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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

(MARK ONE)
                |X|     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                              For the fiscal year ended December 31, 2001

                |_|     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from           to

                         Commission File Number: 0-31247

                                    ITSA LTD.
             (Exact Name of Registrant as Specified in Its Charter)

           CAYMAN ISLANDS                                      NOT APPLICABLE
  (State or Other Jurisdiction                                (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)

               C/O ITSA - INTERCONTINENTAL TELECOMUNICACOES LTDA.
                               SCS, QUADRA 07-BL.A
                        ED. TORRE PATIO BRASIL, SALA 601
                            70.307-901 BRASILIA - DF
                                     BRAZIL
          (Address of Principal Executive Offices, Including Zip Code)

     Registrant's telephone number, including area code: 011-55-61-314-9904

        Securities registered pursuant to Section 12(b) of the Act: NONE

  Securities registered pursuant to Section 12(g) of the Act: ORDINARY SHARES,
                           PAR VALUE $0.01 PER SHARE

     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].

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [X] Yes [ ] No

     The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 29, 2002 was approximately $145,977

     As of March 29, 2002, 10,000,000 shares of the registrant's Ordinary
Shares, $0.01 par value, were outstanding.

     DOCUMENTS INCORPORATED BY REFERENCE:  None.

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<page>


                                TABLE OF CONTENTS



PART I   ......................................................................1
Item 1.  Business..............................................................1

         Background............................................................1
         Company Overview......................................................2
         Brazilian Pay Television Industry.....................................3
         Brazilian Broadband Market............................................3
         Operating Systems and the Company's Markets...........................3
         New Markets...........................................................5
         Mais TV Operating Model...............................................5
         Programming...........................................................6
         High Speed Internet Access and Data Communications Services...........7
         Operations............................................................7
         Employees.............................................................8
         Facilities and Equipment..............................................8
         Competition...........................................................9
         Regulatory Environment................................................9

Item 2.  Properties...........................................................11

Item 3.  Legal Proceedings....................................................11

Item 4.  Submission of Matters to a Vote of Security Holders..................11

PART II  .....................................................................12
Item 5.  Market for Registrant's Common Equity and Related Stockholder
           Matters............................................................12

Item 6.  Selected Financial Data..............................................13

Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations..........................................17

         Overview.............................................................17
         General  ............................................................18
         Results of Operations................................................19
         Liquidity and Capital Resources......................................24
         Inflation and Exchange Rates.........................................26
         Recent Economic Events...............................................26
         Critical Accounting Policies.........................................26
         New Accounting Pronouncements........................................28



                                      -i-

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         Certain Factors Which May Affect the Company's Future Results........30

Item 7A. Quantitative and Qualitative Disclosures about Market Risk...........32

Item 8.  Financial Statements and Supplementary Data..........................34

Item 9.  Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure...............................................53

PART III .....................................................................54
Item 10. Directors and Executive Officers of the Registrant...................54

         Section 16(a) Beneficial Ownership Reporting Compliance..............54

Item 11. Executive Compensation...............................................55

         Summary Compensation Table...........................................55
         Stock Options........................................................55
         Employment Agreements................................................55

Item 12. Security Ownership of Certain Beneficial Owners and Management.......56

Item 13. Certain Relationships and Related Transactions.......................57

PART IV  .....................................................................57
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.....57


                                      -ii-

<page>


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


         STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K/A THAT ARE NOT PURELY
HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934, INCLUDING STATEMENTS REGARDING THE COMPANY'S (AS HEREINAFTER DEFINED)
EXPECTATIONS, HOPES, INTENTIONS OR STRATEGIES REGARDING THE FUTURE.
FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS REGARDING THE COMPANY'S EXPANSION
PLANS, THE IMPACT OF COMPETITION, THE START-UP OF CERTAIN OPERATIONS AND TRENDS
AFFECTING THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS, INCLUDING
THE COMPANY'S ABILITY TO MEET FUTURE CASH REQUIREMENTS. ALL FORWARD-LOOKING
STATEMENTS IN THIS REPORT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY AS
OF THE DATE OF THIS REPORT, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY
SUCH FORWARD-LOOKING STATEMENTS, EXCEPT AS REQUIRED BY LAW. ALL FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS AS A RESULT
OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THE FACTORS SET FORTH IN
"ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- CERTAIN FACTORS WHICH MAY AFFECT THE COMPANY'S FUTURE RESULTS."


                                     PART I

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

         On July 21, 2000, ITSA Ltd., a Cayman Islands company, became the
successor to TV Filme, Inc., a Delaware corporation, following the successful
completion of a debt restructuring pursuant to a plan of reorganization of TV
Filme, Inc. under Chapter 11 of the United States Bankruptcy Code. Unless
otherwise indicated, ITSA Ltd., the successor company to TV Filme, Inc., along
with its subsidiaries, will hereinafter be referred to as "ITSA" or the
"Company," and TV Filme, Inc., the predecessor company to ITSA Ltd., will
hereinafter be referred to as "TV Filme."

         Except as otherwise noted, financial information has been presented in
U.S. dollars. The Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States
("U.S. GAAP") in U.S. dollars.

BACKGROUND

         The predecessor of TV Filme was founded in 1989 by certain members of
the Company's current senior management team. In September 1989, TV Filme was
granted a license to operate a wireless cable television system in Brasilia, the
capital of Brazil, and commenced operations in 1990 with a one channel offering.
Licenses to operate the Goiania and Belem Systems were acquired in 1994 from TVA
Sistema de Televisao S.A., a subsidiary of Tevecap S.A. ("Tevecap"), one of the
leading pay television operators in Brazil.

         TV Filme was organized in 1996 under the laws of the State of Delaware.
Its largest stockholders included Warburg, Pincus Investors, L.P., Tevecap and
certain members of management and their families.

         During 1998 and the first quarter of 1999, TV Filme faced significant
challenges that ultimately affected TV Filme's ability to pay interest on its
outstanding 12 7/8% senior notes due 2004 (the "TV Filme Senior Notes"). While
TV Filme decided to commence discussions with holders of the TV Filme Senior
Notes to pursue a comprehensive financial and operational restructuring plan, TV
Filme failed to make the required interest payment on the TV Filme Senior Notes
on June 15, 1999.

         On August 13, 1999, TV Filme reached an agreement in principle with a
committee representing the holders of the TV Filme Senior Notes. This agreement
was effected pursuant to a pre-arranged plan of reorganization, which received
court approval under Chapter 11 of the U.S. Bankruptcy Code on April 10, 2000.
Effectuation of the plan was completed on July 21, 2000, following support from
ANATEL (the Brazilian Telecommunications Agency) and the Central Bank of Brazil.
In accordance with the terms of the plan of



                                       1
<page>

reorganization, the TV Filme Senior Note holders received a $25 million cash
payment and their existing notes were converted into (i) secured notes in the
aggregate principal amount of $35 million, due 2004, at an interest rate of 12%
per annum (interest payable-in-kind at the Company's option through its first
four interest payments) (the "12% Senior Secured Notes"), and (ii) 80% of the
new common equity of the reorganized company. Current management received 15% of
the new common equity, and the existing common stockholders of TV Filme received
5% of the new common equity of the reorganized company. All outstanding stock
options were cancelled. ITSA Ltd. (the reorganized company) is a Cayman Islands
holding company and is the successor issuer to TV Filme, Inc. pursuant to Rule
12g-3 under the Securities Exchange Act. The 12% Senior Secured Notes were
issued by ITSA-Intercontinental Telecommunicacoes Ltda., a wholly-owned
subsidiary of the Company. On March 18, 2002, the U.S. Bankruptcy Court for the
District of Delaware closed the Chapter 11 bankruptcy case involving TV Filme.

COMPANY OVERVIEW

         The Company develops, owns and operates broadband wireless
telecommunications systems in markets in Brazil, offering video, high-speed
Internet and data communications services. Through its subsidiaries, the Company
has licenses in the cities of Brasilia, Goiania, Belem, Campina Grande, Caruaru,
Porto Velho, Presidente Prudente, Bauru, Franca, Uberaba, Belo Horizonte and
Vitoria, covering over 3 million households and approximately 13 million people.

         The Company offers a pre-paid subscription video service, called Mais
TV, which is comprised of a self-install kit available in retail stores in most
of the cities in which the Company has operations.

         ITSA was also the first company in Brazil to launch a high-speed
Internet access system using the technology of high-speed modems. The system,
called LinkExpress, has been available on a commercial basis in the city of
Brasilia since 1998.

         The Company holds licenses covering the frequency bands from 2,170 to
2,182 MHz and from 2,500 to 2,686 MHz. Currently, with a total of 198 MHz of
spectrum available in each market, the Company is able to offer a wide range of
two-way advanced communication services, including high-speed data services and
high-speed Internet, to both the residential and the corporate markets. The
Company also owns additional specific licenses, which allow the offering of
voice and VPN (Virtual Private Network) corporate services. Currently, the
Company owns and operates its own NOC (Network Operating Center), which is
located in its headquarters in Brasilia.

         Additionally, the Company owns and maintains its proprietary SMS
(Subscriber Management System) called Mythos, which was developed in-house and
customized to Brazilian needs and standards. This advanced software package
allows the Company to have full control of every aspect of its businesses, from
marketing to sales, customer service, technical support, inventory control and
billing. The Company believes that the ability to control and customize the SMS
is a key point in quickly offering reliable services to the market.

         In addition to satellite competitors that operate on a national basis
in Brazil, hardwire cable providers operate or hold licenses to operate in
virtually all of the Company's licensed markets.

         The Company believes that wireless technology is well suited to its
current and potential target markets and is an attractive alternative to
existing television, Internet and telecommunications services. Wireless
telecommunications services can be deployed more rapidly than most alternative
technologies and provide immediate coverage of entire markets, enabling services
to be delivered to all potential subscribers that are in the unobstructed path
of the transmission tower. Wireless services often can be deployed at a
significantly lower system capital cost per installed subscriber than hardwire
cable and other wire-based technologies because incremental investment is
generally only undertaken in response to customer demand with the addition of
each new subscriber. The Company believes that subscribers to television,
Internet and telecommunication services in Brazil are generally indifferent to
the method of delivery of these services.



                                       2
<page>

BRAZILIAN PAY TELEVISION INDUSTRY

         The pay television industry in Brazil began in 1989 with the
commencement of UHF service in Sao Paulo. In contrast to the U.S., the Brazilian
hardwire cable industry and wireless cable industry began developing
concurrently. By December 31, 2001, approximately 297 hardwire cable licenses,
10 Direct-to-Home ("DTH") licenses and 100 wireless licenses had been issued by
the Brazilian government.  The Company believes that as of December 31, 2001,
approximately 13% of Brazilian homes were passed by hardwire cable as compared
to over 80% in the U.S. Brazil is the largest television market in Latin America
with an estimated 36 million television households. As of December 31, 2001, the
Company estimates that there were approximately 3.5 million pay television
subscribers, representing approximately 9 % of Brazilian television households.

         Brazilian television viewers prefer Portuguese language programming,
including movies, sports and "novelas" (soap operas). The second language of
many Brazilians is English. U.S. culture generally, and U.S. films, shows and
sports in particular, are popular with Brazilians. Programming content for pay
television systems in Brazil is offered by the Globo Organization, independent
providers and by Neo-TV, an association formed to help operators negotiate and
purchase programming. In general, much of the Brazilian programming transmitted
by pay television systems, such as HBO Brazil, ESPN International and MTV
Latino, is based on formats found in the U.S. In addition, there are channels
that include programs directly from the U.S., such as Warner and Sony, as well
as channels from Europe and other countries in Latin America.

BRAZILIAN BROADBAND MARKET

         Brazilians were introduced to broadband services only four years ago
when, on an experimental basis, TV Filme starting operating a service called
LinkExpress in the city of Brasilia, which provided one-way Internet access
service using high-speed modems.

         In December 2000, ITSA, through its subsidiary LinkExpress, launched
its two-way broadband service. By the end of 2001, both one and two-way services
were being offered commercially to 1,500 residential subscribers and almost 180
corporate subscribers.

         Only recently, Brazilian companies have been investing in high-speed
Internet access services, using cable modem and DSL systems. Brasil Telecom,
Telefonica de Espana, Telemar, Globocabo, TVA and LinkExpress are the leading
companies that have responded to growing market demand for high-speed Internet
access.

         Reported estimates indicate that there are approximately 14,000,000
Internet users in Brazil and 300,000 subscribers have access to high-speed
Internet services. DSL technology represents 65% of this market, cable modem 28%
and other kinds of access 7%.

OPERATING SYSTEMS AND THE COMPANY'S MARKETS

         The table below provides information regarding the Company's markets as
of December 31, 2001:

<table>
<caption>

                                      ESTIMATED           ESTIMATED           ESTIMATED              FULL
                                        TOTAL               TOTAL                LOS                LAUNCH
                                    POPULATION (1)      HOUSEHOLDS (1)      HOUSEHOLDS (2)           DATE
                                   -----------------  -------------------  -----------------   ------------------

OPERATING MARKETS:

                                       <c>                  <c>                <c>            <c>
Brasilia.........................         2,177,504              514,776            453,000      Feb. 1994 (3)
Belem............................         1,771,417              440,651            370,000      Feb. 1995
Goiania..........................         1,605,396              397,080            297,000      Jan. 1995
Campina Grande...................           523,854               99,592             80,000      May 1999
                                   -----------------  -------------------  -----------------
Total in Operating Markets.......         6,078,171            1,452,099          1,200,000
                                   =================  ===================  =================
New Markets (4)..................         7,127,553            1,765,176          1,412,000
                                   =================  ===================  =================

</table>

------------



                                       3
<page>

(1)     Represents the Company's estimate of the population and the total number
        of households within the greater metropolitan areas of each of its
        markets. The Company's estimates for Brasilia, Goiania, Belem and
        Campina Grande are based on data from the 2000 Census conducted by the
        Brazilian Institute of Geography and Statistics (IBGE) as adjusted to
        reflect estimated total household growth. Includes potential households
        that will receive the signal through the use of repeaters.

(2)     Represents the Company's estimate of the number of Line of Sight ("LOS")
        households within the licensed radius in each market (ranging from 15-35
        kilometers) that can receive an adequate signal from the Company.

(3)     Date when the Brasilia System increased its channel  offering from four
        channels to eight channels.  The Brasilia System began service with one
        channel in 1990.

(4)     Represents the eight markets for which the Company has been awarded
        licenses to operate new Multichannel Multiport Distribution Systems
        ("MMDS").

         BRASILIA SYSTEM. Brasilia, the capital of Brazil, had an estimated
greater metropolitan population of approximately 2.2 million as of December 31,
2001. Brasilia, which is located in the interior of Brazil, was established in
the early 1960's as a planned city when the capital of Brazil was moved from Rio
de Janeiro. Brasilia's generally flat topography is advantageous for wireless
technologies. In addition, Brasilia's zoning provisions favor wireless
technology by requiring that residential buildings be of a similar height and
located together. The Company's current 35-kilometer coverage territory
encompasses approximately 514,000 households that the Company believes can be
served by LOS transmission.

         The Brasilia System, launched in 1990 with one channel, increased to
three channels in July 1992, to four channels in September 1992, to eight
channels in February 1994, to 16 wireless cable channels in November 1994 and to
24 wireless cable channels by the end of 1997. The Brasilia System transmits at
50 watts of power per channel from a transmission tower that is 300 feet above
average terrain. The main competitors in the pay television area in the city of
Brasilia are NET Brasilia, a hardwire cable operator and affiliate of the Globo
Organization, as well as DirecTV and Sky, each of which are DTH operators. The
Company believes that, at December 31, 2001, it was the largest pay television
provider in Brasilia based on the total number of subscribers.

         In December 1997, the Company began providing high speed Internet
access, under the brand name of LinkExpress, to its customers in Brasilia. This
service, which uses wireless cable modems for delivery of access at much higher
speeds than conventional phone line access to subscribers, is believed to be the
first marketed use of cable modem technology in Brazil. In the first years of
operation, LinkExpress offered high-speed Internet access services with a
phone-return. In this system, data were transmitted to the customers using the
wireless technology, while requests from subscribers to the network were
performed with the use of phone-lines. In the third quarter of 2000, ANATEL
approved and awarded additional spectrum to the Company in the frequency band of
2,170 to 2,182 MHz. With the additional spectrum, the Company was able to offer
LinkExpress in a two-way platform. In this new system, customers transmit and
receive data signals through the wireless platform, without the use of the
telephone. The main competitor in the area of high-speed Internet service in
Brasilia is Brasil Telecom, the telephone operator in the city. See "- High
Speed Internet Access and Data Communications Services."

         BELEM SYSTEM. Belem, with an estimated greater metropolitan population
of approximately 1.8 million as of December 31, 2001, lies at the mouth of the
Amazon River and is a major trading port for the rich natural resources of the
Amazon rain forest. The Company launched service in Belem in February 1995.
Although the city is relatively flat, trees block wireless cable transmission in
Belem more often than they do in Brasilia and Goiania and thus, the Belem System
requires increased utilization of signal repeaters. The Belem System reaches the
greater Belem area, including the cities of Mosqueiro, Ananindeua, Icoaraci and
Marituba and the islands of Outeiro and Barcarena. The Company's current
30-kilometer coverage territory encompasses approximately 370,000 households
that the Company believes can be served by LOS transmission.

         The Belem System transmits at 50 watts of power per channel from a
transmission tower that is 300 feet above average terrain. The main competitors
in the pay television area in Belem are ORM Cabo, an independent



                                       4
<page>

hardwire cable operator, as well as DirecTV and Sky. The Company does not
currently offer high-speed Internet service in the city of Belem.

         GOIANIA SYSTEM. Goiania, with an estimated metropolitan population of
approximately 1.6 million as of December 31, 2001, is located approximately 100
miles southwest of Brasilia. Goiania is the capital of the state of Goias, and,
like Brasilia, its topography is favorable to LOS transmission because the city
is relatively flat. The Company launched service in Goiania in January 1995. The
Company's current 30-kilometer coverage territory encompasses approximately
297,000 households that the Company believes can be served by LOS transmission.

         The Goiania System transmits at 50 watts of power per channel from a
transmission tower that is 350 feet above average terrain. The main competitors
in the pay television area in the city of Goiania are NET Goiania, a hardwire
cable operator and affiliate of the Globo Organization, as well as DirecTV and
Sky. The Company believes that, at December 31, 2001, it was the second largest
pay television provider in Goiania based on total number of subscribers. The
Company does not currently offer high-speed Internet service in the city of
Goiania.

         CAMPINA GRANDE SYSTEM. Campina Grande, with an estimated metropolitan
population of approximately 0.5 million as of December 31, 2001, is located
approximately 80 miles west of Joao Pessoa, the capital of the state of Paraiba.
Similar to Brasilia and Goiania, the topography of Campina Grande is favorable
to LOS transmission. The Company launched service in Campina Grande in May 1999,
exclusively using the Mais TV operating model (see below). The Company's current
licensed coverage radius encompasses approximately 80,000 households that the
Company believes can be served by LOS transmission.

         The Campina Grande system transmits at 20 watts of power per channel
from a transmission tower that is approximately 2,500 feet above sea level.
There is currently no hardwire cable operation in Campina Grande. The Company
does not currently offer high speed Internet service in the city of Canpina
Grande.

NEW MARKETS

         The Company has been awarded licenses to operate wireless systems in
the following eight markets: Bauru, Belo Horizonte, Caruaru, Franca, Porto
Velho, Presidente Prudente, Uberaba and Vitoria. The Company believes that, in
the aggregate, these eight markets collectively encompass a total population of
approximately 7.1 million, total households of approximately 1.8 million and LOS
households of approximately 1.4 million. Bauru, Belo Horizonte, Franca,
Presidente Prudente and Vitoria have operating hardwire cable competitors. The
Company has implemented the transmission system in all of these markets and the
service is commercially available to customers, although the Company has been
unable to market its services aggressively.

MAIS TV OPERATING MODEL

         In May 1999, with the launch of the Campina Grande system, the Company
created and implemented a new pay television operating model, "Mais TV." The
major differences between the Mais TV model and the previous model are:

         o    Customers choose from several different programming packages
              and may vary their choice each and every month.

         o    All services are offered exclusively on a prepaid basis. The
              customer receives a booklet which is to be filled out monthly,
              including the programming package selected. With this
              information, the Company, upon receipt of payment notification
              from the bank, is able to activate the selected programming
              package for the customer.

         o    To initiate service, the customer purchases, from either a
              local store or the Company's local showroom, an installation
              kit. Prices for these kits are approximately $25, on average.
              Installation services, if desired by the customer, may be
              contracted for separately, either with the Company or with
              approved third-party installation companies.



                                       5
<page>

         Based on the success of the Campina Grande launch, the Company decided
to implement this new operating model in each of its existing (and future)
operations. The Goiania system switched over to the new model in
September/October 1999, the Brasilia system switched in March 2000 and Belem
system switched in July 2000.

PROGRAMMING

         The Company purchases most of its programming from Neo-TV, an
association formed to help operators negotiate and purchase programming.

         The Company also offers selected local programming to supplement its
channel line-up. For example, the Company owns the rights to televise annually
certain of the games of the Para State Soccer Championship.

         Beginning in October 1997, the Company also began producing its own
programming guide, called "Mais TV News," which it distributes at no charge to
its subscribers. The Company believes that its guide is an important marketing
tool and provides an efficient way for the Company to interact with its
customers.

         The Company's channel offerings as of December 31, 2001 are as follows:

<table>
<caption>

  CHANNEL                                    DESCRIPTION
  -------                                    -----------
   
                                       <C>
   HBO Brazil                                Brazilian Version of HBO
   HBO Brazil 2                              HBO Brazil with a six hour time delay
   ESPN Brazil                               Brazilian Version of ESPN
   Eurochannel                               Package of programming from free TV in Europe
   Mundo                                     Variety channel
   Band News                                 Brazilian 24 hour news channel
   MTV Brazil                                Brazilian version of MTV
   RTPi *                                    Radio and Television Portugal, a free broadcast channel from Portugal
   CNN International                         International Version of CNN
   TNT                                       Brazilian version of TNT
   Cartoon Network                           Cartoon Network produced in the U. S.
   Fox                                       General entertainment
   Discovery Channel                         Brazilian version of Discovery Channel
   PSN                                       Premium Sports channel
   ESPN International                        International version of ESPN
   Warner                                    Warner channel produced in the U.S.
   Cinemax Prime                             Films and special programming
   Sony                                      Sony channel produced in the U.S.
   Nickelodeon *                             Children's channel
   Discovery Kids                            Children's version of Discovery
   People and Arts / Travel Channel *        Tourism, biography and art channel
   Redevida                                  Catholic programming
   Cinemax                                   Films and special programming
   Hallmark                                  Films and special programming
   Fox Kids                                  Children's version of Fox
   AXN                                       Brazilian version of AXN
   Canal Adulto *                            Adult programming
   Genesis*                                  Evangelical programming
   Local                                     Local programming
   Globo                                     Local off-air channel (where available)
   SBT                                       Local off-air channel (where available)
   Bandeirantes                              Local off-air channel (where available)
   Record                                    Local off-air channel (where available)
   Nacional                                  Local off-air channel (where available)
   Rede TV!                                  Local off-air channel (where available)
   Cultura                                   Local off-air channel (where available)

</table>



                                       6
<page>

<table>
<caption>

  CHANNEL                                    DESCRIPTION
  -------                                    -----------
   
                                       <C>
   Apoio                                     Local off-air channel (where available)

</table>

------------
*        Offered where available.

