<PAGE>

================================================================================

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

                                    FORM 20-F

|_|  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                                       OR

|X|           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1998

                                       OR

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

For the transition period from ______________________ to ______________________

                             Commission file number:

                          Paging Network do Brasil S.A.
      -------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                          Paging Network do Brasil Inc.
      -------------------------------------------------------------------
                 (Translation of Registrant's name into English)

                        The Federative Republic of Brazil
      -------------------------------------------------------------------
                 (Jurisdiction of incorporation or organization)

                           Rua Alexandre Dumas, 1,711
                              Chacara Santo Antonio
                          Sao Paulo, 04717-004, Brazil
      -------------------------------------------------------------------
                    (Address of principal executive offices)

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

 Title of each class                   Name of each exchange on which registered
 -------------------                   -----------------------------------------
       None                                               None 

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

                                      None
      -------------------------------------------------------------------
                                (Title of Class)

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

                                      None
       -------------------------------------------------------------------
                                (Title of Class)

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

                      1,378,401 Common Shares, no par value

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

                               Yes  |X|   No  |_|

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

                          Item 17  |_|   Item 18  |X|

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<PAGE>



                                Table of Contents

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----

<S>                                                                                                             <C>
Presentation of Certain Information...............................................................................1

Forward-Looking Statements........................................................................................1

Exchange Rates....................................................................................................1

PART I

   Item 1.   Description of Business..............................................................................4

   Item 2.   Description of Property.............................................................................16

   Item 3.   Legal Proceedings...................................................................................16

   Item 4.   Control of Registrant...............................................................................17

   Item 5.   Nature of Trading Market............................................................................20

   Item 6.   Exchange Controls and Other Limitations Affecting Security Holders..................................21

   Item 7.   Taxation............................................................................................21

   Item 8.   Selected Financial Data.............................................................................26

   Item 9.   Management's Discussion and Analysis of Financial Condition and Results of Operations...............27

   Item 10.  Directors and Officers of Registrant................................................................35

   Item 11.  Compensation of Directors and Officers..............................................................35

   Item 12.  Options to Purchase Securities from Registrant or Subsidiaries......................................36

   Item 13.  Interest of Management in Certain Transactions......................................................36

PART II

   Item 14.  Description of Securities to be Registered..........................................................38

PART III

   Item 15.  Defaults Upon Senior Securities.....................................................................38

   Item 16.  Changes in Securities, Changes in Security for Registered Securities and

               Use of Proceeds...................................................................................38

PART IV

   Item 17.  Financial Statements................................................................................38

   Item 18.  Financial Statements................................................................................38

   Item 19.  Financial Statements and Exhibits...................................................................39

Signatures.......................................................................................................40

Index to Financial Statements...................................................................................F-1

</TABLE>

<PAGE>


                       Presentation of Certain Information

     As used herein, references to the Company, the Registrant and PageNet do
Brasil refer to Paging Network do Brasil S.A.

     The Company publishes its financial statements in U.S. dollars. In this
Annual Report, references to "dollars" or "$" are to U.S. dollars and references
to "real" or "reais" are to Brazilian reais. Except as otherwise stated herein,
all monetary amounts in this Annual Report have been presented in dollars.
Solely for the convenience of the reader, this Annual Report contains
translations of certain real amounts into dollars at specified rates. These
translations should not be construed as representations that the real amounts
actually represent such dollar amounts or could be converted into dollars at the
rates indicated or at any other rate. Unless otherwise stated, the translations
of reais into dollars have been made in accordance with the provisions of
Statement of Financial Accounting Standards No 52 as it applies to entities
operating in highly inflationary economies, at a P-TAX rate published daily by
the Brazilian Central Bank (the "Central Bank").

                           Forward-Looking Statements

     This Form 20-F contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended with respect to the financial condition, results of operations and
business of the Company. When used in this Form 20-F, words such as
"anticipate," "believe," "estimate," "expect," "intend," "predict," "project,"
and similar expressions, as they relate to Company or its management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. Such statements are
subject to certain risks, uncertainties and assumptions, including a high level
of, and restrictions imposed by, debt, the ability to implement management
initiatives, dependence on the wireless communications industry, fluctuations in
quarterly results, and competition. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, expected or
projected. Such forward-looking statements reflect the current views of the
Company's management with respect to future events and are subject to these and
other risks, uncertainties and assumptions relating to the operations, results
of operations, growth strategy and liquidity of the Company.

                               Exchange Rate Data

     The Company publishes its financial statements in dollars. However,
currently the majority of the Company's revenues and expenses are denominated in
reais. For information regarding the effects of currency fluctuations on the
Company's results, see "Item 9. Management's Discussion and Analysis of
Financial Condition and Results of Operations."

     There are two legal foreign exchange markets in Brazil: the Commercial
Market and the Floating Market. The Commercial Market is reserved primarily for
foreign trade transactions and transactions that generally require prior
approval from Brazilian monetary authorities, including the purchase and sale of
registered investments by foreign persons and related remittances of funds
abroad. Purchases of foreign exchange in the Commercial Market may be carried
out only through a financial institution in Brazil authorized to buy and sell
currency in that market. The "Commercial Market Rate" is the commercial selling
rate for Brazilian currency into U.S. dollars, as reported by the Central Bank.
The "Floating Market Rate" generally applies to transactions to which the
Commercial Market 


<PAGE>


Rate does not apply. Prior to the implementation of the Real Plan, the
Commercial Market Rate and the Floating Market Rate differed significantly at
times. Since the introduction of the real, the two rates have not differed
significantly, although there can be no assurance that there will not be
significant differences between the two rates in the future. Both the Commercial
Market Rate and the Floating Market Rate are reported by the Central Bank on a
daily basis.

     Both the Commercial Market Rate and the Floating Market Rate are freely
negotiated but may be influenced by the Central Bank, which typically intervened
in the Commercial Market, prior to the implementation of the Real Plan, in order
to control fluctuations and to regulate disparities between the Commercial
Market Rate and the Floating Market Rate. After implementation of the Real Plan,
the Central Bank allowed the real to float with minimal intervention.

     On March 6, 1995, the Central Bank announced that it would intervene in the
market and buy or sell U.S. dollars, establishing a band (faixa de flutuacao) in
which the exchange rate between the real and the U.S. dollar could fluctuate.
The Central Bank initially set the band with a floor of R$0.86 per US$1.00 and a
ceiling of R$0.90 per US$1.00 and provided that, from and after May 2, 1995, the
band would fluctuate between R$0.86 and R$0.98 per US$1.00. Shortly thereafter,
the Central Bank issued a new directive providing that the band would be between
R$0.88 and R$0.93 per US$1.00. On June 22, 1995, the Central Bank issued another
directive providing that the band would be between R$0.91 and R$0.99 per US$1.00
and subsequently reset the band on January 30, 1996 to between R$0.97 and R$1.06
per US$1.00. There can be no assurance that the band will not be altered in the
future. On June 7, 1996, the Commercial Market rate as reported by the Central
Bank was R$0.99910 per US$1.00. On February 18, 1997, the Central Bank again
reset the band to between R$1.05 and R$1.14 per US$1.00.

     By means of Comunicado No. 6565, dated January 18, 1999, the Central Bank
extinguished the band. According to such regulation, the Central Bank will no
longer intervene in the exchange market and the exchange rates shall be
determined by the inter-bank market. However, in the case of occasional strong
variations of the exchange rates, the Central Bank will be permitted to
intervene with limited powers.

     On April 22, 1999, the Commercial Market rate as reported by the Central
Bank was R$1.697 per US$1.00.

     The following table sets forth the Commercial Market Rate for U.S. dollars
for the periods and dates indicated. Amounts are expressed in reais and have
been translated from the predecessor currencies in effect during the relevant
period at the rates of exchange at the time the successor currency took effect.

<TABLE>
<CAPTION>
                                                           Exchange Rates per US$1.00(1)
                                                           -----------------------------
Period                                            Low          High       Average(2)     Period-End
------                                            ---          ----       ----------     ----------

<S>                                               <C>          <C>        <C>            <C>     
1990........................................      0.000004     0.000062   0.000025       0.000062
1991........................................      0.000062     0.000389   0.000149       0.000389
1992........................................      0.000393     0.004505   0.001655       0.004505
1993........................................      0.004557     0.118584   0.032809       0.118584
1994........................................      0.120444     0.940000   0.645000       0.846000
1995........................................      0.834000     0.972600   0.917742       0.972500
1996........................................      0.971800     1.041400   1.004000       1.039100
</TABLE>


                                      -2-
<PAGE>


<TABLE>
<S>                                               <C>           <C>          <C>              <C>     
1997........................................      1.039500      1.116400     1.078100         1.116400
1998........................................      1.116500      1.208700     1.162600         1.208700
</TABLE>
-----------

(1)  The information set forth above is based on information published by the
     Central Bank.

     The Federal Reserve Bank of New York does not publish a noon-buying rate
     for reais.

(2)  Weighted average of the exchange rates on business days for the period.

     Brazilian law provides that whenever there is a material imbalance, or a
serious risk of a material imbalance, in Brazil's balance of payments, the
Brazilian Government may, for a limited period of time, impose restrictions on
the remittance to foreign investors of the proceeds of their investments in
Brazil, as it did for approximately six months in 1989 and early 1990, as well
as on the conversion of the Brazilian currency into foreign currencies.

     The Brazilian Government currently restricts the ability of Brazilian or
foreign persons or entities to convert Brazilian currency into U.S. dollars or
other currencies other than in connection with certain authorized transactions.
The Central Bank has issued a certificate of registration authorizing each of
the scheduled payments of principal of, premium on, and interest on the
Company's 13-1/2% Senior Notes due 2005 (the "Notes") or for payments of
principal of, premium on and interest on the Notes upon any early redemption of
the Notes at the option of a holder of Notes. However, consent from the Central
Bank is needed for the payment of principal of, premium, if any, on and interest
on the Notes upon acceleration of the Notes following an event of default under
the Indenture (an "Event of Default") pursuant to which the Notes were issued or
for certain late payments of the Notes (i.e., payments made 181 days or more
after a scheduled payment date). In addition, consent from the Central Bank is
needed for (i) payments in respect of the Notes upon redemption by the Company
in the event of certain changes in Brazilian law relating to tax withholding,
(ii) payments in respect of the Notes in the event of redemption of the Notes by
the Company, (iii) payments in respect of the Notes in the event of certain
asset sales, and (iv) payments in respect of the Notes in the event of a change
of control. There can be no assurance that any required consent from the Central
Bank will be obtained.

     There can be no assurance that the Brazilian Government will not in the
future impose more restrictive foreign exchange regulations that would have the
effect of eliminating or restricting the Company's access to foreign currency
that would be required to meet its foreign currency obligations, including the
Notes. The likelihood of the imposition of such restrictions by the Brazilian
Government may be affected by, among other factors, the extent of Brazil's
foreign currency reserves, the availability of sufficient foreign currency on
the date a payment is due, the size of Brazil's debt service burden relative to
the economy as a whole, Brazil's policy toward the International Monetary Fund
and political constraints to which Brazil may be subject.



                                      -3-
<PAGE>





                                     PART I

Item 1.  Description of Business.

General

     PageNet do Brasil's is a leading provider of paging and wireless messaging
services in Brazil. The Company has secured licenses which enable it to
broadcast paging services throughout the country, and currently serves
approximately 96,767 subscribers. The Company has installed 82 paging
transmitters in 10 cities (the "Existing Coverage Area"), commenced offering
paging services in greater Sao Paulo in January 1997, began marketing paging
services in greater Rio de Janeiro in September 1997 and is evaluating whether
to commence the marketing of paging services in three additional cities during
1999. PageNet do Brasil was formed by Paging Network International N.V.
("PageNet NV"), a wholly owned subsidiary of Paging Network, Inc. ("PageNet
USA"), the largest paging company in the United States, Warburg, Pincus
Ventures, L.P. ("Warburg Pincus"), a private equity fund, TVA Sistema de
Televisao S.A. ("TVA"), a leading pay television company in Brazil, and a wholly
owned subsidiary of Abril S.A., Latin America's largest publishing enterprise,
IVP Paging (Cayman) L.P. ("IVP Cayman"), the general partner of which is
International Venture Partners, Inc. ("IVP"), a private investment fund focused
on Brazil, and Multiponto Telecomunicacoes Ltda. ("Multiponto"), an equity
investor focused on the Brazilian telecommunications sector. Management believes
that a number of factors create a favorable environment for the paging industry
in Brazil, including: (i) Brazil's large population, (ii) the paging market's
relatively low penetration rate and high historical growth rate, and (iii) the
relatively high demand for reliable communications services. The Company
believes it will be well positioned to maintain a leading position as a provider
of paging services in Brazil because of its state-of-the-art infrastructure,
high quality services, low cost structure and strategic relationships.

Business Strategy

     The Company's strategy is to be a leading provider of paging services in
Brazil. The principal elements of the Company's business strategy are to: (i)
provide high quality paging services at a low cost, (ii) leverage the PageNet
USA relationship, (iii) gain rapid market penetration, and (iv) provide superior
customer service.

     Provide High Quality Paging Services at a Low Cost. The Company has
employed state-of-the-art FLEX(R) technology developed by Motorola, Inc. and is
using equipment similar to that used by PageNet USA in the United States.
Furthermore, the Company utilizes a fully redundant paging system that is linked
by satellite. Management believes that as the number of subscribers grows, this
advanced technology will allow the Company to be a provider of high quality
paging services at a low cost per subscriber.

     Leverage the PageNet USA Relationship. The Company has implemented a
marketing strategy and operating procedures similar to those of PageNet USA in
the United States adapted to the Brazilian needs, and two members of the
Company's senior management have had significant experience managing PageNet USA
operations in the United States. Moreover, pursuant to a technical services
agreement between the Company and PageNet USA (the "Technical Services
Agreement"), PageNet USA provides the Company with access to PageNet USA's
products, paging expertise, intellectual 


                                      -4-
<PAGE>


property (including the exclusive use of PageNet USA's tradename in Brazil),
volume supplier discounts and other capabilities. The Company has also benefited
from the favorable relationships that PageNet USA has established with suppliers
of paging equipment and from its use of the PageNet brand name, which is well
established among multinational corporations. PageNet do Brasil is PageNet USA's
first venture in the Latin American paging market, and PageNet USA's only
enterprise in Brazil.

     Gain Rapid Market Penetration. The Company has gained, and continues to
seek to gain, subscribers in its markets rapidly through extensive marketing and
advertising and competitive pricing. As of December 31, 1998, the Company has
captured an estimated 8% of the Sao Paulo paging market. Unlike competitors
whose primary focus has been the consumer market, the Company focuses on both
business and consumer paging customers. The Company targets business customers
through a commissioned direct sales force and through telemarketing, and
individual customers through advertising and through retail distribution
channels including the use of two "retail showrooms" strategically located in
Sao Paulo.

     Provide Superior Customer Service. Management believes that many of its
competitors have not made customer service a primary focus of their business
strategy and do not provide the customer with service standards that are
prevalent in the United States. By focusing on key elements of customer
satisfaction during the sales process and over the life of the subscription, the
Company provides high levels of customer service similar to those provided by
PageNet USA in the United States. Moreover, similar to PageNet USA's practice in
the United States, the Company has introduced customer service account
representatives to the paging industry in Brazil, as a complement to sales
representatives. The primary function of customer service account
representatives is to serve existing accounts. In addition, customer service
account representatives act as a secondary sales force, targeting existing
customers for additional services and paging units. The Company believes this
innovation allows it to ensure superior customer satisfaction, thereby
minimizing customer turnover and increasing subscriber base growth.



                                      -5-
<PAGE>



The Company's Markets

     The Company has secured two national licenses which enable it to broadcast
paging services on specified frequencies throughout Brazil. In addition, the
Company has secured another local license which serves to enhance the Company's
capacity in certain cities in the Existing Coverage Area. The Company is
actively marketing paging services in Sao Paulo and Rio de Janeiro and currently
offers extended paging coverage in the remainder of the Existing Coverage Area.

[update table]

                                                           Estimated
Existing Coverage Area(1)                                 Population
----------------------                                   (in millions)
                                                         -------------

Initial Markets:

Sao Paulo...........................................           22.7
Rio de Janeiro......................................           10.9
Expansion Markets:

Brasilia............................................            1.7
Curitiba............................................            2.0
Belo Horizonte......................................            3.4
Extended Coverage:

Porto Alegre........................................            2.7
Salvador............................................            2.6
Recife..............................................            2.8
Belem...............................................            1.7
Goiania.............................................            1.3
                                                              -----
   Total............................................           51.8
----------

(1)  Includes, in each case, the city identified as well as the regions
     surrounding such city in which the Company expects to provide its services.

