<PAGE>

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

                                    FORM 10-K

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

                      For the year ended December 31, 1999
                                       or
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          For the transition period from ____________ to _____________

                        Commission File No. 333-82305-01

                                  COMPLETEL LLC
             (Exact name of Registrant as specified in its charter)

           Delaware                                          52-2073805
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification No.)

   6300 South Syracuse Way, Suite 355
       Englewood, Colorado 80111                                80111
(Address of principle executive offices)                     (Zip Code)

       Registrant's telephone number, including area code: (303) 741-4788

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

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

     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 and (2) has been subject to such filing
requirements for the past 90 days. Yes    No X
                                      ---   ---

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

     The aggregate market value of the voting stock held by nonaffiliates of the
Registrant, computed by reference to the last sales price of such stock, as of
the date hereof: N/A.
                 ---

     The number of common units outstanding as of March 27, 2000 was 128,870.59
units.
<PAGE>

Item 1.  Business

     CompleTel LLC is a holding company with no operations other than the
operations conducted by our direct subsidiary CableTel Management, Inc. and our
indirect subsidiary CompleTel Europe N.V. We own 100% of CableTel Management,
Inc., a corporation we formed to provide personnel and management services to us
and our subsidiaries. Our principal operations are conducted through CompleTel
Europe N.V., a Netherlands public company that recently completed its initial
public offering, scheduled to close on March 30, 2000. Following the initial
public offering, we will hold approximately 77.45% of the outstanding common
stock of CompleTel Europe, assuming no exercise of the underwriter's
over-allotment option. CompleTel Europe currently has operations in France,
conducted through CompleTel SAS, in Germany, conducted through CompleTel GmbH,
and in the United Kingdom, conducted through CompleTel UK Limited. Unless
otherwise indicated, "we," "our," "us" and words of similar import used in this
report refer to the business conducted by CompleTel Europe N.V. and its
subsidiaries.

     Through CompleTel Europe, we are a rapidly-growing CLEC operating primarily
in France and Germany. Our vision is to become a leading alternative broadband
provider of voice, high-speed data and Internet protocol-based services in
selected local markets across Europe. We target business end-users, other
telecommunications carriers and Internet-related providers in large metropolitan
areas with limited local access competition. Using our state-of-the-art, fiber
optic, metropolitan area networks (MANs), we offer a wide range of voice, data
and Internet-related services to our directly connected, on-net, customers,
including local and long-distance voice services, dedicated high-capacity access
and a suite of Internet-related access and applications.

     We believe that the rapid increase in demand for high-capacity data
telecommunications services and an absence of alternative local providers have
left our targeted customer segments largely underserved and provide us with
significant opportunities to grow our business. We are currently implementing
our business plan to deploy and operate our metropolitan area networks in 11
cities in France and Germany and provide Internet-related services in these
cities and the United Kingdom. As of February 25, 2000, we had commercially
launched services in nine cities, Paris, Grenoble, Lyon, Marseille and Lille in
France, and Berlin, Essen, Munich and Nuremberg in Germany. We expect to become
operational in two additional cities, Nice and Toulouse in France, during the
first half of 2000. We plan to use the proceeds from CompleTel Europe N.V.'s
initial public offering to expand our metropolitan area networks in our existing
cities, deploy networks in an additional six cities, Amiens, Nantes and Rouen in
France and Hamburg, Mannheim and Stuttgart in Germany, and to accelerate the
expansion of our Internet-related services. We had deployed over 447 route
kilometers as of February 25, 2000.

     In each of our target markets, we have focused on achieving an early market
position to secure a number of competitive advantages. We believe these
advantages include continuing to recruit and retain experienced personnel,
growing and developing a customer base, securing critical rights-of-way, and
promoting our name recognition.

     We have assembled a strong management team that we believe has the
necessary management and telecommunications experience for us to achieve our
goals. Our senior management collectively have over 100 years of
telecommunications industry experience, which we combine with experienced
regional management teams familiar with the local communities and businesses
that we serve. Our national and local managers have broad telecommunications
industry experience with companies such as COLT, Cegetel, Alcatel, Bosch
Telecom, VIAG Interkom, Siemens, France Telecom and Deutsche Telekom. In
addition, we benefit from the extensive telecommunications industry experience
of our major equity investors, which include: funds sponsored by Madison
Dearborn Partners, a Chicago-based private equity firm, experienced with
investments in other telecommunications providers, such as Focal Communications
Corporation, Nextel Communication Inc. and Allegiance Telecom, Inc.; LPL
Investment Group, an investment firm controlled by Lawrence F. DeGeorge; and
funds sponsored by Meritage Investment Partners, a Denver-based private equity
firm that invests exclusively in telecommunications companies. Two of our
directors, James C. Allen and Royce Holland, provide us with significant
additional competitive local exchange carrier experience. Mr. Allen was a
co-founder and the former chief executive officer of Brooks Fiber Properties and
currently serves as a director of several telecommunications companies including
MCI WorldCom.

                                       1
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Mr. Holland was a co-founder of both MFS Communications and Allegiance Telecom,
Inc. and continues to serve as a director and chief executive officer of
Allegiance.

Attractive and growing markets

     We have selected the French and German telecommunications markets as we
believe they offer significant opportunities. These are the two largest
telecommunications markets in continental Europe as measured by revenues,
estimated to be $24.7 billion in France and $36.2 billion in Germany, in 1998,
according to Tarifica.

On-net customer-driven network

Overview

     Our market entry strategy is to focus on providing local access to an
underserved on-net customer base. We believe there are substantial long-term
benefits of our on-net strategy as compared to an off-net reseller strategy:

     .    substantial increased product offerings made possible by direct
          connection;
     .    higher revenue per customer;
     .    lower interconnection costs and improved operating margins; and
     .    increased loyalty of customers and reduced churn.

     Our integrated network architecture includes switches and data routers,
customer premise equipment and metropolitan area network fiber rings. Our
integrated network supports local and long-distance voice, high-speed packetized
data and services based on the Internet delivery platform. We believe our
networks offer greater capacity, higher reliability and lower operating costs
than those of the incumbent carriers in the areas we serve. The integrated
design of our networks significantly reduces our cost of providing a bundled
service offering.

     To deliver high-quality, reliable telecommunications services, we employ a
state-of-the-art, uniform, high-capacity, protocol-transparent technology
platform. Our platform encompasses digital telephone and packet data switches
and synchronous digital hierarchy (SDH) transmission technology compliant with
European telecommunications standards, with a centralized network management and
monitoring centers designed to readily accommodate future technology upgrades.

Customers and route design

     We have developed our network designs based on the needs and requirements
of our target customer segments using our knowledge of and experience in the
facilities-based competitive local exchange markets. We also draw on the
expertise of a broad range of independent third-party consultants.

     We target high density business areas which currently experience limited
competition from other local carriers where customers purchase their
telecommunications services principally from the incumbent operators or from
resellers.

     In order to identify specific target customers within identified service
areas, we complete a detailed geocoded analysis of demographic, competitive,
economic and telecommunications demand characteristics within each target city.
Ultimately, we generate a list of prioritized prospects in each target area and
a map of the target service area pinpointing the location of each potential
customer, and key demographics of those potential customers. We then plot a
route for the network, with the precise location of the route being driven to
ensure the highest possible density of customers as close as possible to each
route.

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Network design principles

     A key feature of our network design is its adaptability to changes in
service offerings, network standards, and new technology and protocols. Our
network design enables us to provide high-transmission to our customers while
providing substantial potential for expansion in a cost-effective manner. Our
networks are able to efficiently support a wide mix of telecommunications
traffic and protocols, including telephony, data, digital videoconferencing,
virtual private networks (VPNs), private lines, and Internet. Our network is
based on the following principles:

     .    Scalability. We can expand both transmission capacity and switching
          capacity rapidly and cost-effectively as traffic volume and capacity
          demands increase. We install duct systems typically with six ducts.
          Each duct is capable of holding more than three hundred fibers. Our
          current deployment uses one duct. The remaining ducts can accommodate
          additional capacity for our use, or can be sold to or swapped with
          other telecommunication service providers. As we install our duct
          system, we also install the access duct to the points of entry of
          buildings immediately adjacent to the network route to expedite adding
          new customers.

     .    Revenue-driven deployment schedule. Using our disciplined geomarketing
          design process, we design and deploy our networks to maximize
          potential revenue generation while minimizing our build-out costs.

     .    Reliability. Our networks provide redundancy at multiple levels. The
          ring structure is designed to provide dual direction routing
          capability that allows the connection to be completed in the event of
          network failure. Additionally, our external carrier interconnects have
          alternative routing capability which should assure access to
          alternative carriers. We have chosen vendors that we believe provide
          reliable and quality equipment, such as Nortel, Siemens, Ciena and
          Cisco.

     .    A mix of local access technologies. We employ different technologies
          as we believe it allows us to: (1) meet customers' changing
          communication requirements; (2) provide investment-justified rapid
          expansion of the network coverage; and (3) respond to a wide range of
          integration requirements among different customer segments. The link
          between the network and the customer is typically fiber, but may also
          be copper or wireless transmission. We plan to employ multiple
          technologies including asynchronous transfer mode (ATM), Ethernet,
          frame-relay, SDH, wave division multiplexing, packet data or Internet
          protocol routing. On a case by case basis, we extend the reach and
          efficiency of our core network rings through alternative methods, such
          as leased fiber or point-to-point wireless.

     .    Protocol transparent and future proof. We are installing transmission
          equipment that should allow us to converge circuit-switched and data
          networks, and extend the value of our circuit switches into the
          future. As these networks effectively merge, traffic can move more
          economically over data networks, resulting in simplified network
          management. We are continually reviewing our designs to ensure
          flexibility and rapid evolution, as we believe that over time voice,
          data, video, Internet, intranets and extranets will interconnect with
          our seamless network platform.

Network infrastructure

     .    Metropolitan area networks. The core of our network is the fiber loops
          that we build in selected areas. MANs comprise single or several fiber
          optic rings that allow customers direct connection within a city or
          metropolitan area to our network. We construct MANs that have route
          diversity and a self-healing architecture, allowing for traffic to be
          re-routed in case of a network outage, which should allow us to
          provide the highest levels of reliability.

     .    Construction and installation. The local access networks consist of
          fiber deployed in newly constructed ducts and existing ducts. The time
          necessary to construct a new fiber optic network varies, depending
          upon factors such as the size of the fiber ring to be installed,
          whether the construction is underground or aerial, city specific
          rights-of-way process, whether the conduit is in place or requires
          construction, and the initial number of buildings targeted for
          connection to the fiber ring. We install our fiber optic cables in
          conduits

                                       3
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          that we own or that we lease from third parties. In certain
          isolated instances, however, to achieve maximum speed to market, we
          utilize a "smart-build" strategy and lease fiber trunking capacity
          from third parties. We also may lease conduit or pole space from
          utilities, railroads, carriers, provincial highway authorities, local
          governments and transit authorities. These arrangements are generally
          for multi-year terms and have renewal options.

     We use a five-step deployment process for each MAN:

          -    We determine the preliminary route of the MAN by completing a
               detailed analysis of demographic, competitive, economic and
               telecommunications demand characterization of each target city.

          -    Our local management and sales teams then conduct a walk-by
               inspection of the proposed route.

          -    We submit requests for rights-of-way and construction permission
               to the appropriate municipal authorities.

          -    Upon approval, we select a local civil construction firm which
               completes the construction.

          -    Nortel, acting as our turnkey network assembler, completes the
               installation of SDH and data transmission equipment, and
               preassembles customer premise equipment.

     .    Points of presence (POPs) and distribution nodes. POPs are secured
          interconnection points with other carriers, typically with a minimum
          of two interconnect POPs per market. We purchase or lease sites, and
          construct POPs in each market at the location of other carriers,
          public Internet peering locations and local telehouses. Distribution
          nodes are located in leased or purchased facilities to house
          electronic equipment which provide the ability to add and remove voice
          and data traffic from the fiber backbone destined to a customer or an
          interconnection point. These nodes are secured,
          environmentally-controlled, and continuously monitored stand-alone
          facilities.

     .    Switch and Internet data centers. We construct switching centers in
          most of our markets. Our switching centers are environmentally
          controlled, secure sites, featuring back-up AC/DC power, emergency
          back-up battery and power generator, heating, ventilation and
          air-conditioning systems, redundant communication facilities, fire
          suppression and direct connection to our high-speed fiber optic city
          MAN backbone. Our switching centers are continuously monitored by our
          network operation centers. The purchased or leased facilities are
          typically sized between 600 square meters and 4,000 square meters.
          Specific accommodations are made to provide for the provision of
          co-location and hosting services. Co-location services provide our
          customers with access and the space to install their own equipment in
          our POPs. Our co-location centers offer customers a secure location,
          controlled environment, monitoring and immediate access to high-speed
          connections to the Internet and our voice switching and data
          networking equipment. In addition, Internet data centers are being
          deployed to support our Internet strategy, leveraging our
          carrier-class switch center facilities. Our switching center assets
          facilitate the rapid deployment of our Internet data centers.

