," "will," "expects," "estimates,"  "projects,"  "positioned,"  "strategy,"
and  similar  expressions   identify  such  forward-looking   statements.   Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the  Registrant,  or industry  results,  to be materially  different  from those
contemplated  or projected,  forecast,  estimated or budgeted in or expressed or
implied by such forward-looking  statements. Such factors include, among others,
the risk and  other  factors  set  forth  under  "Risk  Factors"  as well as the
following:  general  economic  and business  conditions,  industry  trends,  the
Registrant's  ability to continue  to design its  network,  install  facilities,
obtain and maintain any required  government  licenses or approvals  and finance
construction and development, all in a timely manner, at reasonable costs and on
satisfactory  terms  and  conditions,  as well  as  assumptions  about  customer
acceptance,  churn  rates,  overall  market  penetration  and  competition  from
providers of alternative  services,  and  availability,  terms and deployment of
capital.

<PAGE>


                                TABLE OF CONTENTS

PART I                                                                     PAGE
------

Item 1    Business ........................................................  1

Item 2    Property ........................................................  1

Item 3    Legal Proceedings ...............................................  1

Item 4    Submission of Matters to a Vote of Stockholders..................  1

PART II
-------

Item 5    Market for the Registrant's Common Stock and
          Related Stockholder Matters .....................................  2

Item 6    Selected Financial Data .........................................  2

Item 7    Management's Discussion and Analysis of Results
          of Operations and Financial Condition ...........................  3

Item 7A   Quantitative and Qualitative Disclosures About Market Risk ......  7

Item 8    Financial Statements and Supplementary Data .....................  7

Item 9    Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure .............................  7

PART III
--------

Items 10, 11, 12 and 13....................................................  8

PART IV
-------

Item 14   Exhibits, Financial Statement Schedules and
          Reports on Form 8-K .............................................  8

Exhibit Index .............................................................  9

Signatures ................................................................ 10

Index to Financial Statements .............................................F-1
<PAGE>

                                     PART I
                                     ------

ITEM 1. BUSINESS.
----------------

     CCPR  Services,  Inc.  (the  "Company")  is a  wholly-owned  subsidiary  of
Cellular  Communications of Puerto Rico, Inc.  ("CCPR").  CCPR is a wholly-owned
subsidiary of CoreComm Incorporated  ("CoreComm").  The Company is the principal
operating subsidiary of CoreComm's Puerto Rico cellular system. The Company also
owns or  controls  the  following  Federal  Communications  Commission  cellular
licenses  with  respect to that system:  Aguadilla,  Arecibo,  Mayaguez,  Ponce,
Ricon, Adjuntas, Ciales, Vieques and Culebra.

     The  Company is a Delaware  corporation  that was  incorporated  on May 28,
1982. The Company's  executive offices are located at 110 East 59th Street,  New
York, New York 10022 and its telephone number is (212) 906-8481.


ITEM 2. PROPERTY.
----------------

     The Company  leases office space,  sales and service  centers and warehouse
space in the  Commonwealth  of Puerto  Rico.  In  addition,  the Company owns or
leases  transmitter  sites and leases a cellular switch site. The loss of any of
these leases,  either because of a failure to obtain a renewal of a lease or for
any reason not known or anticipated by the Company, could have an adverse effect
on the Company's cellular operations until a substitute site could be found.

     The Company  believes that the properties that are currently under lease or
owned by the Company are adequate to serve its present  business  operations and
its goals of providing  continuous  cellular  coverage  throughout  Puerto Rico,
although the Company may require  additional  properties  for new cell sites and
sales and service  centers as demand for  cellular  service  increases.  See the
Notes to the Company's Financial Statements included elsewhere in this Form 10-K
for information concerning lease commitments.


ITEM 3. LEGAL PROCEEDINGS.
-------------------------

     The Company is involved in various disputes, arising in the ordinary course
of business, which may result in pending or threatened litigation. The Company's
management  expects  no  material  adverse  effect  on the  Company's  financial
condition to result from these matters.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS.
-------------------------------------------------------

     Omitted pursuant to General Instruction I(2)(c)of Form 10-K.


                                       1
<PAGE>

                                     PART II
                                     -------

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
        MATTERS.
------------------------------------------------------------------------

     The Company is a wholly-owned subsidiary of CCPR.


ITEM 6.  SELECTED FINANCIAL DATA.
--------------------------------

The  following  table  sets forth  certain  financial  data for the years  ended
December 31, 1997,  1996,  1995, 1994 and 1993. The selected  financial data has
been restated to include the combined  financial data of Services and the merged
companies.  This  information  should be read in conjunction  with the financial
statements and notes thereto appearing elsewhere in this Form 10-K.
<TABLE>
<CAPTION>

                                                                      YEAR ENDED DECEMBER 31,
                                              --------------------------------------------------------------------
                                                 1997           1996           1995           1994           1993
                                              --------------------------------------------------------------------
                                                                          (IN THOUSANDS)
<S>                                           <C>            <C>            <C>            <C>            <C>
INCOME STATEMENT DATA:
    Revenues                                  $ 55,932       $ 38,295       $ 28,105       $ 14,085       $  5,981
    Operating income (loss)                     18,645          9,348          4,504         (3,535)        (5,612)
    Income (loss) before extraordinary item     (2,008)         1,491          1,821         (3,643)        (5,697)
    Net income (loss)                           (5,334)         1,491          1,821         (3,643)        (5,697)
</TABLE>
<TABLE>
<CAPTION>


                                                                           DECEMBER 31,
                                              ---------------------------------------------------------------------
                                                 1997           1996           1995           1994           1993
                                              ---------------------------------------------------------------------
<S>                                           <C>            <C>            <C>            <C>            <C>
BALANCE SHEET DATA:
     Working capital (deficiency)             $ (27,488)     $  (8,156)     $   6,222      $ (39,534)     $ (26,436)
     Property, plant and equipment-net          119,702         90,000         69,594         52,760         42,482
     Total assets                               279,082        163,408        122,087         80,530         74,386
     Long-term debt excluding capital lease     200,000        115,000         90,000            225            225
     Shareholders' equity (deficiency)           (3,043)         2,291            800         24,127         27,770
</TABLE>



The  Company  did not  declare  or pay any cash  dividends  during  the  periods
indicated.


                                       2
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION.
-------------------------------------------------------------------------

     Effective   December   31,   1997,   certain   subsidiaries   of   Cellular
Communications of Puerto Rico, Inc. ("CCPR") merged with and into CCPR Services,
Inc. (the "Company"). The Company is a wholly-owned subsidiary of CCPR, and CCPR
is a  wholly-owned  subsidiary of CoreComm.  As a result of these  mergers,  the
Company owns and operates a portion of CCPR's Puerto Rico cellular  system.  The
Company manages and operates the remainder in accordance with an  Administration
and Management Agreement between the Company and the San Juan Cellular Telephone
Company  ("SJCTC")  (a general  partnership).  The Company  owns  27.146% of the
partnership  interests in SJCTC, and CCPR directly or through  subsidiaries owns
the remaining 72.854% of the interests.

     These mergers have been  accounted for in a manner  similar to a pooling of
interests since all of the companies were wholly-owned by CCPR. Accordingly, all
prior periods  presented  have been restated to include the combined  results of
operations  of Services  and the merged  companies.  Services  charges  SJCTC an
administrative  fee based on its revenues  and a capital  usage fee which is the
recovery of a portion of Services' capital costs.

                              RESULTS OF OPERATIONS

Years Ended December 31, 1997 and 1996
--------------------------------------

     Administrative  and  capital  usage  fees  charged  to SJCTC  increased  to
$35,743,000 from $18,417,000  primarily because of increases in capital costs in
the SJCTC license area.

     Service revenue  increased to $18,452,000  from  $17,701,000 as a result of
subscriber growth.

     The loss from equipment, before depreciation of rental equipment, decreased
to  $282,000  from  $580,000  primarily  because  the  Company  is  not  selling
telephones  below their cost to prepaid  subscribers.  Reductions in the cost of
cellular telephones also contributed to this decrease.

     Equity in net income  (loss) of SJCTC  decreased to a loss of $199,000 from
income of $304,000. The change is a result of the increase in capital usage fees
charged to SJCTC.

     Operating expenses increased to $2,981,000 from $2,736,000 primarily due to
additional costs associated with the expanded network,  offset by a reduction in
interconnection charges.

     Selling,  general and administrative expenses increased to $10,986,000 from
$10,092,000  as a result of  increased  selling and  marketing  to increase  the
customer base and additional personnel to service the expanding customer base.

     Depreciation of rental equipment increased to $221,000 from $193,000 due to
an increase in rental telephones.