(Source: Instituto Brasileiro de Geografia e Estatistica--IBGE (Brazilian
Institute for Geographics and Statistics) (1995) )

     Initial Markets. The Company commenced offering paging services in greater
Sao Paulo in January 1997 and in Rio de Janeiro in September 1997, the two
largest metropolitan areas in the country with a combined population of
approximately 33.6 million (the "Initial Markets"). The Company occupies 43,000
square feet of office space in Sao Paulo and 19,460 square feet of office space
in Rio de Janeiro and had approximately 96,767 subscribers as of December 31,
1998.

     Expansion Markets. The Company has installed transmitters in eight cities
(the "Expansion Markets") in addition to the Initial Markets, including
Brasilia, Curitiba and Belo Horizonte, where the Company is evaluating whether
to open local offices. The extent to which the Company will develop local
offices in these, or any other, cities will depend upon a number of factors,
including business and consumer demand, general economic conditions, the
presence of competing businesses and telephone infrastructure. Moreover, the
Company will consider attractive opportunities to enter other markets on an
ongoing basis. The Company is currently focused on the Initial Markets and is
evaluating whether to market paging services in the Expansion Markets during
1999.


                                      -6-
<PAGE>


     Subscriber Capacity. The Company currently has sufficient license capacity
in its Initial and Expansion Markets to provide paging services to approximately
600,000 subscribers, of which the Company can currently serve 200,000 based on
its existing infrastructure. The Company expects to expand its infrastructure
based on the demand for paging services in each market.

     Extended Coverage. Extended coverage allows a paging customer to receive
pages in cities other than the customer's base city. Through the
satellite-linked transmission system, customers can choose to receive pages only
in their base city or to extend their paging service to include additional
cities. For example, a customer in Sao Paulo can still receive pages when
traveling to a city in the Extended Coverage Area. The Company has installed
transmitters in eight cities in addition to Sao Paulo and Rio de Janeiro,
including Brasilia, Curitiba and Belo Horizonte, and is currently offering its
customers in the Initial Markets extended paging coverage in all of these
cities.

Operations and Systems

     Overview. The Company's day-to-day operations for the provision of paging
service to its subscribers are substantially similar to those of PageNet USA in
the United States. Pagers and other paging equipment are received by the Company
and placed in inventory, where they are appropriately labeled and coded for
proper tracking after sale, and programmed to respond only to a particular code.
These pagers are then supplied to the Company's direct sales representatives,
the Company's stores or to other sellers of the Company's service, who are
responsible for the initial sales process including payment collection, the
completion of an application for service, and the delivery of a functioning
pager. The Company's billing department enters the appropriate customer
information to begin the billing process, and the collections department begins
tracking the customer's payment history to ensure timely payment. Customer
service representatives address calls from customers regarding the functions of
the pager, service details and payment policies. The dispatch center, which
receives the calls from individuals sending pages to subscribers and enters the
message into the paging terminal, dispatches messages 24 hours per day, seven
days per week. The systems department monitors daily all of the Company's
equipment including transmitters, paging terminals and supporting software and
hardware.

     Dispatch Center. The Company operates state-of-the-art dispatch centers in
Sao Paulo, utilizing customized dispatch software and analytic staffing software
designed to enhance productivity. The Company currently has sufficient telephone
capacity in both cities to conduct its business for the foreseeable future and
expects that it will be able to obtain additional telephone capacity as the
demands of its business require. The Company emphasizes both productivity and
quality performance to its dispatch center staff through training, monthly
monitoring and incentive based performance measures.

     Advanced Information Systems. The Company uses an advanced proprietary
management information system, customized to accommodate the Brazilian market.
This system is used primarily to support three principal areas of the Company's
business: (i) customer service, including billing systems; (ii) network
management and operational support systems; and (iii) general business support
systems including financial management. The Company's information systems have
been designed to accommodate efficiently the increased volumes of data that the
Company expects to process in the future as the Company's subscriber base
continues to grow.

     Customer Service. The Company's customer information and billing system
incorporates all aspects of billing and customer preferences, which are intended
to produce a high level of customer 


                                      -7-
<PAGE>


satisfaction and to minimize customer turnover levels. The Company's customer
information and billing system provides management with readily accessible
information regarding subscribers' pager usage, coordinates customer account
information among the various departments and ensures that customers receive all
requested products and technical and support services. This access to
information facilitates the provision of attentive customer service. The
Company's account representatives, who are responsible for customer service,
respond to a customer's telephonic inquiry within 24 hours. The Company believes
that customer service is an important factor in developing customer loyalty and
differentiating its service from that of its competitors.

     Billing and Collections. The Company utilizes the Brazilian custom of
invoicing customers through the banking system. Billing information is
electronically transmitted to the Company's bank which then sends the invoices
and collects the Company's receivables at its branches or affiliates. The
Company has implemented a collections policy to contact delinquent customers,
charge a late fee and finally suspend service until the account is made current.
The Company monitors customer payment patterns and has developed a subscriber
credit criteria policy.

     Network Maintenance. The Company has two separate but coordinated network
maintenance systems. The first is dedicated to the proper maintenance of the
paging system which includes daily dial-in to each of the Company's paging
transmitters, monthly preventative maintenance reviews of each site, periodic
review of the satellite uplink and constant monitoring of the paging terminals
that reside in the Company's local offices. This department is also responsible
for updating and upgrading the hardware and software so that the system is
operating at the highest possible level. The second system is responsible for
the maintenance and interconnectivity of all other computer systems, including
the dispatch department's systems, the Company's LAN and related productivity
software and the telephone system. In addition, this department is responsible
for the Company's relationship with local and long distance telephone companies
including the acquisition of additional telephone lines.

Sales and Marketing

     The Company's current marketing strategy is to differentiate its service
from that which is available in the Brazilian market today. The Company believes
that it provides service at a lower cost and with higher quality than its
competitors through the use of its advanced FLEX(R) technology and
satellite-linked network, customized information systems, and focus on customer
service. In its marketing and advertising, the Company highlights the PageNet
brand name which is associated with worldwide leadership and quality in the
paging business. The Company also prices its high quality service competitively
and utilizes various sales channels to distribute its product. The Company
focuses on both the business market and the consumer market.

Business Market

     Customer Segmentation. The Company targets businesses whose employees are
highly mobile or work at several locations. Such customers include companies in
service industries, hospitals and medical professionals, construction and
manufacturing companies, governmental agencies and retail and financial
institutions. In addition, the Company's use of the PageNet name, which is
recognized by U.S.-based multinational companies, gives the Company a
competitive advantage over other paging companies in acquiring multinational
accounts. The Company believes that the business market segment will offer
stronger recurring revenues and will experience a higher subscriber retention
rate 


                                      -8-
<PAGE>


than the consumer market segment. As of December 31, 1998, businesses accounted
for approximately 25% of the Company's pagers in service in Brazil.

     Subject to appropriate credit policies, the Company leases pagers to
businesses, thereby reducing the business customer's capital outlay and
increasing the Company's revenue per unit.

     Distribution. The Company employs a direct sales force to target specific
businesses. Sales representatives receive leads through a number of sources,
including the Company's telemarketing department, referrals and advertising. In
addition, unlike its competitors, the Company employs a separate team of account
representatives, whose primary function is to serve existing accounts. In
addition, the account representatives act as a secondary sales force, targeting
existing customers for additional services and paging units. The Company
believes that by shifting the customer service function from the sales
representative to an account representative, the sales representative is more
productive and the customer is better served.

Consumer Market

     Customer Segmentation. The Company estimates that, as of December 31, 1998,
individuals accounted for approximately 75% of total pagers in service in
Brazil. Management believes that consumer demand for paging service arises from
two factors: (i) the need for reliable, portable communications services, and
(ii) the higher cost and lower reliability of cellular telephone service.

     Advertising is a key component of the Company's consumer marketing
strategy. To that end, management has hired Standard Ogilvy & Mather, a
multinational advertising firm with extensive experience in consumer products to
target high quality customers. The Company's advertising campaign and
maintenance program includes the use of newspapers, television, magazines,
billboards and radio.

     Distribution. In Sao Paulo, the Company's advertising campaign directs
consumers to the Company's strategically located retail showrooms. Additionally,
the Company has developed a retail outlet distribution channel through which the
Company provides pagers to the retailer at discounted prices. Once purchased by
a subscriber, the pager is activated on the Company's standard retail contract
as a subscriber-owned pager.

Products

     Existing Products. The Company offers PIN-based alphanumeric paging with
dispatch service included, at a competitive price. Additional product
enhancements are available to subscribers, including extended coverage in the
Existing Coverage Area, pager protection against loss or theft and pager
maintenance.

     Subsequent Products. The Company expects to offer additional products, many
of which will be new products to the Brazilian paging market. These products are
expected to include: (i) page-by-name, which allows the caller to eliminate the
use of a PIN and send a page using only the subscriber's name; (ii) direct dial
paging, which allows the caller to dispense with the use of a PIN and send a
page using a subscriber's direct telephone number; (iii) customized greeting,
which allows a subscriber to customize service and have a dispatch center
operator answer using the subscriber's name and other information as designated
by the subscriber; (iv) numeric paging; (v) PageMail, which adds voice mail
service to an existing subscriber account; (vi) click detection, which enables
Brazil's 


                                      -9-
<PAGE>


prevalent pulse telephones to send pages where tone telephones would otherwise
be required; (vii) self dispatch, which allows subscribers to send pages
directly from their personal computers, without accessing the dispatch center;
and (viii) Internet dispatch and e-mail capabilities. Although the Company's
current principal focus is offering its initial products at competitive prices
and achieving rapid market penetration, the Company anticipates that these
additional products may enhance revenues and attract more technologically
demanding customers when and if such subscriber products are implemented and
offered.

     Future Products. In the future, the Company may deploy new paging or
paging-related products, including products using two-way spectrum. Although the
Company has access to additional technologies through its relationship with
PageNet USA, there can be no assurance that the Company will offer any of these
products or services in the future.

Paging Systems Equipment

     The Company's paging system equipment consists of call distribution
telephone connectors, dispatch systems, paging terminals, satellite uplinks,
satellite receivers, paging transmitters and pagers. Additional supporting
equipment includes fully redundant telephone switches, dispatch systems and
paging terminals, uninterrupted power supplies, backup generators, dedicated
land lines redundant to the microwave and satellite-linked systems and land
lines to each transmitter for daily diagnostic review and maintenance. The
Company, with the technical support of PageNet USA, has supervised the entire
paging infrastructure buildout from transmitter site selection to transmitter
installation alignment to programming of the paging terminal.

     The Company has secured satellite access from Embratel Sistema Telebras,
the Brazilian state-owned satellite and long distance telephone company, to
access BrasilSat One, a Brazilian satellite, and link its paging transmitters.
The Company leases its satellite access under a five-year contract. A "backbone"
network of satellite paths with microwave and conventional radio links will
connect the operators, telephone lines, terminals and control equipment to
various cities to be served.

     The Company uses one of the most sophisticated paging message transmission
protocols available, developed with FLEX(R)-based technology. The FLEX(R)
transmission protocol, developed by Motorola, Inc., improved upon the prior
paging message transmission system, POCSAG, by increasing the accuracy of the
data coding format and refining the error correction process. These improvements
made FLEX(R) the more reliable method of transmitting paging messages.
Additionally, the technological improvements of FLEX(R) allow a paging service
provider to utilize less of its transmission system capacity for each message.
The improved efficiency of the FLEX(R)-based paging transmission system results
in the transmission of up to three times the amount of data using a single
paging frequency than previously possible under the POCSAG system.

     An additional benefit of a FLEX(R)-based paging message transmission system
is the improved battery life of FLEX(R)-based pagers. Because FLEX(R) technology
has improved the timing of message delivery, the batteries of FLEX(R)-based
pagers tend to last longer than those of pagers using POCSAG technology.

     The Company's paging transmission system is fully redundant, thereby
allowing the system to automatically readjust and continue operating through an
identical paging terminal upon the failure of any of the system's key
components. This system is driven by the Company's fully-featured diagnostics
software and alarm-monitoring hardware.


                                      -10-
<PAGE>


     The Company does not and will not manufacture any of the pagers or related
transmitting and computerized paging terminal equipment used in the Company's
paging operations. The Company's relationship with PageNet USA provides it with
access to volume discounts on all of its supplies. PageNet USA has arranged with
its U.S. suppliers to ensure that the Company will receive favorable prices on
all supplies, including pagers. There can be no assurance that PageNet USA's
arrangement with its suppliers will continue or that the Company will be able to
receive all of its supplies at prices comparable to those obtained by PageNet
USA.

Competition

     The Company does experience and will continue to experience direct
competition from one or more competitors in all the locations in which it plans
to operate. Competition for subscribers to the Company's paging services in most
geographic markets will be based primarily on the price of hardware, the price
of monthly service, quality of services offered and the geographic area covered.
The Company believes that its price of hardware and service, the quality of its
services and its geographic coverage areas will generally compare favorably with
those of its competitors.

     Although most of the Company's competitors are small privately owned
companies serving only one market area, others are subsidiaries or divisions of
larger companies that provide paging services in multiple market areas. Among
the Company's primary competitors are Teletrim, Mobitel, and Conectel.

     In the Sao Paulo and Rio de Janeiro metropolitan areas, which together are
estimated to represent approximately 80% of the current paging market in Brazil,
more than eight competitors share a market of approximately 960,000 pagers.
While there is healthy competition in the paging market, no single competitor
dominates the market. The current industry leaders, Teletrim, Mobitel and
Conectel together share more or less evenly approximately 70% of the market.
While Teletrim is clearly the largest player in Rio de Janeiro, Conectel and
Mobitel share the lead in Sao Paulo. With respect to the share of monthly new
subscriber sales, 80% of all sales are approximately divided evenly among
PageNet, Teletrim, Mobitel and Conectel, each capturing approximately 20% of
sales.

     The primary focus of the Company's competitors in the Brazilian paging
market has been the consumer market, rather than the business market. The
Company focuses on both the consumer and business market and thereby takes
advantage of the fact that the corporate customer in the business markets is
more likely to maintain service, remit payments on a timely basis, purchase
enhanced services and have a better appreciation for the paging service.

Employees

     As of December 31, 1998, the Company had a total of 750 employees. The
Company's employees are not currently subject to collective bargaining
agreements, although under the Brazilian Constitution the employees have a right
to organize a union. The Company considers its employee relations to be good.

Government Regulation

     Telecommunications. Under Brazilian law, the provision of public services
requires a concession, license or authorization granted by the relevant
governmental authority. Under the 


                                      -11-
<PAGE>


Brazilian Constitution, the Federal Government is required to provide, directly
or through concession, license or authorization, telecommunication services in
accordance with the applicable regulations. According to this Constitutional
provision, the Federal Government may freely grant concessions to private sector
companies to provide telephone and telecommunications services and data
transmission services. On July 19, 1996, Law 9,295 was enacted to regulate
telecommunication services, which includes a provision establishing that the
Federal Government may impose restrictions in the composition of the capital
stock of the companies holding concessions for the provision of mobile cellular
telephone services and satellite signal transportation services for the period
of three years following the enactment of such law. Such restriction will be
imposed when required by national interest and shall require that at least 51%
of the voting capital of such companies is held by Brazilian citizens. It is
also provided by such law that the concessions can only be granted to companies
organized under Brazilian law and having their head offices in Brazil. Decree
2,056 of November 4, 1996, which approved the regulations applicable to cellular
telephone services, delegated to the Ministry of Communications the authority to
establish limits to foreign participation with respect to such services. The
Ministry of Communication has issued the call for a public bid (Concorrencia
001/96-SFO/MC) for the purchase of concessions to provide cellular telephone
services, with the requirement that at least 51% of the voting capital of the
proposed owners of the concessions be held by Brazilian citizens. Brazil was
divided into 10 concession areas and the interested companies presented their
bids on April 7, 1997. The awarding of the concessions has been succesfully
completed, except for the region encompassing the State of Amazonas, which had
no bidders.

     On July 16, 1997, Law 9,472, the General Telecommunications Law, was
enacted. The law created the National Telecommunication Agency (ANATEL) with the
function of regulating telecommunication in the country. The law also provides
for (i) the organization of the telecommunications system, including the
granting of licenses, which has replaced the Telecommunications Code enacted in
1962 and (ii) the restructuring and privatization of the Telebras System that
was succesfully completed in 1998. Article 18, Sole Paragraph of the law
authorizes the Federal Government, under certain conditions, to impose foreign
ownership restrictions relating to the capital stock of companies providing
telecommunications services.