HIGH SPEED INTERNET ACCESS AND DATA COMMUNICATIONS SERVICES

         In December 1997, the Company began providing Internet access services,
under the brand name LinkExpress, to its customers in Brasilia. This service,
which uses wireless cable modems for delivery of access at greatly increased
speeds to subscribers, is believed to be the first marketed use of cable modem
technology in Brazil. In the first years of operation, LinkExpress offered
high-speed Internet access services with a phone-return. In this system, data
were transmitted to the customers using the wireless technology, while requests
from subscribers to the network were performed with the use of phone-lines. In
the third quarter of 2000, ANATEL approved and awarded additional spectrum to
the Company, in the frequency band of 2,170 to 2,182 MHz. With the additional
spectrum, the Company was able to offer LinkExpress in a two-way platform. In
this new system, customers transmit and receive data signals through the
wireless platform, without the use of the telephone. Currently, with a total of
198 MHz of spectrum available in each market, the Company is able to offer a
wide range of two-way advanced communication services, including high-speed data
services and high-speed Internet, both to the residential and the corporate
markets. The Company also owns additional specific licenses, which allow the
offering of voice and VPN (Virtual Private Network) corporate services.
Currently, the Company owns and operates its own NOC (Network Operating Center),
which is located in its headquarters in Brasilia.

         In the future, the Company may also offer this service in other
markets, depending on market demand.

OPERATIONS

         MARKETING. Prior to applying for a license in a potential new market,
the Company has historically conducted pre-marketing surveys to evaluate the
demographics and terrain of such market. Upon receipt of a license, the Company
then develops a plan designed to manage subscriber growth by maintaining a
manageable backlog of installations. Such backlog is maintained at a manageable
level by adjusting installation capacity to correspond with sales levels. The
amount of time a subscriber waits for the commencement of service is determined
based upon several factors, including whether the subscriber is in a single
family home or multiple dwelling unit and the effect of any competition in the
market. This development plan ensures that the quality of installations and
customer service remains high.

         The Company focuses its marketing strategy on customer loyalty. The
Company has limited its sales efforts to passive telemarketing and is directing
its marketing expenditures towards customer loyalty programs such as promotional
discounts at retail stores, gifts, parties and other items given exclusively to
customers. This approach has enabled it to significantly reduce expenditures,
reduce churn, increase customer loyalty and target its sales to prospects who
truly want the service and have the financial wherewithal to pay for the
service. In addition, upon the launch of the Mais TV model in each city, the
Company redirects its marketing efforts in such city toward brand recognition
and awareness in order to generate the majority of its new installations through
sales of installation kits at local stores. This involves partnering with the
local stores on advertising and paying sales commissions to stores rather than
having a direct sales force.

         INSTALLATION. Upon launching the Mais TV model in any given city, the
Company creates a network of authorized installers in order to reduce direct
costs of installation and expects the customer to pay for this service, or
self-install the system. While the Company still offers installation service on
a limited basis, it does not attempt to be competitive in this market and
reserves this service primarily for apartments and other large buildings where
the third-party installation teams are not as qualified. Because of this
strategy, and because installation kits are sold for approximately $25, the
Company expects to receive only a nominal amount of revenue on future
installations.

         CUSTOMER SERVICE. The Company believes that delivering high levels of
customer service in installation and maintenance enables it to maintain customer
satisfaction. To this end, the Company (i) schedules installations



                                       7
<page>

promptly, (ii) provides a customer service hotline, (iii) provides quick
response repair service and (iv) makes follow-up calls to new subscribers
shortly after installation to ensure customer satisfaction. The Company seeks to
instill a customer service focus in all its employees through ongoing training
programs. Under the Mais TV model, the Company still offers high levels of
customer service, but charges the customer for anything other than routine
service calls.

         The Company operates a single service center located in Brasilia where
billing, accounts payable, human resources administration, marketing, customer
service hotline and all routing and scheduling functions are centralized. The
Company believes that operating a centralized service center further enhances
and improves the quality of its customer service function.

         SUBSCRIBER MANAGEMENT SYSTEM. The Company has developed its own
subscriber management system, called Mythos. The Company believes that its
subscriber management system enables it to deliver superior customer service,
monitor customer payment patterns and facilitate the efficient management of
each of its operating systems. This advanced software package allows the Company
to have full control of every aspect of its businesses, from marketing to sales,
customer service, technical support, inventory control and billing. The Company
believes that the ability to control and customize the SMS is a key point in
quickly offering reliable services to the market. The Company has seven
employees dedicated to the development, enhancement, integration and maintenance
of the Company's subscriber management system.

EMPLOYEES

         As of December 31, 2001, the Company had a total of 450 employees. All
of the Company's employees, except for Messrs. Hermano Lins and Carlos Andre
Lins, are subject to collective bargaining agreements. The collective bargaining
agreements covering the employees of TV Filme Brasilia and TV Filme Goiania will
expire in June 2002. The collective bargaining agreements are with the Union for
the Employees of Subscription TV Industry. Employees of TV Filme Belem and TV
Filme Campina Grande are not covered under a collective bargaining agreement;
however, the Company has historically honored the terms of the TV Filme Brasilia
and TV Filme Goiania agreements with its other employees. The Company has
experienced no work stoppages in its history. The Company provides its employees
with health insurance (which is not required by law in Brazil) and certain other
benefits, which it believes enable it to attract and retain qualified and
motivated employees.

         The Company significantly reduced its headcount in the areas of sales
and installations, and reduced headcount in virtually all areas of the Company.
As a result, the Company reduced the number of employees by approximately 195
employees in the last 12 months.

FACILITIES AND EQUIPMENT

         ADMINISTRATIVE FACILITIES. A centralized corporate administrative
facility is located in Brasilia to handle training, engineering, computer
systems development, financial and controller functions and strategic planning,
as well as customer service, billing, accounts payable and certain other
administrative functions. In addition, the Company has established regional
operating offices in its operating markets to coordinate sales, local marketing,
installation and technical support services, maintenance and local
administrative functions.

         TRANSMISSION FACILITIES. The Company's head-end and transmitter
facilities are located in leased buildings at the Company's transmission tower
sites. The transmitting antennas generally are able to serve the maximum
regulatory range for its license coverage areas. In certain areas within the
Company's markets that are otherwise terrain-blocked, the Company utilizes
signal repeaters to enhance signal coverage. For new markets, the Company
expects to lease space for transmission and head-end facilities and expects to
use transmitting antennas which will serve the entire license coverage areas in
each market.

         DIGITAL TECHNOLOGY. The Company currently transmits its video services
in analog format. Should competitive conditions require, or if the Company deems
such technology to be cost effective and practical to provide, it may implement
digital technology, provided the Company has adequate resources for such


                                       8
<page>

implementation. For high speed Internet access and data communications services,
the Company already utilizes digital transmission system and technology.

COMPETITION

         Through its subsidiaries, the Company is the only entity licensed to
operate wireless cable systems in each of its licensed markets. The Company has
the authority to provide services using 198 MHz of spectrum, from 2,500 to 2,686
MHz and from 2,170 to 2,172 MHz in each such market.

         The Company believes that, as of December 31, 2001, it was the largest
pay television provider in Brasilia based on total number of subscribers. The
Company's principal competitors in the city of Brasilia are NET Brasilia, a
hardwire cable operator and affiliate of the Globo Organization, as well as
DirecTV and Sky, each of which is a DTH operator. In Brasilia, the Company also
offers high speed Internet access to the residential market and data
communication services to the corporate market. The Company's principal
competitor for these services is Brasil Telecom, the local telephone operator.

         The Company believes that, as of December 31, 2001, it was the second
largest pay television provider in Goiania based on total number of subscribers.
The main competitors in the pay television area in the city of Goiania are NET
Goiania, a hardwire cable operator and affiliate of the Globo Organization, as
well as DirecTV and Sky. The Company believes that, as of December 31, 2001, it
was the largest pay television provider in Belem based on total number of
subscribers. The main competitors in the pay television area in Belem are ORM
Cabo, an independent hardwire cable operator, as well as DirecTV and Sky.

         The Company believes that, as of December 31, 2001, it was the largest
pay television provider in the city of Campina Grande. The Company's principal
competitors are Sky and DirecTV. Currently, there is no hardwire cable provider
in the city of Campina Grande.

         In addition to other terrestrial pay television operators, the Company
faces competition from several other sources, such as direct broadcasting
satellite systems ("DBS"), local off-air VHF/UHF channels, home videocassette
recorders and out-of-home theaters. Currently, there are three DBS providers in
Brazil, "Sky," an affiliate of the Globo Organization, DirecTV, and Tecsat, a
privately held company in Brazil. Competition in the pay television industry is
based upon program offerings, customer service, reliability and pricing. Many
actual and potential competitors have greater financial, marketing and other
resources than the Company. No assurance can be given that the Company will be
able to compete successfully. See "--Brazilian Pay Television Industry," and
"--Operating Systems and the Company's Markets."

REGULATORY ENVIRONMENT

         GENERAL. In July 1997, the Brazilian government adopted Federal Law No.
9472/97, the "General Telecommunications Law." Such law revoked the Brazilian
Telecommunications Code of 1962 pursuant to which the pay television industry
was subject to regulation by the Ministry of Communications. The General
Telecommunications Law provides that ANATEL has jurisdiction over the regulation
of telecommunications services. ANATEL has been vested with the power to, among
other things, revoke, modify and renew licenses within the spectrum available to
wireless services, approve the assignment and transfer of control of such
licenses, approve the location of channels that comprise MMDS systems, regulate
the type, configuration and operation of equipment used by MMDS systems, and
impose certain other reporting requirements on MMDS license holders and MMDS
operators.

         Currently, MMDS license holders remain subject to the provisions of
Presidential Decree Number 2196 ("Decree No. 2196"), issued April 8, 1997, which
regulates "Special Services," including MMDS systems and operations. Decree No.
2196 specifies the competitive procedures for the granting of concessions and
licenses for the rendering of Special Services in Brazil. Based on the
provisions of Decree No. 2196, the Ministry of Communications revised Rule
002/94, which specifically regulated MMDS service, by means of Administrative
Rule 254, dated April 16, 1997, hereinafter referred to as the "Revised MMDS
Rule."



                                       9
<page>

         OWNERSHIP OF LICENSES. Decree No. 2196 eliminated the requirement that
only companies in which Brazilian nationals own at least 51% of the voting
capital were eligible to be granted a license to operate an MMDS system.
Consequently, under current regulations any company constituted in accordance
with the laws of Brazil and with a head office and management located in Brazil
is eligible to be granted such a license. Until November 1997, TV Filme Servicos
held the licenses to operate the MMDS systems in Brasilia, Goiania and Belem. As
a result of the lifting of the 51% ownership requirement, in November 1997, TV
Filme Servicos transferred the respective license for Brasilia, Goiania and
Belem to TV Filme Brasilia, TV Filme Goiania and TV Filme Belem, respectively.
Brazilian regulators approved this transfer. Licenses for the new markets are
held by TV Filme Sistemas. Although Decree No. 2196 eliminated the requirement
discussed above, the General Telecommunications Law permits the Executive
Branch, through Presidential Decree, to impose restrictions on foreign capital
investments in telecommunications companies. However, such restrictions may not
be imposed retroactively with respect to outstanding licenses. Decree No. 2196
also provides that licenses shall be granted for renewable periods of ten or
fifteen years; all the current invitations for bids for MMDS services provide
for 15-year terms.

         PRICES. The system operator may freely establish prices for pay
television and high-speed Internet services currently in operation, although
ANATEL may intervene in the event of abusive pricing practices. ANATEL may
impose penalties including fines, suspension or revocation of a license in the
event the license holder fails to comply with applicable regulations or becomes
legally, technically or financially unable to provide MMDS service. ANATEL and
CADE, the Brazilian antitrust authority, also may intervene to the extent
operators engage in unfair practices intended to eliminate competition. Under a
Brazilian law designed to reduce inflation, the prices which the Company may
charge to a particular subscriber may not be increased until the next
anniversary of the subscriber's initial subscription date and may only be
increased by a percentage no greater than the percentage of the increase in the
general inflation rate which occurred during the subscriber's contract year.

         TWO-WAY MMDS. In some countries, including the United States, MMDS
license holders have been granted additional spectrum to provide bi-directional,
or "two-way," services to their customers, including Internet access, data
transmission and other advanced telecommunications services. In the third
quarter of 2000, ANATEL approved and awarded additional spectrum to the Company,
in the frequency band of 2,170 to 2,182 MHz. Currently, with a total of 198 MHz
of spectrum available in each market, the Company is able to offer a wide range
of two-way advanced communication services, including high-speed data services
and high-speed Internet, to both the residential and the corporate markets. The
Company also owns additional specific licenses, which allow the offering of
voice and VPN (Virtual Private Network) corporate services. Currently, the
Company owns and operates its own NOC (Network Operating Center), which is
located in its headquarters in Brasilia.

         OTHER LICENSES. The Company also owns two licenses for data
communications services in Brazil, under the definition of "Limited Services."
These licenses allow the Company to implement and operate data communications
networks using wireless or cable and fiber platforms, as well as offer special
services to the corporate market.

         OTHER REGULATIONS. MMDS license holders are subject to regulation with
respect to the construction, marking and lighting of transmission towers
pursuant to the Brazilian Aviation Code and certain local zoning regulations
affecting construction of towers and other facilities. Restrictions imposed by
local authorities may also exist. The pay television and high-speed Internet
industry also is subject to the Brazilian Consumer Code. The Consumer Code
entitles the purchasers of goods or services to certain rights, including the
right to discontinue a service and obtain a refund if the services are deemed to
be of low quality or not rendered adequately. For instance, in case of a
suspension of the transmission for a given period, the subscriber shall be
entitled to a discount on the monthly fees. The Revised MMDS Rule also contain
certain provisions relating to consumer rights, including a provision for
mandatory discounts in the event of interruption of service.

         Due to the regulated nature of the pay television, high-speed Internet
and data communications industry, the adoption of new, or changes to existing,
laws or regulations or the interpretations thereof may impede the Company's
growth and may otherwise have a material adverse effect on the Company's results
of operations and financial condition.



                                       10
<page>

ITEM 2.  PROPERTIES
         ----------

         The Company leases approximately 37,000 square feet of office space for
its corporate headquarters and the Brasilia System in Brasilia. In addition, the
Company leases office space for the Goiania System, Belem System and Campina
Grande System consisting of approximately 29,000, 22,000 and 16,000 square feet,
respectively. The Company also leases space for transmission towers located in
Brasilia, Goiania, Belem and Campina Grande. Finally, the Company leases office
space and space for transmission towers in certain of its newly awarded markets.
The Company believes that office space and space for transmission towers is
readily available on acceptable terms in the markets in which the Company
operates wireless cable systems.

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

         The Company is not party to any lawsuit or proceeding required to be
reported herein.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

         No matters were submitted to a vote of security holders during the
fourth quarter of 2001.



                                       11
<page>


                                     PART II

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

         From July 30, 1996 to February 4, 1999, TV Filme's common stock, $0.01
par value per share (the "Common Stock"), was quoted on the Nasdaq National
Market ("Nasdaq") under the symbol "PYTV." Effective February 4, 1999, the
Common Stock was delisted from Nasdaq based on the inability to comply with
certain requirements for continued listing, including the net tangible assets
and minimum bid price requirements. Following delisting, the Common Stock and
subsequently the Company's ordinary shares, $0.01 par value per share (the
"Ordinary Shares") have been listed on the OTC Bulletin Board, sporadically
traded in the over-the-counter-market and reported in the "pink sheets." The OTC
Bulletin board is a controlled quotation service that offers real-time quotes,
last-sale prices and volume information in over-the-counter equity securities.

         The following table reflects the high and low sale prices for the
Common Stock and the Ordinary Shares, as reported by the OTC Bulletin Board, for
the periods indicated:

                                                         HIGH               LOW
                                                         ----               ---
                                                               (PER SHARE)
           Year ended December 31, 2001
           ----------------------------
           Fourth Quarter 2001                         $ 0.15             $ 0.03
           Third Quarter 2001                            0.55               0.05
           Second Quarter 2001                           0.90               0.65
           First Quarter 2001                            1.25               0.50

           Successor Period ended December 31, 2000
           ----------------------------------------
           Fourth Quarter 2000                           2.50               1.03
           Third Quarter 2000                            2.56               1.88

           Predecessor Period ended July 20, 2000
           --------------------------------------
           Second Quarter 2000                           0.38               0.31
           First Quarter 2000                            1.13               0.34


         On February 28, 2002, there were approximately 16 holders of record of
the Ordinary Shares. The Company believes that it has approximately 1,070
beneficial owners.

         The Company has never declared or paid any cash dividends on the
Ordinary Shares and does not presently anticipate paying any cash dividends on
the Ordinary Shares in the foreseeable future. The Company currently expects
that earnings, if any, will be retained for growth and development of the
Company's business. The Company's ability to declare and pay dividends is (i)
affected by the ability of the Company's present and future subsidiaries to
declare and pay cash dividends or otherwise transfer funds to the Company since
the Company conducts its operations entirely through its subsidiaries, and (ii)
restricted by the terms of the Indenture, dated as of July 20, 2000, among
ITSA-Intercontinental Telecomunicacoes Ltda., as issuer, the several Guarantors
named therein, and The Bank of New York, as trustee, pursuant to which the
Company issued $35 million aggregate principal amount of 12% Senior Secured
Notes due 2004.

         Subject to the foregoing and to any restrictions which may be contained
in future indebtedness of the Company, the payment of cash dividends on the
Ordinary Shares will be within the sole discretion of the Company's Board of
Directors, and will depend upon the earnings, capital requirements and financial
position of the Company, applicable requirements of law, general economic
conditions and other factors considered relevant by the Company's Board of
Directors.



                                       12
<page>

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

         The selected consolidated balance sheet data as of December 31, 2001
and the selected consolidated statement of operations data for the year ended
December 31, 2001 were derived from, and are qualified by reference to, the
Consolidated Financial Statements, which have been audited by Arthur Andersen
S.C., independent auditors. The selected consolidated balance sheet data as of
December 31, 1997, 1998 and 1999 and December 31, 2000 and the selected
consolidated statement of operations data for each of the years ended December
31, 1997, 1998 and 1999, the six months and twenty days ended July 20, 2000 and
the five months and eleven days ended December 31, 2000 were derived from, and
are qualified by reference to, the Consolidated Financial Statements, which have
been audited by other independent auditors. The Consolidated Financial
Statements have been prepared in accordance with U.S. GAAP in U.S. dollars. For
this purpose, until December 31, 1997, amounts in Brazilian currency were
remeasured into U.S. dollars in accordance with the methodology set forth in
Statement of Financial Accounting Standards No. 52 ("SFAS 52") as it applies
to entities operating in highly inflationary economies. Pursuant to SFAS 52,
supplies, property, plant and equipment, intangibles and deferred installation
fees and the related income statement accounts were remeasured at exchange rates
in effect when the assets were acquired or the liabilities were incurred. All
other assets and liabilities were remeasured at fiscal year end exchange rates;
and all other income and expense items were remeasured at average exchange rates
prevailing during the year. Remeasurement adjustments were included in exchange
and translation gains (losses). Effective January 1, 1998, the Company
determined that Brazil ceased to be a highly inflationary economy under SFAS 52.
Accordingly, as of January 1, 1998, the Company began using the real as the
functional currency of its Brazilian subsidiaries. As a result, all assets and
liabilities are translated into dollars at period end exchange rates and all
income and expense items are translated into U.S. dollars at the average
exchange rate prevailing during the period. In addition, in January 1998, the
Company recorded a loss associated with holding a net foreign currency monetary
liability position. Effective July 21, 2000, the Company emerged from Chapter 11
bankruptcy proceedings and implemented "fresh start accounting." Accordingly,
all assets and liabilities were restated to reflect their respective fair
values. The Consolidated Financial Statements after that date are those of a new
reporting entity and are not comparable to the pre-confirmation periods. The
data presented below should be read in conjunction with the Consolidated
Financial Statements and related notes thereto and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
other information included elsewhere in this Report.

         Set forth below is selected financial data for the years ended December
31, 1997, 1998 and 1999, the six months and twenty days ended July 20, 2000, the
five months and eleven days ended December 31, 2000 and the year ended December
31, 2001.

<table>
<caption>

                                                    PREDECESSOR COMPANY (1)                   SUCCESSOR COMPANY (1)
                                          -----------------------------------------------  --------------------------
                                                                               SIX MONTHS   FIVE MONTHS
                                                                               AND TWENTY    AND ELEVEN
                                                                               DAYS ENDED    DAYS ENDED    YEAR ENDED
                                              YEAR ENDED DECEMBER 31,           JULY 20,    DECEMBER 31,   DECEMBER 31,
                                            1997         1998        1999         2000          2000          2001
                                            ----         ----        ----      ----------   ------------   ----------
                                                       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                       <c>         <c>           <c>        <c>             <c>         <c>
STATEMENT OF OPERATIONS DATA:
Revenues..............................    $  50,547   $  45,408     $ 26,177   $   13,044      $  11,964   $  21,697
Operating costs and expenses:
   System operating (exclusive of
      depreciation and amortization
      and stock compensation expense
      shown below)....................       17,631      19,617       12,040         6,534         4,845      11,800
   Selling, general and administrative
      (exclusive of depreciation and
      amortization and stock compensation
      expense shown below)............       27,965      31,637       15,705         9,223         6,904      11,555
   Depreciation and amortization......       12,162      21,651       14,205         6,442         5,257       8,020
   Stock compensation.................           --          --           --            --         3,270          --
                                          ---------    --------     --------   -----------     ---------   ---------
      Total operating costs and
        expenses......................       57,758      72,905       41,950        22,199        20,276      31,375
                                          ---------    --------     --------   -----------     ---------   ---------

Operating loss........................       (7,211)    (27,497)     (15,773)       (9,155)       (8,312)     (9,678)
Other expense (2).....................      (12,045)    (12,723)     (46,073)      (10,776)       (3,819)    (10,681)
                                          ---------    --------     --------   -----------     ---------   ---------
Loss before reorganization items and
   extraordinary item.................      (19,256)    (40,220)     (61,846)      (19,931)      (12,131)    (20,359)

</table>


                                       13
<page>

<table>
<caption>

                                                    PREDECESSOR COMPANY (1)                   SUCCESSOR COMPANY (1)
                                          -----------------------------------------------  --------------------------
                                                                               SIX MONTHS   FIVE MONTHS
                                                                               AND TWENTY    AND ELEVEN
                                                                               DAYS ENDED    DAYS ENDED    YEAR ENDED
                                              YEAR ENDED DECEMBER 31,           JULY 20,    DECEMBER 31,  DECEMBER 31,
                                            1997         1998        1999         2000          2000          2001
                                            ----         ----        ----      ----------   ------------  -----------
                                                       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                       <c>         <c>           <c>        <c>             <c>         <c>
Reorganization items:
   Reorganization costs...............           --          --       (4,724)       (2,709)           --          --
   Adjust accounts to fair value......           --          --           --        (3,221)           --          --
                                          ---------    --------     --------   -----------     ---------   ---------
       Total reorganization items.....           --          --       (4,724)       (5,930)           --          --
                                          ---------    --------     ---------  -----------     ---------   ---------
Loss before extraordinary item........      (19,256)    (40,220)     (66,570)      (25,861)      (12,131)    (20,359)
Extraordinary item:
   Gain on extinguishment of debt.....           --          --           --        88,781            --          --
                                          ---------    --------     --------   -----------     ---------   ---------
Net income (loss).....................    $ (19,256)  $ (40,220)    $(66,570)  $    62,920     $ (12,131)  $ (20,359)
                                          =========   =========     ========   ===========     =========   =========
Basic and diluted earnings (loss) per
 share:
   Before extraordinary item..........    $   (1.78)  $   (3.72)   $  (6.15)  $     (2.39)    $   (1.21)  $     (2.04)
   Extraordinary item.................          --          --          --           8.20            --            --
   Net income (loss)..................    $   (1.78) $    (3.72)   $  (6.15)  $      5.81     $   (1.21)  $     (2.04)
                                          ==========  ==========    ========   ===========     =========   ==========
Weighted average number of shares
   outstanding during the year/period.       10,940      10,825       10,825        10,825        10,000      10,000
                                          =========   =========     ========   ===========     =========   =========

</table>

<table>
<caption>

                                              PREDECESSOR COMPANY (1)            SUCCESSOR COMPANY (1)
                                          -----------------------------------   -----------------------
                                                                                   AT           AT
                                                  AT DECEMBER 31,              DECEMBER 31, DECEMBER 31,
                                           1997          1998        1999         2000         2001
                                           ----          ----        ----      ------------ ------------
                                                           (DOLLARS IN THOUSANDS)

                                        <c>          <c>         <c>          <c>         <c>
BALANCE SHEET DATA:
Working capital (deficiency) (3).....      $97,723      $ 58,227    $(118,602)   $   1,884   $  (3,558)
Pledged securities (4)...............       17,324            --          --            --          --
Property, plant and equipment, net...       63,405        50,974      27,755        19,149      13,665
Total assets.........................      186,397       133,314      83,322        62,925      46,499
Total long-term debt.................      140,000        140,000        --         39,200      44,045
Stockholders' equity (deficiency) (5)       22,330       (21,767)    (91,642)       11,088     (10,045)

</table>

<table>
<caption>
                                                    PREDECESSOR COMPANY (1)                   SUCCESSOR COMPANY (1)
                                          -----------------------------------------------  ---------------------------
                                                                               SIX MONTHS   FIVE MONTHS
                                                                               AND TWENTY    AND ELEVEN
                                                                               DAYS ENDED    DAYS ENDED   YEAR ENDED
                                              YEAR ENDED DECEMBER 31,           JULY 20,    DECEMBER 31,  DECEMBER 31,
                                            1997         1998        1999         2000          2000         2001
                                            ----         ----        ----      ----------   ------------  ------------
                                                     (DOLLARS IN THOUSANDS, EXCEPT REVENUE PER SUBSCRIBER DATA)

                                       <c>           <c>         <c>          <c>           <c>         <c>
OTHER FINANCIAL DATA:
Net cash provided by (used in)
operating
   activities.........................    $  1,884      $ (6,332)   $ (5,187)    $ (27,735)    $  (1,715)  $     962
Net cash used in investing activities.     (37,082)      (14,062)     (3,002)       (3,924)       (2,317)     (2,274)
Net cash used in financing activities.        (182)         (200)         --        (2,161)           --          --
EBITDA (6)............................       5,026        (5,846)     (6,292)       (2,713)          215      (1,658)
Capital expenditures..................      37,082        14,062       3,002         3,924         2,317       2,274

OTHER OPERATING DATA:
Number of subscribers at end
  of period (7).......................     111,244        77,069      72,240       74,814         80,609      69,355
Average monthly revenue per
subscriber (8)........................   $   37.91      $  35.39    $  27.01     $  19.60      $   28.06   $   24.68

</table>



                                       14
<page>


         Set forth below is selected financial data for the quarters ended March
31 and June 30, 2000, the 20 days ended July 20, 2000, the 71 days ended
September 30, 2000, the quarter ended December 31, 2000 and the quarters ended
March 31, June 30, September 30 and December 31, 2001.