                                       3
<PAGE>


     Depreciation  expense  increased to $17,010,000 from $11,546,000  primarily
because of an increase in property, plant and equipment.

     Amortization  expense increased to $3,871,000 from $1,927,000 primarily due
to the increase in investment in SJCTC.

     Interest and other income  (expense)  decreased to an expense of $1,788,000
from income of $600,000  primarily due to an increase in loss on write-downs and
disposals of property, plant, and equipment.

     Interest  expense  increased to $19,394,000  from $8,094,000 as a result of
the increase in long-term  debt at a higher  effective  interest rate during the
first quarter of 1997.

     The provision  for income taxes  decreased to $2,000 from $960,000 due to a
decrease in Puerto Rico taxable income.

     In  connection  with the repayment of the bank loan,  Services  recorded an
extraordinary loss of $4,067,000 ($3,326,000 net of income tax benefit) from the
write-off of unamortized deferred financing costs.

Years Ended December 31, 1996 and 1995
--------------------------------------

     Administrative  and  capital  usage  fees  charged  to SJCTC  increased  to
$18,417,000  from  $11,914,000  as a result of increases in revenues and capital
costs in the SJCTC license area.

     Service revenue  increased to $17,701,000  from  $14,221,000 as a result of
subscriber growth.

     The loss from equipment, before depreciation of rental equipment, decreased
to  $580,000  from  $932,000  primarily  because  of  reductions  in the cost of
cellular  telephones.  Services sells cellular telephones below cost in response
to competition and to generate subscriber growth.

     Equity in net  income  of SJCTC of  $304,000  in 1996 is the  result of the
acquisition  of an  approximately  6% ownership  interest in the  partnership in
February 1996.

     Operating expenses increased to $2,736,000 from $2,178,000 primarily due to
increased usage of the network and additional costs associated with the expanded
network.

     Selling,  general and administrative expenses increased to $10,092,000 from
$8,191,000  as a result of  increased  selling and  marketing  to  increase  the
customer base and additional personnel to service the expanding customer base.


                                       4
<PAGE>


     Depreciation of rental equipment decreased to $193,000 from $225,000 due to
rental telephones becoming fully depreciated

     Depreciation  expense  increased to $11,546,000  from $8,920,000  primarily
because of an increase in property, plant and equipment.

     Amortization  expense increased to $1,927,000 from $1,185,000 primarily due
to the increase in investment in SJCTC.

     Intercompany  interest  income  increased  to $597,000  from  $407,000 as a
result of the increase in the amounts due from affiliates.

     Interest and other income  increased to $600,000  from $169,000 as a result
of increases in cash available for short-term investment.

     Interest  expense  increased to $8,094,000 from $2,769,000 as a result of a
higher average balance on long-term debt outstanding during 1996.

     The  provision  for income taxes  increased to $960,000  from $149,000 as a
result of an increase in Puerto Rico income tax.


                         LIQUIDITY AND CAPITAL RESOURCES

     The Company  requires capital to expand its Puerto Rico cellular system and
for debt  service.  The Company is  currently  adding cell sites and  increasing
capacity  throughout  Puerto  Rico.  The  Company  expects to use  approximately
$26,300,000  in 1998 for  contemplated  additions  to the Puerto  Rico  cellular
network and for other non-cell site related capital expenditures.  The Company's
commitments  at December 31, 1997 of $4,000,000  for cellular  network and other
equipment and for  construction  services are included in the total  anticipated
expenditures.  The Company  expects to be able to meet these  requirements  with
cash from operations and cash from CCPR.

     CCPR has received  loans from CoreComm of $17,056,000  through 1997,  which
are  non-interest  bearing and are due on June 30, 1998.  CCPR used the funds to
make  loans to the  Company.  As of March  20,  1998,  CoreComm  had  loaned  an
additional  $11,400,000,  of  which  $3,000,000  was used by the  Company  for a
portion of its interest payment.

     In January  1997,  the Company  issued  $200,000,000  principal  amount 10%
Senior  Subordinated  Notes due 2007 (the  "Notes")  and  received  proceeds  of
$193,233,000 after discounts, commissions and other related costs. The Notes are
unconditionally  guaranteed by CCPR. The Company used approximately $116,000,000
of the proceeds to repay the  $115,000,000  principal  outstanding  plus accrued
interest and fees under an existing bank loan.  In addition,  the Company made a
cash payment to CCPR of $80,000,000 in exchange for a 21% interest in SJCTC.


                                       5
<PAGE>


     The Notes are due on  February  1, 2007.  Interest  on the Notes is payable
semiannually commencing August 1, 1997. The Notes are redeemable, in whole or in
part, at the option of the Company at any time on or after  February 1, 2002, at
a redemption price of 105% that declines  annually to 100% in 2005, in each case
together with accrued and unpaid interest to the redemption  date. The Indenture
contains  certain  covenants  with  respect  to the  Company,  CCPR and  certain
subsidiaries of CCPR that limit their ability to, among other things,  (i) incur
additional  indebtedness,  (ii) pay  dividends  or make other  distributions  or
restricted payments (except for dividend payments to CCPR and an aggregate of up
to  $100,000,000  to be used for dividends or restricted  payments to CoreComm),
(iii) create liens,  (iv) sell assets,  (v) enter into mergers or consolidations
or (vi) sell or issue stock of subsidiaries.

     Cash provided by operating  activities was  $23,818,000  and $8,959,000 for
the  years  ended  December  31,  1997 and  1996,  respectively.  The  change is
primarily  due  to  increased  depreciation  and  amortization  and  changes  in
operating assets and liabilities.  Purchases of property, plant and equipment of
$37,335,000  in 1997 were  primarily  for  additional  cell sites and  increased
capacity in its Puerto Rico cellular network.

     Write-offs  of accounts  receivable,  net of  recoveries as a percentage of
service  revenues was 7.1% for the year ended December 31, 1997 compared to 6.2%
for the year ended  December 31, 1996.  This  percentage  increased  because the
Company has attracted  and continues to attract new segments of the market.  The
Company  continues  to attempt to reduce this  percentage  by  improving  credit
procedures and instituting innovative forms of payment such as prepaid billing.

YEAR 2000

     Many computer systems  experience  problems  handling dates beyond the year
1999.  Therefore,  some computer  hardware and software will need to be modified
prior to the year 2000 in order to remain  functional.  The Company is assessing
both the internal  readiness of its computer  systems and the  compliance of the
computer systems of certain  significant  customers and vendors for handling the
year 2000.  The  Company  expects to  implement  successfully  the  systems  and
programming  changes necessary to address year 2000 issues, and does not believe
that the  cost of such  actions  will  have a  material  adverse  effect  on the
Company. There can be no assurance,  however, that there will not be a delay in,
or increased costs associated with, the implementation of such changes,  and the
Company's  inability to implement  such changes could have an adverse  effect on
the Company.  In addition,  the failure of certain of the Company's  significant
customers  and  vendors  to address  the year 2000  issue  could have a material
adverse effect on the Company.


                                       6
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
------------------------------------------------------------------

     The Company is required to provide these  disclosures  in its Annual Report
on Form 10-K for the year ended December 31, 1998.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
----------------------------------------------------

     The Financial Statements are included herein commencing on page F-1.

     The following is a summary of the quarterly  results of operations  for the
     years ended December 31, 1997 and 1996.
<TABLE>
<CAPTION>

                                                                    (IN THOUSANDS)

                                                                         1997
                                                                  THREE MONTHS ENDED
                                              -------------------------------------------------------
                                               MARCH 31       JUNE 30     SEPTEMBER 30    DECEMBER 31
                                              -------------------------------------------------------
<S>                                           <C>            <C>            <C>            <C>
Revenues                                      $ 12,983       $ 14,123       $ 13,556       $ 15,270
Operating income                                 4,593          5,168          4,159          4,725
Income (loss) before extraordinary item            590             (1)        (1,136)        (1,461)
Net income (loss)                               (3,163)           425           (749)        (1,847)
</TABLE>
<TABLE>
<CAPTION>

                                                                           1996
                                                                    THREE MONTHS ENDED
                                              -------------------------------------------------------
                                               MARCH 31      JUNE 30      SEPTEMBER 30    DECEMBER 31
                                              -------------------------------------------------------
<S>                                           <C>            <C>            <C>            <C>
Revenues                                      $ 8,325        $ 8,995        $ 10,369       $ 10,606
Operating income                                1,714          1,946           2,420          3,268
Net income                                         55            266              64          1,106
</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.
-----------------------------------------------------------------------

     Not applicable.


                                       7
<PAGE>

                                    PART III
                                    --------

ITEMS 10, 11, 12 AND 13.
-----------------------

     Omitted pursuant to General Instruction I(2)(c) of Form 10-K.