     Pursuant to Decree 2,534 of April 2, 1998, which approved the General
Granting Plan ("Plano Geral de Outorgas") for fixed telephone communication
services, the Federal Government has started a bid call aiming at the granting
of authorizations for the exploitation of such services in the four regions in
which the county has been divided for such purposes.

     Pursuant to Decree 2,617 of June 5, 1998, the concessions, permissions and
authorizations for the exploitation of telecommunication services aimed at the
public in general shall only be granted or issued to companies organized under
Brazilian law, with head offices and administration in the country, in which the
majority of the quotas or shares with voting rights are held by companies
organized under the laws of Brazil and with head offices and administration in
the country or by individuals resident in Brazil.

     Development of Paging Regulations. The National Telecommunications Agency
(ANATEL) is the governmental body responsible for the granting of paging
licenses in Brazil and is also the body in charge of regulating the exploitation
of such services in Brazil. Currently, paging services in Brazil ("Servico
Especial de Radiochamada") are regulated by Rule No. 15/97, approved by
Ordinance 558, of November 3, 1997, of the Ministry of Communications, making
use of its residual competence prior to the effective installation of ANATEL.
Ordinance 558/97 expressly revoked Ministry of Communications Ordinances 232/91,
257/91 and 579/94, as well as Ordinance Minfra-SNC 32/91.


                                      -12-
<PAGE>


     Pursuant to paging regulations, a paging operator must first obtain a
paging license from ANATEL in order to provide paging services in Brazil. All
licenses are non-exclusive licenses to provide paging services in a service
area.

     The paging regulations distinguish between nationwide, regional,
mid-regional, micro-regional and local licenses. The nationwide license allows
the license holder to provide paging services in the Federal District and the 26
States of the Federation. The regional licenses allow the license holder to
provide paging services in one of nine regional areas encompassing one or more
Brazilian States. The State of Sao Paulo constitutes Regional Area One, the
States of Rio de Janeiro and Espirito Santo constitute Regional Area Two, and so
forth. The mid and micro regional areas are defined by the Brazilian Institute
of Geography and Statistics - IBGE. Finally, the local license allows the
license holder to provide separate services in one locality of the national
territory. The paging regulations also provide that the license holder may,
eventually, provide paging services on an international basis, as long as it has
transmission capacity through other providers abroad.

     The recently enacted Paging Authorizations Plan, approved by ANATEL's
Resolution 108 of March 5, 1999, has allocated the frequencies to the areas
provided for in the paging regulations and has defined the number and localities
of each of the national, regional, mid regional, micro regional and local
licenses.

     Regarding the granting of new licenses, the paging regulations provide that
a license holder or its controlled or affiliated companies may only have one
permission to exploit paging services in the same area of coverage. The
regulations also provide for the consolidation of previously existing licenses
in one sole permission under certain circumstances. The transfer of paging
licenses or the transfer of control of the license holder is subject to the
prior approval of the Ministry of Communications. The transfer of licenses or
the transfer of control of the license holder can only be made after the
effective commercial operation of the services begins.

     On April 8, 1997, the President enacted Decree No. 2196, approving the
Regulation for Special Telecommunication Services, within which paging services
are included. Such Decree provides the guidelines for the granting of licenses
with respect to such services by the Ministry of Communications. Such Decree
confirmed the competence of the Ministry of Communications to establish specific
complementary rules, to grant licenses, to allocate frequencies and to supervise
the exploitation of such special services. Since the enactment of the General
Telecommunications Law, the Ministry of Communications has been replaced by
ANATEL regarding such functions.

     Decree No. 2196/7 regulates the procedure for the granting of new licenses
for exploitation of special services, which include the possibility of a prior
public consultation by the Ministry of Communications with respect to the
granting of such licenses, as well as the applicable terms and conditions of
such grants. The Decree also regulates the requirements of the call for public
bid, the rules for pre qualification of the interested parties, the criteria for
judgment of the proposals and for the granting of the licenses. The granting of
new licenses shall be formalized by means of the execution of a contract between
the Ministry of Communications and the awarded party.

     Regarding the exploitation of the services the Decree expressly assures the
licensees the right to use equipment not owned by the licensee and to contract
with third parties the development of activities inherent, accessory or
complementary to the licensed services, provided that: (a) the licensee 


                                      -13-
<PAGE>


shall remain responsible before the Ministry of Communications and the users for
the execution and exploitation of the services; and (b) the licensee shall be
contractually bound to the users.

     Decree No. 2196/97 assures the transfer of the licenses, provided the
transferee complies with the qualification requirements imposed by the Ministry
of Communications and undertakes to comply with all of the conditions of the
contract, assuming all rights and obligations of the transferor. As mentioned
above, there is no minimum term for the transfer of paging licenses, the only
requirement being the commencement of the commercial operation of such services.

     The number of requests for paging licenses presented to the Ministry of
Communications increased in 1994 and 1995 and, as of March 14, 1997,
approximately 855 local operating licenses had been issued. The Ministry of
Communications has estimated that another 1,000 local operating licenses will be
issued in the near future. In April 1997, two of the Licenseholders (TVA and
Multiponto) were granted nationwide licenses by the Ministry of Communications.
As of April 1999, only twelve national licenses were issued by the Ministry of
Communication and pursuant to ANATEL's Resolution 108/99, only 17 such licenses
shall be issued in total.

     Paging Licenses. Under the General Telecommunications Law, Decree 2196/97
and Rule 15/97, paging licenses are granted by ANATEL for a period of 10 or 15
years and are renewable for successive 10 or 15 year periods. Renewal of
licenses is expected provided the paging operator has complied with the terms of
the operating license and has requested the renewal at least 18 months prior to
the expiration date of the license. Under the Decree a fee may be charged for
the renewal of the license in an amount to be agreed between ANATEL and the
licensee, based on the magnitude of the service, at least 12 months prior to the
expiration of original term. The license establishes the terms and conditions
under which the paging service should be provided. Those conditions include,
among others: (i) lack of exclusivity of the service, (ii) a prohibition on the
transfer of the license prior to the commencement of commercial operation of the
service, (iii) prior authorization from the Ministry of Communications for any
transfer of the license, (iv) the licensee's compliance with certain terms and
conditions specified by ANATEL such as price schedules, and (v) the licensee's
performance under the license. Any transfer of a paging license is subject to
the prior approval of ANATEL. A license may not be directly transferred by a
license holder to a third party until after the commencement of commercial
operation of the service. Transfers of shares which cause a change in the
control of the licensee or entity which controls the licensee must also receive
prior approval of the ANATEL. Licenses may be revoked prior to their expiration
by ANATEL for a number of reasons, including: (i) the public interest as
determined by the Ministry of Communications, (ii) the failure of the licensee
to meet the terms and conditions of the license, (iii) the transfer of the
license without the consent of ANATEL, or (iv) the failure of the licensee to
pay the required license fees. To initiate paging services, the paging operator
must be granted three different permits or approvals by ANATEL: (i) the initial
license, which entitles the license holder to develop paging services under a
certain frequency and in certain localities formalized by an adhesion contract
signed by the license holder and the Ministry of Communications, prior to the
installation of ANATEL, and with such agency thereafter; (ii) the Project
Approval Certificate which permits installation of equipment necessary for the
development of the paging service in accordance with the installation project of
the license holder and, once the installation period is complete, (iii) the
paging operating license. Under applicable regulations, the Licenseholders
received paging licenses from the Ministry of Communications and pursuant to the
Operating Agreements and other covenants (the "Operating Agreements"), the
Company was required to construct and start the operation of its service within
12 months of the issuance of the paging license, which the Company has duly
complied with. To meet the requirements of operating within the meaning of the
paging license, a licensee is required to construct a single site 


                                      -14-
<PAGE>


from which a radio signal can be directed. The Company has complied with this
condition in each of the cities for which a local paging license and a Project
Approval Certificate have been obtained and, as a result, the corresponding
paging operating permit for each of such cities has been issued by the Ministry
of Communications. Under nationwide licenses, it will be necessary for the
Company to present and obtain approval from the Ministry of Communications of
the installation project, as well as, the subsequent issuance of the paging
operating license for the relevant station. The fee for an operating license
totals one-half of one percent of the fixed assets of the licensee (deemed to be
the transmitters, paging terminal and initial supply of pagers). In addition,
licensees must pay a fee of approximately R$1,206 per transmitter installed, per
frequency, per year.

     According to Rule No. 5/99, approved by ANATEL's Resolution 109, of March
5, 1999, the license for the exploitation of paging services implies the
commitment of making it available and in regular operation within the terms and
minimum percentages of localities defined in accordance with the population and
coverage area of the service as determined therein. With respect to national
licenses, Rule No. 5/99 requires that at least 30% of the counties with
population higher than 300,000 inhabitants, of at least five Brazilian States,
within the term of two years, and at least 60% of the counties with population
higher than 300,000 inhabitants, of at least 12 Brazilian States, within the
term of four years. The Company already complies with the first requirement, and
needs only to add coverage of two Brazilian States in order to comply with the
second requirement.

     Subject to certain exceptions, generally any paging licenses not already
issued are to be granted pursuant to a public auction administered by ANATEL.
The rules of the auction are expected to be open to public comment before the
actual process is initiated. The Company is planning to participate in this
auction although there can be no assurance that the Company will acquire any
licenses at the auction.

     Additional frequencies have been awarded to Mobitel in Sao Paulo and Rio de
Janeiro, and to Teletrim in Rio de Janeiro. The current regulations allow the
Company to request additional frequency allocations if needed; such additional
frequency allocations will be granted pursuant to a public auction administered
by ANATEL. The Company anticipates needing additional licenses in the Initial
Markets only. There can be no assurance that the Company will receive the
additional licenses, which may materially alter the Company's market
projections.

     Paging License Ownership; Operating Agreements; Agreements to Transfer
Licenses. The licenses presently operated by the Company were granted to and are
owned by TVA, Multiponto and San Francisco Comunicacoes Ltda., an affiliate of
IVP (the "Licenseholders") and are valid through July 28, 2009. The Company has
entered into Operating Agreements with each of the Licenseholders pursuant to
which the Company has the right to operate the paging licenses held by the
Licenseholders. The Company has also entered into Agreements of Promise of
Assignment and Transfer of Permissions (the "Transfer Agreement") with each
Licenseholder pursuant to which the Licenseholders have agreed, subject to the
necessary approvals, to transfer their paging licenses to the Company. The
Company has already requested the approval of ANATEL for the transfer of the
license owned by TVA to the Company. As soon as such transfer is completed, the
Company will request the approval for transfer and consolidation of the
remaining licenses and their respective frequencies. .Under the applicable
paging legislation, operating agreements are permitted and do not amount to a
transfer of the license.


                                      -15-
<PAGE>


Trademarks

     The Company markets its paging and related services under various names and
marks, including PageNet and PageMail. The Company's use of each of these marks
is granted by the terms of the Technical Services Agreement. Under the Technical
Services Agreement, the Company has use of the PageNet USA trademarks and
service marks in Brazil for so long as PageNet USA holds such properties absent
breach by the Company of its obligations thereunder or Brazilian governmental
action requiring its termination. PageNet USA has applied to register the mark
PageNet in Brazil. PageNet USA has advised the Company that certain third
parties also have applied to register the PageNet name in Brazil. PageNet USA is
pursuing vigorously its registration of the PageNet mark. However, there can be
no assurance that PageNet USA will be successful in which case the Company may
not have the right to use the PageNet mark.

Item 2.  Description of Property.

     The Company currently leases 43,000 square feet of office space in Sao
Paulo and 19,460 square feet in Rio de Janeiro [under a five-year lease]. These
spaces house the Company's corporate headquarters, as well as its Sao Paulo and
Rio de Janeiro operations, including dispatch centers, systems rooms and a
retail showroom. In addition, the Company leases an additional retail showroom
in downtown Sao Paulo.

     In each of the cities in which the Company has secured paging licenses, the
Company has entered into and will continue to enter into agreements for the
placement, construction and maintenance of paging transmitter antennas.

Item 3.  Legal Proceedings.

     The Company is not a party to any legal proceedings that would have a
material adverse effect on its results of operations and financial condition.


                                      -16-
<PAGE>


Item 4.  Control of Registrant.

[review/update]

     The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, no par value (the "Common Stock") and
Preferred Stock, no par value (the "Preferred Stock") as of April 23, 1999 as
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), unless otherwise stated with respect to
(i) each person known by the Company to be the beneficial owner of more than
five percent of any class of the Company's voting securities and (ii) all
directors and executive officers of the Company, as a group.

<TABLE>
<CAPTION>
                                                                     Common Stock                        Preferred Stock
                                                                     ------------                        ---------------
Name and Address of                                              Number                               Number
Beneficial Owner                                               of Shares        Percentage(1)       of Shares      Percentage
----------------                                               ---------        -------------       ---------      ----------

<S>                                                            <C>              <C>                 <C>            <C>   
Paging Brazil Holding Co., LLC
c/o Warburg, Pincus Ventures, L.P.
466 Lexington Avenue

New York, New York 10017(2).................................     939,955             68.2%                --              --
Warburg, Pincus Ventures, L.P.                                                                     
466 Lexington Avenue                                                                               
New York, New York 10017(2)(3)..............................     939,955             68.2%            20,000           66.7%
Paging Network International N.V.                                                                  
4965 Preston Park Blvd.                                                                            
                                                                                                   
Plano, Texas 75093(4).......................................     325,982             19.1%                --              --
IVP Paging (Cayman) L.P.                                                                           
c/o Maples and Calder                                                                              
P.O. Box 309                                                                                       
George Town, Grand Cayman                                                                          
                                                                                                   
Cayman Islands, B.W.I.......................................     325,982             23.7%             8,000           26.7%
Multiponto Telecomunicacoes Ltda.                                                                  
Avenida Presidente Wilson No. 231                                                                  
                                                                                                   
Rio de Janeiro, Brazil(5)...................................     122,243              8.6%             2,000            6.7%
Douglas M. Karp(6)                                                                                 
Warburg, Pincus Ventures, L.P.                                                                     
466 Lexington Avenue                                                                               
                                                                                                   
New York, New York 10017....................................     939,955             68.2%            20,000           66.7%
Gary D. Nusbaum(6)                                                                                 
Warburg, Pincus Ventures, L.P.                                                                     
466 Lexington Avenue                                                                               
                                                                                                   
New York, New York 10017....................................     939,955             68.2%            20,000           66.7%
All directors and executive officers as a group                                                    
(6 persons)(7)..............................................      28,844              2.1%                --              --
</TABLE>

-----------
(1)  Calculated in accordance with Rule 13d-3 under the Exchange Act.

(2)  Warburg Pincus owns 100% of the voting interests in Paging Brazil Holding
     Co. ("LLC Holding LLC"). 


                                      -17-
<PAGE>


(3)  The sole general partner of Warburg Pincus is Warburg, Pincus & Co., a New
     York general partnership ("WP"). E.M. Warburg, Pincus & Co., LLC, a New
     York limited liability company ("EMW LLC"), manages Warburg Pincus. The
     members of EMW LLC are substantially the same as the partners of WP. Lionel
     I. Pincus is the managing partner of WP and the managing member of EMW LLC.
     WP has a 15% interest in the profits of Warburg Pincus as the general
     partner, and also owns approximately 1.2% of the limited partnership
     interest in Warburg Pincus.

(4)  PageNet NV holds a subscription bond that is currently exercisable into
     325,982 shares of Common Stock. 

(5)  Multiponto holds a subscription bond that is currently exercisable into
     40,748 shares of Common Stock. 

(6)  All shares indicated as owned by Messrs. Karp and Nusbaum are owned by
     Warburg Pincus and are included because of the affiliation of Messrs. Karp
     and Nusbaum with Warburg Pincus. Messrs. Karp and Nusbaum, Managers of
     Holding LLC, are Managing Directors and members of EMW LLC and general
     partners of WP.

(7)  Excludes directors qualifying shares.

Shareholders Agreement

     The relations among the Company's shareholders, Warburg Pincus, Holding
LLC, PageNet NV, IVP Cayman, Multiponto, TVA (together, the "Shareholders") and
Messrs. Trynin and Fregenal (together with other stockholding members of the
Company's management "Management Investors"), are governed by a Shareholders
Agreement, dated as of December 11, 1996 (as amended, the "Shareholders
Agreement"). The following describes certain terms of the Shareholders
Agreement:

     Board of Directors. The Company is managed by a Board of Directors that is
currently comprised of five members. For so long as IVP Cayman beneficially owns
at least 10% of the Common Stock outstanding on a fully diluted basis, IVP
Cayman will have the right to designate one director to the Board of Directors.
For so long as (i) PageNet NV beneficially owns at least 10% of the Common Stock
outstanding on a fully diluted basis or (ii) the Technical Services Agreement is
in full force and effect, PageNet NV shall have the right to designate one
director to the Board of Directors. For so long as Warburg Pincus beneficially
owns more shares of Common Stock outstanding on a fully diluted basis than any
other shareholder of the Company, Warburg Pincus will have the right if it so
chooses to designate a majority of the directors of the Board of Directors. In
the event Warburg Pincus is not entitled to designate a majority of the Board of
Directors, but Warburg Pincus beneficially owns at least 10% of the Common Stock
outstanding on a fully diluted basis, Warburg Pincus will have the right to
designate one director to the Board of Directors.