<table>
<caption>
                                              PREDECESSOR COMPANY (1)                    SUCCESSOR COMPANY (1)
                                         ------------------------------------- --------------------------------------
                                          QUARTER     QUARTER       20 DAYS     71 DAYS       QUARTER       QUARTER
                                            ENDED      ENDED         ENDED       ENDED         ENDED         ENDED
                                          MARCH 31,   JUNE 30,      JULY 20,  SEPTEMBER 30,  DECEMBER 31,   MARCH 31,
                                             2000       2000          2000       2000           2000          2001
                                          ---------   --------      --------  -------------  ------------   ---------
                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                       <c>        <c>            <c>        <c>             <c>         <c>
STATEMENT OF OPERATIONS DATA:
Revenues..............................    $   5,911  $    5,675     $  1,459   $   5,285       $  6,679    $    6,408
Operating costs and expenses:
   System operating (exclusive of
      depreciation and amortization
      and stock compensation expense
      shown below)....................        2,600       2,925          552       1,897          2,582         3,657
   Selling, general and administrative
      (exclusive of depreciation and
      amortization and stock compensation
      expense shown below)............        4,018       6,702        1,670       2,938          4,332         4,323
   Depreciation and amortization......        3,095       2,869          478       2,535          2,722         2,668
   Stock compensation.................           --          --           --          --          3,270            --
                                          ---------   ---------     --------   ---------       --------    ----------
      Total operating costs and
        expenses......................        9,713      12,496        2,700       7,370         12,906        10,648
                                          ---------   ---------     --------   ---------       --------    ----------
Operating loss........................       (3,802)     (6,821)      (1,241)     (2,085)        (6,227)       (4,240)
Other income (expense):
      Interest and other expense......       (5,794)     (4,679)      (1,224)       (907)        (1,526)       (1,258)
      Interest and other income.......        1,382       1,387          126         323            596           174
      Foreign exchange loss...........        2,189      (2,824)        (143)       (182)        (2,123)       (3,950)
                                          ---------   ---------     --------   ---------       --------    ----------
       Total other expense, net.......       (2,223)     (6,116)      (1,241)       (766)        (3,053)       (5,034)
                                          ---------   ---------     --------   ---------       --------    ----------
Loss before reorganization items and
   extraordinary item.................       (6,025)    (12,937)      (2,482)     (2,851)        (9,280)       (9,274)
Reorganization items:
   Adjust accounts to fair value......           --          --       (3,221)         --             --            --
                                          ---------   ---------     --------   ---------       --------    ----------
       Total reorganization items.....           --          --       (3,221)         --             --            --
                                          ---------   ---------     --------   ---------       --------    ----------
Loss before extraordinary item........       (6,025)    (12,937)      (5,703)     (2,851)        (9,280)       (9,274)
Extraordinary item:
   Gain on extinguishment of debt.....           --          --       87,585          --             --            --
Net income (loss).....................    $  (6,025) $  (12,937)    $ 81,882    $ (2,851)      $ (9,280)   $   (9,274)
                                          =========  ==========     ========    ========       ========    ==========
Basic and diluted earnings (loss)
 per share:
   Before extraordinary item..........        (0.56)       (1.20)      (0.53)       (0.29)         (0.93)       (0.93)
   Extraordinary item.................           --          --         8.09          --             --            --
   Net income (loss)..................     $  (0.56) $     (1.20)   $   7.56   $    (0.29)     $   (0.93)  $    (0.93)
                                           ========  ===========    ========   ==========      =========   ==========
Weighted average number of shares
   outstanding during the period......       10,825      10,825       10,825      10,000         10,000        10,000
                                          =========  ==========     ========   =========       ========    ==========

</table>

<table>
<caption>
                                                           SUCCESSOR COMPANY (1)
                                      ----------------------------------------------------------
                                           QUARTER ENDED    QUARTER ENDED       QUARTER ENDED
                                              JUNE 30,      SEPTEMBER 30,       DECEMBER 31,
                                                2001             2001                2001
                                           -------------    --------------    -----------------
                                               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                         <c>               <c>                 <c>
   STATEMENT OF OPERATIONS DATA:
   Revenues.............................    $     5,591       $     4,921         $     4,777
   Operating costs and expenses:
      System operating (exclusive of
         depreciation and amortization
         shown below)...................          3,176             2,354               2,614
      Selling, general and
         administrative (exclusive of
         depreciation and amortization
         shown below)...................          2,699             2,378               2,154
      Depreciation and amortization.....          2,099             1,702               1,551
                                            -----------       -----------         -----------
         Total operating costs and
           expenses.....................          7,974             6,434               6,319
                                            -----------       -----------         -----------

   Operating loss.......................         (2,383)           (1,513)             (1,542)
   Other income (expense):
         Interest and other expense.....         (1,270)           (1,965)               (743)
         Interest and other income......            179               204                 177
         Foreign exchange loss..........         (2,533)           (5,993)              6,298
                                            -----------       -----------         -----------
   Total other expense, net.............         (3,624)           (7,754)              5,732
                                            -----------       -----------         -----------
   Net income (loss)....................    $    (6,007)      $    (9,267)        $     4,190
                                            ===========       ===========         ===========
</table>



                                       15
<page>

<table>
<caption>
                                                           SUCCESSOR COMPANY (1)
                                      ----------------------------------------------------------
                                           QUARTER ENDED    QUARTER ENDED       QUARTER ENDED
                                              JUNE 30,      SEPTEMBER 30,       DECEMBER 31,
                                                2001             2001                2001
                                           -------------    --------------    -----------------
                                               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                         <c>               <c>                 <c>
   Basic and diluted earnings (loss)
      per share.........................          (0.60)            (0.93)              (0.42)
   Weighted average number of shares
      outstanding during the period.....         10,000            10,000              10,000
                                            ===========       ===========         ===========
</table>

-----------

(1)      The Selected Consolidated Financial Data includes (i) TV Filme Servicos
         on a historical basis through July 20, 2000 and (ii) ITSA and its
         subsidiaries from July 21, 2000, adjusted for the effects of the plan
         of reorganization of TV Filme completed on that date. See Notes 1 and 3
         to the Consolidated Financial Statements.

(2)      Other expense is comprised primarily of foreign currency losses and
         interest expense.

(3)      For periods prior to 1998, working capital includes the current portion
         of pledged securities represented by U.S. Treasury bills and notes,
         which, as required by the terms of the indenture relating to the TV
         Filme Senior Notes, were restricted to meet scheduled interest payment
         requirements within one year.

(4)      The pledged securities, represented by U.S. Treasury bills and notes,
         were purchased as collateral for the TV Filme Senior Notes to provide
         for payment in full, when due, of the first four scheduled interest
         payments on the TV Filme Senior Notes. A portion of the total amount of
         pledged securities purchased has been classified in current assets to
         be applied in full against scheduled interest payments coming due
         within one year.

(5)      The Company has never paid cash dividends on its Ordinary  Shares.  See
         "Item 5. Market For Registrant's Common Equity and Related Stockholder
         Matters."

(6)      EBITDA is earnings before interest, taxes, depreciation, amortization,
         non-cash charges, reorganization costs, adjust accounts at fair value,
         gain on extinguishment of debt and stock compensation. EBITDA is
         presented supplementally because it is used by the Company to review
         and analyze the results at each of its television systems. The Company
         has excluded one-time items, such as non-cash charges, reorganization
         costs, adjust accounts at fair value and gain on extinguishment of
         debt, from EBITDA as these items do not impact operating results on a
         recurring basis. For 1997, one-time items totaled $75,000 of non-cash
         charges. In 1999, the Company recognized reorganization costs of
         $4,724,000. During the twenty days ended July 20, 2000, the Company
         recognized adjustments to state accounts at fair value of $3,221,000
         and a gain on extinguishment of debt of $87,585,000. During the five
         months and eleven days ended December 31, 2000, the Company recognized
         a non-cash charge for stock compensation of $3,270,000. This
         information should not be considered as an alternative to any measure
         of performance as promulgated under generally accepted accounting
         principles (such as operating income or income (loss)) nor should it be
         considered as an indicator of the Company's overall financial
         performance. The Company's calculation of EBITDA may be different from
         the calculations used by other companies and therefore comparability
         may be limited. The Company believes that providing EBITDA data will
         furnish investors, creditors, analysts and other parties interested in
         the pay television industry additional information regarding the
         ability of the Company to meet its capital expenditures, working
         capital and debt service requirements.

(7)      See "Item 1. Business -- Operating Systems and the Company's Markets."

(8)      Average  monthly  revenue per  subscriber is calculated  by dividing
         subscription revenue for the month by the average number of subscribers
         for the month.



                                       16
<page>


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

OVERVIEW

         The Notes to Consolidated Financial Statements are an integral part of
Management's Discussion and Analysis of Financial Condition and Results of
Operations and should be read in conjunction herewith.

         The Company develops, owns and operates broadband wireless
telecommunications systems in markets in Brazil, offering video, high-speed
Internet and data communications services. Through it subsidiaries, the Company
has licenses in the cities of Brasilia, Goiania, Belem, Campina Grande, Caruaru,
Porto Velho, Presidente Prudente, Bauru, Franca, Uberaba, Belo Horizonte and
Vitoria, covering over 3 million households and approximately 13 million people.

         The Company offers a pre-paid subscription video service, called Mais
TV, which is comprised of a self-install kit available in retail stores in most
of the cities in which the Company has operations.

         ITSA was also the first company in Brazil to launch a high-speed
Internet access system using the technology of high-speed modems. The system,
called LinkExpress, has been available on a commercial basis in the city of
Brasilia since 1998.

         The Company holds licenses covering the frequency bands from 2,170 to
2,182 MHz and from 2,500 to 2,686 MHz. Currently, with a total of 198 MHz of
spectrum available in each market, the Company is able to offer a wide range of
two-way advanced communication services, including high-speed data services and
high-speed Internet, to both the residential and the corporate markets. The
Company also owns additional specific licenses, which allow the offering of
voice and VPN (Virtual Private Network) corporate services. Currently, the
Company owns and operates its own NOC (Network Operating Control Center), which
is located in its headquarters in Brasilia.

         Additionally, the Company owns and maintains its proprietary SMS
(Subscriber Management System) called Mythos, which was developed in-house and
customized to the Brazilian needs and standards. This advanced software package
allows the Company to have full control of every aspect of its business, from
marketing to sales, customer service, technical support, inventory control and
billing. The Company believes that the ability to control and customize the SMS
is a key point in quickly offering reliable services to the market.

         During 1998 and the first quarter of 1999, the Company faced
significant challenges that ultimately affected the Company's ability to pay
interest on its outstanding TV Filme Senior Notes. While TV Filme decided to
commence discussions with holders of the TV Filme Senior Notes to pursue a
comprehensive financial and operational restructuring plan, TV Filme failed to
make the required interest payment on the TV Filme Senior Notes on June 15,
1999.

         On August 13, 1999, TV Filme reached an agreement in principle with a
committee representing holders of the TV Filme Senior Notes. This agreement was
effected on pursuant to a pre-arranged plan of reorganization, which received
court approval under Chapter 11 of the U.S. Bankruptcy Code on April 10, 2000.
Effectuation of the plan was completed on July 21, 2000, following support from
ANATEL and the Central Bank of Brazil. In accordance with the terms of the plan
of reorganization, the TV Filme Senior Note holders received a $25 million cash
payment and their existing notes were converted into (i) the 12% Senior Secured
Notes in the aggregate principal amount of $35 million, due 2004, at an interest
rate of 12% per annum (interest payable-in-kind at the Company's option through
its first four interest payments), and (ii) 80% of the new common equity of the
reorganized company. Current management received 15% of the new common equity,
and the existing common stockholders of TV Filme received 5% of the new common
equity of the reorganized company. All outstanding stock options were cancelled.
ITSA Ltd. (the reorganized company) is a Cayman Islands holding company and is
the successor issuer to TV Filme, Inc. pursuant to Rule 12g-3 under the
Securities Exchange Act. The 12% Senior Secured Notes were issued by
ITSA-Intercontinental Telecommunicacoes Ltda., a wholly-owned subsidiary of the
Company. On March 18, 2002, the U.S. Bankruptcy Court for the District of
Delaware closed the Chapter 11 bankruptcy case involving TV Filme.



                                       17
<page>

GENERAL

         Historically, the Company has generated operating losses, which may
increase to the extent that operations of additional systems are commenced or
acquired. As the Company continues to develop systems, operating income from
more developed systems is expected to be partially or completely offset by
corporate overhead, operating losses from less developed systems and from
development costs associated with establishing new systems. This trend is
expected to continue until the Company has a sufficiently large subscriber base
to absorb operating and development costs of new systems. There can be no
assurance that the Company will be able to achieve or sustain net income in the
future.

         Each of the Company's existing systems has required an initial capital
investment of approximately $1.0 million to $1.5 million to build and install a
transmission tower, headend facilities and other equipment. These costs are
generally depreciated over ten years. In addition, each new subscriber has
required an average incremental investment of approximately $450 in the case of
video service, which includes the cost of a decoder box, installation labor and
materials, other equipment and supplies, and marketing and selling costs. In the
case of residential/corporate high-speed Internet service, each new subscriber
has required an average incremental investment of approximately $522 (including
a cable modem). The Company capitalizes installation costs, including
installation labor, decoders and other direct costs, and depreciates these costs
over a four-year period. Prior to 1998, these costs were depreciated over a
five-year period. The Company charges new subscribers installation fees which
vary from market to market, depending on factors which include the subscriber's
access to other forms of services and whether the installation is the first
installation in a building. The Company has charged its subscribers an
installation fee typically ranging from $35 to $75 for video service (or
approximately $10 net of sales commissions in markets which have adopted the
Mais TV model) and from $45 to $80 for residential high-speed Internet service.

         The Company defers installation fees, net of direct selling expenses,
and recognizes these fees as revenues ratably over a four-year period. Prior to
1998, the Company recognized these fees as revenues ratably over a five-year
period.

         The Company's historical subscriber growth has resulted from the
addition of subscribers in Brasilia and from the launch of operating systems in
Goiania, Belem and Campina Grande. In the past, subscriber losses have resulted
from the general economic situation in Brazil, including the strict tightening
of consumer credit and increased levels of unemployment. Revenues primarily
consist of monthly fees paid by subscribers for the programming packages,
installation fees recognized for the period and advertising fees and revenue
derived from the provision of high speed Internet access services. See "Item 1.
Business -- High Speed Internet Access and Data Communications Services." System
operating expenses include programming costs, a portion of the costs of
compensation and benefits for the Company's employees, transmitter site
rentals and certain repair and maintenance expenditures. Depreciation and
amortization expenses consist primarily of depreciation of decoder boxes,
head-end facilities and installation costs.

         The development of a new system requires significant expenditures,
substantial portions of which are incurred before the realization of revenues.
These expenditures, together with the associated early operating expenses,
result in negative cash flow until an adequate revenue generating subscriber
base is established. As the subscriber base increases, revenue, as well as
certain costs such as programming costs, generally increase while other costs,
such as tower rental and related maintenance costs, remain constant or increase
at proportionately lower levels. Accordingly, although costs increase in the
aggregate as the subscriber base grows, costs as a percentage of revenues
decrease and operating margins should generally increase.

         Although the Company's financial statements are presented pursuant to
U.S. GAAP in U.S. dollars, the Company's transactions are consummated in both
reais and U.S. dollars. Inflation and devaluation in Brazil have had, and are
currently having, substantial effects on the Company's results of operations and
financial condition. From time to time, the Company purchases hedge contracts to
reduce the risk of having a substantial portion of its cash in reais. As of
December 31, 2001, there were no outstanding hedge contracts.

         As a holding company, the Company is dependent on the receipt of
dividends and payment of intercompany obligations from its operating
subsidiaries in order to meet its cash requirements. The payment of



                                       18
<page>

dividends from the subsidiaries of the Company to the Company and the payment of
any interest on or the repayment of any principal of any loans or advances made
by the Company to any of its subsidiaries may be subject to statutory or
contractual restrictions, are contingent on the earnings and performance of such
subsidiaries and are subject to various business considerations. See "Item 5.
Market For Registrant's Common Equity and Related Stockholder Matters."

RESULTS OF OPERATIONS

         Although the Company's consolidated financial statements are presented
in U.S. dollars and pursuant to U.S. GAAP, the Company's transactions are
consummated in both reais and U.S. dollars. Inflation and devaluation in Brazil
have had substantial effects on the Company's results of operations and
financial condition. See "Inflation and Exchange Rates."

         As a result of the changes in exchange rates during the periods
presented and fresh-start reporting, the period-to-period comparisons of the
Company's results of operations are not necessarily meaningful and should not be
relied upon as an indication of future performance of the Company.

         Effective July 21, 2000, the Company emerged from Chapter 11 bankruptcy
proceedings and implemented "fresh start accounting." Accordingly, all assets
and liabilities were restated to reflect their respective fair values as of that
date. The Consolidated Financial Statements after that date are those of a new
reporting entity and are not comparable to the pre-confirmation periods. The
following table presents statements of operations, balance sheet and other
operating data for the year ended December 31, 1999, the six months and twenty
days ended July 20, 2000, the five months and eleven days ended December 31,
2000 and the year ended December 31, 200, and is included solely for comparative
analysis.

<table>
<caption>

                                           PREDECESSOR COMPANY                                      SUCCESSOR COMPANY
                           -----------------------------------------------------  --------------------------------------------------
                                                                                   FIVE MONTHS
                                                     SIX MONTHS AND                 AND ELEVEN
                             YEAR ENDED                TWENTY DAYS                  DAYS ENDED                 YEAR ENDED
                             DECEMBER 31,    % OF     ENDED JULY 20,   % OF         DECEMBER 31,    % OF       DECEMBER 31    % OF
                                 1999       REVENUE        2000       REVENUE           2000       REVENUE        2001       REVENUE
                           ---------------  -------  ------------------------     ---------------- -------  ------------------------

                        <c>                 <c>   <c>                 <c>      <c>               <c>     <c>               <c>
STATEMENT OF OPERATIONS
   DATA:
Revenues.................. $   26,177          100%  $   13,044          100%     $    11,964       100%    $    21,697       100%
Operating costs and
  expenses:
  System operating
     (exclusive of
     depreciation and
     amortization and
     stock compensation
     expense shown below).     12,040           46%       6,534           50%           4,845        40%         11,800        55%
  Selling, general and
     administrative
     (exclusive of
     depreciation and
     amortization and
     stock compensation
     expense shown below).     15,705           44%       9,223           71%           6,904        58%         11,555        53%
  Depreciation and
    Amortization..........     14,205           54%       6,442           49%           5,257        44%          8,020        37%
   Stock compensation.....         --            --          --           --            3,270        27%             --         --
                           ----------      --------  ----------      -------      -----------    ------     -----------    ---------
</table>


                                       19
<page>

<table>
<caption>

                                           PREDECESSOR COMPANY                                      SUCCESSOR COMPANY
                           -----------------------------------------------------  --------------------------------------------------
                                                                                   FIVE MONTHS
                                                     SIX MONTHS AND                 AND ELEVEN
                             YEAR ENDED                TWENTY DAYS                  DAYS ENDED                 YEAR ENDED
                             DECEMBER 31,    % OF     ENDED JULY 20,   % OF         DECEMBER 31,    % OF       DECEMBER 31    % OF
                                 1999       REVENUE        2000       REVENUE           2000       REVENUE        2001       REVENUE
                           ---------------  -------  ------------------------     ---------------- -------  ------------------------

                        <c>                 <c>   <c>                 <c>      <c>               <c>     <c>               <c>
     Total operating
       costs and expenses.     41,950          160%      22,199          170%          20,276       169%         31,375       145%
                           ----------      --------  ----------      --------     -----------    -------    -----------    -------
Operating loss............    (15,773)         (60%)     (9,155)         (70%)         (8,312)      (69%)        (9,678)      (45%)
Other income (expense):
   Interest expense.......    (22,756)         (87%)     (9,926)         (76%)         (1,867)      (16%)        (5,254)      (24%)
   Interest income........      7,281           28%       2,895           22%             411         3%            715         3%
   Foreign exchange loss..    (30,564)        (117%)     (3,745)         (29%)         (2,303)      (19%)        (6,179)      (28%)
    Other financial
      income (expense)....        (34)            --         --           --              (60)     (0.5%)            37       0.2%
                           ----------      --------- ----------      -------      -----------    --------   -----------    -------
      Total other income
        (expense).........    (46,073)        (176%)    (10,776)         (83%)         (3,819)      (32%)       (10,681)      (49%)
                           ----------      --------  -----------     --------     -----------    -------    ------------   --------
Loss before
   reorganization items
   and extraordinary item.    (61,846)        (236%)    (19,931)        (153%)        (12,131)      (101%)      (20,359)      (94%)
Reorganization items:
   Reorganization costs...     (4,724)         (18%)     (2,709)         (21%)             --         --              --        --
   Adjust accounts to
   fair value.............         --            --      (3,221)         (25%)             --         --              --        --
                           ----------      --------  -----------     ---------    -----------    -------    -----------    --------
      Total reorganization
        items.............     (4,724)         (18%)     (5,930)         (46%)             --         --              --        --
                           ----------      --------  -----------     ---------    -----------    -------     -----------    -------
Loss before extraordinary
   item...................    (66,570)        (254%)    (25,861)        (199%)        (12,131)      (101%)      (20,359)      (94%)
Extraordinary item:
   Gain on extinguishment
   of debt................         --            --      88,781          681%              --         --             --         --
                           ----------      --------  ----------      --------     -----------    -------    -----------    --------
Net income (loss)......... $  (66,570)        (254%) $   62,920          482%     $   (12,131)      (101%)  $   (20,359)      (94%)
                           ==========      ========  ==========      ========     ===========    =======    ===========    ========

BALANCE SHEET DATA:
Working capital
   (deficiency) .......... $ (118,602)               $ (143,528)                  $     1,884               $   (3,558)
Property, plant and
   equipment, net.........     27,755                    25,369                        19,149                   13,665
Total assets..............     83,322                    75,894                        62,925                   46,499
Total long-term debt......         --                        --                        39,200                   44,045
Stockholders' equity
   (deficiency) ..........    (91,642)                 (112,599)                       11,088                  (10,045)

OTHER OPERATING DATA:
Number of subscribers at
   end of period..........     72,240                    74,814                        80,609                   69,355
Average monthly revenue
   per subscriber......... $    27.01                $    19.60                   $     28.06               $    24.68


</table>



                                       20
<page>

         The Company acknowledges that the Consolidated Financial Statements
after the commencement date of "fresh start accounting" are those of a new
reporting entity and are not comparable to pre-confirmation reorganization
periods. However, the Company believes that for purposes of discussion of the
particular line items within results of operations, the six months and twenty
days ended July 20, 2000 should be combined with the five months and eleven days
ended December 31, 2000 in order to provide more meaningful analysis and
understandable information. The following table has been presented to disclose
the effects of the "fresh start accounting" recognized on July 20, 2000.