                                     PART IV
                                     -------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
------------------------------------------------------------------------

  (a)(1)  Financial Statements - See list of Financial Statements on page F-1.

     (2)  Financial  Statement  Schedules  - See  list  of  Financial  Statement
          Schedules on page F-1.

     (3)  Exhibits - See Exhibit Index on page 9.

  (b)     Reports on Form 8-K. The Company filed no current  reports on Form 8-K
          during the quarter ended December 31, 1997.

  (c)     Exhibits - The  response to this  portion of Item 14 is submitted as a
          separate section of this report.

  (d)     Financial  Statement  Schedules  - See  list  of  Financial  Statement
          Schedules on page F-1. See the Index to  Financial  Statements  of the
          San Juan Cellular Telephone Company on page S-1.


                                       8
<PAGE>

                                  EXHIBIT INDEX

Exhibit No.
----------

   3.1    Restated Certificate of Incorporation of the Company. (Incorporated by
          reference from Exhibit 3.1, File Number 333-26055)

   3.2    By-laws of the Company.  (Incorporated  by reference from Exhibit 3.2,
          File Number 333-26055)

   4.1    Indenture  dated as of January 31,  1997 by and  between the  Company,
          Cellular  Communications  of Puerto Rico, Inc. and The Chase Manhattan
          Bank, N.A.  (Incorporated  by reference from Exhibit 4.3 of CoreComm's
          1996 Form 10-K, File Number 19869-99)

   4.2    Registration  Rights  Agreement  dated as of January  31,  1997 by and
          among the Company,  Cellular  Communications  of Puerto Rico, Inc. and
          Donaldson, Lufkin & Jenrette Securities Corporation,  Salomon Brothers
          Inc  and  Wasserstein  Perella  Securities,   Inc.   (Incorporated  by
          reference from Exhibit 4.2 of CoreComm's  1996 Form 10-K,  File Number
          19869-99)

   10.1   Partnership Agreement relating to San Juan Cellular Telephone Company.
          (Incorporated by reference to Exhibit 10.4, File Number 33-44420)

   10.2   Tax  Sharing  Agreement  dated as of  January  31,  1997 by and  among
          CoreComm,  Cellular  Communications  of  Puerto  Rico,  Inc.  and  the
          Company. (Incorporated by reference to Exhibit 10.2 of CoreComm's 1996
          Form 10-K, File Number 19869-99)

   10.3   Agreement  dated as of  January  31,  1997,  by and  between  Cellular
          Communications of Puerto Rico, Inc. and the Company.  (Incorporated by
          reference to Exhibit 10.7 of  CoreComm's  1996 Form 10-K,  File Number
          19869-99)

   21     Omitted pursuant to General Instruction I(2)(b) of Form 10-K.

   27     Financial Data Schedule, for the year ended December 31, 1997.


                                       9
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

Dated:  March 26, 1998

                                      CCPR SERVICES, INC.


                                      By:  /s/ Stanton N. Williams
                                      ------------------------------------------
                                      Stanton N. Williams
                                      Vice President and Chief Financial Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant in the capacities and on the date indicated.

Signature                       Title                             Date
---------                       -----                             ----

/s/ George S. Blumenthal        Principal Executive               March 26, 1998
----------------------------    Officer and Director
George S. Blumenthal


/s/ J. Barclay Knapp            Chief Operating Officer           March 26, 1998
----------------------------    and Director
J. Barclay Knapp


/s/ Stanton N. Williams         Principal Financial Officer       March 26, 1998
----------------------------
Stanton N. Williams


/s/ Gregg Gorelick              Principal Accounting Officer      March 26, 1998
----------------------------
Gregg Gorelick


/s/ Richard J. Lubasch          Director                          March 26, 1998
----------------------------
Richard J. Lubasch


                                       10
<PAGE>


                        Form 10-K - Item 14(a)(1) and (2)

                               CCPR Services, Inc.

                          Index to Financial Statements
                        and Financial Statement Schedules

The  following  financial  statements  and schedule of CCPR  Services,  Inc. are
included in Item 8:

Report of Independent Auditors...........................................F-2
Balance Sheets - December 31, 1997 and 1996..............................F-3
Statements of Operations - Years Ended
   December 31, 1997, 1996 and 1995......................................F-4
Statement of Shareholder's Equity (Deficiency) - Years Ended
   December 31, 1997, 1996 and 1995......................................F-5
Statements of Cash Flows - Years Ended
   December 31, 1997, 1996 and 1995......................................F-6
Notes to Financial Statements............................................F-8

The following financial statement schedule of CCPR Services, Inc. is included in
Item 14(d):

Schedule II  -  Valuation and Qualifying Accounts........................F-19



All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.


                                      F-1
<PAGE>



                         Report of Independent Auditors





Board of Directors and Shareholder
CCPR Services, Inc.


We have audited the  accompanying  balance sheets of CCPR  Services,  Inc. as of
December  31,  1997  and  1996,  and  the  related   statements  of  operations,
shareholder's  equity,  and cash flows for each of the three years in the period
ended  December  31, 1997.  Our audits also  included  the  financial  statement
schedule  listed in the Index at Item  14(a).  These  financial  statements  and
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of CCPR Services, Inc. at December
31, 1997 and 1996, and the results of its operations and its cash flows for each
of the three years in the period ended  December 31, 1997,  in  conformity  with
generally  accepted  accounting  principles.  Also, in our opinion,  the related
financial statement schedule, when considered in relation to the basic financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.


                                                    ERNST & YOUNG LLP


San Juan, Puerto Rico
February 27, 1998


                                      F-2
<PAGE>

                               CCPR Services, Inc.

                                 Balance Sheets
<TABLE>
<CAPTION>

                                                                                      DECEMBER 31
                                                                               1997                1996
                                                                        ----------------------------------
<S>                                                                     <C>                  <C>
ASSETS
Current assets:
   Cash and cash equivalents                                            $    9,181,000       $   1,921,000
   Marketable securities                                                       235,000           5,917,000
   Accounts receivable - trade, less allowance for doubtful
     accounts of $1,839,000 (1997) and $3,472,000 (1996)                    17,847,000          18,553,000
   Due from affiliates                                                      12,313,000           6,855,000
   Equipment inventory                                                       2,497,000           2,292,000
   Prepaid expenses                                                          3,108,000           2,423,000
                                                                        ----------------------------------
Total current assets                                                        45,181,000          37,961,000

Property, plant and equipment, net                                         119,702,000          90,000,000
Investment in San Juan Cellular Telephone Company                           98,822,000          21,401,000
Unamortized license acquisition costs                                        8,233,000           8,869,000
Deferred financing costs, net of accumulated
  amortization of $584,000 (1997) and $1,065,000 (1996)                      6,206,000           4,118,000
Other assets, net of accumulated amortization
  of $1,046,000 (1997) and $607,000 (1996)                                     938,000           1,059,000
                                                                        ----------------------------------
Total assets                                                            $  279,082,000       $ 163,408,000
                                                                        ==================================

LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIENCY)
Current liabilities:
   Accounts payable                                                     $    6,335,000       $   6,713,000
   Accrued expenses                                                         18,343,000          10,307,000
   Due to affiliates                                                        44,897,000          26,643,000
   Deferred revenue                                                          3,094,000           2,454,000
                                                                        ----------------------------------
Total current liabilities                                                   72,669,000          46,117,000

Long-term debt                                                             200,000,000         115,000,000
Obligation under capital lease                                               9,456,000                   -
Commitments and contingent liabilities

Shareholder's equity (deficiency):
   Common stock, $1 par value; authorized 1,500 shares;
       issued and outstanding 1,400 shares                                       1,000               1,000
   Additional paid-in capital                                               19,513,000          19,513,000
   Retained earnings (deficit)                                             (22,557,000)        (17,223,000)
                                                                        ----------------------------------
Total shareholder's equity (deficiency)                                     (3,043,000)          2,291,000
                                                                        ----------------------------------
Total liabilities and shareholder's equity (deficiency)                 $  279,082,000       $ 163,408,000
                                                                        ==================================
</TABLE>

See accompanying notes.


                                      F-3
<PAGE>

                               CCPR Services, Inc.