     Restrictions on Transfer of Stock. Neither IVP Cayman nor PageNet NV will
sell, assign, transfer or otherwise dispose of ("Transfer") any capital stock of
the Company ("Capital Stock") held by it without the prior written approval of
Warburg Pincus, which approval will not be unreasonably withheld. Such
restriction applies to IVP Cayman only for a period of five years following the
issuance of any such stock. The Management Investors may not Transfer stock held
by them for a period of five years following the issuance of such stock, subject
to certain exceptions.

     PageNet NV Right of First Offer. PageNet NV has a right of first offer with
respect to either the Transfer by any Shareholder or the Transfer by the Company
of any of its assets.


                                      -18-
<PAGE>


     Tag-Along Rights; Drag-Along Rights. The Shareholders Agreement provides
tag-along rights for (i) the Management Investors in the event that the
Shareholders Transfer all their shares of Common Stock and (ii) each Investor in
the event that another Shareholder Transfers any of its Capital Stock. In the
event that Warburg Pincus chooses to Transfer all its shares of Common Stock or
Preferred Stock to a proposed transferee, the Shareholders Agreement provides
that Warburg Pincus may require each other Shareholder to Transfer all its
shares of Common Stock or Preferred Stock, as the case may be, to such
transferee.

     Preemptive Rights. Except in connection with an underwritten public
offering or a merger of the Company, the Shareholders Agreement provides each
Shareholder with preemptive rights in connection with any issuance of equity
securities by the Company.

     Consent Rights of Preferred Stock. The consent of the holders of a majority
in interest of the outstanding Preferred Stock is required for any of the
following actions to be taken by the Company: (i) the acquisition or disposition
of significant assets outside the ordinary course of business, (ii) the
incurrence of any indebtedness or other commitment in excess of US$250,000,
(iii) the amendment of the by-laws (estatutos sociais) of the Company (the
"By-laws"), (iv) the guarantee of any third party indebtedness or the incurrence
of any lien outside the ordinary course of business, (v) transactions with
affiliates, (vi) the entry by the Company into a new business, (vii) the
issuance of any equity securities, and (viii) the winding up, liquidation or
dissolution of the Company. The consent rights of the holders of the Preferred
Stock with respect to the matters described in clauses (i) through (vi) above
will not be required in the event that Warburg Pincus ceases to beneficially own
any shares of Preferred Stock.

Registration Rights Agreement

     In connection with the formation of the Company, the Company entered into a
Registration Rights Agreement with the Shareholders (the "Registration Rights
Agreement"), pursuant to which the Company granted registration rights with
respect to all shares of Common Stock and Preferred Stock owned by the
Shareholders. Such registration rights also extend to any capital stock of the
Company issued as a dividend in respect of such shares. Subject to certain
customary exceptions and limitations, the Company has agreed to provide two
demand registrations to the holders of Registrable Securities (as defined in the
Registration Rights Agreement), which may be exercised by the holders of more
than 50% of the Registrable Securities. The Registration Rights Agreement also
provides for piggyback registration rights in the event the Company files a
registration statement for the sale of its securities, subject to certain
customary exceptions and limitations. In addition, once the Company is qualified
to use Form F-3 or S-3 under the Securities Act, the holders of Registrable
Securities shall have the right to request four registrations on Form F-3 or S-3
to register all or a portion of such shares under the Securities Act, subject to
certain conditions. In general, all fees, costs and expenses of such
registration (other than underwriting discounts and selling commissions
applicable to sales of the Registrable Securities) will be borne by the Company.
The Company has agreed to indemnify the holders of Registrable Securities from
any liability arising out of or relating to any untrue statement of a material
fact or any omission of a material fact in any registration statement or
prospectus filed by the Company pursuant to the Registration Rights Agreement,
subject to certain exceptions.

Equity Registration Rights

     In connection with the issuance of non-voting member interests of Holding
LLC (together with shares of Common Stock of the Company distributed in respect
thereof, the "Registrable Securities") to the Initial Purchasers of the Notes,
the Company and Holding LLC (together, the "Issuers") and 


                                      -19-
<PAGE>


Warburg Pincus, IVP Cayman, Multiponto, TVA, and PageNet NV (together, the
"Shareholders") and the Initial Purchasers have entered into the Equity
Registration Rights Agreement, which provides that the holders of Registrable
Securities have the following registration rights and other rights and
obligations with respect to the Registrable Securities.

     Registration Rights. Subject to certain customary exceptions and
limitations, the holders of Registrable Securities will be entitled to require
the Company to effect up to two registrations, which may be exercised by holders
of at least 35% of Registrable Securities. The Equity Registration Rights
Agreement also provides for piggyback registration rights in the event that
either of the Issuers files a registration statement for the sale of its
securities, subject to certain customary limitations.

     Tag-Along Rights. Subject to certain customary exceptions and limitations,
in the event of a proposed direct or indirect sale or other disposition
(collectively, a "Transfer") of beneficial ownership of Common Stock or any
other common equity of the Company or any equity interests in Holding LLC
(whether now or hereafter issued), in any such case, by any Shareholder in any
transaction or a series of related transactions to any person or persons (such
other person or persons being hereinafter referred to as the "proposed
purchaser") at any time prior to the date of the consummation of one or more
bona fide underwritten public offerings of Common Stock of the Company, as a
result of which 20% of the outstanding shares of Common Stock are listed on a
United States national securities exchange or the Nasdaq National Market System
(the "Triggering Date"), each of the holders of Shares or Registrable Securities
(collectively, the "Subject Equity") shall have the right to require the
proposed purchaser to purchase from each of them up to a percentage of the
number of shares of Subject Equity owned by such holder equaling the percentage
derived by dividing the total number of shares of Common Stock which the
Shareholders and their Affiliates propose to transfer by the total number of
shares of Common Stock beneficially owned by the Shareholders and their
Affiliates; provided that, in the event of a proposed Transfer, either at a time
or as a result of which would result in a Change of Control (as defined in the
Indenture), the holders of Registrable Securities will have the right to sell
all of their Subject Equity.

     Obligation to Sell. Subject to certain customary exceptions and
limitations, in the event of any direct or indirect sale or other disposition of
beneficial ownership of all Common Stock of the Company then held by the
Shareholders prior to the Triggering Date in a transaction resulting in the
acquisition of beneficial ownership of all voting interests in the Company for
cash or freely marketable Securities (the "Subject Sale"), all holders of
Registrable Securities will be required to sell all Registrable Securities
beneficially owned by them on equivalent terms as applicable to the Subject
Sale; provided that (a) the consideration to be received by the holders of
Registrable Securities shall be the same type of consideration received by the
Shareholders and their respective Affiliates and, in any event, shall be cash or
freely transferable marketable securities, and (b) after giving effect to such
transaction, the Shareholders and their respective Affiliates shall not own,
directly or indirectly, any capital stock or rights to purchase capital stock of
the Company or Holding LLC.

Item 5.  Nature of Trading Market.

     The Company's outstanding registered securities consist solely of the
Notes. There is no formal trading market for such securities.


                                      -20-
<PAGE>


Item 6.  Exchange Controls and Other Limitations Affecting Security Holders.

     Brazilian law provides that whenever there is a material imbalance, or a
serious risk of a material imbalance, in Brazil's balance of payments, the
Brazilian Government may, for a limited period of time, impose restrictions on
the remittance to foreign investors of the proceeds of their investments in
Brazil, as it did for approximately six months in 1989 and early 1990. The
Brazilian Government may also impose restrictions on the conversion of the
Brazilian currency into foreign currencies. Such restrictions may hinder or
prevent the Company from purchasing equipment required to be paid for in any
currency other than reais, paying scheduled interest and principal payments
under the Notes in U.S. dollars and making payment on judgments obtained in a
court in Brazil. Such restrictions could adversely affect the Company. The
Company could also be adversely affected by delays in, or a refusal to grant,
any required Brazilian governmental approval for conversion of real payments and
remittances abroad in respect of such dividends, distributions, interest and
principal payments.

     The Brazilian Government currently restricts the ability of Brazilian or
foreign persons or entities to convert Brazilian currency into U.S. dollars or
other currencies other than in connection with certain authorized transactions.
The Central Bank has authorized the issuance of the Notes and issued a
certificate of registration (Certificate of Registration No. 241/33999, of
February 5, 1998) authorizing each of the scheduled payments of principal of,
premium on, and interest on the Notes and, subject to approval of the Central
Bank, by means of issuance of an addendum to the certificate of registration,
for payments of principal of, premium on and interest on the Notes upon any
early redemption of the Notes at the option of a holder of Notes (call option).
Specificconsent from the Central Bank is also needed for the payment of
principal of, premium, if any, on and interest on the Notes upon acceleration of
the Notes following an Event of Default. In addition, consent from the Central
Bank is needed for (i) payments in respect of the Notes upon redemption by the
Company in the event of certain changes in Brazilian law relating to tax
withholding, (ii) payments in respect of the Notes in the event of redemption of
the Notes by the Company, (iii) payments in respect of the Notes in the event of
certain asset sales, and (iv) payments in respect of the Notes in the event of a
change of control. There can be no assurance that any required consent from the
Central Bank will be obtained.

     There can be no assurance that the Brazilian Government will not in the
future impose more restrictive foreign exchange regulations that would have the
effect of eliminating or restricting the Company's access to foreign currency
that would be required to meet its foreign currency obligations, including the
Notes. The likelihood of the imposition of such restrictions by the Brazilian
Government may be affected by, among other factors, the extent of Brazil's
foreign currency reserves, the availability of sufficient foreign currency on
the date a payment is due, the size of Brazil's debt service burden relative to
the economy as a whole, Brazil's policy toward the International Monetary Fund
and political constraints to which Brazil may be subject.

Item 7.  Taxation.

Brazil

     Based upon the advice of Xavier, Bernardes, Braganca, Sociedade de
Advogados, Brazilian counsel to the Company, the following is a summary of the
material Brazilian income tax consequences to the Company in connection with the
sale and repayment of the Notes (including any interest thereon) and to
beneficial owners of the Notes that are non-residents of Brazil in connection
with the purchase, ownership and disposition of such Notes. This summary is
limited to the Company and to


                                      -21-
<PAGE>


non-residents of Brazil which acquire the Notes at the issue price from the
Initial Purchasers, and does not address investors who purchase Notes at a
premium or market discount. In addition, this summary is based on the Brazilian
tax regulations as presently in effect and does not take into account possible
future changes in such tax laws. Prospective purchasers of the Notes are advised
to consult their tax advisers as to the consequences of a purchase and sale of
the Notes.

     Individuals domiciled in Brazil and Brazilian companies are taxed in Brazil
on the basis of their worldwide income (which includes earnings of Brazilian
companies' foreign subsidiaries, branches and affiliates). The income of
non-Brazilian residents in general are taxed in Brazil only when derived from
Brazilian sources. Interest, fees, commissions and any other income (which for
the purposes of this paragraph includes any deemed income on the difference
between the issue price of the Notes and the price at which the Notes are
redeemed ("original discount")) payable by a Brazilian obligor to an individual,
company, entity, trust or organization domiciled outside Brazil is subject to
income tax withheld at source. The rate of withholding with respect to debt
obligations is 15% or such other lower rate as provided for in an applicable tax
treaty between Brazil and such other country where the recipient of the payment
has its domicile. Notwithstanding the foregoing, the applicable withholding
income tax rate for interest, commissions, expenses and discounts, payable to
persons or entities domiciled abroad, arising from negotiable instruments such
as the Notes, was reduced to zero, pursuant to Law No. 9.481 of August 13, 1997,
as modified by Article 20 of Law No. 9.532 of December 10, 1997, which restricts
such income tax reduction to negotiable instruments that (i) are placed abroad
with the previous approval of the Central Bank and (ii) have a minimum average
amortization term of at least 96 months. As a result, since the Notes have an
original maturity in excess of 96 months, such reduction will apply to payments
of interest and other income with respect to the Notes paid during 1999. Such
reduction should continue to apply after 1999 unless the provisions of the
above-mentioned law are modified by new tax legislation. In any event, if any
Notes are redeemed prior to the maturity date, such reduction will not apply and
upon any such redemption the Brazilian withholding tax will be applied on the
amount of interest (including original discount), fees and commissions paid on
such Notes from the date of issue through the date of redemption.

     Under the terms of the Notes, the Company is required to gross-up
Noteholders for Brazilian withholding tax, subject to certain exceptions. The
Company has the right to redeem the Notes at par in the event of certain
increases in Brazilian withholding tax to a rate in excess of 15%.

     Any earnings or capital gains made abroad as a result of a transaction
between two non-residents of Brazil are not subject to tax in Brazil. However,
gains realized by a non-resident on the disposition of the Notes inside Brazil,
or to a Brazilian resident outside of Brazil, will be subject to Brazilian tax.

     Pursuant to Decree 1,815 of February 8, 1996, reais resulting from the
conversion of the proceeds received by a Brazilian borrower from a foreign
currency loan (including those in connection with the issue of bonds or notes)
are subject to a tax on exchange transactions. Under Article 4 of Decree
1,815/96, the Minister of Finance is empowered to establish the applicable tax
rate, which was set by means of Portaria 241 of October 31, 1996. Portaria 241
was revoked by Portaria 85, enacted on April 24, 1997, which reduced to zero the
IOF rate applicable on the reais. The IOF tax is currently regulated by Decree
No. 2,219 dated May 2, 1997. Under Law 8,894 of June 21, 1994, such tax rate may
be increased up to 25%. In any event, the tax burden falls upon the Brazilian
borrower, not upon foreign creditors such as the holders of the Notes and will
be deducted from the proceeds of the issue of the Notes.


                                      -22-
<PAGE>


     On August 15, 1996, the Brazilian Congress approved Constitutional
Amendment No. 12 creating a new temporary tax, the Contribuicao Provisoria sobre
Movimentacao Financeira ("CPMF"). Based on such Amendment, Law No. 9,311 of
October 24, 1996 was enacted, determining the creation of the CPMF tax. Under
Law No. 9,311/96, as modified by Law No. 9.539 of December 12, 1997, all
financial debt and money transfers effected on or within 24 months after January
23, 1997 will be subject to the assessment of the CPMF tax at the rate of 0.20%.
Funds arising from the collection of the CPMF tax will be applied only in the
public health system. Since January 23, 1999, CPMF was extinguished and Congress
has approved Constitutional Amendment No. 21, on March 19, 1999, in order to
reestablish CPMF at the rate of 0.38%, starting on June 19, 1999, for a period
of one year, and subsequently at the rate of 0.30%, for a period of two years.

     There is no stamp, transfer or other similar tax in Brazil with respect to
the transfer, assignment or sale or any debt instrument outside Brazil
(including the Notes).

United States

     Federal Income Taxation

     Based upon the advice of Willkie Farr & Gallagher, the following is a
summary of the material U.S. federal income tax consequences associated with the
purchase, ownership and disposition of a Note. This summary does not discuss all
of the tax consequences that may be relevant to certain types of investors
subject to special treatment under the U.S. federal income tax laws (such as
individual retirement accounts and other tax-deferred accounts, securities
broker-dealers, life insurance companies, tax-exempt organizations and foreign
persons, or to persons whose "functional currency" is other than the U.S. dollar
or to persons which hold Notes as part of a "straddle" or "conversion
transaction" or otherwise as part of a "synthetic asset") and is limited to
investors which hold Notes as capital assets. In addition, this summary is
limited to initial holders that acquire the Notes at the issue price from the
Initial Purchasers. This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), final, temporary and proposed Treasury regulations
thereunder, revenue rulings, court cases, and other legal authorities as now in
effect (or proposed) and as currently interpreted, and does not take into
account possible changes in such tax laws or other legal authorities or such
interpretations. No rulings on any of the issues discussed below will be sought
from the U.S. Internal Revenue Service (the "IRS").