<table>
<caption>

                                                                 DEBT       EXCHANGE      FRESH
                                          PRE-CONFIRMATION     DISCHARGE    OF STOCK      START      REORGANIZED
                                          -----------------   ------------ ------------ -----------  -------------
                                                                      (IN THOUSANDS)

ASSETS

CURRENT ASSETS

                                       <c>                 <c>          <c>          <c>          <c>
   Cash and cash equivalents............  $          36,163   $   (27,902) $        --  $       --   $     8,261
   Accounts receivable, net.............              1,380            --           --          --         1,380
   Prepaid expense and other current
    assets..............................              6,964                                                6,964
                                          -----------------   ------------ ------------ -----------  -------------
       Total current assets.............             44,507       (27,902)          --          --        16,605

Property, plant and equipment, net......             25,369            --           --      (3,221)       22,148
Reorganization value in excess of
   amounts allocable to identifiable
   assets...............................                 --            --           --      31,413        31,413
Licenses................................              5,638            --           --          --         5,638
Other assets............................                380            --           --          --           380
                                          -----------------   ------------ ------------ -----------  -------------
TOTAL ASSETS............................  $          75,894   $   (27,902) $        --  $   28,192   $    76,184
                                          =================   ============ ============ ===========  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)

CURRENT LIABILITIES
   Accounts payable.....................  $          9,908    $    (2,902) $        --  $       --   $     7,006
   Payroll and other benefits payable...             2,243             --           --          --         2,243
   Accrued interest payable.............            28,646        (26,196)          --          --         2,450
   Accrued liabilities and taxes payable             7,238             --           --          --         7,238
                                          -----------------   ------------ ------------ -----------  -------------
   Senior notes in default..............           140,000       (140,000)          --          --            --
                                          -----------------   ------------ ------------ -----------  -------------
      Total current liabilities.........           188,035       (169,098)          --          --        18,937

12% Senior Secured Notes................                --         35,000           --          --        35,000
Deferred installation fees..............               479             --           --          --           479

Minority Interest.......................               (21)            --           --          21            --

STOCKHOLDERS' EQUITY (DEFICIENCY)
   Common stock.........................               108             86          (94)         --           100
   Additional paid-in capital...........            45,657         17,329           94     (41,412)       21,668
   Accumulated deficit..................          (152,865)        88,781           --      64,084            --
   Cumulative translation adjustment....            (5,499)            --           --       5,499            --
                                          -----------------   ------------ ------------ -----------  -------------
      Total stockholders' equity
         (deficiency)...................         (112,599)        106,196           --      28,171        21,768
                                          -----------------   ------------ ------------ -----------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIENCY)...................  $        75,894     $   (27,902) $        --  $   28,192   $    76,184
                                          =================   ============ ============ ===========  =============

</table>


                                       21
<page>

         As previously indicated, the 2000 statement of operations presented
below, which combines the results of operations for the six months and twenty
days ended July 20, 2000 and the five months and eleven days ended December 31,
2000, has been presented to complement and facilitate management's discussion
and analysis. Differences between periods due to the fresh start accounting are
explained in the discussion and analysis of results of operations below, when
necessary.

<table>
<caption>
                                                                               COMBINED
                                                ---------------------------------------------------------------------
                                                                        YEAR ENDED DECEMBER 31,
                                                ---------------------------------------------------------------------
                                                              % OF                     % OF                    % OF
                                                   1999      REVENUE       2000       REVENUE       2001      REVENUE
                                                   ----      -------       ----       -------       ----      -------
                                                                (IN THOUSANDS, EXCEPT SUBSCRIBER DATA)

                                              <c>           <c>       <c>            <c>       <c>           <c>
Revenues.......................................  $  26,177     100%      $ 25,008       100%      $ 21,697      100%
Operating costs and expenses:
    System operating (exclusive of amortization
      and stock compensation expense shown
      below)...................................     12,040      46%        11,379        46%        11,800       54%
    Selling, general and administrative
      (exclusive of amortization and stock
      compensation expense shown below)........     15,705      60%        16,127        64%        11,555       53%
    Depreciation and amortization..............     14,205      54%        11,699        47%         8,020       37%
    Stock compensation.........................         --      --          3,270        13%            --       --
                                                 ----------   ------     ---------     ------     ---------    ------
      Total operating costs and expenses.......     41,950     160%        42,475       170%        31,375      145%
                                                 ----------   ------     ---------     ------     ---------    ------

Operating loss.................................    (15,773)    (60%)      (17,467)      (70%)       (9,678)     (45%)

Other income (expense):
   Interest expense............................    (22,756)    (87%)      (11,793)      (47%)       (5,254)     (24%)
   Interest income.............................      7,281      28%         3,306        13%           715        3%
   Foreign exchange loss.......................    (30,564)   (117%)       (6,048)      (24%)       (6,179)     (28%)
   Other financial income (expense)............        (34)     --            (60)       --             37      0.2%
                                                 ----------   ------     ---------     ------     ---------    ------
      Total other income (expense).............    (46,073)   (176%)      (14,595)      (58%)      (10,681)     (49%)
                                                 ----------   ------     ---------     ------     ---------    ------
Loss before reorganization items and
   extraordinary item..........................    (61,846)   (236%)      (32,062)     (128%)      (20,359)     (94%)
Reorganization items:
   Reorganization costs........................     (4,724)    (18%)       (2,709)      (11%)           --       --
   Adjust accounts to fair value...............         --      --         (3,221)      (13%)           --       --
                                                 ----------   ------     ---------     ------     ---------    ------
      Total reorganization items...............     (4,724)    (18%)       (5,930)      (37%)           --       --
                                                 ----------   ------     ---------     ------     ---------    ------
Loss before extraordinary item.................    (66,570)   (254%)      (37,992)     (152%)      (20,359)     (94%)
Extraordinary item:
   Gain on extinguishment of debt..............         --      --         88,781      (355%)           --       --
                                                 ----------   ------     ---------     ------     ---------    ------
Net income (loss)..............................  $ (66,570)   (254%)     $ 50,789       203%      $(20,359)     (94%)
                                                 ==========   ======     =========     ======     =========    ======

BALANCE SHEET DATA:
Working capital (deficiency) ..................  $(118,602)              $  1,884                 $ (3,558)
Property, plant and equipment, net.............     27,755                 19,149                   13,665
Total assets...................................     83,322                 62,925                   46,499
Total long-term debt...........................         --                 39,200                   44,045
Stockholders' equity (deficiency) .............    (91,642)                11,088                  (10,045)

OTHER OPERATING DATA:
Number of subscribers at end of period.........     72,240                 80,609                   69,355
Average monthly revenue per subscriber.........  $   27.01               $  28.06                 $  24.68

</table>

         REVENUES. The Company's revenues consist primarily of subscription
revenues (which are principally monthly fees paid by subscribers for the
Company's pay television programming and Internet access and data communication
services and equipment use), installation fees and advertising revenues. The
Company introduced its pre-paid television subscription model, Mais TV, during
late 1999 and early 2000 in two of its principal markets, Brasilia and Belem.
Under the pre-paid subscription model, customers pay the monthly fee in advance
of the Company's provision of the monthly services. However, the Company does
not recognize these fees as revenues until the service is provided.



                                       22
<page>

         The Company's revenues for 2001 decreased by 13% compared to 2000,
primarily due to a decrease in the average number of subscribers, which resulted
in an 8% decrease in subscription revenues, a 61% reduction in installation fees
revenues and a 22% reduction in advertising revenues. These decreases were
partially offset by an increase in internet and data communication services
revenues of approximately $845,000, or 388%. These fluctuations include the
effects of the 19% devaluation of the real against the U.S. dollar in 2001,
which also contributed to the declines in revenues.

         Revenues for 2000 decreased by 4% compared to 1999, primarily due to a
38% increase in sales and other taxes which are deducted from gross revenues and
a 25% reduction in installation fees revenues. These decreases were partially
offset by a 100% increase in internet and data communication services revenues
and a 47% increase in advertising revenues. The principal taxes deducted from
gross operating revenues are state value-added taxes, the ICMS, and the federal
social contribution taxes, including PIS and COFINS. The ICMS tax is
approximately 25% but could be higher depending on the state where the revenue
is earned. PIS and COFINS are imposed at a combined rate of 3.65%. The COFINS
rate increased from 2.00% to 3.00% in 2000, which accounted for substantially
all of the increase in the value-added and indirect sales taxes referred to
above. The revenue fluctuations also include the effects of the 9% devaluation
of the real against the U.S. dollar experienced in 2000.

         SYSTEM OPERATING EXPENSES. System operating expenses include
programming costs, certain payroll and employee benefit costs, vehicle rentals,
the costs of providing the Mais TV magazine and other costs. System operating
expenses increased in 2001 by 4% compared to 2000, primarily due an increase in
the cost of the transmission rights to Belem's Soccer Championship. In 2001, the
Company paid $1,027,000 for these rights, compared to $842,000 paid in 2000. For
2000 compared to 1999, system operating expenses decreased by 11%, primarily due
to the reduction of programming costs related to lower priced packages offered
by the Company.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses include certain payroll and employee benefit
costs, rental costs, advertising and promotional expenses and other
administrative expenses. SG&A expenses decreased 28% in 2001 compared to 2000,
primarily due to the reorganization of the Company's internal structure, which
consisted of a reduction in the number of employees and in other administrative
expenses. These actions resulted in reduction in expenses of approximately
$1,980,000 in 2001 as compared to 2000. For 2000 compared to 1999, SG&A expenses
increased by 7%, primarily due to expenses related to the transition to the
pre-paid subscription model in the Brasilia and Belem systems, as well as
increased expenses directly resulting from the growth in the number of
subscribers. These items increased expenses by approximately $1,918,000 in 2000
as compared to 1999.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization includes
depreciation of systems, equipment, installation material and amortization of
licenses and reorganization intangible. Depreciation and amortization decreased
in 2001 by 31% compared to 2000, primarily due to adjustments to reduce fixed
assets to their fair value as a result of the adoption of "fresh start
accounting" and certain assets acquired before December 31, 1997 becoming fully
depreciated. This was partially offset by the amortization of the reorganization
intangible totaling $2,099,000 for the year ended December 31, 2001. A
reorganization intangible asset of $31,413,000 was recognized upon the adoption
of fresh-start accounting. See Note 3 of the Notes to Consolidated Financial
Statements. Depreciation and amortization decreased in 2000 by 18% compared to
1999, primarily for the same reasons describing the reduction between 2001 and
2000 and which has been partially offset by the amortization in the
reorganization intangible of $1,352,000 for the five month and eleven days ended
December 31, 2000.

         STOCK COMPENSATION. Stock compensation expense was recognized during
2000 in connection with the Company's reorganization.

         INTEREST EXPENSE. Interest expense decreased by 55% in 2001 compared to
2000, primarily due to a significant extinguishments of debt, which totaled
approximately $140 million on July 20, 2000, and was reduced to $35 million as
the result of the Company's restructuring and fresh start accounting. For 2000
compared to 1999, interest expense decreased by 48%, primarily due to the
extinguishments of debt referred to above.

         INTEREST INCOME. Interest and other income decreased by 78% in 2001
compared to 2000, primarily due to a decrease in average cash balances between
the two periods. Interest and other income decreased by 55% in 2000 compared to
1999, also primarily due to a decrease in the average cash balances between the
two periods.



                                       23
<page>

         FOREIGN EXCHANGE LOSS. Foreign exchange loss in 2001 remained
substantially unchanged compared to 2000 since the Company's outstanding balance
of its U.S. dollar denominated debt did not change significantly during 2001.
For 2000 compared to 1999, foreign exchange loss decreased by 80%, primarily due
to the decrease in liability position associated with the Company's
restructuring and the significant devaluation of the real as compared to the
U.S. dollar that occurred in late 1999.

         REORGANIZATION COSTS. During 2000 and 1999, reorganization costs
totaling $5,930,000 and $4,724,000 were incurred in connection with the
Company's reorganization and emergence from Chapter 11 bankruptcy proceedings.
Included within the $5,930,000 recognized in 2000 is an adjustment to state
assets and liabilities as a result of adoption of the fresh start accounting.

         EXTRAORDINARY ITEM-GAIN ON EXTINGUISMENT OF DEBT. During 2000, an
extraordinary gain of $88,781,000 was recognized as a result of the Company's
restructuring and emergence from Chapter 11 bankruptcy proceedings.

         NET INCOME (LOSS). Net income (loss) for 2001 was ($20.4) million
versus $50.8 million in 2000, primarily due to the effect of the extraordinary
gain of $88.8 million in 2000 resulting from the Company's restructuring and
partially offset by reorganization items of ($9.2) million. For 2000, net income
(loss) was $50.8 million versus ($66.6) million in 1999, primarily due to the
extraordinary gain associated with the Company's restructuring, reduced interest
expenses, a decrease in recorded foreign currency exchange loss and a decrease
in operating loss.

LIQUIDITY AND CAPITAL RESOURCES

<table>
<caption>

                                                         1999                   2000 (1)                    2001
                                                     -------------            --------------            --------------

                                                    <c>                       <c>                    <c>
CASH FLOWS DATA :
Net cash provided by (used in) operating activities.   $(5,187)                  $(31,611)              $      962
Net cash used in investing activities...............    (3,002)                    (6,241)                  (2,274)
Net cash used in financing activities...............        --                         --                       --
Capital expenditures................................     3,002                      7,400                    2,274

</table>

-----------

(1)      For purposes of facilitating analysis, the cash flow data for the six
         months and twenty days ended July 20, 2000 has been combined with the
         cash flow data for the five months and eleven days ended December 31,
         2000.

         Although the Company generated net cash provided by operating
activities of $962,000 during 2001, operating losses amounted to $20,359,000.
Net cash provided by operating activities in 2001 can be attributed to
depreciation and amortization of $8,020,000, provision for doubtful accounts of
$1,633,000 and foreign exchange loss of $6,179,000, which are items or
adjustments that are made to reconcile the net loss to cash provided by
operating activities. In addition, an increase in accounts payable and accrued
liabilities of $5,773,000 in 2001 as compared to 2000 and proceeds from the sale
of operating loss carryforwards of $1,800,000 contributed to a positive cash
flow from operating activities in 2001. Net cash used in operating activities of
$31,611,000 and $5,187,000 during 2000 and 1999, respectively, primarily
resulted from operating losses experienced during these periods.

         The Company made capital expenditures of approximately $2.3 million,
$7.4 million and $3.0 million during 2001, 2000 and 1999, respectively. These
capital expenditures were primarily financed with available cash. In 2000,
proceeds from sales of equipment totaled $1,159,000.

         As of December 31, 2001, the Company had approximately $2.4 million in
cash and cash equivalents. The Company has incurred operating losses since
inception and had a working capital and stockholders' deficiency of $3,558,000
and $10,045,000, respectively, at December 31, 2001. Operating losses are
expected to continue in the future until such time as the Company is successful
in securing a subscriber base capable of generating a significantly higher level
of operating revenues.

         The Company's business is capital intensive. In previous years, the
Company made a substantial amount of import purchases of equipment with the use
of letters of credit provided by banks in Brazil. As of December 31,



                                       24
<page>

2001, the Company had no amounts outstanding under letters of credit. While the
Company believes that additional vendor financing may be available, the Company
currently has no lines of credit or other credit facilities available. Although
the Company is in negotiations to obtain a line of credit, there can be no
assurance that the Company will be successful in such negotiations or that any
such line of credit will be on terms favorable to the Company.

         The Company's Ordinary Shares are currently tradable in the
over-the-counter market and are listed on the OTC Bulletin Board. The effects of
shares trading in the over-the-counter market, as opposed to being listed on a
national exchange, include, without limitation, the limited release of market
prices of the Ordinary Shares, limited news coverage of the Company and limited
investor interest in the Company. These factors may have a significant adverse
effect on the trading market and prices for the Ordinary Shares, thereby
affecting the Company's ability to issue additional securities or secure
additional financing. In addition, because the Ordinary Shares are deemed to be
a penny stock under the Securities Enforcement Penny Stock Reform Act of 1990,
additional disclosure is required in connection with trading in the Ordinary
Shares, including delivery of a disclosure schedule explaining the nature and
risk of the penny stock market. These requirements could further limit the
liquidity of the Ordinary Shares.

         The Company has limited capital resources available to fund capital
expenditures, fund maturities of debt as they become due and to support its
operations until such time the Company is able to generate significant levels of
positive cash flow from operations.

         The Company is therefore dependent upon obtaining additional financing
to provide funds to support operations and to fund maturities of debt as they
become due. The Company is negotiating with certain of its stockholders to
provide additional equity or debt financing, but the Company can give no
assurance that acceptable agreements for such financing will be reached. The
Company also can give no assurance that it will be able to obtain sufficient
financing from sources other than its stockholders on commercially reasonable
terms, or at all. Furthermore, the indenture under which the Company's
outstanding debt was issued restricts the amount of additional indebtedness that
the Company may incur. Failure to obtain any required additional financing could
adversely affect the Company's growth and, ultimately, could have a material
adverse effect on the Company's business, results of operations and financial
condition. The future success of the Company is dependent upon its ability to
increase its subscriber base and to obtain additional financing.

         In developing its subscriber base, the Company initially adopted an
aggressive policy of adding new subscribers, which included relaxed customer
credit requirements. Since 1997, and especially during 1998 and 1999, Brazil has
suffered economic downturns that resulted in increases in the Company's past-due
accounts. The Company's business is affected by its customers' ability to pay
for the services they receive. If the Brazilian economy worsens because of a
decrease in the level of economic activity, devaluation of the real, inflation
or an increase in domestic interest rates, then a greater portion of the
Company's customers may not be able to pay their bills, which would increase the
Company's bad debts and provision for doubtful accounts. The economic recession
in the United States of America that commenced in 2001, coupled with investor
reluctance to invest in developing countries after the September 11, 2001
terrorist attacks in the U.S., contributed to bring an economic slowdown and
increased unemployment in Brazil. This is turn has led to higher interest rates
and greater devaluation. Higher interest rates and devaluation generally result
in a significant decrease in purchasing power of Brazilian consumers, resulting
in a decrease in the demand for services, such as cable television services, and
higher accounts receivable delinquency. All of the foregoing has contributed to
an increase in the Company's level of past-due accounts. Past-due balances have
had a significant adverse effect on the Company's liquidity and financial
condition since increases in these balances reduce the amount of funds available
to meet its working capital, debt service and capital expenditure requirements.
To mitigate the effects of this situation, since 2000, the Company has
implemented a program to strengthen its customer credit requirements policy and
to reduce the number of days past due bills that are permitted to be outstanding
before disconnecting service. See "Critical Accounting Policies" below.
Furthermore, the Company's adoption of its pre-paid subscription service, Mais
TV, is also intended to minimize the level of the Company's past-due accounts
and its impact on the Company's financial condition. The Company increased its
allowance for uncollectible accounts by $1,337,000 in 1999, $1,670,000 in 2000
and $1,633,000 in 2001. These amounts represented approximately 5%, 6% and 6% of
gross revenues in 1999, 2000 and 2001, respectively. During the same periods,
write-offs of bad debts mounted to approximately $1.0 million in 1999 and 2000
and approximately $1.4 million in 2001. As a result, the Company reduced its
accounts receivable balance from approximately $1.6 million at December 31, 2000
to approximately $1.2 million at December 31,



                                       25
<page>

2001, and reduced its allowance for doubtful accounts from approximately $0.8
million at December 31, 2000 to approximately $0.6 million at December 31, 2001.

INFLATION AND EXCHANGE RATES

         Inflation and exchange rate variations have had, and are expected to
continue to have for the foreseeable future, substantial effects on the
Company's results of operations and financial condition. In periods of
inflation, many of the Company's expenses will tend to increase. Generally, in
periods of inflation, a company is able to raise its prices to offset the rise
of its expenses and may set its prices without governmental regulation. However,
under a Brazilian law designed to reduce inflation, the prices that the Company
may charge to a particular subscriber may not be increased until the next
anniversary of the subscriber's initial subscription date and may only be
increased by a percentage no greater than the percentage of the increase in the
general inflation rate which occurred during the subscriber's contract year.
Thus, the Company is less able to offset expense increases with revenue
increases. Accordingly, inflation may have a material adverse effect on the
Company's results of operations and financial condition.

         Generally, inflation in Brazil has been accompanied by devaluation of
the Brazilian currency relative to the U.S. dollar. The Company collects
substantially all of its revenues in reais, but pays certain of its expenses,
including a significant portion of its equipment costs and substantially all
interest expense, in U.S. dollars. To the extent the real depreciates at a rate
greater than the rate at which the Company is able to raise prices, the value of
the Company's revenues (as expressed in U.S. dollars) is adversely affected.
This effect on the Company's revenues also negatively impacts the Company's
ability to fund U.S. dollar-based expenditures.

         As of January 1, 1998, the Company's financial statements reflect
foreign exchange gains and losses associated with monetary assets and
liabilities denominated in currencies other than the real. As a result, the
devaluation of the real against the U.S. dollar has caused, and is expected to
cause, for the foreseeable future, the Company to record a loss associated with
its U.S. dollar monetary liabilities. Given that the Company has a net U.S.
dollar monetary liability position, the net effect of the devaluation of the
real against the U.S. dollar is to generate losses in the Company's financial
statements. In order to protect against a possible further devaluation of the
real, the Company may from time to time enter into certain foreign exchange
contracts. See "Item 7A. Quantitative and Qualitative Disclosures about Market
Risk."