                            Statements of Operations
<TABLE>
<CAPTION>

                                                                           YEAR ENDED DECEMBER 31
                                                                 1997                1996              1995
                                                           ---------------------------------------------------
<S>                                                        <C>                 <C>                <C>
Revenues:
   Administrative and capital usage fees charged
      to San Juan Cellular Telephone Company               $  35,743,000       $  18,417,000      $ 11,914,000
    Service revenue                                           18,452,000          17,701,000        14,221,000
    Equipment revenue                                          1,936,000           1,873,000         1,970,000
    Equity in net income (loss) of San Juan
       Cellular Telephone Company                               (199,000)            304,000                 -
                                                           ---------------------------------------------------
                                                              55,932,000          38,295,000        28,105,000

Cost and expenses:
   Cost of equipment sold                                      2,218,000           2,453,000         2,902,000
   Operating expenses                                          2,981,000           2,736,000         2,178,000
   Selling, general and administrative expenses               10,986,000          10,092,000         8,191,000
   Depreciation of rental equipment                              221,000             193,000           225,000
   Depreciation expense                                       17,010,000          11,546,000         8,920,000
   Amortization expense                                        3,871,000           1,927,000         1,185,000
                                                           ---------------------------------------------------
                                                              37,287,000          28,947,000        23,601,000
                                                           ---------------------------------------------------
Operating income                                              18,645,000           9,348,000         4,504,000

Other income (expense):
   Intercompany interest income                                  531,000             597,000           407,000
   Interest and other income (expense)                        (1,788,000)            600,000           169,000
   Interest expense                                          (19,394,000)         (8,094,000)       (2,769,000)
                                                           ---------------------------------------------------
Income (loss) before income taxes and extraordinary item      (2,006,000)          2,451,000         2,311,000
Provision for income taxes                                        (2,000)           (960,000)         (490,000)
                                                           ---------------------------------------------------
Income (loss) before extraordinary item                       (2,008,000)          1,491,000         1,821,000
Loss from early extinguishment of debt,
   net of income tax benefit of $741,000                      (3,326,000)                  -                 -
                                                           ---------------------------------------------------
Net income (loss)                                          $  (5,334,000)      $   1,491,000      $  1,821,000
                                                           ===================================================
</TABLE>

See accompanying notes


                                      F-4
<PAGE>

                               CCPR Services, Inc.

                 Statement of Shareholder's Equity (Deficiency)
<TABLE>
<CAPTION>


                                              Common Stock             Additional          Retained
                                           -------------------          Paid-in            Earnings
                                            Shares      Amount          Capital            (Deficit)              Total
                                           -------------------------------------------------------------------------------
<S>                                        <C>        <C>           <C>                 <C>                  <C>
Balance at December 31, 1994
   as previously reported                  1,000      $ 1,000       $  30,406,000       $ (10,477,000)       $  19,930,000
Adjustment for pooling of
   interests                                 400            -          14,255,000         (10,058,000)           4,197,000
                                           -------------------------------------------------------------------------------
Balance at December 31, 1994,
   restated                                1,400        1,000          44,661,000         (20,535,000)          24,127,000
Return of capital                                                     (25,148,000)                             (25,148,000)
Net income                                                                                  1,821,000            1,821,000
                                           -------------------------------------------------------------------------------
Balance at December 31, 1995               1,400        1,000          19,513,000         (18,714,000)             800,000
Net income                                                                                  1,491,000            1,491,000
                                           -------------------------------------------------------------------------------
Balance at December 31, 1996               1,400        1,000          19,513,000         (17,223,000)           2,291,000
Net loss                                                                                   (5,334,000)          (5,334,000)
                                           -------------------------------------------------------------------------------
Balance at December 31, 1997               1,400      $ 1,000       $  19,513,000       $ (22,557,000)       $  (3,043,000)
                                           ===============================================================================

</TABLE>

See accompanying notes.


                                      F-5
<PAGE>

                               CCPR Services, Inc.

                            Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31
                                                                          1997                 1996               1995
                                                                   -------------------------------------------------------
<S>                                                                <C>                  <C>                  <C>
OPERATING ACTIVITIES
Net income (loss)                                                  $   (5,334,000)      $    1,491,000       $   1,821,000
Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
     Depreciation and amortization                                     21,102,000           13,666,000          10,330,000
     Equity in net (income) loss of San Juan Cellular
       Telephone Company                                                  199,000             (304,000)                  -
     Loss from early extinguishment of debt                             4,067,000                    -                   -
     Provision for losses on accounts receivable                        6,620,000            7,087,000           6,164,000
     (Gain) loss on disposal of fixed assets                            1,792,000               67,000             (24,000)
     Changes in operating assets and liabilities:
       Accounts receivable                                             (5,914,000)          (9,629,000)        (13,078,000)
       Due from affiliates                                              (5,458,00)           1,559,000          (4,373,000)
       Equipment inventory                                               (205,000)           2,425,000          (2,517,000)
       Prepaid expenses                                                  (685,000)          (1,028,000)           (348,000)
       Other assets                                                       (97,000)            (472,000)            (85,000)
       Accounts payable                                                  (913,000)           2,428,000          (2,853,000)
       Accrued expenses                                                 6,806,000            2,826,000           1,985,000
       Due to affiliates                                                1,198,000          (11,260,000)         23,992,000
       Deferred revenue                                                   640,000              103,000             797,000
                                                                   -------------------------------------------------------
Net cash provided by operating activities                              23,818,000            8,959,000          21,811,000

INVESTING ACTIVITIES
Purchase of marketable securities                                        (235,000)         (15,658,000)                  -
Proceeds from maturities of marketable securities                       5,917,000            9,741,000                   -
Purchase of San Juan Cellular Telephone Company interest              (80,000,000)             (56,000)                  -
Acquisition of property, plant and equipment                          (37,335,000)         (33,014,000)        (25,096,000)
                                                                   -------------------------------------------------------
Net cash (used in) investing activities                              (111,653,000)         (38,987,000)        (25,096,000)

FINANCING ACTIVITIES
Due to Cellular Communications of Puerto Rico, Inc.                    17,056,000                    -                   -
Principal payments of capital lease obligation                           (194,000)                   -                   -
Additional deferred financing costs                                             -              (23,000)                  -
Proceeds from borrowings                                              193,233,000           52,000,000          10,000,000
Principal payments                                                   (115,000,000)         (27,000,000)                  -
                                                                   -------------------------------------------------------
Net cash provided by financing activities                              95,095,000           24,977,000          10,000,000
                                                                   -------------------------------------------------------
Increase (decrease) in cash and cash equivalents                        7,260,000           (5,051,000)          6,715,000
Cash and cash equivalents at beginning of year                          1,921,000            6,972,000             257,000
                                                                   -------------------------------------------------------
Cash and cash equivalents at end of year                           $    9,181,000       $    1,921,000       $   6,972,000
                                                                   =======================================================
</TABLE>


                                      F-6
<PAGE>

                               CCPR Services, Inc.

                      Statements of Cash Flows (continued)
<TABLE>
<CAPTION>


                                                                                  YEAR ENDED DECEMBER 31
                                                                        1997                1996                1995
                                                                      ------------------------------------------------------------
<S>                                                                   <C>                  <C>                  <C>
Supplemental disclosure of cash flow information:
    Cash paid during the period for interest exclusive
       of amounts capitalized                                         $ 13,155,000         $  7,032,000         $  2,111,000
    Income taxes paid                                                      226,000              757,000              191,000

Supplemental schedule of noncash investing activities:
    Liability to parent company incurred in connection with
      acquisition of San Juan Cellular Telephone Company interest     $          -         $ 21,536,000         $          -
    Liability incurred to acquire property, plant and equipment          3,038,000            1,568,000            2,369,000
    Capital lease obligation incurred to acquire office building         9,922,000                    -                    -

Supplemental disclosure of noncash financing activities:
    Assumption of parent company's long-term debt                     $          -         $          -         $ 80,000,000
    Deferred financing costs transferred in connection with
      assumption of parent company's debt                                        -                    -            4,958,000
    Reduction of amount due to parent company in connection
      with assumption of parent company's debt                                   -                    -           49,894,000
    Return of capital in connection with assumption of parent
      company's debt                                                             -                    -           25,148,000

</TABLE>

See accompanying notes.


                                      F-7

<PAGE>

                               CCPR Services, Inc.
                          Notes to Financial Statements

1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

CCPR  Services,  Inc.  ("Services")  is a  wholly-owned  subsidiary  of Cellular
Communications  of Puerto  Rico,  Inc.  ("CCPR").  Effective  December 31, 1997,
certain subsidiaries of CCPR merged with and into Services. As a result of these
mergers,  Services  owns  and  operates  the  licenses  granted  by the  Federal
Communications  Commission ("FCC") for the non-wireline  cellular systems in the
following markets in Puerto Rico: Aguadilla,  Arecibo,  Mayaguez, Ponce, Rincon,
Adjuntas,  Ciales,  Vieques and  Culebra.  The Company  manages and operates the
non-wireline   cellular   system  in  San  Juan/Caguas  in  accordance  with  an
Administration  and  Management  Agreement  between  Services  and the San  Juan
Cellular Telephone Company (a general partnership). Services owns 27.146% of the
partnership  interests  in the San Juan  Cellular  Telephone  Company,  and CCPR
directly or through  subsidiaries  owns the remaining  72.854% of the interests.
Services  collects  revenues and incurs costs on behalf of the San Juan Cellular
Telephone  Company.  These  revenues  and  costs  are  recorded  by the San Juan
Cellular  Telephone  Company.  Services charges the San Juan Cellular  Telephone
Company an  administrative  fee based on its  revenues  and a capital  usage fee
which is the recovery of a portion of Services' capital costs.