     .    Network operation centers. We have established two network operating
          centers, in Paris, France, and Munich, Germany, that allow centralized
          and integrated management of all the equipment deployed in our MANs
          throughout Europe. These centers continuously monitor performance of
          all the various pieces of transmission and switching equipment, the
          operating systems, the performance of customer transmission paths and
          circuits and customer premises equipment in each of the MANs. The
          center in France is located at Nanterre, which is near our French and
          European headquarters in La Defense in Paris. The center in Germany is
          located in our southern German regional management center in
          Haar/Munich.

     .    SDH and Internet protocol technology. We provide our data, Internet
          connectivity and voice services over our MANs. Our MANs use European
          standards-based synchronous digital hierarchy (SDH) transmission
          technology and Internet protocol to transport information along our
          fiber optic backbone. Our SDH

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          networks are based on self-healing concentric rings, a technology that
          routes traffic through an alternative path in the event there is a
          point of failure. This design results in a highly reliable network
          which is less susceptible to disruptions in the event of breakage at
          one point. Our data services architecture is based on the Internet
          protocol, which is the framework for the evolving network standard
          routing protocol of choice for packet data networking.

     .    Interconnection and service agreements. We enter into interconnection
          or service agreements with a range of other operators for transmission
          of traffic outside of the reach of our local loops. We have entered
          into principal national interconnection agreements with France Telecom
          and Deutsche Telekom, the incumbent operators in France and Germany,
          respectively. We also have entered into agreements with other
          significant national and international carriers, such as MCI WorldCom,
          Telecom Development, Siris and RSLCom. We are in the process of
          developing additional physical interconnections with the incumbent
          public operators, at both their tandem switching centers and the end
          office/serving wire centers in each of our markets. Similarly, we are
          interconnecting our networks with Internet backbone operators and
          public Internet peering locations with the intention to form a Tier
          one Internet traffic aggregation network, connecting France, Germany,
          the United Kingdom and the U.S.

     .    Access agreements and rights-of-way. Our MANs are primarily
          constructed by digging trenches along rights-of-way by obtaining
          rights to use the property from local authorities. Where necessary or
          economically preferable to digging trenches, we also secure other
          rights-of-way agreements with highway commissions, utilities,
          political subdivision, subway operators and others. Speed to market is
          critical in securing rights-of-way because each successive request by
          a new entrant generally has a reduced probability of being granted.

          We have established and plan to continue to establish relationships
          with electric and other utility companies in our target markets to
          obtain rights-of-way access. We intend to use these relationships to
          maximize the penetration and speed of entry and reduce the cost of
          deploying our network in our target markets. In Paris, France, we have
          received approval from the city authorities to lay our fiber in the
          underground sewer system. This agreement enables us to lay our fiber
          in a cost-effective manner because it entails minimal excavation of
          city streets as the system's conduits connect to nearly all buildings
          in Paris.

          We must secure the rights-of-way from local authorities as we
          construct our networks over property in the public domain. Certain
          cities, such as Lyon, Marseille and Paris in France, and Munich, in
          Germany, have adopted framework agreements that govern access to the
          public domain roadways and non-roadways such as sewers, subways,
          tramways, and waterways. We have signed these agreements and have
          secured the rights-of-way, as necessary, to deploy our network over
          and under city property, and use city streets, poles and bridges to
          connect our network. In certain situations, the conduits we use to
          access buildings already benefit from existing rights-of-way.

     .    Building entry license agreements. Before providing services to
          customers, we must obtain permission from the property owner. We have
          adopted a collaborative approach with property developers and owners.
          Generally, they are willing to provide access to their buildings since
          we are providing enhanced services to the building, which should
          increase its value. Our agreements typically contain a provision for
          access by our network to a specified point inside the building, with a
          renewable right of access regarding inside wiring to the premises of
          our clients and allow us access on a non-exclusive basis.

     .    Technology supplier relationships. In 1999, we entered into an
          agreement with Nortel Networks to supply us equipment, including SDH,
          voice and data switching, data routers and customer premise equipment,
          engineering services, NOC management, inventory management, equipment
          installation and first level maintenance during the initial start up
          phase of each market. We selected Nortel Networks to provide the core
          components of our metropolitan area networks to ensure compatibility
          across all of our networks. In Germany, we also purchase voice
          switching equipment from Siemens AG.

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Complementary local access technologies

     Although we intend to provide our services over our own fiber optic network
in each of our targeted markets, we may use point-to-point wireless technology
on a case-by-case basis to complete fiber rings or to provide services to those
customers who we may not be able to serve on-net. This complementary strategy
provides us with rapid access to buildings and allows us to gain market
penetration and take advantage of market opportunities before we have completely
constructed our network or to extend the reach of the fiber networks.

     We intend to apply for licenses to provide point-to-multipoint wireless
services to supplement our fiber-based network. These licenses for high
frequency wireless facilities can be used to provide services that we will use
to serve outlying customers to whom it is not economical or technologically
feasible to provide fiber cable, to infill our existing network and to serve
other areas where customer density or other constraints make installing a fiber
network less attractive or economical than providing wireless services. In June
1999, we received from the Autorite de Regulation des Telecommunications (ART)
an experimental point-to-multipoint wireless license in Marseille, France. We
filed for a permanent point-to-multipoint license for 18 regions in France on
January 31, 2000, and, as a result, our experimental authorization in Marseille
has been extended through the date that a permanent license is awarded or
denied. We expect a decision on the license within approximately six months from
January 31, 2000. We do not know the extent of competition for these licenses,
and their award will be based on certain objective criteria set forth in the
call for tender and, in part, discretionary on the part of the regulatory
authority. We may not receive any licenses or licenses for all of the
frequencies and locations for which we applied. If we are unable to supplement
our network with wireless facilities, we may be unable to serve some areas and
customers that will be served by those receiving the licenses.

     In certain cases where existing copper facilities within a customer's
premises or a campus business park environment can be used, we also may deploy
DSL transmission technology over leased facilities to extend the reach of our
local networks. As allowed by regulations, we intend to provide DSL services to
an expanded base of customers. DSL offers enhanced performance for small and
medium-sized businesses currently accessing the Internet with standard modems or
integrated services digital network connections that are too small to
economically connect to our fiber optic network. It provides greater speed,
reliability and flexibility than standard modem or ISDN connections over copper
lines.

High-capacity telecommunications and Internet services

     We offer a wide range of products and services, individually and in
bundles.

Basic voice services

     Through our direct connections to customers, our basic fixed wireline voice
services cover all outbound calls, including local, national, international and
fixed-to-mobile services. We bundle resold long-distance with our local
services, and create bundled packages including Internet access. In isolated
cases, we may provide indirectly connected voice services available to off-net
customers, to allow them to access our long-distance services using a prefix
code. Our basic voice services also include calling features, such as call
forwarding, call waiting, speed dialing and call line identification. While the
growth rate basic voice services is lower than other telecommunications
segments, they currently represent the largest segment of telecommunications
services in France and Germany.

Enhanced voice service portfolio

     We plan to provide:

     .    Virtual private network. VPN utilizes the facilities of a public
          network but operates as a closed user group, to provide customers with
          multiple locations the convenience of a private network with the scope
          and scale of a public network.

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     .    Unified messaging. Unified messaging allows customers to access
          fax-mail, voice-mail and e-mail from any location, including the
          Internet.

     .    Personal numbering services. Personal numbering services provide
          customers with flexibility in directing the location of incoming
          calls. Customers will receive a number from our number series and
          calls to this number will be directed by our network to a
          pre-programmed mobile phone, fixed line or international number.

     .    Teleconferencing. Teleconferencing allows three or more parties to be
          connected and hold a telephone discussion. We may also provide visual
          presentation, recording and subconferencing.

Data services

     Our MANs allow customers to utilize our high-capacity technology to deliver
their data traffic to end-users and carriers at substantially lower costs and
higher reliability than the incumbent operators.

     .    Dedicated access leased lines. Our local dedicated access and private
          line services are available for data connections over our own MANs at
          transmission speeds from 64 kbps to beyond multiples of 2 gigabytes
          per second on lines ranging from ISDN lines to Stm-16 circuits. We
          will offer LAN to LAN services and will also consider specific
          requests for building private or closed-user group networks from
          private and government authorities.

     .    Internet protocol services. We expect to provide a variety of
          Internet, intranet, and extranet services utilizing Internet protocol
          (IP). We also plan to include a range of flexible high-capacity
          Internet protocol-based services, which will allow customers with
          uneven data transmissions capacity needs to pay for transmission on an
          as-used basis. In such cases, our customers will be charged only for
          the excess capacity used beyond their monthly flat-rate capacity. We
          plan to interconnect our IP services with a variety of peering and
          transit relationships, including aggregating Internet traffic in a
          Tier one level backbone between France, Germany, the United Kingdom
          and the U.S.

     .    Asynchronous transfer mode (Atm) services. Atm is a recently
          commercialized technology which allows customers with requirements to
          move large amounts of data between locations quickly and reliably. We
          expect to introduce Atm services for multi-site customers, LAN to LAN
          interconnection, and high-speed Internet access for Internet service
          providers.

     .    DSL. We are developing plans to provide digital subscriber line
          services, as regulations allow. DSL technology sends high-speed
          digital signals over a customer's existing copper telephone wires
          through special modems installed in the customer's premises and the
          telephone network. We plan to provide DSL to new targeted market
          segments, generally businesses with less than 35 employees and
          heavy-user residences.

Internet services

     In addition to pursuing the retail and carrier markets, we are developing
Internet-related services. We have acquired two Internet service providers to
further our Internet strategy. In March 1999, our French operating company
acquired all of the outstanding stock of Acces et Solutions Internet S.A.R.L.,
an Internet service provider based in Lyon. Our operating company in the United
Kingdom acquired all of the outstanding stock of iPcenta (formerly known as Web
International Networks Limited), an Internet service provider based in London,
in June 1999. We intend to leverage our facilities and operating presence in our
markets across France and Germany to facilitate the rapid roll-out of
Internet-related services. To accelerate the launch of these services, we have
established a separate dedicated Internet division.

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     To implement our Internet strategy, we intend to accelerate the upgrade of
each of our switch centers in France and Germany to create Internet data
centers, including large centers in Paris and Munich (SuperPOPs), and smaller
centers in the regional switch centers (MetroPOPs) and, subject to obtaining a
waiver from our banks under our credit facility, we intend to install a center
in London. We provide space in our switch centers for other carriers and
Internet-related providers to locate their equipment. We intend to provide
carrier-class quality reliability, powering and security. We intend to
progressively provide a range of Internet services through these IDCs,
including:

     .    Dedicated access. We offer dedicated Internet access at a variety of
          speeds.

     .    Co-location and complex hosting. We offer secure space for customers
          to locate their Internet equipment, and plan on offering on our own
          computer servers, a package of services to provide customers with
          turnkey Internet solutions.

     .    Termination service. We plan on offering Internet service providers
          co-locating in our facility a share of any termination revenue paid by
          other carriers for incoming calls.

     .    Server support. We plan on providing services to support on ongoing
          maintenance and management of customer's servers.

     .    Operating system support and other professional services. We plan on
          providing value-added services to support customers in the provision
          of their operating software and other technical professional services.

     .    Packaged content. We intend to aggregate packages of bundled content
          to enable our customers to efficiently access valuable web sites and
          web-based information.

     .    Application services. We plan to provide a host of applications, on a
          shared basis, for our customers to access certain applications,
          designed for targeted segments.

     We believe there is significant customer demand among Internet service
providers, Internet protocol-based carriers and corporate customers for these
services in all of our targeted cities. We intend to roll-out these services in
geographic and vertical phases. We plan to have Cisco Systemstm , Microsoft(tm)
and UNIX accredited staff on site at these IDCs, 24 hours a day, seven days a
week. Our staff will be available to customers on a call-up basis as a function
of service level agreements.

Customer segments

     We target three principal customer segments with a variety of existing and
planned services. We provide high-quality communications solutions for our
customers, based upon their internal and external communications needs, who are:

     .    Small-and medium-sized business, government and institutional
          end-users. Businesses with an average of 35 employees up to 1,000
          employees, local governmental entities and institutions such as
          hospitals and educational establishments.

     .    Internet-related providers. Major Internet service providers and other
          Internet-related companies.

     .    Other telecommunications carriers. Long-distance and international
          carriers and resellers.

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Our products and services include:

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
Customer Segment                 Products and Services
---------------------------------------------------------------------------------------------------------------------
<S>                              <C>                                         <C>
Business, government and
institutional end-users          Voice--local and long-distance:             Inbound
                                                                             Outbound

                                 Internet access:                            Single vendor router
                                                                             Multi vendor router*

                                 Dedicated circuit:                          Intra-city
                                                                             Inter-city*

                                 Internet services:                          Low-end complex hosting
                                                                             e-commerce portal
                                                                             Domain name registration
                                                                             Consulting
                                                                             OS and server support*
                                                                             Application support*

                                 MAN:                                        Case by case
                                 LAN to LAN*

---------------------------------------------------------------------------------------------------------------------
Carriers                         Dedicated circuits
                                 High-end complex hosting and co-location
                                 Call-termination*
---------------------------------------------------------------------------------------------------------------------
Internet-related providers       Inbound call termination:                   Basic
                                                                             Improved*
                                 Dedicated circuits
                                 High-end complex hosting and co-location
                                 OS and server support*
                                 Applications support*
---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Development stage

     We believe that telecommunications users broadly will benefit from the
suite of services we offer, which is an alternative, high-quality and
facilities-based source for a comprehensive range of telecommunications
services. We believe there is a market demand for vendor diversity as businesses
seek competitive pricing, flexible and responsive service, greater reliability
and security and, generally, greater bargaining power.