     For purposes of this discussion, a "U.S. Holder" is an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created under the laws of the United States or any political subdivision
thereof, an estate that is subject to United States federal income taxation
without regard to the source of income, or a trust if a United States court is
able to exercise primary supervision over the administration of that trust and
one or more United States fiduciaries have the authority to control all
substantial decisions of such trust.

     NOTEHOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISERS AS TO THE
CONSEQUENCES OF A PURCHASE AND SALE OF NOTES, INCLUDING, WITHOUT LIMITATION, (I)
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR NON-U.S. TAX LAWS TO WHICH
THEY MAY BE SUBJECT, AND OF ANY LEGISLATIVE OR ADMINISTRATIVE CHANGES IN LAW,
(II) THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUER'S DEDUCTION OF
BRAZILIAN TAXES AND OTHER AMOUNTS (AND OF THE PAYMENT BY THE ISSUER OF
ADDITIONAL AMOUNTS WITH RESPECT THERETO) WITH RESPECT TO PAYMENTS ON THE NOTES,
(III) THE 


                                      -23-
<PAGE>


AVAILABILITY FOR U.S. FEDERAL INCOME TAX PURPOSES OF A CREDIT OR DEDUCTION FOR
BRAZILIAN TAXES OR OTHER AMOUNTS AND (IV) THE CONSEQUENCES OF PURCHASING THE
NOTES AT A PRICE OTHER THAN THE ISSUE PRICE.

     Tax Considerations Applicable to Holding Notes

     Taxation of Interest and Additional Amounts on Notes. Interest on the Notes
and additional amounts relating thereto ("Additional Amounts") (i.e., without
reduction for any Brazilian withholding taxes) will be taxable to a U.S. Holder
as ordinary income at the time it accrues or is received in accordance with the
U.S. Holder's method of accounting for tax purposes.

     A U.S. Holder will treat the gross amount of interest and Additional
Amounts relating thereto (i.e., without reduction for any Brazilian withholding
taxes, if any) as ordinary interest income in respect of the Notes. If the IRS
were to successfully contend that the Notes were issued at a discount for U.S.
federal income tax purposes, the Notes would bear "original issue discount"
("OID"). In such case, U.S. Holders of Notes would be required to accrue portion
of the OID in income as additional interest (whether such holder was a cash or
accrual taxpayer) in each taxable year during which such U.S. holder held such
Note. The amount of OID on a Note would be the excess of its "stated redemption
price at maturity" over the Note's "issue price." The amount of OID taken into
account in a particular year would be calculated under the constant yield to
maturity method. The effect of the OID rules, generally, would be that U.S.
Holders would recognize interest income in each year equal to the excess of the
product of (i) the yield to maturity on the Notes and (ii) the adjusted issue
price over the interest payments on the Notes. Generally, the adjusted issue
price of the Notes will be its issue price increased by previously accrued OID.
Under this method, the amount of OID included in the income of a U.S. Holder in
early years would be less than the includible amount in later years.

     Pursuant to applicable OID rules, the possibility that Additional Amounts
may be payable in respect of Brazilian withholding taxes on interest payments
could subject the Notes to the rules applicable to contingent payment debt
instruments, regardless of whether or not Brazil actually imposes such a
withholding tax. The Notes will be excepted from the application of those rules
if two conditions are satisfied. First, the amounts and timing of the Additional
Amounts are known and second, it is significantly more likely than not that
interest payments on the Notes will continue to be subject to a Brazilian
withholding rate of zero, both as determined based on the facts and
circumstances existing at the date of issue of the Notes. Xavier, Bernardes,
Braganca, Sociedade de Advogados, Brazilian counsel to the Company, has advised
the Company that an income tax withholding rate of 15% would apply with respect
to interest payments on the Notes if Brazil were to discontinue the current zero
withholding on interest payments and that it is substantially more likely than
not that the current zero withholding rate will be continued indefinitely.

     Based upon the advice of its counsel, the Company intends to take the
position that the Notes are not subject to the rules applicable to contingent
debt instruments. However, because the determinations that form the basis of the
legal opinion are inherently factual, the IRS could challenge that position, and
if it were to successfully do so, gain realized by U.S. Holders with respect to
the Notes could be recharacterized as ordinary income rather than capital gain
and, therefore, at present U.S. federal income tax rates, subject to higher tax
rates for U.S. Holders who are individuals. The application of those rules could
also result in an unfavorable mismatch of income and deduction/foreign 


                                      -24-
<PAGE>


tax credit for U.S. Holders. Prospective U.S. Holders should contact their own
tax advisors regarding the application of the OID rules to the Notes.

     The calculation of foreign tax credits and, in the case of a U.S. Holder
that elects to deduct foreign taxes, the availability of deductions, involves
the application of rules that depend on a U.S. Holder's particular
circumstances. U.S. Holders should consult their own tax advisers regarding the
availability of foreign tax credits and the treatment of additional amounts.

     Sale, Exchange or Other Disposition of Notes. A U.S. Holder will generally
recognize gain or loss upon the sale, exchange, retirement or other disposition
of Notes equal to the difference between the amount realized on the sale,
exchange or other disposition of such Note and the U.S. Holder's adjusted tax
basis in the Notes. Such gain or loss generally would be capital gain or loss,
and would be long-term if the Notes were held more than one year.

     Effect of Brazilian Withholding Taxes. It is believed that payments with
respect to a Note will not be subject to Brazilian withholding tax during the
fiscal year of 1999 unless the Note is redeemed prior to June 6, 2005. After
1999 such payments may be subject to Brazilian withholding tax at a rate of 15%.
In the case of any Note which is so redeemed, withholding taxes in respect of
interest previously paid may be imposed by Brazil at the time of redemption. Any
Brazilian tax withheld generally will be treated as a foreign income tax that
U.S. Holders may elect to deduct in computing their taxable income or, subject
to the limitations on foreign tax credits generally, credit against their U.S.
federal income tax liability. No such deduction or credit will be available to
the extent Brazil pays a subsidy to a U.S. Holder, a related person or the
Company, the amount of which is determined (directly or indirectly) by reference
to the amount of the withholding tax. While Brazil does not have a program or
policy of paying such subsidies at present, it has had programs of that nature
in the past and could implement such programs again in the future. For purposes
of determining a U.S. Holder's United States foreign tax credit, gain or loss on
the sale, redemption or other taxable disposition of a Note will generally
constitute United States source income. Interest (including Brazilian
withholding taxes imposed on payments on a Note and Brazilian withholding taxes
imposed with respect to any Additional Amounts payable by the issuer) will
generally constitute non-United States source income. Such interest will
generally constitute passive income. However, if a Note is redeemed prior to
June 6, 2005, and payments with respect to the Note are subject to Brazilian
withholding tax of five percent or more, the IRS might retroactively treat
interest paid with respect to the Note as high withholding tax interest. In any
event, a U.S. Holder may have insufficient foreign source income to utilize
fully any foreign tax credit attributable to such withholding taxes that could
otherwise be utilized (but such withholding taxes may instead be deductible by
the U.S. Holder). A U.S. Holder may be required to provide the IRS with a
certified copy of the receipt evidencing payment of withholding tax imposed in
respect of payments on the Notes (a "Certified Copy") in order to claim a
foreign tax credit in respect of such withholding tax. A U.S. Holder (or its
agent) may obtain a Certified Copy by providing written demand therefor to the
Principal Paying Agent. The Principal Paying Agent will contact the issuer,
which will provide such Certified Copy to the Principal Paying Agent for prompt
forwarding to the relevant U.S. Holder. The issuer will attach to each Certified
Copy a certificate stating (x) that the amount of withholding tax evidenced by
the Certified Copy was paid in connection with payments in respect of the
principal amount of notes then outstanding and (y) the amount of such
withholding tax paid per US$1,000 of principal amount of the Notes.


                                      -25-
<PAGE>


Item 8.  Selected Financial Data.

     The selected financial information for the Company set forth below for the
periods ended December 31, 1996, 1997 and 1998 have been derived from the
Financial Statements of the Company, which have been audited by Ernst & Young,
Auditors Independentes S.C. The information set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements of the Company included
elsewhere in this document. The Financial Statements have been prepared in
accordance with U.S. GAAP. The Company was a development stage company in 1996.
The Company began earning revenue from operations in March 1997 and, therefore,
is no longer a development stage company.

<TABLE>
<CAPTION>
                                                              From April 17,             Year Ended December 31,
                                                           1996 (inception) to      --------------------------------
                                                           December 31, 1996           1997                 1998
                                                           -----------------        ------------         -----------
Statement of Operations Data                                                 (U.S. Dollars)

<S>                                                        <C>                      <C>                  <C>        
Total revenue.....................................            $        --           $10,203,867          $26,169,680
Cost of product sold..............................                     --             (6,952,092)          (8,248,096)
Operating costs and expenses:
   Services, rent and maintenance.................                     --              4,450,359            8,701,887
   Selling and marketing..........................                129,464              8,088,531           11,342,788
   General and administrative.....................              4,776,593             10,876,022           16,721,759
   Depreciation and amortization..................                 55,582              1,380,028            4,571,641
                                                              -----------            -----------          -----------
Operating loss....................................             (4,961,639)           (21,543,165)         (23,416,491)
Other income (expense)............................                 57,031             (3,890,357)         (13,010,209)
                                                              -----------           -------------         ------------
Net loss..........................................            $(4,904,608)          $(25,433,522)        $(36,426,700)
                                                              ============          =============        =============

<CAPTION>
                                                                                     December 31,
                                                              ------------------------------------------------------
                                                                    1996                 1997               1998
                                                              ----------------     --------------      -------------
     Balance Sheet Data                                                            (U.S. Dollars)

<S>                                                           <C>                  <C>                 <C>        
     Cash and cash equivalents.........................         $12,444,689           $59,416,321         $40,077,420
     Pledged securities................................                  --            38,728,563          23,942,069
     Working capital...................................          11,062,070            74,649,587          52,646,878
     Fixed assets, net.................................           4,513,421            18,945,448          21,869,217
     Total assets......................................          20,539,033           132,400,463         100,057,934
     Total debt........................................                  --           125,000,000         125,000,000
     Redeemable preferred stock........................          20,451,427            33,661,424)         37,945,014)
     Shareholders' equity (deficit)....................          (4,875,936)          (33,968,791)        (73,468,856)
</TABLE>




                                      -26-
<PAGE>



Item 9. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

     The following discussion should be read in conjunction with the Financial
Statements, including the notes thereto, included elsewhere in this report.

General

     PageNet do Brasil is a leading provider of paging and wireless messaging
services in Brazil. The Company has secured licenses which enable it to
broadcast paging services throughout the country, and currently serves
approximately 96,767 subscribers. The Company has installed 82 paging
transmitters in 10 cities (the "Existing Coverage Area"), commenced offering
paging services in greater Sao Paulo in January 1997, and began marketing paging
services in greater Rio de Janeiro in September 1997.

     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
Brazilian reais and U.S. dollars. Inflation and devaluation in Brazil have had,
and may continue to have, substantial effects on the Company's results of
operations and financial condition.

     For the purpose of management's discussion and analysis, net revenue is
defined as total revenue less sales tax and cost of product sold.

Results of Operations

     Year Ended December 31, 1998 Compared with Year Ended December 31, 1997

                                                           Year Ended
                                                          December 31,
                                                    1997                1998
                                                    ----                ----

Net revenue..................................    $  3,251,775      $ 17,921,584
Operating costs and expenses:
Services rent and maintenance................       4,450,359         8,701,887
Selling and marketing........................       8,088,531        11,342,788
General and administrative...................      10,876,022        16,721,759
Depreciation and amortization................       1,380,028         4,571,641
                                                  -----------       -----------
     Total operating costs and expenses......      24,794,940        41,338,075
                                                   ----------        ----------
Operating loss...............................     (21,543,165)      (23,416,491)
Other income (expense).......................      (3,890,357)      (13,010,209)
                                                 -------------     -------------
Net loss.....................................    $(25,433,522)     $(36,426,700)
                                                 =============     =============
Other data:
EBITDA1......................................    $(20,163,137)      $18,844,850

----------------------
1    EBITDA is defined as operating income (loss) plus depreciation,
     amortization and non-cash charges. EBITDA is a commonly used measure of
     performance in the paging industry. While EBITDA should not be construed as
     a substitute for operating income (loss) or a better measure of liquidity
     than cash flow from operating activities, each of which is determined in
     accordance with U.S. GAAP, it is included herein to provide additional
     information regarding the ability of the Company 


                                      -27-
<PAGE>

Number of subscribers at end of period.......          47,260            96,767

     Net Revenue. The Company's total revenues primarily consist of monthly fees
paid by subscribers for the paging service, as well as product sales to both
individuals and retailers, net of sales taxes. During the twelve months ended
December 31, 1998, the Company was offering service to customers in Sao Paulo
and Rio de Janeiro. Service in Rio de Janeiro began in September 1997. For
twelve months ended December 31, 1998, the Company generated $17,921,584 (net)
and $24,211,703 (before taxes) in service revenues, $4,718,106 (before taxes) in
product sales to customers, cost of sales $8,248,096 and sales taxes of
$2,760,129. During twelve months ended December 31, 1997, the Company's net
revenue were $3,251,775 and $4,217,273 (before taxes) in service revenue and
$7,564,045 it product sales to customer, cost of sales $6,952,092 and sales
taxes $1,577,451.

     Service, Rent and Maintenance Expenses. Service, rent and maintenance
expenses include a portion of costs of compensation and benefits for the
Company's dispatch and technical employees, transmitter site rentals, telephone
line costs, transmission costs, costs and repair and maintenance expenditures
and service call costs. During the twelve months ended December 31, 1998, the
Company incurred $8,701,887 of expenses in connection with the operations in Sao
Paulo and Rio de Janeiro. During the twelve months ended December 31, 1997, the
Company incurred service, rent and maintenance expenses of $4,450,359. As a
result of the improvement in available telecommunications services available in
Brazil and the Company's interest in cutting costs, in the last quarter of 1998
the Company consolidated its customer dispatch operations. Without any change in
service quality, all dispatch calls originating in Rio de Janeiro are now routed
to Sao Paulo. In addition to savings resulting from labor and management, the
Company also downsized it Rio de Janeiro office space by almost 50% to 19,460
square feet. The cost of this organizational and systems reconfiguration was
$1.4 million.

     Selling and Marketing. Selling and marketing expenses include commissions
to salesmen and retailers, advertising and promotion. During the twelve months
ended December 31, 1998, the Company incurred $11,342,788 of selling and
marketing expenses. During the twelve months ended December 31, 1997, the
Company incurred $8,088,531 of selling and marketing expenses.

     General and Administrative. General and administrative expenses include
compensation benefits, rent, bank fees, outside services and the provision for
losses on accounts receivable. During the twelve months ended December 31, 1998
and 1997, the Company incurred $16,721,759, and $10,876,022 respectively of
general and administrative expenses. For the twelve months ended December 31,
1998 and 1997, included in such amounts is approximately $2,419,000 and
$2,500,000, respectively, of costs associated with the provision for losses on
accounts receivable.

     Depreciation and Amortization. Depreciation and amortization expenses
consist primarily of depreciation of leased pagers, transmitters, paging
terminals, leasehold improvements, telephone lines and cost of network
installation. Depreciation and amortization expenses increased from
approximately $1,380,028 for the twelve months ended December 31, 1997
$4,571,641 for the twelve 

--------------------------------------------------------------------------------
     to meet its capital expenditures and any future debt service. EBITDA,
     however, is not necessarily a measure of the Company's ability to fund its
     cash needs because it does not include capital expenditures, which the
     Company expects to continue to be significant.

                                      -28-
<PAGE>


months ended December 31, 1998, primarily due the purchase and installation of
equipment necessary to buildout its paging network and the buildout of the Rio
de Janeiro office during prior year.

     Operating Loss. For the twelve months ended December 31, 1998 the Company
generated an operating losses of $23,416,491 and for the twelve months ended
December 31, 1997 $21,543,165.

     Interest Expense. Interest expense was $17,365,380 for the twelve months
ended December 31, 1998, and $9,892,031 for the twelve months ended December 31,
1997, primarily as a result of interest associated with the Notes.

     Interest Income. Interest Income increased to $11,935,917 for the twelve
months ended December 31, 1998 primarily as a result of investing the net
proceeds from the Note offering and issuance by the Company of its redeemable
preferred stock. During the twelve months ended December 31, 1997 the interest
income was $9,419,572.

     Exchange and Translation (Losses). Exchange and translation losses was
$3,417,898 for the twelve months ended December 31, 1997 primarily as a result
of its short-term investments in Brazil. Effective January 1, 1998, the Company
began using the real as its functional currency. Unless Brazil returns to a
highly inflationary status, the Company does not expect to incur future exchange
and translation gains and losses.