RECENT ECONOMIC EVENTS

         In January 2001, a new tax to be paid monthly by every
telecommunications operator in Brazil became effective. This tax, called FUST --
Fundo de Universalizacao dos Servicos de Telecommunicacoes (Fund for the
Universalization of Telecommunications Services) -- is calculated based on 1% of
the total gross income of every operator.

         In April 2001, a second new tax to be paid monthly by every
telecommunications operator in Brazil became effective. This tax, called FUNTTEL
-- Fundo para o Desenvolvimento Tecnologico das Telecommunicacoes (Fund for
Technological Development of Telecommunications Sector) -- is calculated based
on 0.5% of the total gross income of every operator.

         In Brazil, energy rationing officially started on June 1, 2001, when
all consumers were induced to save 20% of their average electricity consumption.
The energy crisis has adversely affected some sectors of the Brazilian economy,
including the telecommunications sector. This energy rationing was officially
discontinued in February 2002.

CRITICAL ACCOUNTING POLICIES

         The Company's Consolidated Financial Statement are presented in
accordance with U.S. GAAP. As part of the preparation of its financial
statements, the Company is required to make certain estimates, judgments and
assumptions that management believes are reasonable based upon the information
available at that time. These estimates, judgments and assumptions affect the
reported amounts of assets and liabilities at the dates of the



                                       26
<page>

Consolidated Financial Statements and the reported amounts of revenues and
expenses during the periods presented. The significant accounting policies which
management believes are most critical to aid in fully understanding and
evaluating the Company's reported financial results include the following:

REVENUE RECOGNITION

         PAY TELEVISION SERVICES. The Company charges subscribers for its pay
television services on a monthly basis. Subscription revenues are recorded in
the month the service is provided. The Company also charges subscribers a fee
for the installation of the equipment and connections necessary to receive the
pay television services. Installation fees, net of direct sales costs
specifically incurred for the acquisition or origination of a new customer
contract, are deferred and recognized over a period of four years, the average
life of a subscriber. Revenues from magazine and electronic advertising sales
are recognized as services are rendered.

         INTERNET ACCESS AND DATA COMMUNICATION SERVICES. The Company charges
subscribers for its Internet access and data communication services on a monthly
basis. Subscription revenues are recorded in the month the service is provided.

         The Company has client acceptance and discontinuance of service
policies and procedures to ensure that revenue collectibility is reasonably
assured.

IMPAIRMENT OF LONG-LIVED ASSETS

         The Company evaluates its long-lived and identifiable intangible assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. Recoverability of assets
to be held and used is determined by a comparison of the carrying amount of the
asset to the future undiscounted net operating cash flows expected to be
generated by the asset. In the event that the net operating cash flows expected
to be generated by the asset are lower than the carrying amount of such asset,
impairment loss is measured by comparing the carrying amount of such asset to
its fair value. In the event that an impairment charge is recognized in future
periods, it could materially impact the Company's consolidated financial
condition and results of operations.

DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT

         Depreciation of property, plant and equipment is provided using the
straight-line method based on the estimated useful lives. The application of the
Company's property, plant and equipment accounting policies also involves
estimates, assumptions, and judgments by management with respect to the
estimated useful lives. Changes in circumstances, such as technological
advances, changes to the Company's business model or changes in the Company's
capital and investment strategy, can result in the actual useful lives differing
from the prior estimate. As a result, management may revise useful lives which
may result in the useful lives for certain asset categories being either
shortened or extended, depending on the judgments made by the Company.

PROVISION FOR DOUBTFUL ACCOUNTS

         The provision for doubtful accounts is established in an amount that is
considered sufficient to cover any probable losses on realization of the
accounts receivable from the Company's customers and is recorded in selling,
general and administrative expenses. The Company's accounting policy for
establishing the provision is consistent with the billing and collection
process and historical experience. This provision is established progressively
as follows:

         OVERDUE BILLS           COLLECTION PROCESS         % LOSS PROVIDED FOR
         -------------           ------------------         -------------------
          1 to 30 days   Administrative collection;                  5
                         disconnect services after 7 days,
                         with no further revenue
                         recognition



                           27
<page>

         OVERDUE BILLS           COLLECTION PROCESS         % LOSS PROVIDED FOR
         -------------           ------------------         -------------------
         31 to 60 days   Administrative collection; cancel           50
                         contract after 60 days

          Over 61 days   Administrative collection; cancel          100
                         contract after 60 days

CONTINGENT LIABILITIES

         The accrual for contingencies involves considerable judgment on the
part of the Company's management. As prescribed by SFAS No.5, "Accounting for
Contingencies," a contingency is "an existing condition, situation, or set of
circumstances involving uncertainty as to possible gain or loss to an enterprise
that will ultimately be resolved when one or more future events occur or fail to
occur."

         The Company is subject to various claims, legal and labor proceedings
covering a wide range of matters that arise in the ordinary course of business
activities. The Company accrues reserves for legal proceedings when losses are
probable and can be reasonably estimated. The Company's judgments are based on
the opinion of legal advisors. The amount recognized are adjusted to account for
changes in circumstances for ongoing issues and the establishment of additional
reserves for emerging issues. While the Company believes that the current level
of reserves is adequate, changes in the future could impact these
determinations.

DEFERRED INCOME TAXES

         The Company uses the asset and liability method for the recognition of
deferred tax assets and liabilities for expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. Deferred income tax assets and liabilities are determined for
differences between financial statements tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future. The computation
is based on enacted tax laws and rules applicable to periods in which the
temporary differences are expected to be recovered or settled. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized. Future adjustments to such valuation allowance
could have a significant impact on the Company's financial condition and results
of operations.

         Income taxes are provided based upon the tax laws and rates in Brazil.
All income has been earned in Brazil and the Company is not subject to income
tax in the Cayman Islands on income earned outside of Cayman Islands. The income
taxes computed at Brazil's statutory rate are reconciled to income tax expense.

NEW ACCOUNTING PRONOUNCEMENTS

         During June 1998, the Financial Accounting Standards Board ("FASB")
issued statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative and Hedging Activities." SFAS 133 established
accounting and reporting standards requiring that all derivative financial
instruments (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the derivative's
fair value be recognized in earnings unless specific hedge accounting criteria
are met. In June 2000, the FASB issued Statement of Financial Accounting
Standards No. 138 ("SFAS 138"), which amends SFAS 133 for certain derivative
instruments and certain hedging activities. SFAS 133, as amended, is effective
for fiscal years beginning after June 15, 2000. The effect of adopting SFAS 133,
as amended, beginning January 1, 2001 did not have a material impact on the
Company's Consolidated Financial Statements.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 141 ("SFAS 141"), "Business Combinations." SFAS 141 addresses
financial accounting and reporting for business combinations and supersedes APB
Opinion No. 16 ("Opinion 16"), "Business Combinations" and SFAS 38, "Accounting
for Preacquisition Contingencies of Purchased Enterprises." All business
combinations within the scope of SFAS 141 are to be accounted for using the
purchase method. In addition, SFAS 141 requires that intangible assets be
recognized as assets apart from goodwill if they meet two criteria: the
contractual-legal criterion or the separability



                                       28
<page>

criterion. To assist in identifying acquired intangible assets, SFAS 141 also
provides a list of intangible assets that meet either of those criteria. In
addition to the disclosure requirements prescribed in Opinion 16, SFAS 141
requires disclosure of the primary reasons for a business combination and the
allocation of the purchase price paid to the assets acquired and liabilities
assumed by major balance sheet caption. SFAS 141 also requires that when the
amounts of goodwill and intangible assets acquired are significant to the
purchase price paid, disclosure of other information about those assets must be
provided, such as the amount of goodwill by reportable segment and the amount of
the purchase price assigned to each major intangible asset class. The provisions
of SFAS 141 apply to all business combinations initiated after June 30, 2001.
SFAS 141 also applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1, 2001, or later. The
Company has evaluated the impact of the provisions of SFAS 141 on its
consolidated financial position and results of operations, and at this time,
believes that the possible impact of the adoption of this new accounting
standard will be immaterial.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." SFAS 142
addresses financial accounting and reporting for acquired goodwill and other
intangible assets. SFAS 142 supersedes APB Opinion No. 17, "Intangible Assets"
and also amends SFAS 121, "Accounting for the Impairment of Long Lived Assets
and for Long Lived Assets to Be Disposed Of," to exclude from its scope goodwill
and intangible assets that are not amortized. SFAS 142 addresses how intangible
assets that are acquired individually or with a group of other assets (but not
those acquired in a business combination) should be accounted for in financial
statements upon their acquisition. SFAS 142 also addresses how goodwill and
other intangible assets should be accounted for after they have been initially
recognized in the financial statements. The provisions of SFAS 142 are required
to be applied starting with fiscal years beginning after December 15, 2001.
Early application is permitted for entities with fiscal years beginning after
March 15, 2001, provided that the first interim financial statements have not
been issued. The Company has commenced the process of evaluating the impact of
the provisions of SFAS 142 on its consolidated financial position and results of
operations, and at this time, is still determining the possible impact of the
adoption of this new accounting standard.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations."
SFAS 143 basically requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
Under SFAS 143, the liability for an asset retirement obligation is discounted
and accretion expense is recognized using the credit-adjusted risk-free interest
rate in effect when the liability was initially recognized. In addition,
disclosure requirements contained in SFAS 143 will provide more information
about asset retirement obligations. SFAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002 with earlier
application encouraged. The Company has evaluated the impact of the provisions
of SFAS 143 on its financial statements and believes that the adoption of SFAS
143 will not have a material impact on the Company's financial position and
results of operations.

         During August 2001, FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of
Long-Lived Assets," which supersedes Statement of Financial Accounting Standards
No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," but retains SFAS 121 fundamental
provisions for (a) recognition/measurement of impairment of long-lived assets to
be held and used and (b) measurement of long-lived assets to be disposed of by
sale. SFAS 144 also supersedes the accounting and reporting provisions of APB
Opinion No. 30 ("APB 30"), "Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions," but retains APB 30's
requirement to report discontinued operations separately from continuing
operations and extends that reporting to a component of an entity that either
has been disposed of or it is classified as held for sale. SFAS 144 is effective
for fiscal years beginning after December 15, 2001. The Company has evaluated
the impact of the provisions of SFAS 144 to its financial statements and
believes that the adoption of SFAS 144 will not have a material impact on the
Company's financial position and results of operations.



                                       29
<page>

CERTAIN FACTORS WHICH MAY AFFECT THE COMPANY'S FUTURE RESULTS

FACTORS RELATING TO BRAZIL GENERALLY

         THE COMPANY'S BUSINESS COULD SUFFER FROM POLITICAL AND ECONOMIC
UNCERTAINTIES IN BRAZIL. Changes in policies involving, among other things,
tariffs, exchange controls, regulatory policy and taxation, as well as events
such as inflation, currency devaluation, social instability or other political,
economic or diplomatic developments could adversely affect the Company's
business, results of operations and financial condition.

         GOVERNMENT RESTRICTIONS ON THE CONVERSION AND REMITTANCE OF FUNDS
ABROAD COULD HINDER THE COMPANY'S ABILITY TO OPERATE ITS BUSINESS. The Brazilian
government has the authority to restrict the transfer of funds abroad. If the
Brazilian government were to exercise this power, as it has done in the past,
the Company's subsidiaries could be prevented from purchasing equipment required
to be paid for in U.S. dollars and from transferring funds to the Company, which
are required in order for the Company to make scheduled interest payments on its
outstanding 12% Senior Secured Notes. Either of these events could have a
material adverse impact on the Company's business, operating results and
financial condition.

FACTORS RELATING TO THE COMPANY

         THE COMPANY'S SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT ITS ABILITY
TO RUN ITS BUSINESS. The Company has a significant amount of indebtedness. This
substantial indebtedness could have important consequences. For example, it
could:

         o    limit the Company's ability to obtain additional financing in
              the future to refinance existing indebtedness and for working
              capital, capital expenditures, acquisitions and general
              corporate purposes or other purposes;

         o    require the Company to dedicate a substantial portion of its
              cash flow from operations and cash and/or marketable
              securities on hand to the payment of principal and interest on
              the Company's indebtedness, thereby reducing funds available
              for market expansion and additional market development;

         o    hinder the Company's ability to adjust rapidly to changing
              market conditions; and

         o    make the Company more vulnerable to economic downturns,
              limiting its ability to withstand competitive pressures and
              reduce the Company's flexibility in responding to changing
              business and economic conditions.

         THE COMPANY'S ABILITY TO DISTRIBUTE DIVIDENDS AND MEET DEBT OBLIGATIONS
IS DEPENDENT ON ITS SUBSIDIARIES. Because the Company is a holding company, the
Company's ability to distribute dividends and meet its debt obligations is
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to, or upon loans or other payment of funds by the subsidiaries to, the
Company. The Company's subsidiaries may be obligated as guarantors of the
Company's debt to pay any amounts due to its creditors or to make any funds
available to its creditors. The payment of dividends from the Company's
subsidiaries and the payment of any interest on or the repayment of any
principal of any loans or advances made to the Company by its subsidiaries, or
by the Company to its subsidiaries (1) may be subject to statutory or
contractual restriction, (2) are contingent upon the earnings of such
subsidiaries and (3) are subject to various business considerations.

         THE COMPANY HAS A HISTORY OF LOSSES AND MAY NEVER ACHIEVE
PROFITABILITY. The Company has incurred net losses from operations since its
formation. The Company expects that it will continue to incur losses from
operations in the foreseeable future. The Company can give no assurance that it
will ever become profitable in the future.

         A FAILURE TO EFFECTIVELY MANAGE INTERNAL GROWTH WOULD ADVERSELY AFFECT
THE COMPANY'S BUSINESS. The Company's growth has placed a significant strain on
managerial and operation resources. Any inability to manage growth effectively,
or a drop in productivity of the Company's employees could have a material
adverse effect on the Company's business, results of operations and financial
condition.



                                       30
<page>

         THE COMPANY WILL NEED ADDITIONAL CAPITAL TO FINANCE GROWTH. The
Company's business requires substantial investment on a continuing basis to
finance:

         o  debt service obligations;

         o  capital expenditures and expenses related to subscriber growth
            and system development;

         o  the acquisition of new wireless licenses and operations; and

         o  net losses.

The amount and timing of the Company's future capital requirements will depend
upon a number of factors, many of which are not within the Company's control,
including:

         o  programming costs;

         o  backbone and infrastructure costs;

         o  capital costs;

         o  competitive conditions; and

         o  the costs of any necessary implementation of technological
            innovations or alternative technologies.

         The Company can give no assurance that it will be able to obtain
additional debt or equity capital on satisfactory terms, or at all, to meet the
Company's future financing needs. Furthermore, the indenture under which the
Company's outstanding debt was issued restricts the amount of additional
indebtedness that the Company may incur. Failure to obtain any required
additional financing could adversely affect the Company's growth and,
ultimately, could have a material adverse effect on the Company's business,
results of operations and financial condition.

         THE COMPANY IS IN A COMPETITIVE BUSINESS. The Company faces potential
competition from hardwire cable operators, DBS, local off-air VHF/UHF channels,
telecommunications operators, home videocassette recorders and out-of-home
theaters. Currently, there are three DBS providers in Brazil and the private
telephone companies have started offering high-speed Internet access services,
using DSL technologies, in some markets. Legislative, regulatory and
technological developments may result in additional and significant competition.
Many of the Company's actual and potential competitors have greater financial,
marketing and other resources than does the Company.

         THE COMPANY'S BUSINESS COULD SUFFER FROM CHANGES IN GOVERNMENT
REGULATION. Changes in the regulation of the Company's business activities,
including decisions by regulators affecting the Company's operations, could have
an adverse effect on the Company's business.

         THE COMPANY IS DEPENDENT ON CERTAIN KEY SUPPLIERS. The Company
currently purchases decoders, modems and antennas from a limited number of
sources. The Company's inability to obtain sufficient components as required
from these sources, or to develop alternative sources if and as required in the
future, could result in delays or reductions in customer installations, which,
in turn, could have a material adverse effect on the Company's results of
operations and financial condition.

         In February 2000, the Company's only supplier of decoders (General
Instruments, which has been acquired by Motorola) in its four operating markets
announced that it was planning to discontinue production for this product in the
future, and gave the Company a limited time in which to give additional orders
for the manufacturing of this product. While the Company has a substantial
inventory of decoders available for use for new subscribers, the technology used
in the decoding process is proprietary and no other supplier currently could
provide the Company with additional decoders should they become necessary.
Discussions between the Company, Motorola and several



                                       31
<page>

other operators in Brazil have raised the possibility of Motorola licensing its
technology for production of the decoders in Brazil. The Company and other
operators in Brazil continue to negotiate this matter with Motorola. It is
unclear if Motorola will license its proprietary decoding technology to any
other manufacturer or if it will continue to manufacture the decoders. If
Motorola does not continue production of this decoder, or permit any other
manufacturer to do so, and if the Company requires additional decoders for
subscriber use, it could have a material adverse effect on the Company's results
of operations and financial condition.

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

         The Company's primary market risk exposure is foreign currency exchange
rate risk between the U.S. dollar and the Brazilian real due to the Company
having all of its operations based in Brazil, and most of its revenues and some
of its expenses denominated in reais while substantially all of its debt and
many of its expenses and capital equipment needs are denominated in dollars. In
addition, for operating purposes, the Company holds a significant portion of its
available cash in reais.

         The Company manages its risk exposure on its available cash held in
reais by purchasing, from time to time, foreign currency exchange contracts
which have the effect of "locking-in" a dollar based exchange rate for the
Company's cash held in Brazil. At December 31, 1999, the Company had $28 million
of foreign exchange contracts. The contracts held at December 31, 1999 expired
in February 2000. These contracts permitted the Company to receive in reais, at
maturity, the dollar equivalent of the contract value calculated using the
exchange rate as of the maturity date. Subsequent to February 2000, the Company
has not purchased any foreign currency exchange contracts and, as a result, no
such contracts were outstanding as of December 31, 2000 and 2001. The Company
recognizes realized and unrealized losses in its statement of operations as
foreign exchange loss. Realized and unrealized losses during the periods ended
December 31, 1999 and July 20, 2000 amounted to approximately $1.2 million and
$2.2 million, respectively. There were no realized and unrealized losses on
foreign currency exchange contracts for any periods subsequent to July 20, 2000.

         The Company currently believes that the cost of managing risk exposure
with respect to its U.S. dollar-denominated debt and expenses is too high to
warrant an attempt at mitigating this risk.

         The Company's interest rate risk is considerably low because its only
relevant financial instruments subject to market risk are its 12% Senior Secured
Notes, which is fixed rate, U.S. dollar denominated debt due in 2004. Interest
payments are due on June 20 and December 20 of each year until maturity.
Interest is payable in kind at the Company's option through the June 20, 2002
interest payment. The table below provides information on the Company's
outstanding debt as of December 31, 2001.

<table>
<caption>

                                                           AS OF DECEMBER 31, 2001
                                 -----------------------------------------------------------------------------
                                               EXPECTED MATURITY DATE
                                 ---------------------------------------------------
                                                                           AFTER                     FAIR
                                    2000         2001         2002         2002         TOTAL      VALUE(1)
                                    ----         ----         ----         ----         -----      --------
                                                         (U.S. DOLLARS IN THOUSANDS)

Long-term debt:

                                 <c>          <c>          <c>          <c>         <c>          <c>
U.S. dollars                           --           --           --        44,045      44,045       44,045
                                    -----        -----        ------       ------      ------       ------
Total long-term debt                   --           --           --        44,045      44,045       44,045
                                    -----        -----        ------       ------      ------       ------

</table>


---------------
(1)  The fair value and the carrying amount in the balance sheet for the
     Company's long-term debt are basically the same since this debt carries
     terms and bears interest that are similar to those being currently offered
     in the market.

         In addition to the $44 million principal amount debt outstanding, the
Company is subject to the payment of the interest on this debt, which is also
U.S. dollar-denominated. Assuming the Company exercises its option of
capitalizing the interest portion due on June 20, 2002, the Company expects
total interest to be paid in 2002 will be approximately $2.8 million. Although
the Company's reporting currency is the U.S. dollar, the cash flow required



                                       32
<page>

to service its indebtedness is generated in reais (R$). Using the year-end 2001
exchange rate (R$ 2.3204 per US$ 1.00), the cash flow in reais to pay interest
($2.8 million) due in 2002 would be R$6.5 million. A devaluation of the real to
R$2.80 per U.S. dollar would require cash flow of R$7.8 million to pay the
interest ($2.8 million). If the real devalued to R$3.00 per U.S. dollar, the
cash flow in reais to pay the interest due in 2002 would be R$8.4 million.



                                       33
<page>


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

         The following statements are filed as part of this Annual Report on
Form 10-K/A:

                                                                        PAGE NO.
                                                                        --------

FINANCIAL STATEMENTS:

  ITSA LTD. (SUCCESSOR TO TV FILME, INC.):

         Reports of Independent Auditors....................               35

         Consolidated Balance Sheets as of December 31,
           2000 and 2001....................................               37

         Consolidated Statements of Operations for the
           years ended December 31, 1999 and 2001, the
           six months and twenty days ended July 20,
           2000, and the five months and eleven days
           ended December 31, 2000.............................            38

         Consolidated Statements of Changes in Stockholders'
           Equity (Deficiency) and Other Comprehensive Income
           (Loss) for the years ended December 31, 1999 and
           2001, the six months and twenty days ended July 20,
           2000, and the five months and eleven days ended
           December 31, 2000....................................           39

         Consolidated Statements of Cash Flows for the years
           ended December 31, 1999 and 2001, the six  months
           and twenty days ended July 20, 2000, and the five
           months and eleven days ended December 31, 2000.......           40

         Notes to Consolidated Financial Statements.............           41




                                       34
<page>

This report is a copy of a previously issued report and it has not been reissued
by Arthur Andersen S.C.



                         REPORT OF INDEPENDENT AUDITORS


To ITSA Ltd.

We have audited the accompanying consolidated balance sheet of ITSA Ltd.
(successor to TV Filme, Inc.) and subsidiaries as of December 31, 2001, and the
related consolidated statements of operations, changes in stockholders' equity
(deficit), other comprehensive income (loss) and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ITSA Ltd. and
subsidiaries at December 31, 2001, and the consolidated results of its
operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States.


                            /s/ Arthur Andersen S.C.
Sao Paulo, Brazil
March 22, 2002




                                       35
<page>



                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
ITSA Ltd.

We have audited the accompanying consolidated balance sheets of ITSA Ltd.
(successor to TV Filme, Inc.) and subsidiaries as of December 31, 2000
(Successor) and December 31, 1999 (Predecessor), and the related consolidated
statements of operations, changes in stockholders' equity (deficit) and cash
flows for the five months and eleven days ended December 31, 2000 (Successor)
and for the six months and twenty days ended July 20, 2000 and the year ended
December 31, 1999 (Predecessor). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ITSA Ltd. and
subsidiaries at December 31, 2000 (Successor) and December 31, 1999
(Predecessor), and the consolidated results of their operations and their cash
flows for the five months and eleven days ended December 31, 2000 (Successor)
and for the six months and twenty days ended July 20, 2000 and the year ended
December 31, 1999 (Predecessor), in conformity with accounting principles
generally accepted in the United States.


                                  ERNST & YOUNG
                          Auditores Independentes S.C.