     We have chosen to focus on business end-users, Internet-related providers,
and carriers given our belief that:

     .    These segments represent the most profitable portion of the
          telecommunications market based on their higher usage volumes,
          high-growth, lack of competitive alternatives and more sophisticated
          requirements;

     .    These segments are capital-efficient to serve, given their
          concentration within any particular target area; and

     .    These segments generally are more receptive to exploring high-quality
          alternatives to the incumbent carriers.

Business end-users

     Small- and medium-sized businesses are of particular focus to us, given our
belief that these companies are less likely to currently benefit, via their
existing suppliers, from the price competition and product and service
responsiveness that we offer them. We believe such competition is currently
focused in the long-distance rather than

                                       9
<PAGE>

the local market and for the benefit of multi-national companies rather than
small- and medium-sized enterprises. Additionally, we believe that, given the
limited number of operators vying for share in the local sector, margins in
these sectors will be higher. Further, small- and medium-sized businesses have a
particular focus on local services, as local calling constitutes a greater
percentage of traffic than of multi-nationals customers.

Government end-users

     We have identified local government authorities as important potential
customers in view of their need to obtain advanced technology in linking up all
of their municipal offices at competitive prices. Local government authorities,
such as social security administrations and tax authorities, depend heavily on
local networks to provide their services.

Carriers

     As countries in Europe have begun to liberalize their telecommunications
markets, there has been steep growth in the number of pan-European international
carriers. Generally, these carriers focus on building international and
intercity facilities, while leasing wholesale local circuits from local
providers. Historically, in the U.S., this carrier demand for local access was
the prime driver for the development of alternative local carriers. We provide
carriers with dedicated circuits and co-location services on a wholesale basis.

     In addition, we believe we will be able to terminate French and German
in-bound international calls for foreign telecommunications service providers
through our interconnections with these carriers. We are also currently in
negotiations with operators to terminate their regional and local call traffic
into Germany and France.

Internet-related providers

     We believe that the dramatic increase in Internet usage will result in the
commensurate growth in Internet-related companies, in access, content provision,
e-commerce, advertising, and numerous other segments. These customers have
specific sets of needs that we believe we will be able to satisfy. We are
developing suites of services to support their requirements, primarily in
high-capacity access and value-added services.

Sales, marketing and distribution

Customer acquisition strategy

     We believe that one of our competitive advantages is based on professional
direct sales and customer care programs. As a result, to address the retail
business end-user segment, our sales force is structured principally on a
city-by-city basis.

     We believe that experienced, local sales personnel provide us with:

     .    useful knowledge of local dynamics and the target customer base;

     .    established contacts and relationships in the local market, enabling
          them to pre-sell our products and services prior to our initiating
          network operation in that market;

     .    insight that will allow us to tailor our product and service offerings
          to specific local customer needs; and

     .    enhanced commitment to each market which may facilitate more rapid
          access to rights-of-way for network construction and direct targeting
          of customer specific needs.

     Initially, we concentrate our sales and marketing effort on larger
customers. Once we secure these customers' business, we direct our sales and
marketing activities to focus on capturing smaller customers. As networks are

                                       10
<PAGE>

deployed in additional cities, we will expand our focus on national and
pan-European customers. To this end, we have already developed national sales
and service functions in both France and Germany, which operate alongside the
local sales and service functions and which currently sell to the carrier and
Internet provider customer segments.

     As of January 31, 2000, we had 121 employees in sales and marketing,
representing nearly 37% of our operating employees. Our salespeople come from
two primary sources, either directly from other telecom providers or from
related industries. As of February 25, 2000, we had 315 orders for 118,549 line
equivalents of capacity, of which 137 services were installed and the remainder
were pending installation.

Marketing communications

     We believe that a key to effectively implementing our business plan is to
create an "umbrella" pan-European identity under the CompleTel trade name. While
we believe that name recognition is important to our success and that our brand
awareness will become an increasingly important tool, we do not use mass-media
to develop brand awareness due to significant cost inefficiencies. Consistent
with our focused on-net strategy, we use a targeted marketing approach for
on-net prospects, within 500 meters of our network backbone, primarily driven by
telemarketing and direct mail activities. We supplement these targeted
communications with periodic press communications and event marketing.

Pricing

     Pricing is one of our ways to differentiate ourselves from the incumbent
operators and to attract customers, although it is only one of our
differentiators alongside consistent, reliable, quality, customer care and
superior product range. We plan generally to price our services to our customers
at a discount to the incumbent operator, offering combined services discounts to
incent customers to buy a portfolio of services, designed to maximize global
usage and revenue per customer. The wholesale rates charged to other carriers
and Internet-related providers are generally set at the market price or slightly
below the market price of the leading facilities-based carriers but we do not
anticipate offering a major discount compared to any alternative carrier. On a
promotional basis, we may provide discounted installation to facilitate customer
migration from the incumbent carriers.

Customer service

     Our goal is to maintain an advantage over our competitors in our target
markets by providing superior customer service and care. We believe that
providing a high level of customer service is a key element to establishing
customer loyalty and attracting new customers. We have dedicated customer
service representatives who initiate contact with our customers on a routine
basis to ensure customer satisfaction.

     We also believe that technology plays an important role in customer
satisfaction. Advanced technological equipment is crucial to enabling the
provision of high quality of service to our customers. We have installed
sophisticated status-monitoring and diagnostic equipment at our network
operations centers allowing us to identify and remedy network problems before
they affect customers.

     Our customer care function includes:

     .    on-line customer care personnel available 24 hours a day, seven days a
          week;

     .    an integrated data base management system that can immediately access
          all of a customer's data and allow us to quickly respond to customer
          inquiries;

     .    an integrated billing system capable of being customized for all of
          our services;

     .    the availability of on-line service ordering, order status viewing,
          billing inquiries and other services to allow customers to manage
          their services;

                                       11
<PAGE>

     .    access to technical support to resolve problems;

     .    escalation processes to deal with customer concerns;

     .    personal relationships with customers based on local and dedicated
          customer care staff; and

     .    a local designated sales account executive to grow and support the
          customer relationship.

     We offer high-quality, responsive, personalized and customizable services.
To our business end-user customers, our customer care is provided on a local
basis rather than a national basis to develop customer relationships at the city
level and develop responsibility and accountability at the local level. Our
local structure is supported by our centralized operations centers in France and
Germany, including service provisioning, network supervision and after-hours
customer care.

Management information and billing systems

     All of management information systems are centralized in our European Data
Center (EDC) located in Paris, France. We believe the importance of implementing
a scalable and highly flexible platform of applications with track-records in
the European and/or U.S. competitive local exchange market is an important
criteria in selecting and integrating a comprehensive management information
system. Using consulting firms specializing in information technology and
telecommunications, we have assembled, integrated and implemented a system to
smoothly and effectively coordinate our key business processes:

     .    prospecting, lead-generation and customer acquisition;
     .    order flow and service provisioning;
     .    network planning and design;
     .    customer care, billing and collection;
     .    account management;
     .    network management and maintenance; and
     .    business financial systems.

     The core of our management information system is anchored in applications
supplied by Kenan, a subsidiary of Lucent Technologies, TCSI, Oracle, Nortel
Networks and Siemens. All of the applications are operated from our computing
center in the European Data Center with localized interfaces, local language and
business processes, for each market and country. We also have incorporated a
data warehouse within our European Data Center to allow our sales force to
monitor customer line usage on a daily basis and detect changes in customer
behavior and usage, which allows us to be proactive and identify better product
offerings for particular customers.

Competition

Overview

     Competition for the provision of local telecommunications services in
Europe is still in the early stages of development. The markets for public,
switched telecommunications services in France, Germany and many of the other
Western European countries were closed to competition until January 1, 1998.
Therefore, legislators, regulators and courts in those countries have limited
experience in regulating a pro-competitive telecommunications sector.
Historically, no entity other than the incumbent public telecommunications
operators had the right to provide public telephone service or networks in those
countries.

     Currently, the European Union is actively seeking to stimulate competition
among telecommunications providers. European member states are required to end
restrictions on the entry of new telecommunications operators and adopt
standardized regulations intended to promote competition. We believe that the
ongoing

                                       12
<PAGE>

liberalization of the European Union telecommunications market will cause more
local exchange carriers, including pan-European carriers, to enter the market.
Under the new regulatory structure, existing public telecommunications operators
may compete in local exchange services markets outside of their home countries,
either alone or through existing joint ventures, subject to restrictions on
market concentration and anti-competitive mergers and acquisitions.

     In today's regulatory environment, we will compete with both incumbent
public telecommunications operators, like France Telecom and Deutsche Telekom,
and other local exchange carriers in each market we enter. Based on their
historically exclusive market positions, incumbent public telecommunications
operators generally have several competitive advantages over new competitors,
including:

     .    expansive economic and human resources;
     .    close ties to local and national regulatory authorities;
     .    ubiquitous local and long-distance distribution facilities;
     .    existing rights-of-way;
     .    control of or access to telephone numbers; and
     .    control over local telecommunications connectivity.

     We believe that the principal competitive factors affecting our business
will be:

     .    price;
     .    customer service;
     .    network quality;
     .    accurate billing; and
     .    variety of services.

     Our ability to compete effectively will depend upon our ability to maintain
high-quality services at competitive prices. Because France, Germany and most of
our intended Western European markets, other than the United Kingdom, have only
recently liberalized or still are in the process of liberalizing the provision
of voice telephony, our target customers in most of these markets are not
accustomed to obtaining services from competitors to the incumbent public
telecommunications operators and may be reluctant initially to use emerging
telecommunications providers.

Incumbent carriers

     We expect that our principal competitors will be the incumbent public
telecommunications operators in the markets which we serve:

     .    France Telecom in France, and
     .    Deutsche Telekom in Germany.

     Each market presents a different competitive landscape. In France, France
Telecom has invested heavily in upgrading its network and enjoys relatively high
approval ratings from its customers. In Germany, we believe that attractive
opportunities exist to invest in the development of local exchange
infrastructure to provide enhanced services that have not been aggressively
pursued by Deutsche Telekom or by other new entrants.

Alternative providers

     We will face competition in France from operators of fiber networks such as
MCI WorldCom, COLT and Cegetel, a consortium of Vivendi and British Telecom. We
believe that we can effectively compete in France because most current
competitors seeking to gain market share from France Telecom are focusing on
long-distance service instead of local exchange service and have concentrated
their efforts on the competitive high-volume areas in and around Paris, such as
the business district of La Defense. In Germany, we face competition from a
number of

                                       13
<PAGE>

companies, including national carriers such as COLT, VIAG Telekom and
ARCOR, along with city utility carriers. Additionally, we face competition from
numerous resellers of long-distance and in isolated areas, competition from
cable television operators.

     We are deploying our networks in recently liberalized Western European
markets and are operating in a fast changing and competitive industry. In the
future we expect that we will need to effectively compete against an increasing
number of telecommunications service providers who may enter our targeted
markets, including among others, a number of publicly traded, European-based
providers, such as Jazztel, Versatel and Thus. We believe that we may encounter
increasing competition from these companies. We cannot assure you that we will
be able to effectively compete with the larger, established telecommunications
providers and the other operators in our markets.

Regulation

Overview

     National and local laws and regulations governing the provision of
telecommunications services differ significantly among the countries in which we
intend to operate. The interpretation and enforcement of such laws and
regulations vary and could limit our ability to provide various
telecommunications services in different markets. In addition to licenses in
France, Germany and the United Kingdom, we also have obtained a license under
Section 214 of the U.S. Communications Act that permits us to terminate calls in
the U.S. that originated on our European networks and to transport traffic
originating in the U.S. to our networks or through one of our interconnections.

     Deregulation of telecommunications is a relatively new phenomenon in Europe
and there is little history to guide competitive entrants. Relationships between
European Union member governments and the European Union's central agencies are
evolving. The degree to which the European Union telecommunications market will
be subject to national or European Union control remains to be seen. Other than
the United Kingdom, there is little history in Western Europe to provide
guidance to competitive entrants concerning the independence of newly-created
regulatory bodies to demonstrate how vigorously or efficiently such bodies will
adopt and enforce regulations or rules. Regulatory, judicial, legislative or
political considerations may prevent us from offering our services to residents
of Western European countries and may adversely affect our business.

European Union

     The European Union consists of the following member states: Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
The Netherlands, Portugal, Spain, Sweden and the United Kingdom. Other countries
are applying for membership as more of Europe adopts the trend to
liberalization. The European Union member states are required to implement
Directives issued by the European Commission and the European Council by passing
national legislation. If a European Union member state fails to effect such
directives with national or other appropriate legislation or fails to render the
provisions of such directives effective within its territory, the European
Commission may take action against the European Union member state to enforce
the Directives, including proceedings before the European Court of Justice.
Private parties may also bring actions against European Union member states for
failures to implement such legislation.