     During 1997, the Company entered into foreign currency swap agreements to
hedge its foreign currency exposure. At December 31, 1997, the Company had an
investment which was the equivalent of a U.S. dollar denominated investment with
a fixed interest rate in the amount of $53,361,000. The Company expects to
continue to enter into such contracts as its debt and a significant amount of
its payables are dollar denominated.

     Monetary Loss. Monetary loss was $7,148,993 for the twelve months ended
December 31, 1998. During the twelve months ended December 31, 1997 the Company
did not have monetary loss, the functional currency was U.S. dollar.

     Income Taxes. The Company did not have taxable income during the periods
presented and expects to generate losses for the foreseeable future.

     Net Loss. As explained above, net loss in the period presented is primarily
attributable to the still small subscriber base and expenses incurred during the
period in connection with the development of the Company's business.

     Year Ended December 31, 1997 Compared with Period Ended December 31, 1996
(from inception on April 7, 1996)

     As a result of the development of the Company's business in Sao Paulo and
Rio de Janeiro during the periods presented, 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. The period ended
December 31, 1996 reflects operations from April 7, 1996, the date of the
Company's inception.

                                                      Period Ended
                                                      December 31,

                                                 1996              1997
                                                 ----              ----


                                      -29-
<PAGE>


Net revenue...............................   $        --        $   3,251,775
Operating costs and expenses:
Services rent and maintenance.............            --            4,450,359
Selling, general and administrative.......     4,906,057           18,964,553
Depreciation and amortization.............        55,582            1,380,028
                                              ----------         ------------
     Total operating costs and expenses...     4,961,639           24,794,940
                                               ---------           ----------
Operating loss............................    (4,961,639)         (21,543,165)
Other income (expense)....................        57,031           (3,890,357)
                                             -----------         ------------
Net loss..................................   $(4,904,608)        $(25,433,522)
                                             ============        ============
Other data:
EBITDA....................................   $(4,906,057)        $(20,163,137)
Number of subscribers at end of period....            --               47,260

     Net Revenue. The Company's total revenues primarily consist of monthly fees
paid by subscribers for the paging service, as well as product sales to both
individuals and retailers, net of sales taxes. During the twelve months ended
December 31, 1997, the Company was offering service to customers in Sao Paulo
and in September 1997 began offering services in Rio de Janeiro. During such
twelve month period, the Company generated $4,217,273 in service revenue and
$7,564,045 in product sales to customers, had cost of sales of $6,952,092, and
had sales tax of $1,577,451. During the twelve month period ended December 31,
1997, the Company's net revenue was $3,251,775. The Company had no revenue for
the period ended December 31, 1996 (from inception on April 7, 1996).

     Service, Rent and Maintenance Expenses. Service, rent and maintenance
expenses include a portion of costs of compensation and benefits for the
Company's dispatch and technical employees, transmitter site rentals, telephone
line costs, transmission costs, vehicle rental costs and repair and maintenance
expenditures and service call costs. During the twelve month period ended
December 31, 1997, the Company incurred $4,450,359 of expenses in connection
with the continued buildout of its paging network and the operations of the Sao
Paulo and Rio de Janeiro systems. During the period ended December 31, 1996
(from inception on April 7, 1996), the Company did not incur any service, rent
and maintenance expenses.

     Selling and Marketing. Selling and marketing expenses include commissions
to salesmen and retailers, advertising and promotion. During the twelve month
period ended December 31, 1997, the Company incurred $8,088,531 of selling and
marketing expenses. Such amounts increased from the prior year as the Company
did not have significant operations in 1996.

     General and Administrative. General and administrative expenses include
compensation benefits, rent, bank fees, outside services and the provision for
losses on accounts receivable. During the twelve month period ended December 31,
1997, the Company incurred $10,876,022 of general and administrative expenses.
Included in such amount is approximately $2,500,000 of costs associated with the
formation of the Company.

     Depreciation and Amortization. Depreciation and amortization expenses
consist primarily of depreciation of leased pagers, transmitters, paging
terminals, leasehold improvements, telephone lines and cost of network
installation. Depreciation and amortization expenses increased from
approximately $55,582 for the period ended December 31, 1996 (from inception on
April 7, 1996) to $1,380,028 for the twelve month period ended December 31,
1997, primarily due the purchase and 


                                      -30-
<PAGE>


installation of equipment necessary to buildout its paging network and the
buildout of the Rio de Janeiro office.

     Operating Loss. For the twelve month period ended December 31, 1997 the
Company generated an operating losses of $21,543,165 primarily due to low volume
from a low subscriber base and full year expenses in connection with the
development of the Company's business as explained above.

     Interest Expense. Interest expense was $9,892,031 for the twelve month
period ended December 31, 1997, primarily as a result of interest associated
with the Notes.

     Interest Income. Interest income increased to $9,419,572 for the twelve
month period ended December 31, 1997 primarily as a result of investing the net
proceeds from the Note offering and issuance by the Company of its redeemable
preferred stock.

     Exchange and Translation (Losses). Exchange and translation losses
increased to $3,417,898 for the twelve month period ended December 31, 1997
primarily as a result of its short-term investments in Brazil.

     During 1997, the Company entered into foreign currency swap agreements to
hedge its foreign currency exposure. At December 31, 1997, the Company had an
investment which was the equivalent of a U.S. dollar denominated investment with
a fixed interest rate in the amount of $53,361,000. The Company expects to
continue to enter into such contracts as its debt and a significant amount of
its payables are dollar denominated.

     Income Taxes. The Company did not have taxable income during the periods
presented and expects to generate losses for the foreseeable future.

     Net Loss. As explained above, net loss in the period presented is primarily
attributable to the still small subscriber base and expenses incurred during the
period in connection with the development of the Company's business.

Liquidity and Capital Resources

     The Company's operations and expansion into new markets and product lines
will require substantial capital investment for the development and installation
of paging systems and for the procurement of pagers and paging equipment. The
Company made capital expenditures of $15,812,055 for the twelve months ended
December 31, 1997 and for the twelve months ended 31, 1998 was $11,808,542.

     The Company commenced the buildout of systems for its paging services in
May 1996 and completed the buildout of the Initial Markets during the first
quarter of 1998 and is evaluating whether to commence the marketing of paging
services into other markets during 1999. As of December 31, 1998, the Company
has (1) completed the buildout of its Sao Paulo and Rio de Janeiro systems,
which served 96,767 subscribers, (2) installed transmitters in each of the
additional eight cities where it has secured licenses, and (3) hired personnel
and infrastructure necessary to support the Company's Sao Paulo and Rio de
Janeiro operations. The Company expects that the proceeds of the Notes together
with cash on hand will be sufficient to complete the buildout of Brasilia and
Campinas but that it will need to secure additional financing to complete the
planned buildout of other expansion markets.


                                      -31-
<PAGE>


     The principal capital expenditure requirements to construct a paging system
involve the acquisition of pagers for leasing and the acquisition and
installation of transmission facilities, both of which are directly related to
the demand of paging service. Additional capital is required to fund operating
losses incurred during the initial stages of construction and rolling out
services. The Company currently anticipates that its cash requirements
(comprised of capital expenditures, working capital requirements, debt service
requirements and anticipated operating losses) for its 1999 fiscal year will be
approximately $30 million.

Inflation and Exchange Rates

     Inflation and exchange rate variations have had, and may continue to have,
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 in its expenses and may set its prices without
government regulation. However, under Brazilian law designed to reduce
inflation, the rates that the Company may charge to a particular subscriber may
not be increased until the next anniversary of the subscriber's initial
subscription date. 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. Devaluation of the real may also
have an adverse effect on the Company. The Company collects substantially all of
its revenues in reais, but pays certain of its expenses, (including pagers, a
significant portion of its transmission 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) will be adversely
affected. This effect on the Company's revenues may negatively impact the
Company's ability to fund U.S. dollar-based expenditures. Accordingly,
devaluation of the real may have a material adverse effect on the Company's
results of operations and financial condition. Further, as of January 1, 1998,
the Company's financial statements will reflect foreign exchange gains and
losses associated with monetary assets and liabilities denominated in currencies
other than the real. See footnote "Foreign Currency Translation" contained in
the Notes to Financial Statements. As a result, the devaluation of the real
against the U.S. dollar will cause the Company to record a loss associated with
its U.S. dollar monetary liabilities and a gain associated with its U.S. dollar
monetary assets. 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 transaction losses in the Company's financial statements.

Impact of the Year 2000

     The Year 2000 issue is the result of many computer programs and imbedded
chips being written using two digits rather than four to define the applicable
year. Many of the Company's computer programs that have date-sensitive software
may recognize a date using "00"as the year 1900 rather than the year 2000.

     If not addressed and completed on a timely basis, failure of the Company's
computer systems to process Year 2000 related data correctly could have a
material adverse effect. Failures of this kind could, for example, lead to
incomplete or inaccurate accounting, order processing or recording errors in
inventory or other assets. If not addressed, the potential risks to the Company
include financial loss, legal liability, interruption to business.


                                      -32-
<PAGE>


     The Company presently believes that with modifications to existing software
and conversions to new software, the Year 2000 issue will be resolved for all
the Company's own systems on a timely basis.

     However, even if these changes are successful, the Company remains at risk
from Year 2000 failures caused by third parties. The Company has therefore
initiated efforts to survey key utilities and suppliers, among others, to assess
and wherever possible remediate Year 2000 issues. The Company expects to
complete its survey assessment by the second quarter of 1999.

Recent Economic Events

     The economic and financial turmoil in Southeast Asia and Russia during 1997
and 1998 has had an impact on many emerging markets, including Brazil. As a
result of these events, the Brazilian government has taken significant measures
to protect the real, as well as the gains achieved over the last several years
by the Real Plan. Among other actions, Brazils's Central Bank significantly
raised short-term interest rates, and the Brazilian government announced a
series of austerity measures, generally including budget cuts, restrictions on
public indebtedness, tax increases, export incentives and restrictions on
imports. These measures, which are having a negative impact on Brazil's economic
growth, are designed to improve the country's fiscal and current account
deficits and relieve pressure on the real. The Brazilian govenment continues to
attempt to protect its currency through various mechanisms. These include
maintaining high short-term interest rates and maintaining high levels of import
duties on various products. The short-term effect of these policies has been a
tightening of consumer credit and increased rates of unemployement.

     In October, 1998, the Brazilian government proposed its Fiscal Stablization
Program ("PEF"), an austerity plan comprised of a three-year tax increase
program and a structural reform to reduce government spending, which subject to
approval by the Brazilian legislature. In announcing the PEF, the Brazilian
govenment acknowledged the possibility of a recession in 1999. While it is too
soon to measure the impact of such a program, management believes that the
Company will experience an increase in customer delinquency rates, which in turn
will result in increased customer cancellations in the first quarter of 1999 as
compared to the fourth quarter of 1998.

     Additionally, as a result of the devaluation of the Russian currency in
August 1998, securities which are traded in the United States high yield debt
markets have experienced decreases in market value. Based on information
available to the Company, the Company's Notes were traded at approximately 51%
of principal amount at December 31, 1998, up from approximately 43% of principal
amount at September 30, 1998.

     While the Company continues to believe that Brazil's economic downturn and
market uncertainty are short-term in nature, there can be no assurance that the
measures taken by the Company to execute its business plan under the current
economic conditions will be successful.

     The Brazilian government announced a change in monetary policy related to
exchange rates on January 13, 1999. The Central Bank of Brazil announced that
they would use a new broad band of 1.20 to 1.32 R$/US$ and eliminate the
previous band of 1.12 to 1.22 R$/US$. Upon the implementaion of the new broad
band on January 13, 1999, the Real devaluad approximately 8% as the exchange
rate reached the the upper limit of the band. On January 15, the Central Bank
opted to revoke the band system and left the Real to trade freely against
foreign currencies.

     On March 31, 1999, the Real was being negotiated at the rate of R$1.72 to
US$1.00, a 30% devaluation since December 31, 1998. If the 30% devaluation of
the Real against the US dollar had occurred on December 31, 1998, the impact
based on the December 31, 1998 Real exposure and 


                                      -33-
<PAGE>


current translation procedures (using SFAS 52), would be a foreign currency
translation adjustment of approximately US$18 million charged to shareholder's 
equity (deficit).

     Currently, the Company is unable to estimate the ultimate effects of the
new foreign exchange trading policy on its 1999 financial position, and the
related impact on its future operations and its cash flows, nor can it
reasonably estimate if the current foreign exchange rates will remain at the
same levels.


                                      -34-
<PAGE>

         Item 10.  Directors and Officers of Registrant.

         The following section sets forth certain information as of April 21,
1999 with respect to each person who is an executive officer or director of the
Company:

Name                                                   Position

Thomas C. Trynin............................... President, Chief Executive 
                                                Officer and Director
Wilson Olivieri................................ Vice President of Operations
Maria Regina Mangabeira Albernaz Lynch......... Director
Horacio Bernardes Neto......................... Director
Helena de Araujo Lopes Xavier.................. Director

     With the exception of Wilson Olivieri, each of the above-named persons has
served in the indicated position(s) since the formation of the Company in
December 1996. The Company implemented certain management changes in 1998
pursuant to which Wilson Olivieri assumed the position of Vice President of
Operations, formerly held by Marco A. Fregenal, and relinquished his position as
Chief Financial Officer. Mr. Fregenal assumed the position of Vice President of
Sales and Neil R. Milano was appointed the new Chief Financial Officer of the
Company. Since assuming their new positions, Messrs. Fregenal and Milano have
left the Company. The Company is currently conducting a search to find a
replacement Chief Financial Officer for the Company.

Management Committee of Holding LLC

     Holding LLC is managed by a Management Committee appointed solely by
holders of a majority of the voting member interests. As of April 21, 1999, the
following persons are members of the Management Committee:

Name                                                    Position
----                                                    --------

Douglas M. Karp.................... Manager, Chairman of Management Committee
Gary D. Nusbaum.................... Manager, Member of Management Committee
Mark Knickrehm..................... Member of Management Committee
H. Brian Thompson.................. Member of Management Committee
Thomas C. Trynin................... Member of Management Committee

     With the exception of Messrs. Nusabum and Knickrehm, each of the
above-named persons has served in the indicated position(s) since the formation
of Holding LLC in March 1997. Mr. Nusbaum replaced David E. Libowitz as Manager
and Member of Management Committee in the second quarter of 1998 and Mr.
Knickrehm replaced Barry A. Fromberg as Member of Management Committee in the
second quarter of 1998.

Item 11.  Compensation of Directors and Officers.

     For the year ended December 31, 1998, the aggregate compensation, including
bonuses, of all executive officers of the Company was approximately US$984,000.
Members of the Board of 


                                      -35-
<PAGE>


Directors of the Company and Managers and Members of the Management Committee of
Holding LLC (the "Members") who are not officers of the Company do not receive a
salary from the Company.

     Neither the Company nor Holding LLC has set aside funds to provide pension,
retirement or similar benefits to the Directors and executive officers of the
Company or Members of the Management Committee of Holding LLC.

Item 12.  Options to Purchase Securities from Registrant or Subsidiaries.

     Not applicable.

Item 13.  Interest of Management in Certain Transactions.

Formation Transactions

     In connection with its formation, the Company has been a party to the
following transactions with its executive officers, directors and five percent
shareholders:

     In December 1996, the Company entered into a Securities Subscription
Agreement with PageNet NV, Warburg Pincus, IVP Cayman, Multiponto and TVA
pursuant to which, among other things, the Company issued shares of Common
Stock, Preferred Stock and subscription bonds to purchase Common Stock. The
Company believes that the terms of the Securities Subscription Agreement were
negotiated at arm's-length by the initial investors in the Company. In
connection with the formation of the Company, the Company granted registration
rights to Warburg Pincus, IVP Cayman, PageNet NV, Multiponto and TVA with
respect to all shares of Common Stock and Preferred Stock owned by them.