                                 Sergio Citeroni
                                     Partner


Sao Paulo, Brazil
March 14, 2001



                                       36
<page>

            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                          (IN THOUSANDS OF US DOLLARS)

<table>
<caption>
                                                                                 SUCCESSOR                  SUCCESSOR
                                                                                 ---------                  ---------

                                                                             DECEMBER 31, 2000          DECEMBER 31, 2001
                                                                             -----------------          -----------------

                                                                               <c>                            <c>
ASSETS
Current assets:
   Cash and cash equivalents.........................................             $      3,858                   $  2,358
   Trade accounts receivable, less allowance of $807 at December 31,
       2000 and $561 at December 31, 2001............................                      795                        589
   Recoverable taxes.................................................                    3,920                          -
   Prepaid expenses and other current assets.........................                      225                        447
                                                                              -----------------        -------------------
       Total current assets..........................................                    8,798                      3,394

Non-current assets:
   Recoverable taxes.................................................                        -                      2,711
   Judicial deposits.................................................                    1,711                      1,259\
   Other assets......................................................                    1,173                        985
   Property, plant and equipment, net................................                   19,149                     13,665
   Reorganization value in excess of amounts allocable to
        identifiable assets..........................................                   26,983                     20,161
   Licenses .........................................................                    5,111                      4,324
                                                                              -----------------        -------------------
       Total non-current assets......................................                   54,127                     43,105
                                                                              -----------------        -------------------
                 Total assets........................................                 $ 62,925                   $ 46,499
                                                                              =================        ===================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
   Accounts payable..................................................             $      3,180                $     2,560
   Payroll and other benefits payable................................                    1,668                        699
   Accrued interest payable..........................................                      131                        147
   Accrued liabilities and taxes payable.............................                    1,935                      3,546
                                                                              -----------------        -------------------
       Total current liabilities.....................................                    6,914                      6,952

Non-current liabilities:
     12% Senior Secured Notes........................................                   39,200                     44,045
     Deferred installation fees......................................                      407                        251
     Reserve for tax, labor proceedings and other
       contingencies.................................................                    5,316                      5,296
                                                                              -----------------        -------------------
       Total non-current liabilities.................................                   44,923                     49,592

Commitments and Contingencies

Stockholders' equity (deficiency):
     Common stock, $.01 par value,
        shares authorized - 20,000,000 at December 31, 2000 and
        2001; shares issued and outstanding - 10,000,000 at
        December 31, 2000 and 2001...................................                      100                        100
     Additional paid-in capital......................................                   24,938                     24,938
     Accumulated deficit.............................................                  (12,131)                   (32,490)
     Cumulative other comprehensive loss.............................                   (1,819)                    (2,593)
                                                                              -----------------        -------------------
        Total stockholders' equity (deficiency)......................                   11,088                    (10,045)
                                                                              -----------------        -------------------
        Total liabilities and stockholders' equity (deficiency)......            $      62,925               $     46,499
                                                                              =================        ===================

</table>

        See accompanying notes to the consolidated financial statements.



                                       37
<page>


            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

          (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<table>
<caption>
                                                               PREDECESSOR                           SUCCESSOR
                                                    -----------------------------------  -----------------------------------
                                                                         SIX MONTHS        FIVE MONTHS
                                                                         AND TWENTY        AND ELEVEN
                                                      YEAR ENDED         DAYS ENDED        DAYS ENDED         YEAR ENDED
                                                     DECEMBER 31,         JULY 20,        DECEMBER 31,       DECEMBER 31,
                                                         1999               2000              2000               2001
                                                    ----------------  -----------------  ----------------  -----------------


                                                 <c>               <c>                <c>               <c>
Revenues.........................................   $    26,177       $     13,044       $     11,964      $    21,697
Operating costs and expenses:
     System operating (exclusive of depreciation
       and amortization and stock compensation
       expense shown below)......................        12,040              6,534              4,845           11,800
     Selling, general and administrative
       (exclusive of depreciation and amortization
       and stock compensation expense shown
       below)....................................        15,705              9,223              6,904           11,555
     Depreciation and amortization...............        14,205              6,442              5,257            8,020
     Stock compensation..........................            --                 --              3,270               --
                                                    -----------       ------------       ------------      -----------
         Total operating costs and expenses......        41,950             22,199            (20,276)          31,375
                                                    -----------       ------------       -------------     -----------
         Operating loss..........................       (15,773)            (9,155)            (8,312)          (9,678)

Other income (expense):
     Interest expense............................       (22,756)            (9,926)            (1,867)          (5,254)
     Interest income.............................         7,281              2,895                411              715
     Foreign exchange loss.......................       (30,564)            (3,745)            (2,303)          (6,179)
     Other ......................................           (34)                --                (60)              37
                                                    -----------       ------------       ------------      -----------
         Total other income (expense) ...........       (46,073)           (10,776)            (3,819)         (10,681)
                                                    -----------       ------------       ------------      -----------

Loss before reorganization items and
   extraordinary item............................       (61,846)           (19,931)           (12,131)         (20,359)
Reorganization items
     Reorganization costs........................        (4,724)            (2,709)                --               --
     Adjust accounts to fair value...............            --             (3,221)                --               --
                                                    -----------       ------------       ------------      -----------
         Total reorganization items..............        (4,724)            (5,930)                --               --
                                                    -----------       ------------       ------------      -----------

Loss before extraordinary item...................       (66,570)           (25,861)           (12,131)         (20,359)
Extraordinary item:
     Gain on extinguishment of debt..............            --             88,781                 --               --
                                                    -----------       ------------       ------------      -----------
Net income (loss)................................   $   (66,570)      $     62,920       $    (12,131)     $   (20,359)
                                                    ===========       ============       ============      ===========

Basic and diluted earnings (loss) per share:
   Before extraordinary item.....................   $     (6.15)      $      (2.39)      $      (1.21)     $     (2.04)
   Extraordinary item............................            --               8.20                 --               --
                                                    -----------       ------------       ------------      -----------
   Net income (loss).............................   $     (6.15)      $       5.81       $      (1.21)     $     (2.04)
                                                    ===========       ============       ============      ===========

 Weighted average number of shares
   Outstanding during the year/period............   10,824,594        10,824,594         10,000,000        10,000,000
                                                    ==========        ==========         ==========        ==========

</table>

        See accompanying notes to the consolidated financial statements.



                                       38
<page>


            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIIENCY)
                      AND OTHER COMPREHENSIVE INCOME (LOSS)

         FOR THE YEAR ENDED DECEMBER 31, 2001 (SUCCESSOR), FOR THE FIVE
              MONTHS AND ELEVEN DAYS PERIOD ENDED DECEMBER 31, 2000
         (SUCCESSOR), FOR THE SIX MONTHS AND TWENTY DAYS ENDED JULY 20,
    2000 (PREDECESSOR) AND FOR THE YEAR ENDED DECEMBER 31, 1999 (PREDECESSOR)

                 (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

<table>
<caption>

                                                                                             CUMULATIVE
                                          COMMON STOCK          ADDITIONAL                     OTHER
                                     ----------------------     PAID-IN       ACCUMULATED   COMPREHENSIVE
                                     SHARES       PAR VALUE      CAPITAL        DEFICIT     INCOME (LOSS)       TOTAL
                                     ------       ---------     ----------    -----------   -------------       -----

                                  <c>            <c>       <c>              <c>              <c>           <c>
PREDECESSOR BALANCE AT
   DECEMBER 31, 1998..........       10,824,594     $  108    $   45,657       $ (63,655)       $ (3,877)     $  (21,767)
Cumulative translation
   adjustment.................               --         --            --              --        $ (3,305)     $   (3,305)
Net loss......................               --         --            --       $ (66,570)             --      $  (66,570)
                                                                                                            -------------
Comprehensive loss...........                                                                                 $  (69,875)
                                 --------------- ------------ ------------ ---------------- --------------- -------------

PREDECESSOR BALANCE AT
   DECEMBER 31, 1999..........       10,824,594     $  108    $   45,657       $(130,225)       $ (7,182)     $  (91,642)
Cumulative translation
   adjustment.................               --         --            --              --        $  1,683      $    1,683
Net income....................               --         --            --       $  62,920              --      $   62,920
                                                                                                            -------------
Comprehensive income.........                                                                                 $   64,603
Effect of reorganization and
   fresh-start accounting:                   --         --            --              --              --              --
   Cancellation of Predecessor
     equity...................     (10,824,594)     $ (108)           --              --              --      $     (108)
   Issuance of new shares
     pursuant to the Plan of
     Reorganization...........       10,000,000     $  100    $   17,423              --              --      $   17,523
   Fresh-start accounting
    valuation adjustment......               --         --    $  (41,412)      $  67,305        $  5,499      $   31,392
                                 --------------- ------------ ------------ ---------------- --------------- -------------

SUCCESSOR BALANCE AT JULY 21,
   2000.......................       10,000,000     $  100    $   21,668              --              --      $   21,768
Stock compensation............               --         --    $    3,270              --              --      $    3,270
Cumulative translation
   adjustment.................               --         --            --              --        $ (1,819)     $   (1,819)
Net loss......................               --         --            --       $ (12,131)                     $  (12,131)
                                                                                                            -------------
Comprehensive loss...........                                                                                 $  (13,950)
                                 --------------- ------------ ------------ ---------------- --------------- -------------

SUCCESSOR BALANCE AT
   DECEMBER 31, 2000..........       10,000,000     $  100    $   24,938       $ (12,131)       $ (1,819)     $  $11,088
Cumulative translation
   adjustment.................               --         --            --              --        $   (774)     $     (774)
Net loss......................               --         --            --       $ (20,359)             --      $  (20,359)
                                                                                                            -------------
Comprehensive loss...........                                                                                 $  (21,133)
                                 --------------- ------------ ------------ ---------------- --------------- -------------

SUCCESSOR BALANCE AT
   DECEMBER 31, 2001..........       10,000,000     $  100    $   24,938       $ (32,490)       $ (2,593)     $  (10,045)
                                     ==========     ======    = ========       ==========       =========     ===========
</table>

        See accompanying notes to the consolidated financial statements.


                                       39
<page>

            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                          (IN THOUSANDS OF US DOLLARS)

<table>
<caption>
                                                                 PREDECESSOR                               SUCCESSOR
                                                      -----------------------------------     ------------------------------------
                                                                            SIX MONTHS         FIVE MONTHS
                                                                            AND TWENTY          AND ELEVEN
                                                        YEAR ENDED          DAYS ENDED          DAYS ENDED          YEAR ENDED
                                                       DECEMBER 31,          JULY 20,          DECEMBER 31,        DECEMBER 31,
                                                           1999                2000                2000                2001
                                                      ----------------    ---------------     ---------------    -----------------

                                                   <c>                       <c>                <c>                <c>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...............................      $   (66,570)              62,920             (12,131)           (20,359)
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
     Depreciation and amortization..............           14,669                6,442               5,257              8,020
     Provision for doubtful accounts............            1,337                  548               1,123              1,633
     Amortization of debt issuance costs........            1,677                   --                  --                 --
     Deferred installation fees.................             (737)                (392)                (33)               (91)
     (Gain) loss on disposal of equipment.......               --                 (197)               (147)                47
     Foreign exchange loss......................           24,553                3,745               2,303              6,179
     Stock compensation.........................               --                   --               3,270                 --
     Adjust accounts to fair value..............               --                3,221                  --                 --
     Gain on extinguishment of debt.............               --              (88,781)                 --                 --
Changes in operating assets and liabilities:
     Accounts receivable........................           (1,422)                 626              (1,330)            (1,042)
     Prepaid expenses and other current assets..           (4,092)                 (59)              1,409                345
     Other assets...............................              286               (2,106)               (740)              (679)
     Accounts payable...........................            4,369                  142              (3,414)              (158)
     Payroll and other benefits payable.........             (685)                 738                (419)              (718)
     Accrued interest...........................           18,025              (15,074)              1,867              4,861
     Reserve for tax, labor proceedings and
       other contingencies......................               --                   --                (357)               912
     Accrued liabilities .......................            3,403                  492                 958              1,800
     Payment on matured foreign exchange derivative
       contracts................................               --               (2,161)                 --                 --
     Sale of operating loss carryforwards.......               --                   --                 669                212
                                                      ----------------    ---------------     ---------------    -----------------
Net cash provided by (used in) operating activities        (5,187)             (29,896)             (1,715)               962
                                                      ----------------    ---------------     ---------------    -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment.......           (3,002)              (4,633)             (2,767)            (2,274)
Sales of equipment..............................               --                  709                 450                 --
                                                      ----------------    ---------------     ---------------    -----------------
Net cash used in investing activities...........           (3,002)              (3,924)             (2,317)            (2,274)

Effect of exchange rate changes on cash and cash
 equivalents....................................           (7,128)                 (94)               (371)              (188)
Net change in cash and cash equivalents.........          (15,317)             (33,914)             (4,403)            (1,500)
Cash and cash equivalents at beginning of period           57,492               42,175               8,261              3,858
                                                      ----------------    ---------------     ---------------    -----------------
Cash and cash equivalents at end of period......      $    42,175         $      8,261        $      3,858       $      2,358
                                                      ================    ===============     ===============    =================
Interest paid...................................      $        --         $     25,000        $         --       $         --
                                                      ----------------    ---------------     ---------------    -----------------
SUPPLEMENTAL NONCASH FINANCING AND INVESTING
ACTIVITIES:
Accrued interest on loan refinanced.............      $        --         $         --        $      4,200       $      4,845

</table>

        See accompanying notes to the consolidated financial statements.



                                       40
<page>

            ITSA LTD. (SUCCESSOR TO TV FILME, INC.) AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            (IN THOUSANDS OF US DOLLARS, UNLESS OTHERWISE INDICATED)

         1.  Principal Operations
             --------------------

         Background

         On July 21, 2000, ITSA Ltd., a Cayman Islands company, became the
successor to TV Filme, Inc., a Delaware corporation, following the successful
completion of a debt restructuring pursuant to a plan of reorganization of TV
Filme, Inc. under Chapter 11 of the United States Bankruptcy Code. On March 18,
2002, the U.S. Bankruptcy Court for the District of Delaware closed the Chapter
11 bankruptcy case involving TV Filme, Inc. Unless otherwise indicated, ITSA
Ltd., the successor company to TV Filme, Inc., and its subsidiaries will
hereinafter be referred to as the "Company," and TV Filme, Inc., the predecessor
company to ITSA Ltd., will hereinafter be referred to as "TV Filme."

         As of July 21, 2000, the Company adopted fresh-start reporting (see
Note 3).

         Following financial difficulties in the years 1998 and 1999, TV Filme
selected a financial advisor to assist in evaluating strategic alternatives for
the restructuring of its long term debt, represented by the 12-7/8% Senior Notes
due 2004 (the "TV Filme Senior Notes"). On August 13, 1999, TV Filme reached an
agreement in principle with a committee representing holders of the TV Filme
Senior Notes. On January 26, 2000, TV Filme filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code, together with a pre-negotiated
Plan of Reorganization and the Disclosure Statement relating to such Plan, with
the U.S. Bankruptcy Court for the District of Delaware. The court approved the
Disclosure Statement on March 1, 2000. Following approval of the Disclosure
Statement, ballots respecting the Plan were circulated to those parties entitled
to vote on the Plan, and the Plan was confirmed at a hearing by the court on
April 10, 2000. Consummation of the Plan was completed on July 21, 2000,
following approval of ANATEL (the Brazilian Telecommunications Agency) and the
Central Bank of Brazil.

         In accordance with the terms of the Plan of Reorganization, the TV
Filme Senior Note holders received a $25 million cash payment and their existing
notes were converted into (i) secured notes in the aggregate principal amount of
$35 million, due 2004, at an interest rate of 12% per annum (the "12% Senior
Secured Notes"), and (ii) 80% of the new common equity of the reorganized
company. Current management received 15% of the new common equity, and the
existing common stockholders of TV Filme received 5% of the new common equity of
the reorganized company. Shares granted to current management have been expensed
in the financial statements of the successor based on the fair value at that
date. They have been expensed in the period as there are no contractual
requirements in connection with the issuance of these shares. TV Filme's stock
option plan and outstanding stock options under the plan were cancelled. ITSA
Ltd. (the reorganized company) is a Cayman Islands holding company and is the
successor issuer to TV Filme. The TV Filme Senior Notes were cancelled upon
surrender. The 12% Senior Secured Notes were issued by ITSA-Intercontinental
Telecommunicacoes Ltda., a wholly-owned subsidiary of the Company.

         Stockholders (Deficiency)

         The Company's management is concentrating its efforts to address the
Company's negative stockholders equity and negative working capital. To this
end, the Company has initiated the short-term action of reducing selling,
general and administrative expenses. In the near term, the Company intends to
restructure its organization and downsize its work force, renegotiate its supply
contracts, and create a Survey and Development Group to provide the Company with
new services and products.



                                       41
<page>

         Future Operations and Liquidity

         The Company has incurred operating losses since inception and had a
working capital and stockholders' deficiency at December 31, 2001. Operating
losses are expected to continue in the future until such time as the Company is
successful in securing a subscriber base capable of generating a significantly
higher level of operating revenues.

         The Company has limited capital resources available to fund capital
expenditures, fund maturities of debt as they become due and to support its
operations until such time the Company is able to generate significant levels of
positive cash flow from operations.

         The Company is therefore dependent upon obtaining additional financing
to provide funds to support operations and fund maturities of debt as they
become due. The Company is negotiating with certain of its stockholders to
provide additional equity or debt financing, but the Company can give no
assurance that acceptable agreements for such financing will be reached. The
future success of the Company is dependent upon its ability to increase its
subscriber base and to obtain additional financing.

         Company Operations

         The Company develops, owns and operates broadband wireless
telecommunications systems in markets in Brazil, offering video, high-speed
Internet and data communications services. Through it subsidiaries, the Company
has licenses in the cities of Brasilia, Goiania, Belem, Campina Grande, Caruaru,
Porto Velho, Presidente Prudente, Bauru, Franca, Uberaba, Belo Horizonte and
Vitoria, covering over 3 million households and approximately 13 million people.

         The Company offers a pre-paid subscription video service, called Mais
TV, which is comprised of a self-install kit available in retail stores in most
of the cities which the Company has operations.

         ITSA was also the first company in Brazil to launch a high-speed
Internet access system using the technology of high-speed modems. The system,
called LinkExpress, has been available on a commercial basis in the city of
Brasilia since 1998.

         Although the economic situation in Brazil has remained relatively
stable in recent years, a return to higher levels of inflation, and currency
fluctuations could adversely affect the Company's operations. The devaluation of
the Brazilian real in relation to the U.S. dollar has had significant effects on
the Company's consolidated financial statements. The exchange rate of the
Brazilian real ("R$") to the U.S. dollar was R$1.7890:US$1.00 at December 31,
1999, R$1.9554:US$1.00 at December 31, 2000 and R$2.3204:US$1.00 at December 31,
2001.

         ITSA Ltd. (the parent company) has no material assets of its own other
than the investment in its subsidiaries. All assets of the subsidiaries are
restricted.

         The Company is dependent upon a single supplier of decoders to serve
its operating markets. This supplier announced that it was planning to
discontinue production of these decoders in the future and gave the Company a
limited time in which to give additional orders for the manufacturing of this
product. While the Company has a sufficient inventory of decoders to serve new
subscribers based on the projections of future subscribers' activity, the
technology used in the decoding process is proprietary and no other supplier
currently could provide the Company with additional decoders should they become
necessary. The Company is currently exploring for alternatives, including the
possibility of the supplier licensing its technology for production of such
decoders in Brazil. If the Company encounters an interruption in the supply or
limited availability of these decoders, it could have a material adverse effect
on the Company's financial condition or results of operations, including current
estimates on recoverability of long-lived assets being currently held and used
by the Company.



                                       42
<page>

         2. Summary of Significant Accounting Policies.
            ------------------------------------------

         Basis of Presentation

         The consolidated financial statements of the Company have been prepared
in accordance with generally accepted accounting principles in the United States
in U.S. dollars. Until December 31, 1997, amounts in Brazilian currency were
remeasured into U.S. dollars in accordance with the methodology set forth in
Statement of Financial Accounting Standards No. 52 ("SFAS 52"), "Foreign
Currency Translation," as it applies to entities operating in highly
inflationary economies.

         Effective January 1, 1998, the Company determined that Brazil ceased to
be a highly inflationary economy under SFAS 52. Accordingly, as of January 1,
1998, the Company began using the real as the functional currency of its
Brazilian subsidiaries. As a result, all assets and liabilities are translated
into dollars at period end exchange rates and all income and expense items are
translated into U.S. dollars at the average exchange rate prevailing during the
period. Translation gain and losses are reported in cumulative other
comprehensive income (loss), a separate component of stockholders' equity
(deficit). Foreign currency transaction gains and losses are reported in income.

         Certain prior year amounts have been reclassified to conform to the
current year presentation. Such reclassifications had no effect on the operating
results or financial position of the Company.

         Principles of Consolidation

         The consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany accounts and transactions have
been eliminated in consolidation.

         The Company's operating subsidiaries included in the consolidated
financial statements are:

<table>
<caption>

                                                                                      OWNERSHIP INTEREST AS OF
                                                                                            DECEMBER 31,
                                                                                   -------------------------------
        OWNED SYSTEMS                                                                  2000              2001
        -------------                                                              -------------     -------------

        
                                                                            <c>               <c>
        TV Filme Servicos Ltda                                                         100%              100%
        TV Filme Brasilia Servicos de Telecomunicacoes Ltda                            100%              100%
        TV Filme Goiania Servicos de Telecomunicacoes Ltda                             100%              100%
        TV Filme Belem Servicos de Telecomunicacoes Ltda                               100%              100%
        TV Filme Programadora  Servicos de Telecomunicacoes Ltda                       100%              100%
        TV Filme Operacoes Ltda                                                        100%              100%
        Link Express Servicos e Telecomunicacoes Ltda (1)                              100%              100%

</table>



         -----------------

         (1)      On March 28, 2000, the Company established Link Express
                  Servicos e Telcomunicacoes Ltda. to operate in the high-speed
                  Internet and data communication market.

         Revenue Recognition

         Pay Television Services. The Company charges subscribers for its pay
television services on a monthly basis. Subscription revenues are recorded in
the month the service is provided. The Company also charges subscribers a fee
for the installation of the equipment and connections necessary to receive the
pay television services. Installation fees, net of direct sales costs
specifically incurred for the acquisition or origination of a new customer
contract, are deferred and recognized over a period of four years, the average
life of a subscriber. Revenues from magazine and electronic advertising sales
are recognized as services are rendered.

         Internet Access and Data Communication Services. The Company charges
subscribers for its Internet access and data communication services on a monthly
basis. Subscription revenues are recorded in the month the service is provided.




                                       43
<page>

         The Company has client acceptance and discontinuance of service
policies and procedures to ensure revenue collectibity is reasonably assured.

         Provision for Doubtful Accounts

         The provision for doubtful accounts is established in an amount that is
considered sufficient to cover any probable losses on realization of the
accounts receivable from the Company's customers and is recorded in selling,
general and administrative expenses. The Company's accounting policy for
establishing the provision is consistent with the billing and collection process
and historical experience. This provision is established progressively as
follows:

           OVERDUE BILLS          COLLECTION PROCESS         % LOSS PROVIDED FOR
           -------------          ------------------         -------------------
            1 to 30 days  Administrative collection;                  5
                          disconnect service after 7 days,
                          with no further revenue
                          recognition

           31 to 60 days  Administrative collection; cancel           50
                          contract after 60 days

            Over 61 days  Administrative collection; cancel          100
                          contract after 60 days

         Property, Plant and Equipment

         Property, plant and equipment are stated at cost. The Company
capitalizes materials, subcontractor costs, labor and overhead incurred
associated with initial subscriber installations.