     The European Commission and the European Council have issued a number of
key directives establishing basic principles for the liberalization of the
European Union telecommunications market. One of the European Union's objectives
is to create a free and open market for telecommunications. Although the
European Union set January 1, 1998 as the deadline for mandatory liberalization
of the provision of voice telephony services throughout the European Union, each
European Union Member State had to enact its own laws to implement the European
Union's mandate through its own processes. Not every European Union Member State
has enacted laws that implement the directives within the time frame set by the
European Union or in a way that complies or will comply with the intent and
spirit of the directives. Further, there can be no assurance that all European
Union Member States will enact laws which fully comply with the intent and
spirit of the directives. Greece, Portugal, Ireland, Spain and

                                       14
<PAGE>

Luxembourg have been granted additional implementation periods. Each Member
State is required to make the minimum changes necessary to comply with the
European Union Directives, but the actual method or form of implementation of
European Union directives varies from country to country. Also, the European
Commission has initiated legal action against Belgium, Denmark, Germany, Greece,
Italy, Luxembourg and Portugal for not implementing the directive on full voice
telephony competition adequately.

     In 1990, the "Services Directive" required Member States to abolish all
exclusive and special rights for the provision of all telecommunication services
other than for public switched voice telephone service and public
telecommunications networks. Since that first phase of activity, further
legislative initiatives have been designed to provide full liberalization of the
telecommunications sector, including notably the adoption of:

     .    The revised Open Network Provision Directive, which Member States were
          required to implement by June 30, 1998, aims to ensure the
          availability of quality public telephone services and to define the
          services to which all users should have access in the context of
          universal service at an affordable price.

     .    The Full Competition Directive, which required Member States to
          abolish exclusive and special rights for the provision of public voice
          telephone services and to allow the provision of public
          telecommunications networks by January 1, 1998. The Full Competition
          Directive also abolished special and exclusive rights regarding the
          self-provision of infrastructure, the use of infrastructure operated
          by third parties and the use of shared infrastructure for the
          provision of services other than public voice telephony.

     .    The Licensing Directive, which established a common framework for
          general authorizations and individual licenses in the field of
          telecommunication services. The Licensing Directive is intended to
          allow telecommunications operators to benefit from an European
          Union-wide market for telecommunications and establish a common
          framework for national authorization regimes and seeks to facilitate
          cross-border networks and services.

     .    The Interconnection Directive, which mandates that each Member State
          ensure that the historical public telecommunications operators and
          operators with significant market power:

     .    provide interconnection to other operators under terms and conditions
          that are cost-oriented, non-discriminatory, objective and transparent;

     .    publish by July 1, 1997, their "unbundled" interconnection terms and
          conditions;

     .    negotiate access agreements and specific terms of interconnection,
          subject to the intervention of the member state's regulatory authority
          in case of a breakdown in the negotiations; and

     .    adopt transparent accounting methods for each cost component.

     Member States are also required to adopt a quick, cheap and effective
procedure to solve interconnection disputes in order to prevent the historical
operator from maintaining its dominant position through litigation and other
delaying tactics. The Interconnection Directive is expected to be amended to
provide for carrier pre-selection in the fixed market, enabling subscribers to
choose an alternative carrier to convey their long-distance calls, with the
possibility of overriding their choice on a call-by-call basis. In addition, the
Interconnection Directive requires number portability in the fixed and mobile
markets, enabling subscribers, while remaining at a specific location, to retain
their telephone number despite switching network operators. Number portability
for all subscribers on public fixed networks was required by January 1, 2000.
Carrier pre-selection was required for public fixed networks by January 1, 2000,
by operators with significant market power. Member States may also decide to
apply this requirement to other operators, as has been the case in the United
Kingdom.

                                       15
<PAGE>

France

     In July 1996, France enacted legislation amending the French Code des
Postes et Telecommunications, abolishing France Telecom's legal monopoly and
providing for the immediate liberalization of all telecommunications activities
in France, but maintaining a partial exception for the provision of voice
telephony to the public on fixed wireline. Such voice telephony was fully
liberalized "including carrier pre-selection" on January 1, 1998. French law
allows market participants to build and operate public voice telecommunications
networks or offer services following receipt of the required license.
Interconnection is available as a matter of right to all licensed operators.

     Licenses are granted by the Secretaire d'Etat a l'Industrie, the
"Telecommunications Ministry", in charge of telecommunications upon
recommendation of ART, an independent regulatory authority. ART has broad
rule-making and adjudicatory powers and is administratively independent from the
Telecommunications Ministry. Among other things, ART has the power to approve
interconnection rates of operators deemed dominant in the market place,
arbitrate interconnection disputes and to exercise oversight powers and punish
regulatory infractions through suspensions or revocations of licenses or through
fines based on a percentage of the violator's revenues.

     On December 13, 1998, the Minister of Telecommunications, pursuant to ART's
recommendation, awarded our French operating subsidiary a fixed wireline license
and a service license for network deployment in four regions and six cities and
the provision of services in four regions and six departments in France that we
intend to serve. The term of these licenses is 15 years from December 13, 1998.
Under French law, these licenses entitle us, among other things, to obtain
rights-of-way to establish network infrastructure along public roads, to obtain
easements on private property and to obtain certain rights on public domain
property other than roads. We have not yet obtained a license for our planned
development in Amiens.

     We also received a point-to-multipoint wireless authorization for our
planned local loop in Marseille in June 1999. Point-to-multipoint authorizations
are currently available in France only on a limited and experimental basis. We
filed for a permanent point-to-multipoint license on January 31, 2000 and, as a
result, our experimental authorization has been extended until a decision is
made to award or deny our application for permanent license. We expect that the
decision to grant the license will be made within six months of January 31,
2000.

     On December 18, 1998, we entered into an interconnection agreement with
France Telecom. France is one of the European Union Member states that
differentiates between interconnection for public telecommunications network
operators and for voice telephony service providers. The published
interconnection tariffs of France Telecom, which are approved annually by ART,
provide substantially more favorable interconnection terms for public
telecommunications network operators than for voice telephony service providers
that use third-party operators' transmission facilities.

     As a public network operator and service provider in France and pursuant to
our license, we must provide, among other things, non-discriminatory treatment
of customers and we must accept reasonable requests for interconnection from
other operators of networks open to the public and from voice telephony and
mobile telephony providers. In addition, we are required to notify ART of
interconnection agreements and to make contributions to finance universal
service by paying supplementary charges for interconnection to France Telecom,
as well as making payments to a universal service fund based on our volume of
activity. The amounts of universal service contributions are set annually by the
French Telecommunications Ministry as proposed by ART. In addition, we are
required to spend 5% of our net capital investments and property equipment
expenditures in the preceding fiscal year to support research and development in
France.

     In France, unbundling of the local loop is an issue which has still to be
settled. In April 1999, ART started a public consultation on the issue of
unbundling the local loop and requested comment on five possible options: access
to the copper wires; access to a permanent virtual circuit; access to capacity;
resale of local traffic; and resale of subscriptions. The results of the comment
period were published in October 1999. Although the issue has not been

                                       16
<PAGE>

settled as of the date of this prospectus, ART could request that unbundling
solutions be rapidly implemented concerning access to France Telecom's ADSL
lines.

Germany

     The German Telecommunications Act of July 25, 1996, ended the legal
monopoly of Deutsche Telekom AG for the provision of voice telephony and public
telecommunications networks, and immediately liberalized all telecommunications
activities in Germany, but postponed effective liberalization of voice telephony
until January 1, 1998. Since January 1, 1998 the German telecommunications
market has been completely open to competition and a new regulatory authority,
the Regulierungsbehorde fur Telekommunikation und Post (RegTP), has been
installed.

     Under the German regulatory scheme, RegTP grants licenses in four license
classes. A license is required for operation of transmission lines that extend
beyond the limits of a property and that are used to provide telecommunications
services for the general public. This infrastructure license is divided into 3
classes: mobile radio license (class 1); satellite license (class 2); and
general infrastructure license, covering all telecommunications services for the
public which are not covered by the mobile radio license or satellite license
(class 3). In addition to the infrastructure licenses, a license is required for
operation of voice telephony services based on self-operated telecommunications
networks (class 4). A class 4 license does not include the right to operate
transmission lines and a class 3 license does not include the right to provide
voice telephony services. Licensees under class 1, 2 and 3 have the right to
install transmission lines on, in and above public trafficways such as public
roads, squares, bridges and public waterways without payment; however, when
installing transmission lines permission must be obtained from the relevant
authorities. In general, this permission cannot be refused.

     In March of 1999, our German operating subsidiary, CompleTel GmbH was
granted, class 3 and class 4 licenses for three markets in Germany, including
our initial target market, which were subsequently amended as of July 1999 and
as of January 2000, to include among others, our additional markets. The
licenses are of unlimited duration. We have not yet obtained licenses for our
planned development in Hamburg, Mannheim and Stuttgart.

     We entered into an interconnect agreement with Deutsche Telekom in May
1999, which was amended in December 1999 and in January 2000. A company that
operates a public telecommunications network has the right to receive favorable
interconnection rates from Deutsche Telekom, the former incumbent public
telecommunications operator. Deutsche Telekom filed a request with RegTP to
offer more favorable interconnection rates to competitors that maintain a higher
number of interconnection points with Deutsche Telekom's network and less
favorable interconnection rates to competitors that maintain a smaller number of
interconnection points which would have effected the operation of smaller
networks in terms of interconnection pricing. For the time being, RegTP has
rejected the request. A telecommunications provider that does not agree with the
offered rates or is refused interconnection by Deutsche Telekom can take the
case to RegTP who may order interconnection at specific rates. To date,
interconnection has been the source of major dispute between Deutsche Telekom
and its competitors. Several complaints currently pending before RegTP and
German courts concern the content of the standard interconnection offer of
Deutsche Telekom. Although RegTP has established standard interconnection rates,
Deutsche Telekom and some of its major competitors have been unable to reach
agreement on other aspects of interconnection such as rates for unbundled local
loops. Rates for unbundled access to the customer line have been considered and
rates have been set by RegTP which Deutsche Telekom's competitors generally
regard as too high and anti-competitive. Other pending disputes concern the
costs of billing services provided by Deutsche Telekom to other carriers and
rates for direct access to the end-user lines of Deutsche Telekom.

United Kingdom

     The Telecommunications Act of 1984 provides a licensing and regulatory
framework for the telecommunications activities in the United Kingdom. The
Secretary of State for Trade and Industry at the Department of Trade and
Industry (DTI), is responsible for granting licenses and for overseeing
telecommunications policy, while the Director General of Telecommunications, the
"Director General", is responsible for enforcing the terms of such licenses.

                                       17
<PAGE>

     Individual licenses are granted for the construction and operation of
public networks, and class (or general) licenses are granted for systems
comprising equipment at a single site, self-provided non-public networks, or
limited public networks. On January 11, 1999, the DTI granted our operating
subsidiary in the United Kingdom, CompleTel UK Limited, an individual license to
operate fixed public telecommunications systems of any kind in the United
Kingdom (a PTO license). The PTO license will also license the operation of
international facilities. We currently do not plan to operate under the PTO
license but we have been advised that this does not constitute ground, which by
itself, would result in a right to revoke the PTO license. To provide
international services in the United Kingdom, we have also obtained an
International Simple Voice Resale License. To provide international facilities,
we do not need a separate license as under the terms of a bill presently before
Parliament the PTO license also will license the operation of international
facilities. However, we also plan to provide some services under the
Telecommunications Services License, a class license that allows us to provide a
number of services other than those requiring individual licenses.

     These licenses impose certain requirements on us, including but not limited
to the requirements that we provide end-users and other network operators with
reasonable and non-discriminatory access to our system. Licenses may also limit
the type of services that may be operated over the license system and the way in
which these can be provided in order to facilitate the open competitive
environment.

     The focus of deregulation in the United Kingdom has been to encourage new
entrants to build competitive networks. Until recently, only network providers
had the right to require interconnection with British Telecommunications plc
("BT") above the level of the network termination point and to obtain favorable
wholesale interconnection rates. A recent interconnection regulation allows
several other categories of operators and service providers to obtain
interconnection on favorable terms from BT and other operators designated as
having market power in a defined market. CompleTel UK Limited has provisionally
been granted favorable interconnection terms, but this right will lapse and a
further application for favorable terms will be required if it does not commence
operations under its PTO license in the first half of 2000. All interconnecting
operators within the designated categories are required to offer interconnection
to similarly situated operators and providers. At present, competitors to BT
generally cannot obtain unbundled access to the local loops, but this is subject
to review and consultation which is likely to result in mandatory unbundling by
BT. In this way, network providers have historically been favored over services
providers.

     The regulatory authorities in the United Kingdom are in the process of
revising the regulatory framework to meet the detailed requirements of the
various European Union telecommunications directives. Initially, we expect these
changes to enhance the competitive position of resellers and other service
providers by lowering their costs of access to the BT network. The
telecommunications regulator, Oftel, oversees competition in the
telecommunications market. Number portability must be provided by public
telecommunications operators at the request of other operators. From January 1,
2000, operators will be required to offer number portability at the customer's
request for a nominal charge. Also, carrier preselection over BT's network will
be required for national or international calls by late 2000, and for all local,
national and international calls as of 2001.