     In December 1996, the Company and PageNet USA entered into a Technical
Services Agreement pursuant to which PageNet USA will provide technical services
and support, including (i) assistance with the conversion and construction of
the Company's paging infrastructure; (ii) access to the PageNet USA personnel
and management supervision to assist the Company in providing paging services;
(iii) training of key members of the Company's management; (iv) making available
on an exclusive basis in Brazil, technology, software, new product development,
and system design; and (v) interfacing with vendors to seek favorable prices and
services, comparable to those obtained by PageNet USA. In addition, pursuant to
the terms of the Technical Services Agreement, PageNet USA granted to the
Company, among other things, an exclusive, royalty-free license (the
"Intellectual Property License") to use the trademarks PageNet and VoiceNow and
the tradename Paging Network in connection with the Company's advertisement,
promotion, marketing, sale, development, and provision of telecommunications
services in Brazil. Subject to certain rights to sublicense, the Intellectual
Property License is non-transferable. In consideration of the performance of
PageNet USA's obligations under the Technical Services Agreement, the Company
has granted PageNet NV the right (in the form of subscription bonds) to purchase
325,982 shares of the Common Stock at an exercise price of approximately US$.025
per share. The initial term of the Technical Services Agreement is five years.
The initial term will be extended for successive three-year terms unless either
party gives notice of its intent not to so extend at least one year prior to the
end of the then current term. PageNet USA may, however, terminate the agreement
(i) six months after it ceases to beneficially own at least five percent of the
Common Stock outstanding on a fully diluted basis 


                                      -36-
<PAGE>


including the subscription bonds to purchase such Common Stock or (ii) if any
entity other than Warburg Pincus owns 50% or more of the Common Stock
outstanding on a fully diluted basis including the subscription bonds to
purchase such Common Stock. The Intellectual Property License will survive the
termination of the Technical Services Agreement absent breach by the Company of
its obligations thereunder or if Brazilian governmental action requires a
termination of the Intellectual Property License. In the event the Intellectual
Property License is terminated, PageNet USA will not, for a period of two years
from such termination, use the trademarks PageNet or VoiceNow in Brazil for
Licensed Services (as defined in the Intellectual Property License). In
addition, the Company is subject to certain performance standards and other
obligations, the non-compliance with which permit PageNet USA to terminate the
Technical Services Agreement (including the Intellectual Property License). The
Company believes that the Technical Services Agreement was negotiated at
arm's-length by the initial investors in the Company.

     In December 1996, the Company entered into Operating Agreements with each
of the Licenseholders pursuant to which the Licenseholders have granted the
Company the exclusive right to resell paging services utilizing the paging
licenses held by the Licenseholders (the "Licenses"). The Company and each
Licenseholder have also entered into Transfer Agreements, pursuant to which the
Licenseholders have agreed to transfer the Licenses to the Company following the
three year waiting period mandated by Brazilian law or on such earlier date as
may be permitted by Brazilian law. In consideration of the performance by each
Licenseholder of its obligations under such agreements, the Company has (i)
issued and sold to IVP Cayman 325,982 shares of the Common Stock for a purchase
price of approximately US$.025 per share, (ii) issued and sold to Multiponto
81,495 shares of the Common Stock for a purchase price of approximately US$.025
per share and has granted Multiponto the right (in the form of subscription
bonds) to purchase up to 40,748 shares of Common Stock at a price of
approximately US$.025 per share and (iii) has granted TVA the right (in the form
of subscription bonds) to purchase up to 40,748 shares of Common Stock at a
price of US$.025 per share. The Company believes that the Operating Agreements
and the Transfer Agreements were negotiated at arm's-length by the initial
investors in the Company. Given that certain acts or omissions by a
Licenseholder could result in the revocation of its paging licenses or
unavailability of such licenses to the Company, the Licenseholders have agreed
to several covenants in the Operating Agreements designed to limit such risk to
the Company.

Restructuring Transactions

     In connection with the sale of the Old Notes, Warburg Pincus contributed
all shares of Common Stock directly owned by it to Holding LLC in exchange for
100% of the voting member interests in Holding LLC. In addition, pursuant to a
subscription agreement (the "Subscription Agreement") with the Company, Holding
LLC purchased shares of Common Stock equivalent to 7.0% of the Common Stock on a
fully diluted basis for the capital accounts of the holders of non-voting member
interests in Holding LCC (such transactions collectively referred to as the
"Restructuring").

     The Subscription Agreement imposes a number of covenants on the Company for
the benefit of Holding LLC, including (i) providing certain financial
information concerning the Company and its subsidiaries that Holding LLC is
required to provide to its Members, (ii) subject to debt instruments to which
the Company is a party, distributing cash to Holding LLC in an amount that is
intended to approximate the Members' U.S. federal income tax liability on the
net income allocated to the Members for U.S. federal income tax purposes by
Holding LLC (but there can be no assurance that such amount will be sufficient
in all cases to discharge such tax liabilities), (iii) creating a sponsored
American Depositary Receipt program for the Common Stock that will be in effect
on or prior to the occurrence of a Liquidation Event (as defined in the
Subscription Agreement) and (iv) notifying Holding LLC at the appropriate time
that there is no material likelihood that PageNet do Brasil should 


                                      -37-
<PAGE>


be considered a "passive foreign investment company" for U.S. federal income tax
purposes for its current or any future taxable year. The Company believes that
the Restructuring was negotiated at arm's-length with Holding LLC.

     All future transactions between the Company and its officers, directors,
principal shareholders or their respective affiliates, will be on terms no less
favorable to the Company than can be obtained from unaffiliated third parties.

                                     PART II

Item 14.  Description of Securities to be Registered.

     Not applicable.

                                    PART III

Item 15.  Defaults Upon Senior Securities.

     There has not been any default with respect to any senior indebtedness of
the Company.

Item 16.  Changes in Securities, Changes in Security for Registered Securities 
          and Use of Proceeds.

     There have not been any changes in the Notes or in use of proceeds from the
offering of Notes. The Notes are unsecured obligations of the Company.

                                     PART IV

Item 17.  Financial Statements.

     Not applicable. See "Item 18. Financial Statements."

Item 18.  Financial Statements.

     See pages F-1 through F-11.


                                      -38-
<PAGE>


Item 19.  Financial Statements and Exhibits.

     (a)  Financial Statements

          The following financial statements, together with the report of Ernst
          & Young Auditores Independentes S.C. thereon, are filed as part of
          this Annual Report.

               Report of Independent Auditors.

               Balance Sheet at December 31, 1997 and 1998.

               Statement of Operations for the Period from April 17, 1996
               (inception) through December 31, 1996 and for the Years Ended
               December 31, 1997 and 1998.

               Statement of Shareholders' Equity (Deficit) for the Period from
               April 1996 (inception) through December 31, 1996 and for the
               Years Ended December 31, 1997 and 1998.

               Statement of Cash Flows for the Period from April 1996
               (inception) through December 31, 1996 and for the Years Ended
               December 31, 1997 and 1998.

               Notes to Financial Statements.

     (b) Exhibits

          3.1*  -- Bylaws of Paging Network do Brasil S.A. (English
                   Translation).

          4.1*  -- Indenture dated as of June 1, 1997 between Paging Network do
                   Brasil S.A. and The Chase Manhattan Bank, as Trustee
                   (including exhibits).

          4.2*  -- Form of Senior Note (included in Exhibit 4.1).

          10.1* -- Purchase Agreement dated as of May 30, 1997 among Paging
                   Network do Brasil S.A., Paging Brazil Holding Co., LLC and
                   the Initial Purchasers.

          10.2* -- Notes Registration Rights Agreement dated as of June 6,
                   1997 among Paging Network do Brasil S.A. and the Initial
                   Purchasers.

          10.3* -- Equity Registration Rights Agreement, dated as of June 6,
                   1997 among Paging Network do Brasil S.A., Paging Brazil
                   Holding Co., LLC, Warburg, Pincus Ventures, L.P., Paging
                   Network International N.V., IVP Paging (Cayman) L.P.,
                   Multiponto Telecomunicacoes Ltda., TVA Sistema Televisao
                   S.A., the Initial Purchasers and Chase Mellon Shareholder
                   Services.

          10.4* -- Escrow and Pledge Agreement, dated as of June 6, 1997
                   between Paging Network do Brasil S.A. and The Chase Manhattan
                   Bank.

          10.5* -- Shareholder Agreement, dated as of December 11, 1996 among
                   Paging Network do Brasil S.A., Warburg, Pincus Ventures,
                   L.P., Paging Network International N.V., IVP Paging (Cayman)
                   L.P., Multiponto Telecomunicacoes Ltda. and TVA Sistema
                   Televisao S.A.


                                      -39-
<PAGE>


          10.6* -- Shareholders Agreement Amendment No. 1 and Waiver, dated
                   as of March 10, 1997 among Paging Network do Brasil S.A.,
                   Warburg, Pincus Ventures, L.P., Paging Network International
                   N.V. IVP Paging (Cayman) L.P., Multiponto Telecomunicacoes
                   Ltda. and TVA Sistema Televisao S.A.

          10.7* -- Securities Subscription Agreement dated as of December 11,
                   1996 among Paging Network do Brasil S.A., Warburg, Pincus
                   Ventures, L.P., Paging Network International N.V., IVP Paging
                   (Cayman) L.P., Multiponto Telecomunicacoes Ltda. and TVA
                   Sistema Televisao S.A.

          10.8* -- Registration Rights Agreement dated as of December 11,
                   1996 among Paging Network do Brasil S.A., Warburg, Pincus
                   Ventures, L.P., Paging Network International N.V., IVP Paging
                   (Cayman) L.P., Multiponto Telecomunicacoes Ltda., TVA Sistema
                   Televisao S.A., Thomas C. Trynin and Marco A. Fregenal.

          10.9* -- Technical Services Agreement dated as of December 11, 1996
                   between Paging Network do Brasil S.A. and Paging Network,
                   Inc. 

          10.10*-- Operating Agreement and Other Covenants dated 
                   December 11, 1996 between Paging Network do Brasil S.A. and
                   Multiponto Telecomunicacoes Ltda.

          10.11*-- Agreement of Promise of Assignment and Transfer of
                   Permissions dated December 11, 1996 between Paging Network
                   International N.V. and Multiponto Telecomunicacoes Ltda.

          10.12*-- Operating Agreement and Other Covenants dated December 11,
                   1996 between Paging Network do Brasil S.A. and TVA Sistema
                   Televisao S.A.

          10.13*-- Agreement of Promise of Assignment and Transfer of
                   Permissions dated December 11, 1996 between Paging Network do
                   Brasil S.A. and TVA Sistema Televisao S.A.

          10.14*-- Operating Agreement and Other Covenants dated December 11,
                   1996 between Paging Network do Brasil S.A. and San Francisco
                   Comunicacoes Ltda.

          10.15*-- Agreement of Promise of Assignment and Transfer of
                   Permissions dated December 11, 1996 between Paging Network do
                   Brasil S.A. and San Francisco Comunicacoes Ltda.

          10.16 -- Employment Agreement dated December 11, 1996 between
                   Paging Network do Brasil S.A. and Thomas C. Trynin. 

          ---------

          *    Incorporated herein by reference to the Exhibit to the Company's
               Registration Statement on Form F-4, Registration No. 333-29865.



                                      -40-
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                 PAGING NETWORK DO BRASIL S.A.
                                                          (Registrant)

                                                 By: /s/ Thomas C. Trynin
                                                    --------------------------
                                                     Thomas C. Trynin
                                                     President and
                                                     Chief Executive Officer

Date: April 30, 1999



                                      -41-
<PAGE>


                          PAGING NETWORK DO BRASIL S.A.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                                <C>
Report of Independent Auditors......................................................................F-2

Balance Sheet at December 31, 1997 and 1998.........................................................F-3

Statement of Operations for the Period from April 17, 1996 (inception) through
  December 31, 1996 and for the Years Ended December 31, 1997 and 1998..............................F-4

Statement of Shareholders' Equity (Deficit) for the Period from April 1996 (inception)
  through December 31, 1996 and for the Years Ended December 31, 1997 and 1998......................F-5

Statement of Cash Flows for the Period from April 1996 (inception)
  through December 31, 1996 and for the Years Ended December 31, 1997 and 1998......................F-6

Notes to Financial Statements.......................................................................F-7
</TABLE>



                                      F-1
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

To the Shareholders
Paging Network do Brasil S.A.
Sao Paulo, Brazil

     We have audited the accompanying balance sheets of Paging Network do Brasil
S.A. as of December 31, 1997 and 1998, and related statements of operations,
shareholders' equity (deficit) and cash flows for the period April 17, 1996
(inception) through December 31, 1996 and for the years ended December 31, 1997
and 1998. 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 disclosure in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Paging Network do Brasil
S.A. at December 31, 1998 and 1997 and the results of its operations and its
cash flows for the period April 17, 1996 (inception) through December 31, 1996
and for the years ended December 31, 1997 and 1998, in conformity with generally
accepted accounting principles in the United States.

                                                    ERNST & YOUNG
                                                    Auditores Independentes S.C.

Sao Paulo, Brazil
March 31, 1999



                                      F-2
<PAGE>



                                           PAGING NETWORK DO BRASIL S.A.
                                                   BALANCE SHEET
                                             (Amounts in U.S. dollars)


<TABLE>
<CAPTION>
                                                                       December 31,              December 31,
                                                                           1997                      1998
                                                                     -----------------         -----------------
<S>                                                                  <C>                       <C>  
Assets
Current assets:
     Cash and cash equivalents.................................      $         377,004         $         219,787
     Short-term investments....................................             59,039,317                39,857,633
     Accounts receivable, net..................................                819,835                   567,291
     Refundable taxes..........................................                280,917                 1,383,380
     Pager inventories.........................................              6,825,310                 2,233,240
     Prepaid expenses and other current assets.................                173,030                   415,535
     Pledged securities-current................................             14,842,004                15,764,225
                                                                     -----------------         -----------------
       Total current assets....................................             82,357,417                60,441,091
Fixed assets, net..............................................             18,945,448                21,869,217
Pledged securities.............................................             23,886,559                 8,177,844
Debt issuance costs, net.......................................              6,895,019                 6,443,007
Other assets...................................................                316,020                   339,212
                                                                     -----------------         -----------------
       Total assets............................................      $     132,400,463         $      97,270,371
                                                                     =================         =================

Liabilities and shareholders' equity (deficit) 
Current liabilities:
     Accounts payable..........................................      $       1,881,127         $       1,376,981
     Accrued expenses..........................................              4,255,335                 5,199,318
     Payable to related parties................................              1,571,368                 1,217,914
                                                                     -----------------         -----------------
       Total current liabilities...............................              7,707,830                 7,794,213
Senior notes...................................................            125,000,000               125,000,000
Redeemable preferred stock, without par value
     Authorized shares - 63,000 shares
     Issued and outstanding 30,000 shares......................             33,661,424                37,945,014

Shareholders' equity (deficit)
Cumulative translation adjustment..............................                     --                 3,596,597
Common stock, without par value
     Authorized - 2,037,387 shares
     Issued and outstanding 1,378,401 shares ..................                 30,760                    30,760
Accumulated deficit............................................            (33,999,551)              (77,096,213)
                                                                     -----------------         -----------------
       Total shareholders' equity (deficit)....................            (33,968,791)              (73,468,856)
                                                                     -----------------         -----------------
       Total liabilities and shareholders' equity (deficit)....      $     132,400,463         $      97,270,371
                                                                     =================         =================
</TABLE>


               See the accompanying notes to financial statements.



                                      F-3
<PAGE>



                          PAGING NETWORK DO BRASIL S.A.
                             STATEMENT OF OPERATIONS
                            (Amounts in U.S. dollars)

<TABLE>
<CAPTION>
                                                            From April 17, 
                                                            1996 (inception)                      Year Ended
                                                               Through                           December 31,
                                                             December 31,          -----------------------------------------
                                                                 1996                     1997                    1998
                                                             --------------        ------------------      -----------------
<S>                                                        <C>                     <C>                     <C>
Revenues:
     Services, rent and maintenance revenue..........                     --       $       4,217,273       $      24,211,703
     Product revenue.................................                     --               7,564,045               4,718,106
                                                           -----------------       -----------------       -----------------
Gross revenues.......................................                     --              11,781,318              28,929,809
     Taxes...........................................                     --              (1,577,451)             (2,760,129)
                                                           -----------------       -----------------       -----------------
     Total revenue...................................                     --              10,203,867              26,169,680
Cost of products sold................................                     --              (6,952,092)             (8,248,096)
                                                           -----------------       -----------------       -----------------
                                                                          --               3,251,775              17,921,584
Operating costs and expenses:
     Services, rent and maintenance..................                     --               4,450,359               8,701,887
     Selling and marketing...........................      $         129,464               8,088,531              11,342,788
     General and administrative......................              4,776,593              10,876,022              16,721,759
     Depreciation and amortization...................                 55,582               1,380,028               4,571,641
                                                           -----------------       -----------------       -----------------
        Total operating costs and expenses...........              4,961,639              24,794,940              41,338,075
                                                           -----------------       -----------------       -----------------
        Operating loss...............................             (4,961,639)            (21,543,165)            (23,416,491)
Other income (expense):
     Interest expense................................                     --              (9,892,031)            (17,365,380)
     Interest income.................................                117,210               9,419,572              11,935,917
     Other expense...................................                     --                      --                (431,753)
     Monetary loss...................................                     --                      --              (7,148,993)
     Exchange and translation loss...................                (60,179)             (3,417,898)                     --
                                                           -----------------       -----------------       -----------------
     Total other income (expense)....................                 57,031              (3,890,357)            (13,010,209)
                                                           -----------------       -----------------       -----------------
Net loss.............................................      $      (4,904,608)      $     (25,433,522)      $     (36,426,700)
                                                           =================       =================       =================

</TABLE>


              See the accompanying notes to financial statements.