         Depreciation is computed on the straight-line basis using estimated
useful lives ranging from five to ten years for buildings and leasehold
improvements (limited to the shorter of the lease term or the useful life) and
five years for machinery and equipment, furniture and fixtures. Depreciation
expense for leased assets is included in depreciation expense.

         Depreciation of property, plant and equipment is provided using the
straight-line method based on the estimated useful lives. The application of the
Company's property, plant and equipment accounting policies also includes
estimates, assumptions, and judgments by management with respect to the
estimated useful lives. Changes in circumstances, such as technological
advances, changes to the Company's business model or changes in the Company's
capital and investment strategy, can result in the actual useful lives differing
from the prior estimates. As a result, management may revise useful lives which
may result in the useful lives for certain asset categories being either
shortened or extended, depending on the judgments made by the Company.


         Use of Estimates

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

         Cash and Cash Equivalents

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



                                       44
<page>

         Advertising Expense

         The Company expenses all advertising costs as they are incurred.
Advertising expenses amounted to $1,073 in 1999, $921 and $397 for the periods
ended July 20, 2000 and December 31, 2000, respectively, and $884 in 2001.

         Recoverability of Long-Lived Assets to be Held and Used in the Business

         The Company uses the provisions of SFAS No. 121 "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of" to
evaluate the need to record impairment on its property, plant and equipment,
reorganization value in excess of amounts allocable to identifiable assets and
licenses. In accordance with this standard, the Company periodically evaluates
the carrying value of long-lived assets to be held and used, when events and
circumstances warrant such a review. The carrying value of long-lived assets is
considered impaired when the anticipated undiscounted cash flow from such assets
is less than their carrying value. In that event, a loss is recognized based on
the amount by which the carrying value exceeds the fair value market value of
the assets. The Company has performed a review of its long-lived assets and
concluded that the Company's evaluation of its ability to recover the carrying
value of its long-lived assets was not impaired at December 31, 2001. This
assessment was based upon projections of future operations that assumed certain
levels of revenues, subscribers and gross margin percentages would be achieved.
There is no assurance that the Company will be successful in achieving these
levels of revenues, subscribers and gross margin percentages. If the Company is
unable to achieve such projections of future operations, it could result in a
significant impairment provision being recorded in future periods related to its
investment in its long-lived assets.

         Reorganization Value in Excess of Amounts Allocable to Identifiable
         Assets

         The excess value recorded in conjunction with fresh-start accounting is
being amortized on a straight-line basis over a period of 10 years. Amortization
expense for the five months and eleven days ended December 31, 2000 (Successor)
and for the year ended December 31, 2001 was $1,352 and $2,099, respectively.

                                                          SUCCESSOR
                                                -----------------------------
                                                DECEMBER 31,    DECEMBER 31,
                                                    2000            2001
                                                --------------  -------------

Reorganization value in excess of amounts
   allocable to identifiable assets............    $ 28,335       $ 23,612
Accumulated amortization.......................      (1,352)        (3,451)
                                                  ----------     ----------
                                                   $ 26,983      $  20,161
                                                   =========      =========


         Licenses

         Licenses are comprised of wireless and data communications licenses,
which are amortized on a straight-line basis over the period of the license.
Amortization expense for the year ended December 31, 1999 (Predecessor), the six
months and twenty days ended July 20, 2000 (Predecessor), the five months and
eleven days ended December 31, 2000 (Successor) and the year ended December 31,
2001 (Successor) was $1,105, $141, $115 and $290, respectively.

         Income Taxes

         The Company uses the asset and liability method for the recognition of
deferred tax assets and liabilities for expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. Deferred income tax assets and liabilities are determined for
differences between financial statements tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future. The computation
is based on enacted tax laws and rules applicable to periods in which the
temporary differences are expected to be recovered or settled. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the




                                       45
<page>

amount expected to be realized. Future adjustments to such valuation allowance
could have a significant impact on the Company's financial condition and results
of operations.

         Earnings (Loss) Per Share

         Basic and diluted earnings (loss) per common share are computed by
dividing the income or loss attributable to common stock, by the weighted
average number of common stock shares outstanding during any period. No
retroactive effect was given to the reorganization process. The Company's
average number of common shares used in the computation of earnings per common
share was 10,000,000 for the year ended December 31, 2001 (Successor),
10,000,000 for the five months and eleven days ended December 31, 2000
(Successor), 10,824,594 for the six months and twenty days ended July 20, 2000
(Predecessor) and 10,824,594 for the year ended December 31, 1999 (Predecessor).
Basic and diluted earnings per share are the same as the effect of any
outstanding stock equivalents would not have been dilutive in the relevant
periods.

         Concentrations

         Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash investments and trade
receivables. The Company requires no collateral for accounts receivable.
Management believes the risk with respect to trade receivables is mitigated to
some extent by the fact that the Company's customer base is highly diversified.
The Company has significant programming supplied by HBO Brasil. The Company has
entered into contracts to secure this source of programming, with no obligation
on the Company's part. The provision for doubtful accounts was $1,337 for the
year ended December 31, 1999, $548 and $1,123 for the periods ended July 20,
2000 and December 31, 2000, respectively, and $1,633 for the year ended December
31, 2001.

         Recoverable Taxes

         The Company also records recoverable taxes, which are generally taxes
withheld at the source and other prepaid taxes that are generally recovered by
an offset to future taxes or a refund from the applicable governmental bodies.
Recoverable taxes could arise from federal, state and municipal authorities.

         Financial Instruments

         The Company's financial instruments include cash and cash equivalents,
accounts receivable, accounts payable and debt. The following methods and
assumptions were used by the Company in estimating its fair value disclosures
for financial instruments:

         Cash and cash equivalents. The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.

         Accounts receivable and accounts payable. The carrying amounts reported
in the balance sheet for accounts receivable and accounts payable approximate
their fair value.

         Debt. The carrying amount reported in the balance sheet for debt
approximates in its fair value, since this debt carries terms and bears interest
that are similar to those being currently offered in the market.

         New Accounting Pronouncements

         During June 1998, the Financial Accounting Standards Board ("FASB")
issued statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative and Hedging Activities." SFAS 133 established
accounting and reporting standards requiring that all derivative financial
instruments (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the derivative's
fair value be recognized in earnings unless specific hedge accounting criteria
are met. In June 2000, the FASB issued Statement of Financial Accounting
Standards No. 138 ("SFAS 138"), which amends SFAS 133 for certain derivative
instruments and certain hegding



                                       46
<page>

activities. SFAS 133, as amended, is effective for fiscal years beginning after
June 15, 2000. The effect of adopting SFAS 133, as amended, beginning January 1,
2001 did not have a material impact on the Company's consolidated financial
statements.

         During December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101 ("SAB 101") "Revenue Recognition in
Financial Statements." SAB 101 sets forth certain of the SEC staff's views on
applying generally accepted accounting principles to revenue recognition in
financial statements. The Company adopted SAB 101 beginning January 1, 2000, and
the adoption did not have a material effect on the Company's results of
operations or financial position.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 141 ("SFAS 141"), "Business Combinations." SFAS 141 addresses
financial accounting and reporting for business combinations and supersedes APB
Opinion No. 16 ("APB 16"), "Business Combinations" and SFAS 38, "Accounting for
Preacquisition Contingencies of Purchased Enterprises." All business
combinations within the scope of SFAS 141 are to be accounted for using the
purchase method. In addition, SFAS 141 requires that intangible assets be
recognized as assets apart from goodwill if they meet two criteria: the
contractual-legal criterion or the separability criterion. To assist in
identifying acquired intangible assets, SFAS 141 also provides a list of
intangible assets that meet either of those criteria. In addition to the
disclosure requirements prescribed in APB 16, SFAS 141 requires disclosure of
the primary reasons for a business combination and the allocation of the
purchase price paid to the assets acquired and liabilities assumed by major
balance sheet caption. SFAS 141 also requires that when the amounts of goodwill
and intangible assets acquired are significant to the purchase price paid,
disclosure of other information about those assets must be provided, such as the
amount of goodwill by reportable segment and the amount of the purchase price
assigned to each major intangible asset class. The provisions of SFAS 141 apply
to all business combinations initiated after June 30, 2001. SFAS 141 also
applies to all business combinations accounted for using the purchase method for
which the date of acquisition is July 1, 2001 or later. The Company has
commenced the process of evaluating the impact of the provisions of SFAS 141 on
its consolidated financial position and results of operations, and at this time,
is still determining the possible impact of the adoption of this new accounting
standard.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." SFAS 142
addresses financial accounting and reporting for acquired goodwill and other
intangible assets. SFAS 142 supersedes APB Opinion No. 17, "Intangible Assets"
and also amends SFAS 121, "Accounting for the Impairment of Long Lived Assets
and for Long Lived Assets to Be Disposed Of," to exclude from its scope goodwill
and intangible assets that are not amortized. SFAS 142 addresses how intangible
assets that are acquired individually or with a group of other assets (but not
those acquired in a business combination) should be accounted for in financial
statements upon their acquisition. SFAS 142 also addresses how goodwill and
other intangible assets should be accounted for after they have been initially
recognized in the financial statements. The provisions of SFAS 142 are required
to be applied starting with fiscal years beginning after December 15, 2001.
Early application is permitted for entities with fiscal years beginning after
March 15, 2001, provided that the first interim financial statements have not
been issued. The Company has commenced the process of evaluating the impact of
the provisions of SFAS 142 on its consolidated financial position and results of
operations, and at this time, is still determining the possible impact of the
adoption of this new accounting standard.

         During June 2001, FASB issued Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations."
SFAS 143 basically requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
Under SFAS 143, the liability for an asset retirement obligation is discounted
and accretion expense is recognized using the credit-adjusted risk-free interest
rate in effect when the liability was initially recognized. In addition,
disclosure requirements contained in SFAS No. 143 will provide more information
about asset retirement obligations. SFAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002 with earlier
application encouraged. The Company has commenced the process of evaluating the
impact of the provisions of SFAS 143 on its financial statements and is still
evaluating if the implementation of SFAS 143 will have a material impact on the
Company's financial position and results of operations.



                                       47
<page>

         During August 2001, FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of
Long-Lived Assets", which supersedes Statement of Financial Accounting Standards
No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," but retains SFAS No. 121 fundamental
provisions for (a) recognition/measurement of impairment of long-lived assets to
be held and used and (b) measurement of long-lived assets to be disposed of by
sale. SFAS No. 144 also supersedes the accounting and reporting provisions of
APB Opinion No. 30 ("APB 30"), "Reporting the Results of Operations - Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions," for segments of a business
to be disposed of but retains APB 30's requirement to report discontinued
operations separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of or it is classified as
held for sale. SFAS 144 is effective for fiscal years beginning after December
15, 2001 and interim periods within those years, with early application
encouraged. The Company has commenced the process of evaluating the impact of
the provisions of SFAS 144 on its consolidated financial position and results of
operations, and at this time, is still determining the possible impact of the
adoption of this new accounting standard.

         3.  Reorganization and Fresh-Start Reporting
             ----------------------------------------

         As of July 21, 2000, the Company adopted fresh-start reporting in
accordance with AICPA Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization under the Bankruptcy Code." Fresh-start reporting
resulted in significant changes to the consolidated balance sheet based upon the
appraised reorganization value of the Company.

         TV Filme's reorganization value of $76,184 was based on a valuation
performed by an independent firm using 10-year forecasted discounted cash flows
and other economic measures. The value resulted in a greater value than the fair
value of the tangible net assets. As such, the difference of $31,413 was
recorded as Reorganization value in excess of amounts allocable to identifiable
assets.

         The effect of the plan of reorganization and adoption of fresh-start
reporting was as follows:

<table>
<caption>
                                                                 DEBT       EXCHANGE      FRESH
                                           PRE-CONFIRMATION    DISCHARGE    OF STOCK      START      REORGANIZED
                                          ------------------- ------------ ------------ ----------- --------------

                                            <c>              <c>         <c>         <c>                <c>
ASSETS

CURRENT ASSETS
   Cash and cash equivalents............       $  36,163        $(27,902)   $       --  $        --        $8,261
   Accounts receivable, net.............           1,380               --           --          --          1,380
   Prepaid expense and other current
    assets..............................           6,964                                                    6,964
                                          ------------------- ------------ ------------ ----------- --------------
       Total current assets                       44,507         (27,902)           --          --         16,605

Property, plant and equipment, net                25,369               --           --     (3,221)         22,148
Reorganization value in excess of
   amounts allocable to identifiable
   assets...............................              --               --           --      31,413         31,413
Licenses................................           5,638               --           --          --          5,638
Other assets............................             380               --           --          --            380

                                          ------------------- ------------ ------------ ----------- --------------
TOTAL ASSETS............................       $  75,894        $(27,902)  $        --     $28,192        $76,184
                                          =================== ============ ============ =========== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)

CURRENT LIABILITIES
   Accounts payable.....................       $   9,908         $(2,902)  $        --  $       --         $7,006
   Payroll and other benefits payable...           2,243               --           --          --          2,243
   Accrued interest payable.............          28,646         (26,196)           --          --          2,450
   Accrued liabilities and taxes payable           7,238               --           --          --          7,238
   Senior notes in default..............         140,000        (140,000)           --          --             --
                                          ------------------- ------------ ------------ ----------- --------------

</table>


                                       48
<page>

<table>
<caption>
                                                                 DEBT       EXCHANGE    FRESH
                                           PRE-CONFIRMATION    DISCHARGE    OF STOCK      START      REORGANIZED
                                          ------------------- ------------ ------------ ----------- --------------

                                            <c>              <c>         <c>         <c>                <c>
      Total Current Liabilities.........             188,035    (169,098)           --          --         18,937

12% Senior Secured Notes................                  --       35,000           --          --         35,000
Deferred installation fees..............                 479           --           --          --            479

Minority Interest.......................                (21)           --           --          21             --

STOCKHOLDERS' EQUITY (DEFICIENCY)
   Common stock.........................                 108           86         (94)          --            100
   Additional paid-in capital...........              45,657       17,329           94    (41,412)         21,668
   Accumulated deficit..................           (152,865)       88,781           --      64,084             --
   Cumulative translation adjustment....             (5,499)           --           --       5,499             --
                                          ------------------- ------------ ------------ ----------- --------------
      Total stockholders' equity
         (deficiency)...................           (112,599)      106,196           --      28,171         21,768
                                          ------------------- ------------ ------------ ----------- --------------

TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIENCY)...................             $75,894    $(27,902)  $        --     $28,192        $76,184
                                          =================== ============ ============ =========== ==============
</table>


         4.  Accounts Receivable, net
             ------------------------

         Accounts receivable, net were comprised of the following:

                                                           SUCCESSOR
                                                 -----------------------------
                                                 DECEMBER 31,    DECEMBER 31,
                                                     2000            2001
                                                 --------------  -------------

Monthly fee...................................          $ 454           $301
Installation fee..............................             59             23
Advertising...................................            204             55
Other.........................................            884            771
Provision for doubtful accounts...............          (807)          (561)
                                                        -----           ----
                                                        $ 794           $589
                                                        =====           ====


         5.  Prepaid Expenses and Other Current Assets
             -----------------------------------------

         Prepaid expenses and other current assets were comprised of the
following:

                                                       SUCCESSOR
                                             ----------------------------
                                             DECEMBER 31,    DECEMBER 31,
                                                 2000            2001
                                             ------------    ------------

Prepaid expenses..........................            $99           $105
Advances to suppliers.....................            101            309
Other current assets......................             25             33
                                                     ----           ----
                                                     $225           $447
                                                     ====           ====



                                       49
<page>



         6.  Property, Plant and Equipment
             -----------------------------

         Property, plant and equipment were comprised of the following:


                                                           SUCCESSOR
                                                 ------------------------------
                                                 DECEMBER 31,      DECEMBER 31,
                                                     2000              2001
                                                 ------------      ------------

         Land.................................   $     855          $     780
         Building and leasehold improvements..          67                158
         Machinery and equipment..............       7,751              8,364
         Furniture and fixtures...............         234                278
         Installation costs...................      13,893             13,239
                                                 ---------          ---------
                                                    22,800             22,819
         Accumulated depreciation.............      (3,651)            (9,154)
                                                 ---------          ---------
                                                 $  19,149          $  13,665
                                                 ---------          ---------

         In conjunction with fresh-start accounting, property, plant and
equipment were stated at their fair value at July 20, 2000 and, therefore,
accumulated depreciation was reduced to zero at that time.

         Depreciation expense of $6,371 and $3,651 for the periods ended July
20, 2000 and December 31, 2000, respectively, and $5,503 for the period ended
December 31, 2001 is recorded in the statement of operations.

         7.  Licenses
             --------

         Licenses were comprised of the following:

                                                      SUCCESSOR
                                             ---------------------------
                                             DECEMBER 31,   DECEMBER 31,
                                                 2000           2001
                                             ------------   ------------

Licenses..................................      $ 5,647         $4,971
Accumulated amortization..................        (536)          (647)
                                                -------        -------
                                                 $5,111         $4,324

         8.  Accrued Liabilities and Taxes Payable
             -------------------------------------

         Accrued liabilities and taxes payable were comprised of the following:

                                                          SUCCESSOR
                                                -----------------------------
                                                DECEMBER 31,    DECEMBER 31,
                                                    2000            2001
                                                --------------  -------------
  Accrued Liabilities:

  Prepaid customer............................     $ 628           $ 632
  Other accrued liabilities...................        27              94
                                                  -------         -------
                                                     655             726
  Taxes Payable:

  COFINS......................................     $ 261           $  69
  PIS.........................................       295             208
  IRRF........................................       488           1,010
  ICMS........................................       175           1,419
  ISS.........................................        61              90
  Other taxes.................................        --              24
                                                  -------         -------
                                                   1,280           2,820
                                                  -------         -------
  Total accrued liabilities and taxes payable.    $1,935          $3,546
                                                  =======         =======



                                       50
<page>

         9.  12% Senior Secured Notes
             ------------------------

         The 12% Senior Secured Notes ($44,045 and $39,200 outstanding at
December 31, 2001 and 2000, respectively) are U.S. dollar denominated and are
due on December 20, 2004. Interest payments are due on June 20 and December 20
of each year until maturity. Interest is payable in kind at the Company's option
through its first four payment dates. The Company exercised its option at
December 31, 2001 and issued additional notes for the $9,045 interest accrued to
that date representing three of the four exempted payment dates. The 12% Senior
Secured Notes are secured by all of the assets of the Company. In the event of a
default on the 12% Senior Secured Notes, 25% of the lenders thereunder may
declare the unpaid principal or, and any accrued interest on, all the 12% Senior
Secured Notes to be due and payable immediately. In the event the Company
becomes subject to a voluntary or involuntary insolvency proceeding, the 12%
Senior Secured Notes become immediately due and payable.

         10.  Capital
              -------

         At December 31, 2000 and 2001 there were no funds available for
dividends.

         11.  Income Taxes
              ------------

         Income taxes are provided based upon the tax laws and rates in Brazil.
All income has been earned in Brazil and the Company is not subject to income
tax in the Cayman Islands on income earned outside of Cayman Islands.

         The income taxes computed at Brazil's statutory rate are reconciled to
income tax expense.

<table>
<caption>


                                                           PREDECESSOR                     SUCCESSOR
                                                    --------------------------   -----------------------------
                                                                    SIX MONTHS    FIVE MONTHS
                                                                    AND TWENTY     AND ELEVEN
                                                      YEAR ENDED    DAYS ENDED     DAYS ENDED      YEAR ENDED
                                                     DECEMBER 31,    JULY 20,     DECEMBER 31,    DECEMBER 31,
                                                         1999          2000           2000            2001
                                                     ------------   ----------    ------------    ------------


                                                     <c>          <c>             <c>            <c>
Income taxes (benefit) at
      Brazilian statutory rate (34%)..............      $(22,648)    $ 21,393        $(3,013)       $ (6,922)
Other permanent differences including effect
    of exchange variation on tax loss carry-
    forward and sales of tax losses...............         3,876        4,859          3,965          11,356
Non taxable forgiveness of debt...................            --      (30,185)            --              --
Effect of change in tax rate......................           667           --             --              --
Increase (decrease) in valuation allowance........        18,105        3,933           (952)         (4,434)
                                                        --------    ---------       ---------       ---------
  Tax expense......................................     $     --    $      --       $     --        $     --
                                                        ========    =========       =========       =========

</table>

         The Company has not recognized any future income tax benefit for its
net operating loss carryforwards in excess of net deferred tax liabilities as it
is not assured that it will be able to realize a benefit for such losses in the
future. The net operating loss carryforwards amounted to $98,579 at December 31,
2001. Under Brazilian law, net operating losses may be carried forward for an
unlimited period of time. Use of these losses, however, is restricted to 30% of
taxable income in a tax period. Future realization of net operating loss
carryforwards, if any, existing at the date of reorganization will be recorded
as a reduction of "Reorganization value in excess of amounts allocable to
identifiable assets" related to the reorganization, then to intangibles existing
at the date of reorganization and then income tax expense.



                                       51
<page>

         Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The approximate
effect of temporary differences was as follows:

                                                          SUCCESSOR
                                                 ---------------------------
                                                 DECEMBER 31,   DECEMBER 31,
                                                     2000           2001
                                                 ------------   ------------
Deferred tax assets
   Net operating loss carryforwards............   $   39,132     $  33,517
   Deferred installation fees..................          138            85
   Other.......................................        3,398         2,780
                                                  ----------     ---------
                                                      42,668        36,382
   Valuation allowance.........................      (39,927)      (35,483)
                                                  ----------     ---------
                                                      (2,741)         (889)

Deferred tax liabilities
   Fixed assets................................       (2,741)         (889)
                                                  ----------     ---------

Net deferred tax assets........................   $      --      $      --
                                                  ==========     =========

         12.  Tax and Labor Contingencies
              ---------------------------

         The Company is party to certain legal proceedings arising in the normal
course of business, and has made provisions when it believes that it can
reasonably estimate probable losses. The Company believes that the provisions
made are sufficient to cover probable losses and does not believe there is a
reasonable possibility of any material losses in excess of the amounts provided.
In connection with some of these proceedings, the Company has made judicial
deposits, which will only be released upon a favorable judgment. Under Brazilian
law, in certain litigation in which monetary claims are asserted against the
Company, the Company is required to make certain deposits into an escrow account
designated by the applicable court. The amount to be deposited is determined
based on the nature and amount of the claim against the Company as well as other
factors considered by the court. In the event of a judgment favorable to the
Company, these escrowed funds will be returned to the Company. On the other
hand, in the event of an unfavorable resolution of the legal claim, these
deposits will be applied as a payment to the plaintiff in the litigation.

         The position of such provisions for tax, labor claims and other
litigation were as follows:

                                                          SUCCESSOR
                                                 ------------------------------
                                                 DECEMBER 31,      DECEMBER 31,
                                                     2000              2001
                                                 ------------      ------------

Tax contingencies..............................    $ 3,960            $ 4,709
Other contingencies............................      1,356                587
                                                   -------           --------
                                                   $ 5,316            $ 5,296
                                                   =======            =======

         Besides the matters described above, the Company is involved as a
plaintiff or defendant in a variety of routine litigation incidental to the
normal course of business. Management believes, based on the opinion of legal
counsel, that it has adequate defenses or insurance protection with respect to
such litigation and that any losses therefrom, whether or not insured, would not
have a material adverse effect on the consolidated results of operations or
consolidated financial position of the Company.

         13.  Commitments
              -----------

         The Company leases, under operating leases, office space and vehicles,
and has entered into various transmission tower rental agreements.



                                       52
<page>

         Rent expense amounted to approximately $2,527 in 1999, $847 and $677
for the periods ended July 20, 2000 and December 31, 2000, respectively, and
$1,291 in 2001. A substantial number of these rental agreements are renewed on a
continuous basis.