Employees

     As of January 31, 2000, we had 421 employees, of which 11 are employees of
CableTel Management and the remainder of CompleTel Europe and its subsidiaries.
We believe that our future success will depend on our ability to attract and
retain highly skilled, qualified and experienced employees. Our employees are
not covered by any collective bargaining agreement. We believe that we enjoy
good relationships with our employees.

                                       18
<PAGE>

Item 2.  Properties

     Our European headquarters are located in Paris, France. We also have sales
offices in each of our markets. Our sales offices, switch and IDC sites, as well
as our operations and service centers, are located in leased facilities. We are
in the process of purchasing our facilities in Toulouse, France.

     Our material properties currently under lease include our switch sites, as
follows:

     Location                  Size (sq. meters)          Lease Expiration Date
     --------                  -----------------          ---------------------

     France:
        Grenoble                      637                 July 2011
        Marseille                   1,789                 February 2011
        Nanterre/Paris              2,638                 November 2010
        Lille                         684                 May 2011
        Lyon                          734                 October 2010
        Nice                          625                 November 2011
        Toulouse                      640                 Own facilities

     Germany:
        Essen                       3,028                 September 2004
        Berlin                      2,795                 November 2009
        Munich                      3,958                 July 2004
        Nuremberg                   1,800                 December 2004

     We believe that our leased facilities are adequate to meet our current
needs and that additional facilities are currently available to meet our
development and expansion needs in existing and projected target markets.

Item 3.  Legal Proceedings

     We are not party to any pending legal proceedings that we believe would,
individually or in the aggregate, have a material adverse effect on our
financial condition or results of operations.

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

     The following matters were submitted to a vote of security holders during
the quarter ended December 31, 1999:

     By written consent dated October 4, 1999 of the holders of a majority of
units entitled to vote, the members authorized the issuance of an aggregate of
250 common units to two members of the board of managers for aggregate
consideration of $250.

     By written consent dated October 26, 1999 of the holders of a majority of
units entitled to vote, the members authorized the execution of a mandate letter
for a credit agreement with Goldman Sachs International and Paribas as
co-arrangers.

     By written consent dated November 23, 1999 of the holders of a majority of
units entitled to vote, the members authorized the issuance by the Company of
18,320 preferred units for aggregate consideration of $42.136 million and
related transactions.

     By written consent dated December 17, 1999 of the holders of a majority of
units entitled to vote, the members authorized the execution by CompleTel Europe
N.V. and its subsidiaries of a ?265 million credit facility agreement with
Goldman Sachs International and Paribas as co-arrangers and related
transactions.

                                       19
<PAGE>

                                     PART II

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

     There is no trading market for our common equity.

     The Company has during the 1999 calendar year made the following sales of
unregistered securities pursuant to Section 4(2) of the Securities Act of 1933:

     .    January 1999, 159 common units for $159 aggregate consideration to an
          employee of an indirect subsidiary;

     .    April 1999, 80 common units for $80 aggregate consideration to an
          employee of an indirect subsidiary;

     .    May 1999, 737 common units for $737 aggregate consideration to four
          employees of an indirect subsidiary;

     .    June 1999, 100 common units for $100 aggregate consideration to an
          employee of an indirect subsidiary;

     .    July 1999, 50 common units for $50 aggregate consideration to an
          employee of an indirect subsidiary;

     .    August 1999, 50 common units for $50 aggregate consideration to an
          employee of an indirect subsidiary;

     .    September 1999, 79 common units for $79 aggregate consideration to an
          employee of an indirect subsidiary;

     .    October 1999, 468 common units for $468 aggregate consideration to two
          members of the Company's board of managers and two employees of an
          indirect subsidiary; and

     .    November 1999, 987 common units for $987 aggregate consideration to
          eight employees of an indirect subsidiary and 18,320 preferred units
          for aggregate consideration of $42.136 million to 17 sophisticated
          investors.

Item 6.  Selected Financial Data

          The following selected consolidated financial data have been derived
from the audited consolidated financial statements included elsewhere in this
report which have been prepared in accordance with accounting principles
generally accepted in the U.S. The selected consolidated financial data set
forth below are qualified by reference to, and should be read in conjunction
with, the audited consolidated financial statements and notes thereto and also
with Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

<TABLE>
<CAPTION>

                                                                                                 Commencement
                                                                                                 of Operations
                                                                                               (January 8, 1998)
                                                                              Year Ended              to
                                                                          December 31, 1999    December 31, 1998
                                                                          -----------------    -----------------
                                                                         (In thousands, except per share amounts)

<S>                                                                      <C>                    <C>
Statement of operations data:
Revenues ....................................................                    $   2,985            $      --
Network costs ...............................................                        2,407                   --
Selling, general and administrative expenses ................                       38,478                8,044
Depreciation and amortization ...............................                        4,534                   59
                                                                               -----------          -----------
Operating loss ..............................................                      (42,434)              (8,103)
Other income (expense) ......................................                       (9,411)                  11
                                                                               -----------          -----------
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>

<S>                                                                               <C>                  <C>
Net loss before minority interest ...........................                      (51,845)              (8,092)
Minority interest in loss of consolidated subsidiaries                               3,501                   --
                                                                                  --------              -------
Net loss ....................................................                    $ (48,344)           $  (8,092)
                                                                                ==========          ===========
</TABLE>
<TABLE>
<CAPTION>

                                                                               As of                As of
                                                                          December 31, 1999    December 31, 1998
                                                                          -----------------    -----------------
                                                                                        (in thousands)
<S>                                                                       <C>                  <C>
Balance sheet data:
Cash and cash equivalents ...................................                    $  60,469            $   3,744
Property and equipment, net .................................                    $  92,872            $   3,441
Total assets ................................................                    $ 182,097            $  10,042
Long term debt ..............................................                    $  79,922            $      --
Total member's equity (deficit) ......................                           $ (64,360)           $  (8,418)
</TABLE>

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

     You should read the following discussion and analysis in conjunction with
the "Selected Consolidated Financial Data" and our audited consolidated
financial statements and the related notes thereto which are included elsewhere
in this prospectus. Such "Selected Consolidated Financial Data" and the audited
consolidated financial statements have been prepared using accounting principles
generally accepted in the U.S.

     The following discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. These
forward-looking statements may include statements concerning our plans,
objectives and future economic prospects, expectations, beliefs, anticipated
events or trends and similar expressions about matters that are not historical
facts. These forward-looking statements involve both known and unanticipated
risks, uncertainties and other factors that may cause our actual results,
performance or achievements, or industry results, to be materially different
from what we say or imply with the forward-looking statements. These factors
include our ability to continually adapt to technological change, our ability to
obtain necessary equipment, the successful deployment of our networks and our
ability to develop wireless transmission systems. They also include our ability
to manage the rapid expansion of our business. These forward-looking statements
apply only as of the time of this report and we have no obligation or plans to
provide updates or revisions to these forward-looking statements or any other
changes in events or circumstances on which these forward-looking statements are
based.


Introduction

     We are a rapidly growing CLEC operating in France and Germany. We offer
traditional fixed wireline retail business telecommunications services to our
directly connected on-net customers and sell wholesale services to other
carriers. We also have established an Internet division to offer a full range of
Internet-related services through Internet data centers we are establishing in
France, Germany and the United Kingdom.

     We currently report all of our historical financial results in U.S. dollars
as our functional currency. We have adopted the euro as our functional currency
effective January 1, 2000, as the principal economic environment in which we
earn revenue and incur expenses has become significantly tied to euro currency
environments, such as France and Germany.

Significant milestones

     .    Between May 1998 and January 1999, Madison Dearborn Partners, Inc. and
          LPL Investment Group Inc., our founders, other directors and other
          individual investors, contributed a total of $65.8 million to
          CompleTel LLC for our initial financing.

     .    In December 1998, CompleTel SAS was awarded licenses to operate
          telecommunications facilities and provide services in selected regions
          in France.

                                       21
<PAGE>

     .    In February 1999, CompleTel Europe closed a units offering in which we
          issued senior discount notes and CompleTel Holdings LLC issued class B
          interests representing a 7% ownership interest in our then outstanding
          share capital. Net proceeds to us totaled $72.6 million.

     .    In March 1999, CompleTel GmbH was awarded licenses to operate
          telecommunications facilities and provide services in selected regions
          in Germany.

     .    In March 1999, CompleTel SAS acquired all of the outstanding capital
          stock of Acces et Solutions Internet S.A.R.L., a Lyon-based Internet
          service provider for $2.1 million in cash.

     .    In April 1999, CompleTel Europe and its subsidiaries received a $90
          million credit facility commitment from Paribas and Nortel Networks.

     .    In June 1999, CompleTel SAS launched commercial services in France and
          obtained an experimental authorization for point-to-multipoint in
          Marseille.

     .    In June 1999, CompleTel UK Limited acquired all of the outstanding
          capital stock of Web International Networks Limited (now iPcenta), a
          London-based Internet service provider for approximately $365,000 in
          cash plus approximately $240,000 in contingent earnout payments.

     .    In July 1999, CompleTel GmbH received an extension of the markets for
          its German licenses.

     .    In October 1999, CompleTel Europe and its subsidiaries received a
          commitment from Goldman Sachs International and Paribas, as
          co-arrangers for syndicated bank financing in the form of a Euro 265
          million senior secured credit facility. The commitment terminated,
          superseded and replaced, without penalty, the commitment from Paribas
          and Nortel Networks.

     .    In November 1999, CompleTel GmbH launched commercial operations in
          Germany.

     .    In the fourth quarter of 1999, CompleTel LLC received additional
          equity contributions from its initial private equity investors,
          directors and management, and from a new private equity investor,
          Meritage Investment Partners, totaling $42.1 million, which CompleTel
          LLC immediately contributed to CompleTel Europe and its operating
          subsidiaries.

     .    In January 2000, CompleTel Europe and its subsidiaries executed the
          Euro 265 million senior secured credit facility. To date, no draws
          have been made under this facility.

Results of operations

     We have generated operating losses and negative cash flow from our
operating activities to date. As a result of our operating history, prospective
investors have limited operating and financial data about us upon which to base
an evaluation of our performance.

Revenues

     We generated our first revenues in the quarter ended June 30, 1999. For the
year ended December 31, 1999, revenues totaled $3.0 million. Since January 1998,
we have developed and refined our business plans, procured regulatory and
governmental authorizations for our initial 11 markets, raised capital, hired
management and other key personnel, designed, developed and begun installing our
fiber optic metropolitan area networks and operation support systems, obtained
senior financing commitments and negotiated equipment and facilities agreements.

Operating expenses

                                       22
<PAGE>

     Our primary operating expenses through December 1999 consisted of network
costs, selling, general and administrative expenses, including start-up costs,
management fees to affiliate, and depreciation and amortization expenses.

Network costs

     Network costs for the year ended December 31, 1999 totaled $2.4 million. We
did not incur network costs in the similar 1998 period. We expect these costs
will increase as we expand our networks and services. Our network costs include
costs such as interconnection costs, the cost of leasing high capacity digital
lines that interconnect our network with the networks of other providers, the
cost of leasing local loop lines that connect our customers to our network, and
switch site rent, operating and maintenance costs. We also lease dark fiber and
conduit to establish and augment our networks in certain markets.

Selling, general and administrative expenses

     Our selling, general and administrative expenses include selling and
marketing costs, customer care, billing, corporate administration, salaries and
other personnel costs and legal fees. For the year ended December 31, 1999,
selling, general and administrative expenses totaled $38.5 million compared to
$8.0 million for the comparable period in 1998. This increase was primarily due
to the rapid growth of personnel costs since commencement of operations.

     We are assembling a large, locally based, direct sales force in our local
and regional markets and a national account team to service multiple location
customers and key account executives. We are supplementing our direct sales
force with commissioned indirect sales agents. To attract and retain a highly
qualified sales force, we offer our sales and customer-care personnel a highly
competitive compensation package. The number of employees increased from 45 as
of December 31, 1998 to 385 as of December 31, 1999. On December 31, 1999, we
had a sales force of 108 (including managers and administrators), compared to
one on December 31, 1998. We expect the number of sales and marketing personnel
to continue to grow and our selling, general and administrative costs to
increase as we develop and expand our operations.

     We anticipate incurring amortization of stock-based compensation expense of
approximately $1.4 million under our stock option plan for the three months
ended March 31, 2000. This amount is based on deferred compensation expense
recorded as of December 31, 1999 totaling approximately $26.5 million.