Services'  business is currently  dependent on the trends in the use of cellular
telephone   services  and  is  subject  to  economic,   social,   political  and
governmental  conditions in Puerto Rico. The sale of cellular services in Puerto
Rico is becoming increasingly competitive.  Services previously had one cellular
competitor in each market,  but now it has many wireless  competitors due to the
introduction  of  broadband   personal   communications   services   ("PCS")  on
frequencies  auctioned by the FCC and specialized  mobile radio ("SMR") services
on existing  SMR  frequencies.  Increased  competition  has  resulted in pricing
pressure,  which  contributes to lower revenues per customer and higher customer
acquisition costs.

USE OF ESTIMATES

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

REVENUE RECOGNITION

Service  revenue is recognized  at the time  services are rendered.  Charges for
services  that are billed in advance are  deferred and  recognized  when earned.
Equipment  sales are recorded  when the  equipment  is shipped to the  customer.
Rental revenue is billed and recognized on a monthly basis.

CASH EQUIVALENTS

Cash  equivalents  are  short-term  highly liquid  investments  purchased with a
maturity of three months or less.


                                      F-8
<PAGE>

                               CCPR Services, Inc.
                    Notes to Financial Statements (continued)


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

MARKETABLE SECURITIES

Marketable securities are classified as available-for-sale, which are carried at
fair value.  Unrealized holding gains and losses on securities,  net of tax, are
carried as a separate  component of shareholder's  equity. The amortized cost of
debt  securities  is adjusted  for  amortization  of premiums  and  accretion of
discounts  to  maturity.  Such  amortization  is included  in  interest  income.
Realized  gains  and  losses  and  declines  in value  judged  to be other  than
temporary will be included in interest  income.  The cost of securities  sold or
matured is based on the specific  identification method.  Interest on securities
is included in interest income.

Marketable   securities  at  December  31,  1997  consisted  of  corporate  debt
securities.  Marketable  securities  at  December  31,  1996  consisted  of U.S.
Treasury  securities and  obligations of U.S.  government  agencies.  During the
years ended  December 31, 1997,  1996 and 1995,  there were no realized gains or
losses on sales of securities.  As of December 31, 1997 and 1996,  there were no
unrealized gains or losses on securities. All of the marketable securities as of
December 31, 1997 had a contractual maturity of less than one year.

EQUIPMENT INVENTORY

Equipment inventory is stated at the lower of cost (first-in,  first-out method)
or market.

INVESTMENT IN SAN JUAN CELLULAR TELEPHONE COMPANY

The investment in San Juan Cellular Telephone Company is accounted for using the
equity method and consists of the cost of acquiring  the  ownership  interest in
the partnership and Services' share of the  partnership's net income (loss) from
the date of  acquisition.  The  excess of the cost over the equity  acquired  is
being amortized through charges to operations by the  straight-line  method over
40 years.  The investment is reviewed for impairment  whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable.

LICENSE ACQUISITION COSTS

The FCC  grants  the  license  to  operate  a  cellular  telephone  system  in a
Metropolitan  Service Area or a Rural Service Area. Costs incurred to obtain FCC
licenses have been deferred and are being amortized by the straight-line  method
over ten years. In connection with the purchase of license interests, the excess
of purchase price paid over the fair value of tangible  assets acquired has been
classified as license  acquisition  costs which are amortized through charges to
operations by the straight-line  method over 40 years. License acquisition costs
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.


                                      F-9
<PAGE>


                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. Depreciation is computed by the
straight-line  method over the estimated  useful lives of the assets.  Estimated
useful lives are as follows: office building - 15 years, operating equipment - 7
to 25 years,  office  furniture and other  equipment - 1 to 5 years,  and rental
equipment - 2 years.

Long-lived  assets are reviewed  for  impairment  whenever  events or changes in
circumstances  indicate that the carrying amount may not be recoverable.  If the
sum of the expected future discounted cash flow is less than the carrying amount
of the asset, a loss is recognized for the difference between the fair value and
carrying value of the asset.

CAPITALIZED INTEREST

Interest  is  capitalized  as a  component  of the cost of  property,  plant and
equipment  constructed.  In 1997, 1996 and 1995, interest of $415,000,  $198,000
and $119,000, respectively, was capitalized.

DEFERRED FINANCING COSTS

Deferred  financing costs  represent costs incurred  relating to the issuance of
debt and are amortized over the term of the related debt.

ADVERTISING

Advertising  costs incurred for the years ended December 31, 1997, 1996 and 1995
were $2,731,000, $2,544,000 and $2,378,000,  respectively. The costs were either
charged to expense or charged to the San Juan Cellular Telephone Company.

2.    BUSINESS COMBINATION

Effective  December  31,  1997,  each  of  CCPR's  subsidiaries  that  owned  or
controlled  an FCC cellular  license in a Puerto Rico market (other than the San
Juan Cellular Telephone Company) was merged with and into Services. The specific
subsidiaries  merged with and into Services were  Aguadilla  Cellular  Telephone
Company,   Inc.   ("Aguadilla"),   Cellular   Communications  of  Arecibo,  Inc.
("Arecibo"),  CCI PR RSA Inc. ("RSA"), Cellular Ponce, Inc. ("Ponce"),  Mayaguez
Cellular Telephone Co., Inc.  ("Mayaguez") and Star Associaties,  Inc. ("Star").
Services' acquired all of the common stock of these subsidiaries in exchange for
400  shares  of  Services   common  stock  with  Services  being  the  surviving
corporation in the mergers.

Also as a result of the mergers,  the partnership known as Gamma  Communications
("Gamma")  was  terminated  effective  December 31, 1997,  and the net assets of
Gamma were transferred to Services.

The mergers and  termination  were accounted for at historical  cost in a manner
consistent  with a transfer of entities under common control which is similar to
that used in a "pooling of interests." Accordingly,


                                      F-10
<PAGE>

                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


2.    BUSINESS COMBINATION (CONTINUED)

Services' financial  statements have been restated to include the results of the
merged   entities  for  all  periods   presented.   All  material   intercompany
transactions have been eliminated.

The results of operations of the previously  separate entities that are included
in the current combined net income (loss) is as follows:

<TABLE>
<CAPTION>

                                         Services          Aguadilla           Arecibo             RSA             Ponce
                                       (Pre-Merger)      (Pre-Merger)       (Pre-Merger)      (Pre-Merger)      (Pre-Merger)
                                       -------------------------------------------------------------------------------------
                                                                           (In Thousands)
<S>                                    <C>                 <C>                <C>              <C>                <C>
YEAR ENDED
DECEMBER 31, 1997

Revenues                               $ 40,232            $ 2,061            $ 1,877          $    770           $ 3,213
Operating income (loss)                  20,000                134                 97            (1,514)              174
Income (loss) before
  extraordinary item                       (638)               103                 94            (1,628)              160
Net income (loss)                        (3,966)               103                 94            (1,628)              160

YEAR ENDED
DECEMBER 31, 1996

Revenues                               $ 26,924            $ 1,962            $ 1,864          $    894           $ 3,061
Operating income (loss)                  13,918               (250)              (726)           (2,284)             (127)
Net income (loss)                         6,580               (277)              (728)           (2,335)             (134)

YEAR ENDED
DECEMBER 31, 1995

Revenues                               $ 17,213            $ 1,845            $ 1,706          $    799           $ 2,104
Operating income (loss)                   7,544               (204)              (506)           (1,873)             (186)
Net income (loss)                         5,389               (228)              (507)           (1,943)             (189)
</TABLE>


Continued on the next page...