                                      F-4
<PAGE>

                          PAGING NETWORK DO BRASIL S.A.
                        STATEMENT OF SHAREHOLDERS' EQUITY
                            (Amounts in U.S. dollars)

<TABLE>
<CAPTION>
                                                                                        Other
                                            Common              Accumulated         Comprehensive
                                            Stock                 Deficit               Income               Total
                                            ------              -----------         -------------            -----
<S>                                         <C>                 <C>                 <C>                      <C>
Issuance of common stock of
   predecessor.....................          $5,950,100         $          --          $          --          $5,950,100
Exchange of common stock of
   predecessor for redeemable
   preferred stock.................          (5,940,000)                   --                     --          (5,940,000)
Issuance of common stock...........              18,572                    --                     --              18,572
Net loss for the period............                  --            (4,904,608)                    --          (4,904,608)
                                      -----------------     ------------------     -----------------   ------------------
Balance at December 31, 1996.......              28,672            (4,904,608)                                (4,875,936)

Issuance of common stock...........               2,088                    --                     --               2,088
Net loss for the period............                  --           (25,433,522)                    --         (25,433,522)
Accrued dividends on redeemable
   preferred stock.................                  --            (3,661,421)                    --          (3,661,421)
                                      -----------------     -----------------      -----------------   -----------------
Balance at December 31, 1997.......              30,760           (33,999,551)                    --         (33,968,791)

Net loss for the period............                  --           (36,426,700)                    --         (36,426,700)
Foreign currency translation
   adjustment......................                  --                    --              3,596,597           3,596,597
Monetary adjustment on redeemable
   preferred stock.................                  --            (2,386,372)                    --          (2,386,371)
Accrued dividends on redeemable
   preferred stock.................                  --            (4,283,590)                    --          (4,283,590)
                                      -----------------     -----------------      -----------------   -----------------
Balance as of December 31, 1998....              30,760     $     (77,096,213)     $       3,596,597   $     (73,468,856)
                                      =================     =================      =================   =================
</TABLE>


               See the accompanying notes to financial statements.


                                      F-5
<PAGE>

                          PAGING NETWORK DO BRASIL S.A.
                             STATEMENT OF CASH FLOWS
                            (Amounts in U.S. dollars)

<TABLE>
<CAPTION>
                                                               From April 17, 1996                  Year Ended
                                                               (inception) Through                 December 31,
                                                                   December 31,                    ------------
                                                                       1996                   1997               1998
                                                                ------------------      ----------------   -----------------
<S>                                                             <C>                     <C>                <C>

Operating activities:
   Net loss..................................................     $    (4,904,608)      $   (25,433,522)   $     (36,426,700)
   Adjustments to reconcile net loss to net cash used by 
   operating activities:
      Depreciation and amortization..........................              55,582             1,380,028            4,571,641
      Provision for losses on accounts receivable............                  --               977,010            2,419,364
      Amortization of debt issuance costs....................                  --               329,530              431,180
      Monetary loss..........................................                  --                    --            7,148,993
      Impairment loss on long-lived assets...................                  --                    --            1,112,292
      Loss on sale of equipment..............................                  --                    --               72,492
      Changes in operating assets and liabilities:
      Increase in accounts receivable.....................                  --               (1,796,845)          (2,166,818)
         Decrease (increase) in refundable taxes.............            (839,859)              558,942           (1,224,234)
         (Increase) decrease in pager inventories............          (2,105,955)           (4,719,355)           4,132,452
         (Increase) decrease in prepaid expenses
           and other current assets..........................            (635,109)              462,079             (268,207)
         Increase in other assets............................                  --              (316,020)             (49,293)
         Decrease in pledged securities......................                  --             6,874,783           15,080,936
         Increase (decrease) in accounts payable.............           2,532,676              (651,549)            (454,104)
         Increase in accrued expenses........................             576,374             3,678,961            1,249,939
         Increase (decrease) in payable to related parties...           1,854,492              (283,124)            (304,120)
                                                                  ---------------       ----------------   ------------------
              Net cash used by operating activities..........          (3,466,407)          (18,939,082)          (4,674,187)

Investing activities:
     Purchase of fixed assets................................          (4,569,003)          (15,812,055)         (11,808,542)
     Proceeds from sale of equipment.........................                  --                    --              366,853
     Decrease (increase) in short-term investment............                  --           (59,039,317)          15,284,017
                                                                  ---------------       ----------------   -----------------
              Net cash (used in) provided by investing
              activities.....................................          (4,569,003)          (74,851,372)           3,842,328

Financing activities:
     Proceeds from the sale of common and redeemable
       preferred stock.......................................          20,461,527             9,550,660                   --
     Proceeds of senior notes, net of debt issuance cost.....              18,572           117,745,451                   --
     Pledged securities......................................                  --           (45,573,342)                  --
                                                                  ---------------       ----------------   -----------------
              Net cash provided by financing activities......          20,480,099            81,722,769                   --

Effect of exchange rate changes on cash......................                  --                    --              674,642
                                                                  ---------------       ---------------    -----------------
Net decrease in cash and cash equivalents....................          12,444,689           (12,067,685)            (157,217)
Cash and cash equivalents at beginning of period.............                  --            12,444,689              377,004
                                                                  ---------------       ---------------    -----------------
Cash and cash equivalents at end of period...................     $    12,444,689       $       377,004    $         219,787
                                                                  ===============       ===============    =================

Supplemental disclosures of cash flow information: 
     Cash paid during the year for:

       Interest on senior notes                                   $            --       $     8,437,500    $      16,875,000
                                                                  ===============       ===============    =================

</TABLE>


               See the accompanying notes to financial statements.


                                      F-6
<PAGE>

                          PAGING NETWORK DO BRASIL S.A.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998
                            (Amounts in U.S. dollars)

1.       Organization

     Paging Network do Brasil S.A. (formerly Warburg Paging do Brasil Ltda., the
"Company") was formed on April 7, 1996 through an investment by Warburg, Pincus
Ventures, L.P. During 1997, the Company started to provide paging services in
Sao Paulo and Rio de Janeiro and offers extended paging services to eight other
cities in Brazil.

         In October 1996, the Company increased its capital to approximately
$5.5 million and in December 1996, as a result of capital contributions of three
new shareholders, received approximately $15 million of additional capital. In
December 1996, the Company changed its name from Warburg Paging do Brasil Ltda.
to Paging Network do Brasil Ltda. and then to Paging Network do Brasil S.A.
following a change in its legal formation from a limited liability company
(Ltda.) to a closed corporation (S.A.). In June 1997, the Company issued $125
million principal amount of 13-1/2% Senior Notes due June 6, 2005 ( the "Senior
Notes"). Prior to consummation of the Senior Note offering, the Company received
from shareholders approximately $9.5 million in connection with the issuance of
additional shares of redeemable preferred stock, and effected a stock split of
40.74774 for each issued and outstanding share of common stock.

2.       Summary of Significant Accounting Policies

     The financial statements have been prepared in accordance with generally
accepted accounting principles in the United States ("U.S. GAAP") in U.S.
dollars.

     The Company's significant accounting policies are as follows:

Foreign Currency Translation

     Until December 31, 1997, the financial statements were translated from
Brazilian reais to U.S. dollars in accordance with the provisions of Statement
of Financial Accounting Standards (SFAS) No. 52 as it applies to entities
operating in highly inflationary economies. Pager inventories, fixed assets and
intangibles and 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 period end exchange rates,
and all other income and expense items were remeasured at average exchange rates
prevailing during the period. Remeasurement adjustments were included in
exchange and translation gains (losses).

         Effective January 1, 1998, the Company determined that Brazil ceased to
be a high inflationary economy under SFAS 52. Accordingly, as of January 1,
1998, the Company began using the real as the functional currency. 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 adjustments are
not included in determining net income but reported in other comprehensive
income. Transaction (losses) associated with the Company's net U.S. dollar
liability position is included in monetary (losses).


                                      F-7
<PAGE>

Foreign Currency Hedge Transactions

         During 1997 and 1998, the Company entered into various foreign currency
transactions including swap agreements, with maturities of one to 12 months, to
hedge its foreign currency exposure. At December 31, 1997 and 1998, the Company
had an investment which was the equivalent of a U.S. dollar-denominated
investment of $51 million and $40 million, respectively. During 1997 and 1998,
these transactions reduced a portion of the devaluation risk associated with the
Company's $125 million dollar payable. Currency gains on investment transactions
designated as hedges are yield adjustments and included in interest income.

         The counterparties to the Company's swap agreements consist of a number
of major international financial institutions. The credit ratings and
concentration of risk of these financial institutions are monitored on a
continuing basis and present no significant credit risk to the Company.

Revenue Recognition

         The Company recognizes revenue under service, rental and maintenance
agreements with customers as the related services are performed. Advance
billings for services are deferred and recognized as revenue when earned. Sales
of pagers are recognized upon delivery. Sales commissions are included in
selling and marketing expenses. The Company will lease certain pagers under
month-to-month arrangements.

Advertising Costs

         The Company expenses the costs of advertising as incurred. Advertising
expense during 1996, 1997 and 1998 was $0, $2,100,000 and $3,437,000,
respectively.

Reclassification

         Certain 1996 and 1997 amounts have been reclassified to conform with
the 1998 presentation.

Cash Equivalents

         The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Short-term
investments are liquid investments with a maturity of greater than three months
for which carrying values approximate market values.

Allowance for Doubtful Accounts

         The Company had an allowance for doubtful accounts of $977,010 at
December 31, 1997 and $1,400,000 at December 31, 1998. Charges to the allowance
during 1996, 1997 and 1998 were $0, $0 and $2,000,000, respectively.


                                      F-8
<PAGE>

Use of Estimates

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

Inventories

         Inventories consist of certain types and brands of pagers (the
subscriber devices) which are held primarily for resale. Inventories are
recorded at the lower of average cost or market.

3.       Related Party Transactions

         The Company has agreed to reimburse its shareholders for certain
transaction costs associated with the formation of the Company and the
$125,000,000 senior note offering consummated on June 6, 1997. As of December
31, 1997 and 1998, the Company had payables of approximately $900,000 and
$968,000, respectively, to Warburg, Pincus and approximately $500,000 and
$250,000 to Paging Network, Inc.

4.       Long Term Debt

         On June 6, 1997, the Company issued $125,000,000 principal amount of
13-1/2% Senior Notes due June 6, 2005. Interest is payable semi-annually in
arrears on June 6 and December 6 of each year. Of the $125,000,000 proceeds
approximately $45,600,000 was used to purchase U.S. government securities,
scheduled interest and principal payments on which are in amounts sufficient to
provide for payment in full when due of the first six scheduled interest
payments on the Senior Notes. Debt issuance costs are capitalized and amortized
over the term of the debt under the effective yield method.

         The Senior Notes are redeemable on or after June 6, 2001 at the option
of the Company, in whole or in part from time to time, at specified redemption
prices declining annually to 100% of the principal amount on or after June 6,
2004, plus accrued interest. The Senior Notes contain certain covenants that,
among other things, limit the ability of the Company to incur additional
indebtedness or issue preferred stock, pay dividends or make certain other
restricted payments. Upon a change of control, the Company is required to make
an offer to purchase the Senior Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any. In
accordance with the covenants of the Senior Notes and the Company's current
level of leverage, at December 31, 1998 it is unable to make any dividend
payments.


                                      F-9
<PAGE>

5.       Accrued Expenses

         Accrued expenses at December 31, 1997 and 1998 are comprised of the
following:

<TABLE>
<CAPTION>
                                                                  1997             1998
                                                                  ----             ----
<S>                                                          <C>              <C>
                Excise taxes payable                         $     141,013    $     334,174
                Withholding taxes payable...............           392,177          247,733
                Payroll and other benefits payable......         1,419,651        1,439,289
                Accrued interest payable................         1,125,000        1,125,000
                Other...................................         1,177,494        2,053,122
                                                             -------------    -------------
                                                             $   4,255,335    $   5,199,318
                                                             =============    =============
</TABLE>


6.       Redeemable Preferred Stock

         The redeemable preferred stock has an accruing dividend with an
effective annual rate of 12% compounding quarterly from its issuance on December
11, 1996. On the fifth anniversary of its issuance, the dividend increases to an
effective rate of 14% compounding quarterly. On the sixth anniversary all
previously accrued dividends will be paid in kind. The annual dividend rate will
increase to 16% in the seventh year, 18% in the eighth year, and 20% in the
ninth and tenth years. After the sixth anniversary, subject to the terms of the
Indenture, all dividends will be payable in cash. The Company is required to
redeem the redeemable preferred stock at $1,000 per share plus accrued and
unpaid dividends on the tenth anniversary of its issuance.

         The holders of the redeemable preferred stock are entitled to voting
rights limited to specific matters included on the Company's by-laws.

         The amount of accrued and unpaid dividends on the redeemable preferred
stock at December 31, 1997 and 1998 was $3,661,424 and $7,945,014, respectively.
There was no such accrual as of December 31, 1996.

7.       Fixed Assets

         Fixed assets at December 31, 1997 and 1998 are comprised of the
following:

<TABLE>
<CAPTION>
                                                                                                   Period of
                                                                  1997              1998          Depreciation
                                                                  ----              ----          ------------
<S>                                                          <C>               <C>                <C>
                Furniture and fixtures..................     $     1,384,612   $     1,915,206      10 years
                Equipment...............................          13,123,646        13,643,133     5-10 years
                Pagers..................................           2,563,325         7,888,885      2.5 years
                Leasehold improvements..................           3,309,475         4,104,869       5 years
                                                             ---------------   ---------------
                                                                  20,381,058        27,552,093
                Less - Accumulated depreciation.........          (1,435,610)       (5,682,876)
                                                             ---------------   ---------------
                                                             $    18,945,448   $    21,869,217
                                                             ===============   ===============
</TABLE>


                                      F-10
<PAGE>

8.       Commitments

         The Company has entered into various office space and transmission
antenna rental agreements. These agreements are readjusted periodically for
inflation. Rental expense commitments at December 31, 1998 are as follows:

                  1999     $2,755,800
                  2000     $2,867,000
                  2001     $2,984,000
                  2002     $3,107,500
                  2003     $3,236,700

         Total rental expense for the periods ended December 31, 1996 and 1997
and 1998 was $124,000, $2,011,000 and $3,020,600, respectively.

9.       Income Taxes

         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 $26.4 million and $48.3
million at December 31, 1997 and 1998, respectively. 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.
For reporting purposes, a valuation allowance of 100% has been recognized.

10.      Non-recurring Charges

         During the year ended December 31, 1998, the Company recorded a charge
of approximately $1.3 million in connection with the consolidation of its
dispatch centers, which were formerly in Rio de Janeiro and Sao Paulo, in Sao
Paulo. The charge was recorded as an operating expense in the fourth quarter
1998 and included in general and administrative expense. Included in such amount
is an impairment loss on long-lived assets of approximately $1.1 million.

11.      Subsequent Event

         The Brazilian government announced a change in monetary policy related
to exchange rates on January 13, 1999. The Central Bank of Brazil announced that
they would use a new broad band of 1.20 to 1.32 R$/US$ and eliminate the
previous band of 1.12 to 1.22 R$/US$. Upon the implementaion of the new broad
band on January 13, 1999, the Real devaluad approximately 8% as the exchange
rate reached the the upper limit of the band. On January 15, the Central Bank
opted to revoke the band system and left the Real to trade freely against
foreign currencies.

         On March 31, 1999, the Real was being negotiated at the rate of R$1.72
to US$1.00, a 30% devaluation since December 31, 1998. If the 30% devaluation of
the Real against the US dollar had occurred on December 31, 1998, the impact
based on the December 31, 1998 Real exposure and current translation procedures
(using SFAS 52), would be a foreign currency translation adjustment of
approximately US$18 million charged to shareholder's equity (deficit).


                                      F-11
<PAGE>

         Currently, the Company is unable to estimate the ultimate effects of
the new foreign exchange trading policy on its 1999 financial position, and the
related impact on its future operations and its cash flows, nor can it
reasonably estimate if the current foreign exchange rates will remain at the
same levels.


                                      F-12