     We also anticipate incurring additional stock-based compensation expense of
approximately $38.2 million upon completion of our initial public offering
("IPO" ) due to the resulting anticipated vesting of certain CompleTel LLC
performance vesting units held by certain of our employees in connection with
what is anticipated to be a qualified public offering. This compensation expense
is based on an assumed IPO price of Euro 16.50 ($15.91)per share. For each $1
increase in the anticipated IPO price per share, additional compensation expense
of approximately $7.2 million will be recorded. In addition, based upon our
value as indicated in the IPO, we will record compensation expense and deferred
compensation of approximately $18.5 million and $57.9 million, respectively, for
performance vesting units that will not vest as a result of the IPO but which
may vest upon a qualified sale by Madison Dearborn Partners or in May 2005 based
on a deemed vesting date. The additional deferred compensation will be amortized
to expense over the remaining vesting period to May 18, 2005 (deemed vesting
date if not prior due to a qualified sale by Madison Dearborn Partners). The
recorded amount of compensation expense and deferred compensation for these
awards will be adjusted at each reporting date to reflect management's estimate
of the number of such units that will ultimately vest and the fair market value
of those units as of the end of the reporting period based on the then current
market value of ordinary shares assuming the successful completion of our
anticipated IPO.

                                       23
<PAGE>

Depreciation and amortization

     For the year ended December 31, 1999, we recorded depreciation and
amortization expense of $4.5 million, compared to $59,000 for the similar period
in 1998. This increase is due to increases in network and non-network related
property and equipment. We started recording network depreciation during the
quarter ended June 30, 1999 when we initiated network services.

Other income and expense

     We incurred interest expense, net of $1.4 million of capitalized interest,
of $8.2 million during the year ended December 31, 1999. The interest expense
recorded reflects the accretion of the notes and the amortization of deferred
financing costs. We capitalize a portion of our interest costs as part of the
construction cost of our networks, in accordance with Statement of Financial
Accounting Standards No. 34 "Capitalization of Interest Costs" ("SFAS 34" ).
Interest income for the same period was $2.6 million, which resulted from the
investment of the proceeds from the high-yield notes and the investment of the
available cash from the equity contributions. We did not recognize any
significant amounts of interest expense or interest income during 1998.

     In addition to the above expenses, some of our employees have purchased
common units of CompleTel LLC for which CompleTel LLC incurs non-cash
compensation charges. For accounting purposes, we record such non-cash
compensation charges as a deemed capital contribution with an offsetting entry
to deferred compensation. Deferred compensation is amortized to expense over the
vesting period of the common units.

Foreign exchange rates

     We are exposed to changes in currency exchange rates because our revenues,
costs, assets and liabilities are, for the most part, denominated in local
currencies. As a result, our financial condition and results of operations, as
reported in dollars as our functional currency through December 31, 1999, may be
affected by changes in the value of the local currencies in which we transact
business. The notes which we issued in February 1999 also expose us to exchange
rate fluctuations as the payment of principal and interest on the notes will be
made in U.S. dollars, and a substantial portion of our future cash flow used to
service these payments will be denominated in local currencies, including the
euro. While we intend to take steps to minimize exchange rate risks, we cannot
assure you that we will not be materially adversely affected by variations in
currency exchange rates.

     We adopted the euro as our functional currency effective January 1, 2000.

Net loss

     Our net loss during the year ended December 31, 1999 and the period from
commencement of operations (January 8, 1998) to December 31, 1998 was $48.3
million and $8.1 million, respectively. The increase was primarily the result of
substantial start-up costs of the operating subsidiaries, primarily our French
subsidiary.

Adjusted EBITDA

     Since the commencement of our operations, we have experienced significant
operating losses and negative Adjusted EBITDA, as set forth below. We expect to
continue to generate significant operating losses and negative Adjusted EBITDA
in each of our markets as we develop, construct and expand our business, until
we have established a sufficient revenue-generating customer base in each
market.

     We expect to experience increasing consolidated operating losses and
negative cash flows from operations as we expand our operations and enter new
markets, even if and after we have achieved positive cash flow from operations
in our initial markets. The following table summarizes our Adjusted EBITDA
calculation for the periods indicated (amounts in thousands of U.S. Dollars).

                                       24
<PAGE>

<TABLE>
<CAPTION>
                                                                      Commencement
                                                                     of Operations
                                                                   (January 8, 1998)
                                                  Year Ended               to
                                               December 31, 1999   December 31, 1998
                                               -----------------   -----------------

<S>                                            <C>                 <C>
Net Loss ................................               $(48,344)           $ (8,092)
Interest expense (net of interest income)                  5,790                 (11)
Income taxes ............................                     --                  --
Depreciation and amortization ...........                  4,534                  59
Non-cash compensation expense ...........                    675                 191
Other expense ...........................                  3,621                  --
                                                      ----------          ----------
Adjusted EBITDA .........................               $(33,724)           $ (7,853)
                                                      ==========          ==========
</TABLE>

     In view of our highly leveraged capital structure, we consider Adjusted
EBITDA to be an important performance measure. Adjusted EBITDA consists of net
earnings (loss) before interest expense, interest income, income taxes, non-cash
compensation expense, depreciation and amortization and other non-cash charges,
including foreign currency exchange rate gains and losses. Conceptually,
Adjusted EBITDA measures the amount of income generated each period that could
be used to service debt, because it is independent of the actual leverage
employed by the business; but Adjusted EBITDA ignores funds needed for capital
expenditures, income taxes and expansion. Some investment analysts track the
relationship of Adjusted EBITDA to total debt as one measure of financial
strength. However, Adjusted EBITDA does not represent cash provided or used by
operating activities and you should not consider Adjusted EBITDA in isolation or
as a substitute for measures of performance prepared in accordance with U.S.
generally accepted accounting principles.

     You also should be aware that Adjusted EBITDA may differ significantly from
cash flows from operating activities as reflected in a statement of cash flows
prepared in accordance with U.S. generally accepted accounting principles. Cash
from operating activities is net of interest and taxes paid and is a more
comprehensive determination of periodic income on a cash, rather than accrual,
basis and is exclusive of non-cash items of income and expenses such as
depreciation and amortization. In contrast, Adjusted EBITDA is derived from
accrual basis income and is not adjusted for changes in working capital.
Consequently, Adjusted EBITDA is not affected by the timing of receivable
collections or when accrued expenses are paid. We are not aware of any uniform
standards for determining Adjusted EBITDA. Presentations of Adjusted EBITDA may
not be calculated consistently by different companies in the same or similar
businesses. As a result, our reported Adjusted EBITDA may not be comparable to
similarly titled measures used by other companies.

Statements of Cash Flows

     We had cash and cash equivalents of $60.5 million as of December 31, 1999,
an increase of $56.8 million from $3.7 million as of December 31, 1998. Details
of the change in cash and cash equivalents are set forth in the table below.

                                       25
<PAGE>

<TABLE>
<CAPTION>
                                                                              Commencement
                                                                              of Operations
                                                                            (January 8, 1998)
                                                           Year Ended               to
                                                        December 31, 1999   December 31, 1998
                                                        -----------------   -----------------
<S>                                                     <C>                 <C>
Cash flows from operating activities ...........                $ (33,280)          $  (3,944)
Cash flows from investing activities ...........                  (73,131)             (4,435)
Cash flows from financing activities ...........                  163,675              12,283
Effect of exchange rates on cash ...............                     (539)               (160)
                                                                ---------           ---------
Net increase in cash and cash equivalents ......                   56,725               3,744
Cash and cash equivalents at beginning of period                    3,744                  --
                                                                ---------           ---------
Cash and cash equivalents at end of period .....                $  60,469           $   3,744
                                                                =========           =========
</TABLE>

Cash flows from operating activities

     During the year ended December 31, 1999, we used $33.3 million in operating
activities, a $29.4 million decrease from the $3.9 million generated from
operating activities for the similar period in 1998. This decrease was primarily
related to the substantial organization and start-up costs incurred during the
development of our networks. Our development efforts increased significantly in
the fourth quarter of 1998 and during 1999 upon our receipt of services licenses
in France and Germany.

Cash flows from investing activities

     We used approximately $73.1 million of cash in investing activities during
the year ended December 31, 1999, compared to a use of $4.4 million for the
similar period in 1998. The increase was due to increased capital expenditures
primarily related to our network development and office facilities and
equipment. Additionally, during the year ended December 31, 1999, we used $2.1
million and $0.4 million in cash to acquire all of the outstanding capital stock
of Acces et Solutions Internet S.A.R.L. and Web International Networks Limited,
now iPcenta, respectively.

Cash flows from financing activities

     We had approximately $163.7 million of cash flows from financing activities
during the year ended December 31, 1999, compared to $12.3 million for the
similar period in 1998. The increase resulted in part from increased cash
contributions to CompleTel LLC, which totaled approximately $104.7 million for
the year ended December 31, 1999, compared to $1.5 million for the similar
period in 1998. Additionally, in April 1999, CompleTel Europe N.V. received from
escrow the net proceeds from its units offering totaling approximately $73.2
million.

Liquidity and capital resources

     The telecommunications business is capital intensive. Since January 1998,
and for the foreseeable future, we have needed and will continue to need large
amounts of capital to fund capital expenditures, working capital, debt service,
and to fund operating losses. As of December 31, 1999, we had $60.5 million of
cash and short-term investments and net working capital of $24.3 million.

     Since January 1998, CompleTel LLC has received $107.9 million in private
equity contributions of which $59.5 million was contributed to our French
operating subsidiary, $40.0 million was contributed to our German operating
subsidiary, $2.1 million was contributed to CompleTel Europe and the remainder
was retained by CompleTel LLC for start-up expenditures on behalf of CompleTel
Europe and its subsidiaries.

                                       26
<PAGE>

     In February 1999, CompleTel Europe and CompleTel Holdings LLC completed a
units offering consisting of senior discount notes and class B interests in
CompleTel Holdings LLC resulting in gross proceeds in respect of the units of
approximately $75.0 million, of which $70.5 million was allocated to the notes,
which represents a substantial discount from the $147.5 million aggregate stated
principal amount at maturity of the notes. The remaining $4.5 million was
allocated to the class B interests of CompleTel Holdings LLC. Cash interest will
not accrue on the notes prior to February 15, 2004. At that date, the principal
amount of the notes will have increased to the $147.5 million stated principal
amount at an effective annual interest rate of 15.1%. The $77 million increase
in principal amount plus amortization of deferred financing costs will be
charged to interest expense. Commencing February 15, 2004, cash interest on the
notes will accrue at 14% per annum and will be payable in cash on August 15 and
February 15 of each year. The notes mature on February 16, 2009. The note
indenture contains restrictive covenants, including among others, limitations on
CompleTel Europe's ability and that of its restricted subsidiaries to: borrow
additional money, pay dividends and make other distributions, make investments,
and sell assets and engage in mergers and consolidations. For the sole purpose
of complying with Dutch banking laws, CompleTel LLC has guaranteed the notes on
a senior unsecured basis. Because we are a holding company with no operations
other than those of our subsidiaries, it is unlikely we would be able to satisfy
the obligations under the guaranty if CompleTel Europe is unable to satisfy its
obligations on the notes.

     In January 2000, CompleTel Europe and its subsidiaries, executed an
agreement for a Euro 265 million senior secured credit facility with Goldman
Sachs International and Paribas as co-arrangers of the facility. The funds will
be available initially to subsidiaries of CompleTel Europe, including CompleTel
Services S.A.S., CompleTel S.A.S., and CompleTel GmbH, in two tranches,
including a euro term facility available until December 31, 2000, in the
aggregate amount of Euro 105 million and a euro revolving loan facility
available until December 31, 2002, in the aggregate amount of Euro 160 million.
The Euro 160 million tranche will become available after May 31, 2000, if the
euro term facility is fully drawn and other specified conditions are satisfied.
Following December 31, 2002, up to Euro 141 million of the outstanding advances
under the euro revolving loan facility will be converted into a term loan, and
any other outstanding advances will become part of a Euro 19 million working
capital facility. As of the date of this prospectus, there were no borrowings
outstanding under the facility.

     The funds available under the facility are to be used substantially to
deploy networks in France and Germany. Advances under the facility cannot exceed
certain limits that increase with time, and are subject to other conditions,
including that our subsidiaries must be operational in designated cities in
France and Germany, and satisfy a debt to capital test. In addition, the
facility includes various financial and other covenants and restrictions that
limit our ability to pay dividends, dispose of assets, and effect merger and
consolidation transactions. The facility also limits the use of proceeds of an
initial public offering, other equity investments, or a high yield issue as it
provides that any such proceeds be held as cash equivalent investments or used
to develop our telecommunications business in France and Germany.

     The rate of interest will be variable based on EURIBOR, plus a margin of up
to 3.75% per annum for the term loan facility or 3.00% per annum for the
revolving loan facility that will be determined based on a senior debt leverage
ratio test, and costs. Upon an event of default, all advances will accelerate
and become immediately due and payable and the undrawn portion of the facilities
will be cancelled and the commitments of the banks reduced to zero.

     The facility is secured by the assets of CompleTel Europe and its
subsidiaries and the stock in certain of its subsidiaries. CompleTel Europe also
has guaranteed the payments under the facility and have agreed to indemnify the
banks against certain losses.