                                      F-11
<PAGE>

                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


2.    BUSINESS COMBINATION (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                                  Services
                                                                                                                (Post-Merger
                                                                                                                    and
                                         Mayaguez             Star              Gamma         Intercompany    Post Termination
                                       (Pre-Merger)       (Pre-Merger)    (Pre-Termination)   Transactions     of Partnership)
                                       ---------------------------------------------------------------------------------------
                                                                           (In Thousands)
<S>                                    <C>                 <C>                <C>              <C>                <C>
YEAR ENDED
DECEMBER 31, 1997

Revenues                               $ 3,476             $ 7,182            $ 1,808          $ (4,488)          $ 56,131
Operating income (loss)                    231                (375)                97                               18,844
Income (loss) before
  extraordinary item                       173                (360)                90                               (2,006)
Net income (loss)                          173                (360)                90                               (5,334)

YEAR ENDED
DECEMBER 31, 1996

Revenues                               $ 3,213             $ 6,885            $ 1,695          $ (8,507)          $ 37,991
Operating income (loss)                   (339)                195             (1,343)                               9,044
Net income (loss)                         (390)                123             (1,348)                               1,491

YEAR ENDED
DECEMBER 31, 1995

Revenues                               $ 2,818             $ 5,543            $ 1,375          $ (5,298)          $ 28,105
Operating income (loss)                   (192)                871               (950)                               4,504
Net income (loss)                         (237)                490               (954)                               1,821
</TABLE>

3.    RECENT ACCOUNTING PRONOUNCEMENT

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting  Comprehensive
Income." SFAS No. 130 requires that all items that are required to be recognized
under accounting  standards as components of comprehensive income be reported in
a  financial  statement  that is  displayed  with the same  prominence  as other
financial statements. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997.  Services will adopt SFAS No. 130 in the first interim period
for its fiscal year ending December 31, 1998.


                                      F-12
<PAGE>

                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


4.    INVESTMENT IN SAN JUAN CELLULAR TELEPHONE COMPANY

The  investment  in the San Juan  Cellular  Telephone  Company  consists  of the
following:

                                                          DECEMBER 31
                                                     1997             1996
                                                -----------------------------
  Purchase of San Juan Cellular
      Telephone Company interests               $ 101,592,000    $ 21,592,000
  Equity in accumulated net income                    105,000         304,000
                                                -----------------------------
                                                  101,697,000      21,896,000
  Accumulated amortization                         (2,875,000)       (495,000)
                                                -----------------------------
                                                $  98,822,000    $ 21,401,000
                                                =============================

In February 1996,  Services  acquired  approximately 6% of the San Juan Cellular
Telephone  Company in exchange for 820,000  shares of common stock of CCPR.  The
stock  was  valued  at  $21,536,000,  the  fair  market  value  on the  date  of
acquisition.  Services recorded a liability to CCPR of $21,536,000 in connection
with the  acquisition.  Services  incurred  $56,000 in  expenses  related to the
acquisition.

In January  1997,  Services  acquired a 21%  interest  in the San Juan  Cellular
Telephone Company from CCPR, in exchange for cash of $80,000,000.

The following  summarizes the assets,  liabilities and partners'  capital of the
San Juan Cellular Telephone Company:

                                                          DECEMBER 31
                                                     1997            1996
                                                -----------------------------
  ASSETS
  Current assets                                $  8,715,000    $  10,180,000
  Deferred costs, net                                163,000          229,000
                                                -----------------------------
                                                $  8,878,000    $  10,409,000
                                                =============================

  LIABILITIES AND PARTNERS' CAPITAL
  Current liabilties                            $          -    $     796,000
  Partners' capital                                8,878,000        9,613,000
                                                -----------------------------
                                                $  8,878,000    $  10,409,000
                                                =============================


                                      F-13
<PAGE>

                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


4.   INVESTMENT IN SAN JUAN CELLULAR TELEPHONE COMPANY (CONTINUED)

The  following  summarizes  the results of  operations  of the San Juan Cellular
Telephone Company:

                                                     YEAR ENDED DECEMBER 31
                                                     1997              1996
                                                ------------------------------

  Revenues                                      $ 107,400,000    $  96,907,000
  Cost and expenses                               108,136,000       88,188,000
                                                ------------------------------
  Operating income (loss)                            (736,000)       8,719,000
  Interest income                                       1,000            2,000
                                                ------------------------------
  Income (loss) before income taxes                  (735,000)       8,721,000
  Income taxes                                              -       (3,319,000)
                                                ------------------------------
  Net income (loss)                             $    (735,000)   $   5,402,000
                                                ==============================

5.    UNAMORTIZED LICENSE ACQUISITION COSTS

Unamortized license acquisition costs consist of:

                                                         DECEMBER 31
                                                     1997           1996
                                                ------------------------------

  Deferred cellular license costs               $  3,252,000      $  3,252,000
  Excess of purchase price paid over
    the fair market value of tangible
    assets acquired                               10,482,000        10,482,000
                                                ------------------------------
                                                  13,734,000        13,734,000
  Accumulated amortization                        (5,501,000)       (4,865,000)
                                                ------------------------------
                                                $  8,233,000      $  8,869,000
                                                ==============================


                                      F-14
<PAGE>

                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


6.   PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of:

                                                           DECEMBER 31
                                                      1997             1996
                                                -------------------------------
  Land                                          $   1,928,000     $   1,928,000
  Office building                                   9,922,000                 -
  Operating equipment                             118,048,000        90,487,000
  Office furniture and other equipment             23,207,000        15,408,000
  Rental equipment                                    623,000           712,000
  Construction in progress                         12,070,000        17,663,000
                                                -------------------------------
                                                  165,798,000       126,198,000
  Accumulated depreciation                        (46,096,000)      (36,198,000)
                                                -------------------------------
                                                $ 119,702,000     $  90,000,000
                                                ===============================

7.    ACCRUED EXPENSES

Accrued expenses consists of:

                                                           DECEMBER 31
                                                     1997              1996
                                                -------------------------------
  Accrued franchise, property and
      income taxes                              $   2,722,000     $   2,943,000
  Interest payable                                  8,333,000         1,678,000
  Other                                             7,288,000         5,686,000
                                                -------------------------------
                                                $  18,343,000     $  10,307,000
                                                ===============================

8.    RELATED PARTY TRANSACTIONS

Pursuant to the  Administration  and Management  Agreement,  Services  allocates
revenues to the San Juan Cellular Telephone Company based on the completed calls
within its license  area during the year,  and  allocates  costs to the San Juan
Cellular  Telephone Company based on the number of cell sites and radio channels
in  operation  or under  construction  within its license  area during the year.
During 1997, 1996 and 1995,  Services  allocated  cellular service and equipment
revenues of $107,400,000,  $96,907,000 and $82,990,000,  respectively, and costs
of  $71,819,000,  $69,198,000  and  $60,232,000,  respectively,  to the San Juan
Cellular Telephone Company.


                                      F-15
<PAGE>

                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


8.    RELATED PARTY TRANSACTIONS (CONTINUED)

In 1995, Services assumed $80,000,000 in long-term debt of CCPR, net of deferred
financing  costs of $4,958,000.  This  transaction was recorded by Services as a
reduction of the amount due to CCPR ($49,894,000) with the balance ($25,148,000)
recorded as a return of capital.

9.   LONG-TERM DEBT

In  January  1997,  Services  issued  $200,000,000  principal  amount 10% Senior
Subordinated  Notes due 2007 (the "Notes") and received proceeds of $193,233,000
after   discounts,   commissions   and  other  related  costs.   The  Notes  are
unconditionally  guaranteed  by  CCPR.  Services  and  CCPR  used  approximately
$116,000,000  of the proceeds to repay the  $115,000,000  principal  outstanding
plus accrued  interest and fees under the bank loan (see below).  In  connection
with the repayment of the bank loan,  Services recorded an extraordinary loss of
$4,067,000 from the write-off of unamortized deferred financing costs.

The  Notes  are due on  February  1,  2007.  Interest  on the  Notes is  payable
semiannually  as of August 1,  1997.  The Notes are  redeemable,  in whole or in
part,  at the option of Services at any time on or after  February 1, 2002, at a
redemption  price of 105% that  declines  annually to 100% in 2005, in each case
together with accrued and unpaid interest to the redemption  date. The Indenture
contains  certain   covenants  with  respect  to  Services,   CCPR  and  certain
subsidiaries of CCPR that limit their ability to, among other things,  (i) incur
additional  indebteness,  (ii) pay  dividends  or make  other  distributions  or
restricted payments (except for dividend payments to CCPR and an aggregate of up
to  $100,000,000  to be used for  dividends or  restricted  payments to CoreComm
Incorporated, the parent company of CCPR ("CoreComm")), (iii) create liens, (iv)
sell  assets,  (v) enter into  mergers or  consolidations  or (vi) sell or issue
stock of subsidiaries. The fair value of the Notes at December 31, 1997 based on
the quoted market price was $194,000,000.