         Future minimum lease payments under noncancelable operating leases with
initial term of one year or more consisted of the following at December 31,
2001:

        2002...........................................     $    503
        2003...........................................          282
        2004...........................................          233
        2005...........................................           28

         14.  Related Party Transactions
              --------------------------

         Through 1999, substantially all programming was supplied to the Company
by a subsidiary of Tevecap S.A., a stockholder of the Company, pursuant to a
programming contract. Amounts paid to such affiliate in 1999 were $7,643.


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

         On February 5, 2001, the Company appointed Arthur Andersen S.C., as the
independent public accountants to audit the Company's financial statements for
the fiscal year ending December 31, 2001. Arthur Andersen replaced the Company's
prior independent accountants, Ernst & Young Auditores Independentes S.C. The
Company dismissed Ernst & Young on May 3, 2001. The Company's Board of Directors
approved the appointment of Arthur Andersen and the dismissal of Ernst & Young.

         The reports of Ernst & Young on the consolidated financial statements
of the Company as of and for the fiscal years ended December 31, 2000 and 1999
did not contain any adverse opinion or a disclaimer of opinion. These reports
were not qualified or modified as to uncertainty, audit scope or accounting
principles. During the two most recent fiscal years ended December 31, 2000 and
1999 and during the period between December 31, 2000 and May 3, 2001, there were
no disagreements between Ernst & Young and the Company on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Ernst & Young, would have caused Ernst & Young to make reference to the subject
matter of the disagreements in connection with their reports. Furthermore,
during the two most recent fiscal years ended December 31, 2000 and 1999 and
during the period between December 31, 2000 and May 3, 2001, there were no
"reportable events" as described in Paragraph 304(a)(1)(v) of Regulation S-K.

         During the two most recent fiscal years ended December 31, 2000 and
1999 and during the period between December 31, 2000 and May 3, 2001, neither
the Company nor anyone on its behalf consulted Arthur Andersen regarding either
(i) the application of accounting principles to a specified transaction (either
completed or proposed), or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, or (ii) any matter that was
either the subject of a disagreement (as described in Paragraph 304(a)(1)(iv) of
Regulation S-K) or a reportable event (as described in Paragraph 304(a)(1)(v) of
Regulation S-K).



                                       53
<page>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
          --------------------------------------------------

         The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or are executive officers of
the Company as of December, 2001.

<table>
<caption>

                     NAME                                    AGE                              POSITION
                     ----                                    ---                              --------


                                                           <c>               <c>
Hermano Studart Lins de Albuquerque                           38                Chief Executive Officer, Secretary
                                                                                and Director
Carlos Andre Studart Lins de Albuquerque                      37                President, Chief Operating Officer,
                                                                                acting Chief Financial Officer and
                                                                                Director
Savio Pinheiro                                                48                Director
Steven A. Audi                                                34                Director
Luciano Puccini Medeiros                                      31                Director

</table>

         The business experience of each of the directors and executive officers
of the Company during the last five years is as follows:

         HERMANO STUDART LINS DE ALBUQUERQUE, one of the co-founders of the
Company, has served as Chief Executive Officer, Secretary and a director of the
Company since its incorporation. Mr. Lins received a Master's degree in
Artificial Intelligence from the University of Sussex, England and a Bachelor of
Science degree in Electronic Engineering from the University of Brasilia. Mr.
Lins was a member of the MMDS Regulation Commission, and is currently a member
of C-INI, a committee inside ANATEL to support the development of Brazil's
National Information Infrastructure. Mr. Lins is also Chairman of the Board of
ITSA. Mr. Lins is the brother of Mr. Carlos Andre Studart Lins de Albuquerque.

         CARLOS ANDRE STUDART LINS DE ALBUQUERQUE, one of the co-founders of the
Company, has served as President, Chief Operating Officer and a director of the
Company since its incorporation and as the acting Chief Financial Officer since
October 1998. Mr. Lins also served as Treasurer of the Company from its
incorporation until July 1997. Mr. Lins received a Bachelor of Science degree in
Physics from the University of Brasilia and a Bachelor of Science degree in
Mathematics from the University of Ceub. Mr. Lins is the brother of Mr. Hermano
Studart Lins de Albuquerque.

         SAVIO PINHEIRO has been a director of the Company since July 2000. Mr.
Pinheiro has been the President of SP Communications and President of the
Consultative Council of ANATEL for more than the past five years.

         STEVEN A. AUDI has been a director of the Company since July 2000. Mr.
Audi is Senior Vice President of Resurgence Asset Management, L.L.C. Mr. Audi
joined Resurgence in 1997. Mr. Audi was formerly with Bear Stearns, from 1992 to
1995, as a Vice President and then Director of Risk Management and with Bankers
Trust, from 1990 to 1992, as an Associate in the Global Markets division. Mr.
Audi holds a B.S. in Economics from Ohio State University and a M.B.A. from the
Wharton School at the University of Pennsylvania.

         LUCIANO PUCCINI MEDEIROS has been a director of the Company since July
2000. Mr. Medeiros received a Juris Doctor degree from Candido Mendes University
Law School in 1993. Acting in the Mergers and Acquisitions, Privatizations,
Securities Law, International Business Transactions and Banking fields, he
practiced law for with Banco Pactual S.A. from 1992 until 1997, when he became
an Associate at the Jones Day Reavis and Pogue Law Office. After working as an
investment banker for Banco Pactual S.A. for one year, in 1999 he joined
Barbosa, Mussnich & Aragao Law Office, where he is currently an Associate.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons holding more than 10% of a
registered class of the Company's equity securities to file reports of ownership


                                       54
<page>


and reports of changes in ownership with the United States Securities and
Exchange Commission (the "Commission") and any exchange on which the Company's
securities are traded. Directors, certain officers and greater than 10%
stockholders are also required by Commission regulations to furnish the Company
with copies of all such reports that they file. Based on the Company's review of
copies of such forms provided to it, the Company believes that all filing
requirements were complied with during the fiscal year ended December 31, 2001.

ITEM 11.  EXECUTIVE COMPENSATION.
          ----------------------

SUMMARY COMPENSATION TABLE

         The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by, or paid to, the Company's
Chief Executive Officer and the only other executive officer of the Company
whose aggregate cash and cash equivalent compensation in 2001 exceeded $100,000
(collectively, the "Named Executive Officers"):

<table>
<caption>

                                                  ANNUAL COMPENSATION
                                     -------------------------------------------
                                                                      OTHER
                                                                      ANNUAL             ALL OTHER
     NAME AND POSITION       YEAR    SALARY ($)     BONUS ($)    COMPENSATION(1)    COMPENSATION ($)(2)
     -----------------       ----    ----------     ---------    ---------------    -------------------


                          <c>       <c>            <c>         <c>                     <c>
Hermano Studart
   Lins de Albuquerque,....  2001      $203,000       $50,000     $   --                  $6,500
   Chief Executive Officer   2000       203,000        50,000     $   --                   6,500
                             1999       203,000            --     $   --                   6,500

Carlos Andre Studart
   Lins de Albuquerque,....  2001      $203,000       $50,000     $   --                  $6,500
   President, Chief          2000       203,000        50,000     $   --                   6,500
   Operating Officer and     1999       203,000                   $   --                   6,500
   acting Chief Financial
   Officer

</table>

---------------------

(1)  No amounts have been reflected in this column for any Named Executive
     Officer because the aggregate value of perquisites and other personal
     benefits for each officer in the specified years was below the the lesser
     of $50,000 or 10% of the total of annual salary and bonus for such officer.

(2)  Represents Company paid life insurance premiums. Does not include Ordinary
     Shares issued to Compex Holdings, a Cayman Islands corporation wholly-owned
     by the Company's management, in connection with the Company's
     reorganization. See Note 1 to the Company's consolidated financial
     statements.

STOCK OPTIONS

         All outstanding options were cancelled in connection with the plan of
reorganization. No options or stock appreciation rights were granted or
exercised by the Named Executive Officers during fiscal 2001.

EMPLOYMENT AGREEMENTS

         The Company has entered into employment agreements with each of Messrs.
Hermano Lins and Carlos Andre Lins, pursuant to which Mr. Hermano Lins serves
full time as Chief Executive Officer of the Company and Mr. Carlos Andre Lins
serves full time as President and Chief Operating Officer of the Company. The
minimum annual base salary under such agreements for each of Messrs. Lins is
$203,000. In addition, each of Messrs. Lins is eligible to receive an annual
bonus, in an amount to be determined by the Board, based on the achievement of




                                       55
<page>

certain criteria which shall be established each year by the Board. The bonus
for any year shall be no less than 25 percent and no greater than 120 percent of
the executive's salary for any year. Pursuant to each of Messrs. Lins'
employment agreements, if the Company terminates the executive's employment for
reasons other than "cause" (as defined therein), the Company is required to pay
(i) any compensation accrued and unpaid as of the date of such termination; (ii)
the executive's base salary as in effect on the date of such termination, for a
period of 18 months commencing on such date, in accordance with customary
payroll procedures (provided, however, that the Company, in its discretion, may
pay such salary in a lump sum); and (iii) any bonus that the executive would
have earned in the year his employment is terminated, prorated as of the date of
such termination.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
          --------------------------------------------------------------

         The following table sets forth certain information regarding the
beneficial ownership of the Company's Ordinary Shares, as of March 15, 2002, by
(i) each person known to the Company to be the beneficial owner of more than 5%
of the Ordinary Shares, (ii) each of the Company's directors, (iii) each of the
Named Executive Officers, and (iv) all directors and executive officers as a
group. All information with respect to beneficial ownership has been furnished
to the Company by the respective stockholders of the Company.

<table>
<caption>

                                                                                                 PERCENTAGE
                                                                                                     OF
NAME AND ADDRESS (1)                                                   NUMBER OF SHARES (2)       CLASS (2)
--------------------                                                   --------------------     -------------

                                                                        <c>                         <c>
Resurgence Asset Management, L.L.C., and related entities (3)
   10 New King Street
   First Floor
   White Plains, New York 10604.................................           3,400,914                   34.0%
Compex Holdings (4)
   c/o Maples & Calder, Attorneys at Law
   Ugland House
   P.O. Box 309 George Town
   Grand Cayman, Cayman Islands, British West Indies............           1,500,000                   15.0%
Various Singer Family Entities (5)
   25 Coligni Avenue
   New Rochelle, New York 10801.................................             848,313                    8.5%
Stephen Feinberg (6)
   450 Park Avenue
   28th Floor
   New York, New York 10022.....................................             572,001                    5.7%
Hermano Albuquerque (7).........................................             116,588                    1.2%
Carlos Andre Albuquerque (7)....................................             116,588                    1.2%
Savio Pinheiro..................................................                  --                    --
Steven A. Audi (8)..............................................                  --                    --
Luciano Puccini Medeiros........................................                  --                    --
All executive officers and directors
  as a group (5 persons) (7)(8).................................             233,176                    2.3%

</table>
-------------------

(1)      Unless otherwise indicated above, the address for each stockholder
         identified above is ITSA Ltd. c/o ITSA-Intercontinental
         Telecomunicacoes Ltda, SCS Quadra 07-Bl.A, Ed. Torre Patio Brasil, Sala
         601, 70.307-901 Brasilia-DF, Brazil.

(2)      Beneficial ownership is determined in accordance with the rules of the
         Commission. Except as indicated in the footnotes to this table, each
         stockholder named in the table has sole voting and investment power
         with respect to the shares set forth opposite such stockholder's name.



                                       56
<page>

(3)      Based on information contained in Schedule 13D filed jointly by
         Resurgence Asset Management, L.L.C., Resurgence Asset Management
         International, L.L.C., Re/Enterprise Asset Management, L.L.C., and
         certain of their related entities and affiliates (the "Resurgence
         Entities") on February 14, 2002. Resurgence Asset Management, L.L.C.
         has sole voting and dispositive power for 1,319,200 shares, Resurgence
         Asset Management International, L.L.C. has sole voting and dispositive
         power for 676,685 shares and Re/Enterprise Asset Management, L.L.C. has
         sole voting and dispositive power for 1,327,943 shares. The Resurgence
         Entities have, in the aggregate, sole voting and dispositive power for
         3,400,914 shares. Steven A. Audi is Senior Vice President of Resurgence
         Asset Management, L.L.C.

(4)      Compex Holdings is a Cayman Islands corporation, owned entirely by the
         following members of the Company's management: Hermano Albuquerque,
         Carlos Andre Albuquerque, Ari Lisboa, Geraldo C. Mello, Carlos Souza,
         Veronica Albuquerque, Dilton Caldas and Robespierre M. Sa.

(5)      Represents 460,027 shares owned by the Gary & Karen Singer Children's
         Trust, 234,286 shares owned by Romulus Holdings, Inc., 149,000 shares
         owned by the Second G & K Singer Children's Trust and 5,000 shares
         owned by the Mars/Normel Retirement Trust. Steven Singer is the
         Executive Vice President of Romulus Holdings, Inc. and the Trustee of
         the Gary & Karen Singer Children's Trust and the Second G & K Singer
         Children's Trust. Brad Singer is an officer of Romulus Holdings, Inc.
         and the Trustee of the Mars/Normel Retirement Trust.

(6)      Based on information contained in Schedule 13G filed by Stephen
         Feinberg on March 1, 2001. As of July 25, 2000, 269,143 shares were
         owned by Cerberus International, Ltd., a corporation organized under
         the laws of the Bahamas ("International"), and 131,429 shares were
         owned by Cerberus Institutional Partners, L.P., a limited partnership
         organized under the laws of Delaware ("Institutional"). In addition, as
         of such date, 171,429 shares were owned in the aggregate by certain
         private investment funds (collectively, the "Funds"). Stephen Feinberg
         possesses sole power to vote and direct the disposition of all Ordinary
         Shares owned by each of International, Institutional and the Funds.

(7)      Does not include shares owned by Compex Holdings.  See note 4 above.

(8)      Does not include shares owned by the Resurgence Entities.  See note 3
         above.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          ----------------------------------------------

         None.

                                     PART IV

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

(A)      1.   Financial Statements.
              --------------------

         The financial statements are included in Part II, Item 8 of this
         Report.

         2.   Financial Statement Schedules and Supplementary Information
              Required to be Submitted.
              -----------------------------------------------------------

         All schedules have been omitted because they are inapplicable or the
         required information is shown in the consolidated financial statements
         or notes.

(B)      Reports on Form 8-K.
         -------------------

         No Current Reports on Form 8-K were filed by the Company during the
         fourth quarter of 2001.


                                       57
<page>

(C)      Index to Exhibits.
         -----------------

         The following is a list of all Exhibits filed as part of this Report:

     EXHIBIT
     NUMBER                           DESCRIPTION OF DOCUMENT
     -------                          -----------------------

      *2.1        First Amended Disclosure Statement relating to the First
                  Amended Plan of Reorganization, dated February 29, 2000,
                  approved by the U.S. Bankruptcy Court for the District of
                  Delaware on March 1, 2000 (incorporated by reference to
                  Exhibit 2.1 to TV Filme's Annual Report on Form 10-K for the
                  year ended December 31, 1999, File No. 0-28670 ("TV Filme's
                  1999 10-K")).
      *2.2        First Amended Plan of Reorganization under Chapter 11 of the
                  Bankruptcy Code, dated February 29, 2000 (incorporated by
                  reference to Exhibit 2.2 to TV Filme's 1999 10-K).
      *2.3        Reorganization and Transfer Agreement, dated as of July 20,
                  2000, by and between TV Filme, Inc., a Delaware corporation,
                  and ITSA Ltd., a Cayman Islands corporation (incorporated
                  herein by reference to Exhibit 2.1 to the Company's Current
                  Report on Form 8-K, filed on August 5, 2000, File No.
                  0-31247).
      *3.1(i)     Memorandum of Association of ITSA Ltd. (incorporated herein by
                  reference to Exhibit 3.1(i) to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2000, File No.
                  0-31247 ("2000 10-K")).
      *3.1(ii)    Articles of Association of ITSA Ltd. (incorporated herein by
                  reference to Exhibit 3.1(ii) to the 2000 10-K).
      *4.1        Indenture, dated as of July 20, 2000, among
                  ITSA-Intercontinental Telecomunicacoes Ltda., as issuer, the
                  several Guarantors named therein, and The Bank of New York, as
                  trustee (incorporated herein by reference to Exhibit 4.1 to
                  the Company's Quarterly Report on Form 10-Q for the period
                  ending June 30, 2000, File No. 0-31247).
      *4.2        Supplement No. 1 to Indenture, dated as of December 18, 2000,
                  among ITSA-Intercontinental Telecomunicacoes Ltda., as issuer,
                  the several Guarantors named therein, and The Bank of New
                  York, as trustee (incorporated herein by reference to Exhibit
                  4.11 to the 2000 10-K).
      *4.3        Note, dated as of July 20, 2000, of  ITSA-Intercontinental
                  Telecomunicacoes  Ltda. to Cede & Co. (incorporated herein by
                  reference to Exhibit 4.12 to the 2000 10-K).
    **10.1        Employment  Agreement,  dated as of July 20,  2000, entered
                  into by and among ITSA Ltd., ITSA Intercontinental
                  Telecommunicacoes Ltda. and Mr. Hermano Studart Lins de
                  Albuquerque.+
    **10.2        Employment  Agreement,  dated as of  July 20,2000,  entered
                  into by and among ITSA Ltd., ITSA Intercontinental
                  Telecommunicacoes Ltda. and Mr. Carlos Andre Studart Lins de
                  Albuquerque.+
     *10.3        Restructuring  Agreement,  dated  January 24, 2000 by and
                  among TV Filme,  Inc. and Specified  Holders (incorporated
                  herein by reference to Exhibit 10.11 to TV Filme's 1999 10-K).
     *10.4        Master  Security  Agreement  made  by  ITSA  Ltd.,  Filme Sub,
                  Inc.,  ITSA-Intercontinental Telecomunicacoes  Ltda.  and
                  certain  subsidiaries  thereof  in favor of HSBC Bank  USA, as
                  Collateral  Agent,  dated as of July 20, 2000  (incorporated
                  herein by  reference to Exhibit 10.10 to the 2000 10-K).
    **21          List of Subsidiaries of ITSA Ltd.
    **24          Powers of Attorney (Appears on signature page).
    **99.1        Letter  to the  Securities  and  Exchange  Commission
                  regarding  conduct  of audit by Arthur Andersen S.C.
   ***99.2        Certification  Pursuant to 18. U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   ***99.3        Certification  Pursuant to 18. U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sabarnes-Oxley Act of 2002.
------------
 +       Management contract or compensatory plan or arrangement.
 *       Incorporated herein by reference.
**       Previously filed.
***      Filed herewith.


                                       58
<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.


February 21, 2003                   ITSA LTD.



                                    By: /s/ Hermano Studart Lins de Albuquerque
                                       ----------------------------------------
                                       Hermano Studart Lins de Albuquerque
                                       Chief Executive Officer

         I, Hermano Studart Lins de Albuquerque, certify that:

1.   I have reviewed this annual report on Form 10-K/A of ITSA Ltd.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report; and

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date:  February 21, 2003


                                    By: /s/ Hermano Studart Lins de Albuquerque
                                       ----------------------------------------
                                       Hermano Studart Lins de Albuquerque
                                       Chief Executive Officer


         I, Carlos Andre Studart Lins de Albuquerque, certify that:

1.   I have reviewed this annual report on Form 10-K/A of ITSA Ltd.

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report; and

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date:  February 21, 2003


                              By:  /s/ Carlos Andre Studart Lins de Albuquerque
                                 ----------------------------------------------
                                 Carlos Andre Studart Lins de Albuquerque
                                 Acting Chief Financial Officer



                                       59
<page>

                                  EXHIBIT INDEX
                                  -------------

     EXHIBIT
     NUMBER                          DESCRIPTION OF DOCUMENT
     -------                         -----------------------

     *2.1         First Amended Disclosure Statement relating to the First
                  Amended Plan of Reorganization, dated February 29, 2000,
                  approved by the U.S. Bankruptcy Court for the District of
                  Delaware on March 1, 2000 (incorporated by reference to
                  Exhibit 2.1 to TV Filme's Annual Report on Form 10-K for the
                  year ended December 31, 1999, File No. 0-28670 ("TV Filme's
                  1999 10-K")).
     *2.2         First Amended Plan of Reorganization under Chapter 11 of the
                  Bankruptcy Code, dated February 29, 2000 (incorporated by
                  reference to Exhibit 2.2 to TV Filme's 1999 10-K).
     *2.3         Reorganization and Transfer Agreement, dated as of July 20,
                  2000, by and between TV Filme, Inc., a Delaware corporation,
                  and ITSA Ltd., a Cayman Islands corporation (incorporated
                  herein by reference to Exhibit 2.1 to the Company's Current
                  Report on Form 8-K, filed on August 5, 2000, File No.
                  0-31247).
     *3.1(i)      Memorandum of Association of ITSA Ltd. (incorporated herein by
                  reference to Exhibit 3.1(i) to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2000, File No.
                  0--31247 ("2000 10-K")).
     *3.1(ii)     Articles of Association of ITSA Ltd. (incorporated herein by
                  reference to Exhibit 3.1(ii) to the 2000 10-K).
     *4.1         Indenture, dated as of July 20, 2000, among
                  ITSA-Intercontinental Telecomunicacoes Ltda., as issuer, the
                  several Guarantors named therein, and The Bank of New York, as
                  trustee (incorporated herein by reference to Exhibit 4.1 to
                  the Company's Quarterly Report on Form 10-Q for the period
                  ending June 30, 2000, File No. 0-31247)
     *4.2         Supplement No. 1 to Indenture, dated as of December 18, 2000,
                  among ITSA-Intercontinental Telecomunicacoes Ltda., as issuer,
                  the several Guarantors named therein, and The Bank of New
                  York, as trustee (incorporated herein by reference to Exhibit
                  4.11 to the 2000 10-K).
     *4.3         Note, dated as of July 20, 2000, of ITSA-Intercontinental
                  Telecomunicacoes Ltda. to Cede & Co. (incorporated by
                  reference to Exhibit 4.12 to the 2000 10-K).
   **10.1         Employment Agreement, dated as of July 20, 2000, entered into
                  by and among ITSA Ltd., ITSA Intercontinental
                  Telecommunicacoes Ltda. and Mr. Hermano Studart Lins de
                  Albuquerque.+
   **10.2         Employment Agreement, dated as of July 20, 2000, entered into
                  by and among ITSA Ltd., ITSA Intercontinental
                  Telecommunicacoes Ltda. and Mr. Carlos Andre Studart Lins de
                  Albuquerque.+
    *10.3         Restructuring Agreement, dated January 24, 2000 by and among
                  TV Filme, Inc. and Specified Holders (incorporated herein by
                  reference to Exhibit 10.11 to TV Filme's 1999 10-K).
    *10.4         Master Security Agreement made by ITSA Ltd., Filme Sub, Inc.,
                  ITSA-Intercontinental Telecomunicacoes Ltda. and certain
                  subsidiaries thereof in favor of HSBC Bank USA, as Collateral
                  Agent, dated as of July 20, 2000 (incorporated herein by
                  reference to Exhibit 10.10 to the 2000 10-K).
   **21           List of Subsidiaries of ITSA Ltd.
   **24           Powers of Attorney (Appears on signature page).
   **99.1         Letter to the Securities and Exchange Commission regarding
                  conduct of audit by Arthur Andersen S.C.
  ***99.2         Certification Pursuant to 18. U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  ***99.3         Certification  Pursuant to 18. U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

--------------
 +       Management contract or compensatory plan or arrangement.
 *       Incorporated herein by reference.
**       Previously filed.
***      Filed herewith