     Based on our current plan, we will satisfy our aggregate capital
requirements to fund the deployment of our business plan through December 31,
2001, with the remaining funds we have already raised, funds available to us
under our Euro 265 million senior secured credit facility, the proceeds from
CompleTel Europe N.V.'s initial public offering (approximately Euro 450.6
million) and additional funds that it intends to raise in the future through
other sources of debt and/or equity financing. Concurrently with CompleTel
Europe N.V.'s initial public offering, CompleTel Europe N.V. is offering Eruo
300 million principal amount of senior notes due 2010. The closing of the

                                       27
<PAGE>

notes offering is conditioned on the closing of CompleTel Europe N.V.'s initial
public offering. CompleTel Europe cannot be certain that it will be successful
in obtaining additional financing.

Capital expenditures

     During the year ended December 31, 1999 and the period from commencement of
operations (January 8, 1998) through December 31, 1998, we made capital
expenditures of $101.8 million and $4.4 million, respectively, for property and
equipment necessary to deploy networks in our initial markets. We also used
capital during these periods to fund our operating losses.

     Based on our current plans, we expect that we will make aggregate capital
expenditures of approximately $375 million through December 31, 2001, to deploy
our planned metropolitan area networks in France, Germany and the United
Kingdom. We intend to fund our capital expenditures and operating losses during
this period with cash on hand, the proceeds from CompleTel Europe N.V.'s initial
public offering, funds available to us under our credit facility and/or other
funds to be raised from various sources of financing, which we currently expect
will largely consist of debt financing, as market conditions may permit.

Impact of the year 2000

     The "year 2000" problem generally describes the various problems that may
result from the improper processing of dates and date-sensitive calculations by
computers and other equipment as a result of computer hardware and software
using only the last two digits of the year to identify the year in a date field.
If a computer program or other piece of equipment fails to properly process
dates including and after the year 2000, the computer's calculations may be
inaccurate and equipment may malfunction. The failure to process dates could
result in system failures or miscalculations causing disruptions in operations
including, among other things, a temporary inability to process transactions,
send invoices or engage in other routine business activities.

     We have completed our initial internal year 2000 conversion and have not
experienced any significant problems. However, until well into the year 2000, we
cannot assure you that all systems will function adequately. Also, we sell our
telecommunications services to companies that may rely upon computerized systems
to make payments for our services, and we interconnect certain portions of our
network and systems with other companies' networks and systems. These
transactions and interactions potentially expose us to year 2000 problems
arising in these other companies' systems. Based on our experience to date, we
do not currently anticipate significant problems related to the year 2000
conversion in the future and do not expect to incur additional costs associated
with year 2000 issues. However, because we cannot predict with any degree of
certainty the effect of the year 2000 conversion on our customers and vendors,
we cannot guarantee that we will not encounter problems related to the year 2000
conversion in the future which may have a material adverse effect on our
business, financial condition and results of operations.

Euro conversion

     Effective January 1, 1999, the euro became the single legal currency of the
eleven participating European Union member states, including The Netherlands,
France and Germany and the conversion rates of the currencies of the
participating member states were irrevocably fixed against the euro as of that
date. Effective January 1, 1999, the French franc, the German mark and the
Netherlands guilder ceased to be the legal currency. From January 1, 1999 until
December 31, 2001, the French franc, the German mark and the Netherlands guilder
will be denominations of the euro and, as such, will be legal tender. The status
of the French franc, the German mark and the Netherlands guilder as
denominations of the euro will continue until, at the latest, June 30, 2002. On
that date (or, if these countries so determine, on some earlier date after
January 1, 2002), French francs, German marks and Netherlands guilders will be
withdrawn from circulation and will cease to be legal tender. Euro notes and
coins are not expected to be issued before January 1, 2002. Prior to that date,
cash payments will continue to be made in the local currencies. From January 1,
2002 until the local currencies are withdrawn and cease to be legal tender, cash

                                       28
<PAGE>

payments may be made by means of euro notes and coins or by way of French
francs, German marks and Netherlands guilders as appropriate.

     We are not burdened with systems that must be redesigned to accommodate the
introduction of the euro as we have purchased and specified our business support
systems, including our billing systems, to accommodate euro transactions and
dual currency operations during the transition period. In addition, we intend to
require all vendors supplying third party software to us to warrant to us that
their programs support dual currency operations.

     We will be dependent on banks, customers and other providers to complete
business transactions and we will be exposed to problems inherent in these
third-party systems. During the transition period, to the extent we are
supplying local and national service, we may continue billings and collections
in the legacy currency to avoid euro conversion problems. However, to the extent
we have international transactions, we will be exposed to euro-related risks.

     The establishment of the European Monetary Union may have a significant
effect on the economies of the participant countries. While we believe that the
introduction of the euro will eliminate exchange rate risks in respect of the
currencies of those member states that have adopted the Euro, which includes
Germany and France, there can be no assurance as to the relative strength of the
euro against other currencies, including the U.S. Dollar. Since a substantial
portion of our net sales will be denominated in euro or legacy currencies of
participant countries, we will be exposed to that risk.

Regulation and Licensing Matters

     France, Germany and the United Kingdom, and any new markets across Europe
in which we intend to operate, subject the telecommunications industry to a
significant degree of regulation. We need telecommunications licenses and other
equivalent authorizations to operate in each of these countries. Our ability to
deploy metropolitan area networks and provide Internet-related services in the
additional six cities included in our business plan depends on our ability to
obtain additional licenses and other authorizations or permissions.

     We must keep our licenses in our existing markets in force or we may be in
default under the senior notes indenture and the credit facility, and we risk
sanctions from the government authorities that grant our licenses. In most
cases, these licenses and other authorizations are of fixed duration, and we
must comply with regulations and technical requirements in order to maintain
them. For example, in France, we must comply with French and European Union
regulations and technical standards regarding interconnection, secrecy,
neutrality, non-discrimination, security, environmental protection, limitations
on ownership, and public service.

New Accounting Standards

     Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133") establishes
accounting and reporting standards for derivative instruments, including certain
instruments embedded in other contracts, and for hedging activities. SFAS 133
requires that an entity recognize all derivatives as either assets or
liabilities and measure those instruments at fair value. It also specifies the
accounting for changes in the fair value of a derivative instrument depending on
the intended use of the instrument and whether (and how) it is designated as a
hedge. SFAS 133 was effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. During 1999, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date of
SFAS 133" (SFAS 137) which delayed the effective date of SFAS 133 until all
fiscal quarters of fiscal years beginning after June 15, 2000. Through December
31, 1999, the Company had not entered into any transactions involving derivative
financial instruments and, therefore, cannot predict the financial statement
impact of adopting SFAS 133 with respect to transactions which have not yet been
entered into.

     In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 ("SAB 101") "Views on Selected Revenue
Recognition Issues" which provides the staff's views in applying

                                       29
<PAGE>

generally accepted accounting principles to selected revenue recognition issues.
The Company has evaluated SAB 101 and it believes that there is no effect on the
revenue recognition policies currently in place.

                                       30
<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

Investment portfolio and interest rate sensitivity

     Our investment policy is limited by CompleTel Europe's indenture for the
senior discount notes and its senior secured credit facility. CompleTel Europe
is restricted to investing in financial instruments with a maturity of one year
or less (with certain limited exceptions). The indenture requires investments
that meet high credit quality standards, such as obligations of the U.S.
government securities or any European Economic Community member government or
any agency thereof guaranteed by the country, certificates of deposits, money
market deposits, and commercial paper with a rating of A-1 or P-1. Under the
credit facility, CompleTel Europe is required to enter into an interest rate
hedging program with respect to 50% of every tranche of 50 million borrowed to
mitigate foreign currency exchange rate risk.

     Interest income earned on our investment portfolio is affected by changes
in short-term interest rates. We are thus exposed to market risk related to
changes in market interest rates. To date, we have managed these risks by
monitoring market rates and the duration of our investments.

     We do not think we are exposed to significant changes in fair value of our
investment portfolio because of our conservative investment strategy.

Impact of foreign currency rate changes

     We are exposed to changes in currency exchange rates because our revenues,
costs, assets and liabilities are, for the most part, denominated in local
currencies. As a result, our financial condition and results of operations, as
reported in dollars as our functional currency through December 31, 1999, may be
affected by changes in the value of the local currencies in which we transact
business. The senior discount notes issued in February 1999 also expose us to
exchange rate fluctuations as the payment of principal and interest on the notes
will be made in dollars, and a substantial portion of our future cash flows used
to service these payments will be denominated in local currencies, including the
euro. While we intend to take steps to minimize exchange rate risks, we cannot
assure you that we will not be materially adversely affected by variations in
currency exchange rates.

     Our operating subsidiaries' monetary assets and liabilities are subject to
foreign currency exchange risk if purchases of network equipment and services
are denominated in currencies other than the subsidiary's own functional
currency. However, the majority of such purchases to date have been based on
each subsidiary's functional currency.

     The spot rates for the euro are shown below expressed in dollar per one
euro.

<TABLE>
<S>                                                  <C>
      December 31, 1998 ............................ $1.181
      December 31, 1999 ............................ $1.007
</TABLE>

     We intend to manage exchange rate risk by incurring financing liabilities
denominated in the currency of the county of operations. In addition, we will
continue to evaluate whether to adopt hedging strategies to manage our exposure
to foreign currency exchange rate risk.

                                       31
<PAGE>

Item 8.  Financial Statements and Supplementary Data

     The consolidated financial statements of the Company are filed under this
Item as follows:

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                                            <C>
  I.    COMPLETEL LLC
        Report of Independent Public Accountants...........................................................     33
        Consolidated Balance Sheets as of December 31, 1999 and 1998.......................................     34
        Consolidated Statements of Operations for the year ended December 31, 1999 and for the Period
          from Commencement of Operations (January 8, 1998) to December 31, 1998...........................     35
        Consolidated Statements of Members' Equity (Deficit) for the year ended December 31, 1999
          and for the Period from Commencement of Operations (January 8, 1998) to December 31,
          1998 ............................................................................................     36
        Consolidated Statements of Cash Flows for the year ended December 31, 1999 and for the
          Period from Commencement of Operations (January 8, 1998) to December 31, 1998....................     37
        Notes to Consolidated Financial Statements.........................................................     38
</TABLE>

                                       32
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To CompleTel LLC:

   We have audited the accompanying consolidated balance sheets of COMPLETEL LLC
(a Delaware limited liability company) and subsidiaries (the "Company") as of
December 31, 1999 and 1998 and the related consolidated statements of
operations, members' equity (deficit) and cash flows for the year ended December
31, 1999, and for the period from commencement of operations (January 8, 1998)
to December 31, 1998 (after corporate reorganization-see Note 1). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

   In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CompleTel LLC and subsidiaries
as of December 31, 1999 and 1998 and the results of their operations and their
cash flows for the year ended December 31, 1999, and for the period from the
commencement of operations (January 8, 1998) to December 31, 1998, in conformity
with accounting principles generally accepted in the United States.


                                       ARTHUR ANDERSEN LLP

Denver, Colorado,
March 2, 2000 (except for the
  the matters regarding the senior notes
  offering and amendment to corporate
  and investor agreements discussed in Note 12, as to
  which the date is March 23, 2000).

                                       33
<PAGE>

                        COMPLETEL LLC AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
          (Stated in thousands of U.S. Dollars, except unit amounts)
                  (After Corporate Reorganization See Note 1)
<TABLE>
<CAPTION>
                                                                                 December 31,   December 31,
                                                                                     1999           1998
                                                                                     ----           ----
<S>                                                                              <C>            <C>
                                    ASSETS
CURRENT ASSETS:
     Cash and cash equivalents .............................................      $  60,469       $   3,744
     Receivables ...........................................................         14,891             537
     Prepaid expenses and other current assets .............................          1,703             214
                                                                                  ---------       ---------
          Total current assets .............................................         77,063           4,495
                                                                                  ---------       ---------

LONG-TERM ASSETS:
     Property and equipment, net ...........................................         92,872           3,441
     Licenses and other intangibles, net ...................................          4,938             950
     Deferred financing costs, net .........................................          6,352             869
     Other long-term assets ................................................            872             287
                                                                                  ---------       ---------
          Total long-term assets ...........................................        105,034           5,547
                                                                                  ---------       ---------
TOTAL ASSETS ...............................................................      $ 182,097       $  10,042
                                                                                  =========       =========

                   LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
     Construction payables .................................................      $  28,711       $    -
     Trade accounts payable ................................................         10,693           1,964
     Accrued liabilities ...................................................         13,383           3,308
                                                                                  ---------       ---------
          Total current liabilities ........................................         52,787           5,272
                                                                                  ---------       ---------

LONG-TERM DEBT .............................................................         79,922            -
                                                                                  ---------       ---------

MINORITY INTEREST ..........................................................            279            -

COMMITMENTS AND CONTINGENCIES (Note 6)

REDEEMABLE CUMULATIVE CONVERTIBLE PREFERRED UNITS:
     No par value, 84,070 and 61,950 units authorized, issued and
       outstanding, respectively ...........................................        113,469          13,188

MEMBERS' EQUITY (DEFICIT):
     Common units, no par value; 131,494 units authorized; 18,485 and 16,385
           units issued and outstanding, respectively ......................         30,065             737
     Deferred compensation .................................................        (28,495)           (540)
     Other cumulative comprehensive loss ...................................         (3,912)           (160)
     Accumulated deficit ...................................................        (62,018)         (8,455)
                                                                                  ---------       ---------
TOTAL MEMBERS' EQUITY (DEFICIT) ............................................        (64,360)         (8,418)
                                                                                  ---------       ---------
TOTAL LIABILITIES AND MEMBERS' EQUITY (DEFICIT) ............................      $ 182,097       $  10,042
                                                                                  =========       =========

</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.