In April 1995,  Services and CCPR entered into a $200,000,000  revolving  credit
facility with various  banks.  The line of credit was available  until March 31,
1999, on which date it would have converted into a term loan. The terms included
the  payment of  interest  each  quarter at a floating  rate,  which was, at the
borrower's option,  either (a) the higher of the bank's base rate or the Federal
Funds Rate plus  1/2%,  (b) the London  Interbank  Offering  Rate or (c) the 936
Rate, plus, based on the ratio of CCPR and  subsidiaries'  debt to cash flow and
the  floating  rate in effect,  either  .25% to 1.875% or 1.25% to  2.875%.  The
effective  rate on  Services'  borrowings  as of December  31, 1996 and 1995 was
7.01% and 7.23%, respectively.  The terms also included an unused commitment fee
of 1/2% per annum which was payable  quarterly.  The carrying amount of the bank
loan at December 31, 1996  approximated fair value based on discounted cash flow
analysis.


                                      F-16
<PAGE>

                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


10.  INCOME TAXES

The provision for income taxes consists of the following:

                                      YEAR ENDED DECEMBER 31
                              1997            1996             1995
                         --------------------------------------------
   Current:
      Federal            $        -       $        -       $        -
      Puerto Rico             2,000          163,000          490,000
                         --------------------------------------------
   Total current              2,000          163,000          490,000
                         --------------------------------------------

   Deferred:
      Federal                     -                -                -
      Puerto Rico                 -          797,000                -
                         --------------------------------------------
   Total deferred                 -          797,000                -
                         --------------------------------------------
                         $    2,000       $  960,000       $  490,000
                         ============================================

Services is  included  in CCPR's  consolidated  federal  income tax  return.  In
January 1997,  Services,  CCPR and CoreComm entered into a tax sharing agreement
which provides that CCPR and Services will pay to CoreComm (or CoreComm will pay
to CCPR or Services,  as  appropriate) an amount which would equal the amount of
federal  income  taxes for which a company  would be liable if such company were
not part of the CoreComm consolidated group.

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
Services' deferred tax liability and asset as of December 31, 1997 and 1996, are
as follows:

                                                            DECEMBER 31
                                                     1997                1996
                                                -------------------------------
   Deferred tax liability:
      Tax over book depreciation                $    797,000        $   904,000

   Deferred tax asset:
      Net operating loss carryforwards             6,796,000            107,000
      Valuation allowance for deferred
         tax assets                               (6,796,000)                 -
                                                -------------------------------
   Net deferred tax asset                                  -            107,000
                                                -------------------------------
   Net deferred taxes                           $    797,000        $   797,000
                                                ===============================

As of December  31, 1997,  Services  had net  operating  loss  carryforwards  of
$17,427,000  to offset future Puerto Rico taxable income that expire as follows:
$1,313,000 in 1998 , $2,029,000 in 1999, $2,164,000 in 2000, $2,568,000 in 2001,
$4,127,000 in 2002 and $5,226,000 in 2003.


                                      F-17
<PAGE>


                            CCPR Services, Inc.
                    Notes to Financial Statements (continued)


11.  LEASES

Total  rent which was  either  charged  to  expense or to the San Juan  Cellular
Telephone  Company during the years ended  December 31, 1997,  1996 and 1995 was
$3,367,000, $2,852,000 and $2,109,000, respectively.

Future minimum annual lease payments  under  noncancelable  operating  leases at
December 31, 1997 are: $2,950,000 (1998);  $2,748,000 (1999); $2,063,000 (2000),
$1,306,000 (2001); $587,000 (2002) and $3,141,000 thereafter.

In 1997,  Services  entered into a lease for office space  through 2012 which is
classified as a capital lease for financial reporting purposes.  Accordingly, an
asset of $9,922,000 has been recorded. Future minimum annual payments under this
lease at December 31, 1997 are as follows:

   1998                                               $ 1,196,000
   1999                                                 1,196,000
   2000                                                 1,196,000
   2001                                                 1,196,000
   2002                                                 1,257,000
   Thereafter                                          12,169,000
                                                      -----------
                                                       18,210,000
   Interest                                            (8,482,000)
                                                      -----------
   Present value of net minimum obligations             9,728,000
   Current portion (included in accrued expenses)        (272,000)
                                                      -----------
                                                      $ 9,456,000
                                                      ===========

12.  PENSION PLAN

Services  has a  defined  contribution  plan  covering  all  employees  who have
completed  six  months  of  employment.  Services'  matching  contributions  are
determined annually.  Participants can make salary deferral  contributions of 1%
to 10% of annual  compensation,  not to exceed the maximum allowed by law. Costs
incurred  for  1997,  1996  and  1995  were  $187,000,  $145,000  and  $121,000,
respectively.

13. COMMITMENTS AND CONTINGENT LIABILITIES

As of December  31,  1997,  Services  was  committed  to purchase  approximately
$4,000,000  for  cellular  network  and  other  equipment  and for  construction
services.  In addition,  as of December 31, 1997,  Services had  commitments  to
purchase cellular telephones and accessories of approximately $1,500,000.

Services is  involved in various  disputes,  arising in the  ordinary  course of
business,  which may  result in  pending  or  threatened  litigation.  Services'
management expects no material adverse effect on Services' financial  condition,
results of operations or cash flows to result from these matters.


                                      F-18
<PAGE>

                               CCPR Services, Inc.

                 Schedule II - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>


             COL. A                      COL. B                  COL. C                 COL. D               COL. E
-----------------------------------------------------------------------------------------------------------------------
                                                                ADDITIONS
                                                        -------------------------
                                                            (1)            (2)
                                                        -------------------------
                                                                       CHARGED TO
                                       BALANCE AT       CHARGED TO        OTHER
                                      BEGINNING OF      COSTS AND       ACCOUNTS-     DEDUCTIONS -       BALANCE AT END
           DESCRIPTION                   PERIOD          EXPENSES       DESCRIBE       DESCRIBE             OF PERIOD
-----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>              <C>              <C>          <C>                   <C>
Year ended December 31, 1997:
  Allowance for doubtful accounts      $ 3,472,000      $ 6,620,000      $ -          $ (8,253,000)(a)      $ 1,839,000

Year ended December 31, 1996:
  Allowance for doubtful accounts      $ 2,903,000      $ 7,087,000      $ -          $ (6,518,000)(a)      $ 3,472,000

Year ended December 31, 1995:
  Allowance for doubtful accounts      $ 1,127,000      $ 6,164,000      $ -          $ (4,388,000)(a)      $ 2,903,000
</TABLE>




(a) - Uncollectible accounts written off, net of recoveries.





                                      F-19
<PAGE>


                             Form 10-K - Item 14(d)

                       San Juan Cellular Telephone Company

                          Index to Financial Statements


The following  financial  statements of the San Juan Cellular  Telephone Company
are included in Item 14(d):

Report of Independent Auditors..........................................S-2
Balance Sheets - December 31, 1997 and 1996.............................S-3
Statements of Operations - Years Ended
   December 31, 1997, 1996 and 1995.....................................S-4
Statement of Changes in Partners' Capital - Years Ended
   December 31, 1997, 1996 and 1995.....................................S-5
Statements of Cash Flows - Years Ended
   December 31, 1997, 1996 and 1995.....................................S-6
Notes to Financial Statements...........................................S-7

Schedules for which provision is made in the applicable accounting regulation of
the  Securities  and  Exchange  Commission  are not  required  under the related
instructions or are inapplicable, and therefore have been omitted.




                                      S-1
<PAGE>


                         Report of Independent Auditors





The Partners
San Juan Cellular Telephone Company
(A Partnership)


We have audited the accompanying  balance sheets of San Juan Cellular  Telephone
Company (A  Partnership)  as of  December  31,  1997 and 1996,  and the  related
statements of operations,  changes in partners'  capital and cash flows for each
of the three  years in the period  ended  December  31,  1997.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of San Juan Cellular  Telephone
Company at December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.


                                                    ERNST & YOUNG LLP


San Juan, Puerto Rico
February 27, 1998



                                      S-2
<PAGE>

                       San Juan Cellular Telephone Company
                                 (A Partnership)

                                 Balance Sheets


                                                             DECEMBER 31,
                                                         1997           1996
                                                    ---------------------------
ASSETS
Current assets:
   Cash                                             $    47,000    $     46,000
   Due from CCPR Services, Inc.                       6,388,000       9,959,000
   Prepaid expenses                                   2,280,000         175,000
                                                    ---------------------------
Total current assets                                  8,715,000      10,180,000

Deferred costs, less accumulated amortization
   of $760,000 (1997) and $674,000 (1996)               163,000         229,000
                                                    ---------------------------

Total assets                                        $ 8,878,000    $ 10,409,000
                                                    ===========================

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
   Accounts payable                                 $         -    $     10,000
   Income tax payable                                         -         786,000
                                                    ---------------------------
Total current liabilities                                     -         796,000

Partners' capital:
   Capital contributions                                272,000         272,000
   Undistributed earnings                             8,606,000       9,341,000
                                                    ---------------------------
Total partners' capital                               8,878,000       9,613,000
                                                    ---------------------------

Total liabilities and partners' capital             $ 8,878,000    $ 10,409,000
                                                    ===========================


See accompanying notes.


                                      S-3
<PAGE>

                       San Juan Cellular Telephone Company
                                 (A Partnership)

                            Statements of Operations
<TABLE>
<CAPTION>


                                                                    YEAR ENDED DECEMBER 31,
                                                          1997               1996               1995
                                                     --------------------------------------------------
<S>                                                  <C>                 <C>               <C>
Revenues:
   Puerto Rico System allocated revenues             $ 107,400,000       $ 96,907,000      $ 82,990,000
                                                     --------------------------------------------------

Costs and expenses:
   Puerto Rico System allocated expenses                71,819,000         69,198,000        60,232,000
   Administrative and capital usage fees                35,743,000         18,417,000        11,914,000
   General and administrative expenses                     488,000            448,000           361,000
   Depreciation and amortization                            86,000            125,000           152,000
                                                     --------------------------------------------------
                                                       108,136,000         88,188,000        72,659,000
                                                     --------------------------------------------------
Operating income (loss)                                   (736,000)         8,719,000        10,331,000

Interest income                                              1,000              2,000             1,000
                                                     --------------------------------------------------
Income (loss) before income taxes                         (735,000)         8,721,000        10,332,000
Income taxes                                                     -          3,319,000         2,979,000
                                                     --------------------------------------------------

Net income (loss)                                    $    (735,000)       $ 5,402,000       $ 7,353,000
                                                     ==================================================

</TABLE>


See accompanying notes.



                                      S-4
<PAGE>

                       San Juan Cellular Telephone Company
                                 (A Partnership)

                    Statement of Changes in Partners' Capital


Balance at December 31, 1994                                  $ (1,970,000)
Net income for the year ended December 31, 1995                  7,353,000
                                                              ------------
Balance at December 31, 1995                                     5,383,000
Distribution                                                    (1,172,000)
Net income for the year ended December 31, 1996                  5,402,000
                                                              ------------
Balance at December 31, 1996                                     9,613,000
Net loss for the year ended December 31, 1997                     (735,000)
                                                              ------------
Balance at December 31, 1997                                  $  8,878,000
                                                              ============

See accompanying notes.


                                       S-5
<PAGE>

                       San Juan Cellular Telephone Company
                                 (A Partnership)

                            Statements of Cash Flows
<TABLE>
<CAPTION>


                                                                            YEAR ENDED DECEMBER 31,
                                                                    1997             1996              1995
                                                              ------------------------------------------------
<S>                                                           <C>                <C>              <C>
OPERATING ACTIVITIES
Net income (loss)                                             $   (735,000)      $ 5,402,000      $  7,353,000
Adjustments to reconcile net income (loss) to net
  cash provided by operating activities:
    Depreciation and amortization                                   86,000           125,000           152,000
    Changes in operating assets and liabilities:
       Prepaid expenses                                         (2,105,000)          991,000        (1,116,000)
       Due from CCPR Services, Inc.                              3,571,000        (3,414,000)       (6,545,000)
       Deferred costs                                              (20,000)                -                 -
       Accounts payable                                            (10,000)            6,000             4,000
       Income tax payable                                         (786,000)       (2,008,000)        2,550,000
       Due to CCPR Services, Inc.                                        -                 -        (2,325,000)
                                                              ------------------------------------------------
Net cash provided by operating activities                            1,000         1,102,000            73,000

FINANCING ACTIVITIES
Distribution                                                             -        (1,172,000)                -
                                                              ------------------------------------------------
Net increase (decrease) in cash                                      1,000           (70,000)           73,000
Cash at beginning of year                                           46,000           116,000            43,000
                                                              ------------------------------------------------
Cash at end of year                                           $     47,000       $    46,000      $    116,000
                                                              ================================================

Supplemental disclosure of cash flow information:
      Income taxes paid                                       $  2,571,000      $  5,327,000      $    429,000

</TABLE>

See accompanying notes.


                                       S-6
<PAGE>


                       San Juan Cellular Telephone Company
                                 (A Partnership)

                          Notes to Financial Statements


1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

San Juan Cellular  Telephone Company (the  "Partnership") was formed on February
21,  1986 for the purpose of  constructing  and  operating a cellular  telephone
system in the San Juan/Caguas, Puerto Rico Metropolitan Statistical Area.

In March  1988,  the  Partnership  was issued a permit to  construct  a cellular
system in San Juan/Caguas by the Federal Communications Commission ("FCC").

Profits and losses of the  Partnership  are  allocated  in  accordance  with the
provisions of the  Partnership  agreement.  The allocation is generally based on
each partner's ownership interest in the Partnership.

As of February 1993,  Cellular  Communications  of Puerto Rico,  Inc.  ("CCPR"),
either directly or through its wholly-owned  subsidiaries,  owned 93.854% of the
Partnership interests. In February 1996, a wholly-owned subsidiary of CCPR, CCPR
Services,  Inc. ("Services"),  acquired the remaining Partnership interests.  In
addition,  the Partnership  made a special cash  distribution of $1,172,000.  In
January 1997,  Services made a cash payment to CCPR of  $80,000,000  in exchange
for a 21% interest in the Partnership. As of January 1997, Services owns 27.146%
of the Partnership  interests and CCPR (directly and through  subsidiaries other
than Services) owns the remaining interests.

The business of the Partnership is currently  dependent on the trends in the use
of cellular telephone services and is subject to economic, social, political and
governmental  conditions  in  Puerto  Rico.  The sale of  cellular  services  is
becoming increasingly  competitive.  The Partnership previously had one cellular
competitor,  but now it has many wireless competitors due to the introduction of
broadband  personal  communications  services  ("PCS") on  frequencies  recently
auctioned by the FCC and specialized  mobile radio ("SMR")  services on existing
SMR frequencies.  Increased competition has resulted in pricing pressure,  which
contributes  to lower  revenues  per customer  and higher  customer  acquisition
costs.

USE OF ESTIMATES

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


                                       S-7
<PAGE>

                       San Juan Cellular Telephone Company
                                 (A Partnership)

                    Notes to Financial Statements (continued)


1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEFERRED COSTS

Deferred  costs include  license  acquisition  costs  incurred to obtain the FCC
permit.  These costs are being  amortized by the  straight-line  method over ten
years (the life of the FCC license).  Deferred costs are reviewed for impairment
whenever  events or changes in  circumstances  indicate that the carrying amount
may not be recoverable.

2.  INCOME TAXES

The  Partnership  is subject to Puerto Rico income  taxes on its income.  Income
taxes  for the  years  ended  December  31,  1996  and  1995 of  $3,319,000  and
$2,979,000,  respectively,  represent current  provisions for Puerto Rico income
taxes.

No provision has been made in the accompanying  financial statements for federal
income tax since, pursuant to provisions of the Internal Revenue Code, each item
of income, gain, loss, deduction or credit is reportable by the partners.

3.  RELATED PARTY TRANSACTIONS

On April 2,  1991,  the  partners  of the  Partnership  approved  the  terms and
conditions  whereby Services will manage and operate the Partnership's  cellular
system.  Pursuant to these terms and conditions,  Services collects revenues and
incurs  expenditures on behalf of the Partnership.  These revenues are allocated
based on the completed  calls within the  Partnership's  license area during the
year,  and expenses are allocated  based on the cell sites and radio channels in
operation or under construction within the Partnership's license area during the
year. In addition,  a portion of Services'  administrative and capital use costs
are charged to the Partnership.

During the years ended  December  31,  1997,  1996 and 1995,  the  Partnership's
revenues  consisted of allocated  revenues.  During the years ended December 31,
1997,  1996 and 1995,  allocated  expenses  were  $71,819,000,  $69,198,000  and
$60,232,000,  respectively, and administrative and capital usage fees charged by
Services were $35,743,000, $18,417,000 and $11,914,000, respectively.

4.  SUBSEQUENT EVENT

In January 1998,  the  Partnership  purchased the FCC license to own and operate
the non-wireline  cellular system in Puerto Rico RSA-4 (Aibonito) and all of the
assets of the system in exchange for $8,400,000 in cash and a promissory note in
the amount of $8,900,000.  The promissory note bears interest at 7.95% per annum
payable  semiannually  beginning  in July 1998 and the  principal  is payable in
January  2003.   Costs  of  $305,000  were  incurred  in  connection  with  this
acquisition.


                                       S-8