                                       34
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
     (Stated in thousands of U.S. Dollars, except unit and per unit amounts)
                   (After Corporate Reorganization See Note 1)

<TABLE>
<CAPTION>
                                                                                               Commencement
                                                                                              of Operations
                                                                               Year             (January 8,
                                                                              Ended              1998) to
                                                                            December 31,        December 31,
                                                                                1999                1998
                                                                                ----                ----
<S>                                                                         <C>                 <C>
REVENUES ..........................................................           $  2,985            $   -

OPERATING EXPENSES:
     Network costs ................................................              2,407                -
     Selling, general and administrative ..........................             38,478               8,044
     Depreciation and amortization ................................              4,534                  59
                                                                              --------            --------
          Total operating expenses ................................             45,419               8,103
                                                                              --------            --------
OPERATING LOSS ....................................................            (42,434)             (8,103)
                                                                              --------            --------
OTHER INCOME (EXPENSE):
     Interest income ..............................................              2,814                  11
     Interest expense, net of capitalized interest ................             (8,604)               -
     Foreign exchange loss and other expense ......................             (3,621)               -
                                                                              --------            --------
          Total other income (expense) ............................             (9,411)                 11
                                                                              --------            --------
NET LOSS BEFORE MINORITY INTEREST .................................            (51,845)             (8,092)

MINORITY INTEREST IN LOSS OF CONSOLIDATED SUBSIDIARIES ............              3,501                 -
                                                                              --------            --------
NET LOSS BEFORE INCOME TAXES ......................................            (48,344)             (8,092)

INCOME TAX PROVISION ..............................................               -                   -
                                                                              --------            --------
NET LOSS ..........................................................            (48,344)             (8,092)

ACCRETION OF REDEEMABLE CUMULATIVE CONVERTIBLE
 PREFERRED UNITS ..................................................             (5,219)               (363)
                                                                              --------            --------
NET LOSS APPLICABLE TO COMMON UNITS ...............................           $(53,563)           $ (8,455)
                                                                              ========            ========
BASIC AND DILUTED LOSS PER COMMON UNIT ............................           $ (6,908)           $ (1,940)
                                                                              ========            ========
WEIGHTED AVERAGE NUMBER OF NON-FORFEITABLE COMMON UNITS OUTSTANDING              7,754               4,359
                                                                              ========            ========
</TABLE>

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

                                       35
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY (DEFICIT)
     (Stated in thousands of U.S. Dollars, except unit and per unit amounts)
                   (After Corporate Reorganization See Note 1)
<TABLE>
<CAPTION>

                                                                                                    Other
                                                        Common Units                              Cumulative
                                                  ------------------------         Deferred      Comprehensive      Accumulated
                                                   Number          Amount        Compensation         Loss            Deficit
                                                  --------        --------       ------------    -------------      -----------
<S>                                               <C>             <C>            <C>             <C>                <C>
BALANCE, January 8, 1998                             -            $   -            $   -            $   -            $   -
    Deemed issuance of common units
        at formation (actual issuance
        May 18, 1998)                               2,400             -                -                -                -
    Issuance of common units at
        May 18, 1998 for services
        provided                                    2,925              115             -                -                -
    Issuance of common units at
        August 24, 1998 for services
        provided                                      263               13             -                -                -
    Issuance of forfeitable common units           10,797              609             (604)            -                -
    Amortization of deferred
        compensation                                 -                -                  64             -                -
    Accretion of redeemable cumulative
        convertible preferred units                  -                -                -                -                (363)
    Cumulative translation adjustments               -                -                -                (160)            -
    Net loss                                         -                -                -                -              (8,092)
                                                   ------         --------         ---------        --------         --------
BALANCE, December 31, 1998                         16,385         $    737         $   (540)        $   (160)        $ (8,455)


    Cancellation of units deemed issued
        at formation and units issued
        for services provided                      (2,250)             (61)              61             -                -
    Issuance of forfeitable common
        units to management investor                2,250              300             (300)            -                -
    Repurchases of previously issued
        forfeitable common units                     (121)             (24)              24             -                -
    Issuance of forfeitable common units            2,221            1,915           (1,915)            -                -
    Issuance of subsidiary stock options             -              26,500          (26,500)            -                -
    Gain on issuance of equity at
        subsidiary                                   -                 698             -                -                -
    Amortization of deferred
        compensation                                 -                -                 675             -                -
    Accretion of redeemable cumulative
        convertible preferred units                  -                -                -                -              (5,219)
    Cumulative translation adjustments               -                -                -              (3,752)            -
    Net loss                                         -                -                -                -             (48,344)
                                                   ------           ------          -------           ------          -------
BALANCE, December 31, 1999                         18,485         $ 30,065         $(28,495)        $ (3,912)        $(62,018)
                                                   ======           ======          =======           ======          =======
</TABLE>

<TABLE>
<CAPTION>
                                                  Total
                                              Comprehensive
                                                   Loss             Total
                                              -------------       --------
<S>                                           <C>                 <C>
BALANCE, January 8, 1998                         $   -            $    -
    Deemed issuance of common units
        at formation (actual issuance
        May 18, 1998)                                -                 -
    Issuance of common units at
        May 18, 1998 for services
        provided                                     -                 115
    Issuance of common units at
        August 24, 1998 for services
        provided                                     -                  13
    Issuance of forfeitable common units             -                   5
    Amortization of deferred
        compensation                                 -                  64
    Accretion of redeemable cumulative
        convertible preferred units                  -                (363)
    Cumulative translation adjustments               (160)            (160)
    Net loss                                       (8,092)          (8,092)
                                                 --------         --------
BALANCE, December 31, 1998                       $ (8,252)        $ (8,418)
                                                 ========

    Cancellation of units deemed issued
        at formation and units issued
        for services provided                        -                -
    Issuance of forfeitable common
        units to management investor                 -                -
    Repurchases of previously issued
        forfeitable common units                     -                -
    Issuance of forfeitable common units             -                -
    Issuance of subsidiary stock options             -                -
    Gain on issuance of equity at
        subsidiary                                   -                 698
    Amortization of deferred
        compensation                                 -                 675
    Accretion of redeemable cumulative
        convertible preferred units                  -              (5,219)
    Cumulative translation adjustments             (3,752)          (3,752)
    Net loss                                      (48,344)         (48,344)
                                                 --------         --------
BALANCE, December 31, 1999                       $(52,096)        $(64,360)
                                                 ========         ========
</TABLE>

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

                                       36
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (Stated in thousands of U.S. Dollars)
                   (After Corporate Reorganization See Note 1)
<TABLE>
<CAPTION>
                                                                                                                  Commencement of
                                                                                                                    Operations
                                                                                                     Year          (January 8,
                                                                                                     Ended           1998) to
                                                                                                  December 31,     December 31,
                                                                                                     1999              1998
                                                                                                     ----              ----
<S>                                                                                               <C>              <C>
OPERATING ACTIVITIES:
     Net loss ............................................................................        $ (48,344)        $  (8,092)
     Adjustments to reconcile net loss to cash flows from operating activities-
          Depreciation and amortization ..................................................            4,534                59
          Non-cash compensation expense ..................................................              675               192
          Accretion of senior notes ......................................................            7,948              -
          Amortization of deferred financing costs .......................................              570              -
          Minority interest in net loss ..................................................           (3,501)             -
          Changes in assets and liabilities-
               Increase in receivables ...................................................          (15,176)             (537)
               Increase in prepaid expenses and other current assets .....................           (1,574)             (214)
               Increase in other long-term assets ........................................             (629)             (287)
               Increase in trade accounts payable and accrued liabilites .................           22,217             4,935
                                                                                                  ---------         ---------
                    Net cash flows from operating activities .............................          (33,280)           (3,944)
                                                                                                  ---------         ---------
INVESTING ACTIVITIES:
     Expenditures for property and equipment .............................................          (97,527)           (3,485)
     Increase in construction payables ...................................................           28,711              -
     Purchase of licenses and other intangibles ..........................................           (4,315)             (950)
     Offering proceeds and investment earnings placed in escrow ..........................          (73,198)             -
     Proceeds from escrowed offering and investment earnings .............................           73,198              -
                                                                                                  ---------         ---------
                    Net cash flows from investing activities .............................          (73,131)           (4,435)
                                                                                                  ---------         ---------
FINANCING ACTIVITIES:
     Gross proceeds from senior notes offering ...........................................           70,532              -
     Proceeds from issuance of common units ..............................................                3                 5
     Issuance of redeemable cumulative convertible preferred units .......................           94,716            12,113
     Issuance of equity in subsidiary ....................................................            4,478              -
     Loan from member ....................................................................             -                1,300
     Payment on loan from member .........................................................             -                 (266)
     Deferred financing costs ............................................................           (6,054)             (869)
                                                                                                  ---------         ---------
                    Net cash flows from financing activities .............................          163,675            12,283
                                                                                                  ---------         ---------
     Effect of exchange rates on cash ....................................................             (539)             (160)
                                                                                                  ---------         ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................................................           56,725             3,744

CASH AND CASH EQUIVALENTS, beginning of period ...........................................            3,744              -
                                                                                                  ---------         ---------
CASH AND CASH EQUIVALENTS, end of period .................................................        $  60,469         $   3,744
                                                                                                  =========         =========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Conversion of member loan to preferred units ..........................................        $    -            $   1,034
                                                                                                  =========         =========
   Accretion of redeemable cumulative convertible preferred units ........................        $   5,219         $     363
                                                                                                  =========         =========
   SAB No. 51 gain recorded in members' equity related to issuance of equity in subsidiary        $     698         $    -
                                                                                                  =========         =========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.

                                       37
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998
                   (After Corporate Reorganization See Note 1)



(1)   ORGANIZATION AND NATURE OF OPERATIONS

   CompleTel LLC ("Parent") (together with its majority-owned subsidiaries, the
"Company") is a Delaware limited liability company. CompleTel LLC was known as
CableTel Delaware LLC ("CableTel Delaware") from its formation on January 8,
1998 through May 18, 1998, when it was reorganized and renamed as CableTel
Europe LLC in connection with the admission of a new member. Effective August
20, 1998, CableTel Europe LLC changed its name to CompleTel LLC.

   The Company has a strategic objective of becoming a leading facilities-based
operator of a technologically advanced, high-capacity, fiber optic
communications infrastructure and provider of telecommunications and
Internet-related services to business and government end-users, carriers and
Internet service providers in targeted metropolitan areas across Western Europe.
A facilities-based operator uses mainly its own telecommunications facilities to
provide service, in contrast with non-facilities-based resellers who purchase
the services of other providers and then retail the services to customers.
Initially, the Company is focusing on building high-capacity fiber optic
networks in France and Germany. Additionally, the Company intends to provide
Internet access services in France, Germany and the United Kingdom ("UK").

   As of December 31, 1998, the accompanying consolidated financial statements
include Parent's direct and indirect wholly-owned subsidiaries consisting of
CableTel Management Inc. ("Management Co."), CompleTel Europe N.V. ("CompleTel
Europe"), CompleTel Holding I B.V. ("BVI"), CompleTel Holding II B.V. ("BVII"),
its French operating subsidiary, CompleTel SAS ("CompleTel France") (formerly
known as CompleTel S.A.R.L., its UK operating subsidiary, CompleTel UK Limited
("CompleTel UK"), and its German operating subsidiary, CompleTel GmbH
("CompleTel Germany"). CompleTel Europe was formed in December 1998 for the
purpose of completing a Rule 144A Offering (the "Offering") (see Note 5) to
finance the development of its switched local telecommunications network and
related services throughout France and Western Europe. As of December 31, 1998,
Parent's operating companies were held indirectly through BVI and BVII.
CompleTel Europe held no material assets or operations as of December 31, 1998.

   In January 1999, Parent formed CompleTel Holdings LLC ("CompleTel Holdings"),
CompleTel ECC B.V. ("CompleTel ECC"), CompleTel (N.A.) N.V. ("NANV") and
CompleTel UK SPC ("CompleTel SPC"). CompleTel Holdings was formed to issue the
equity component of the Offering. CompleTel ECC was formed to be the group's
European corporate center and to hold the proceeds of the Offering, through an
escrow account, until CompleTel Europe received aggregate financing commitments
of at least $90 million (see Note 6). Through a series of transactions in the
restructuring, CompleTel LLC contributed approximately $58 million of equity,
consisting of cash of approximately $52 million and accounts receivable of
approximately $6 million, to CompleTel France. Also, through a series of
restructuring transactions, CompleTel SPC became a wholly-owned subsidiary of
BVI, BVI was contributed to CompleTel Europe, in exchange for the issuance of
73,537,325 additional ordinary shares and CompleTel Europe became a wholly-owned
subsidiary of NANV. Furthermore, CompleTel LLC contributed its 100% interest in
NANV to CompleTel Holdings in exchange for all 19,596,429 Class A Membership
Interests in CompleTel Holdings. The Non-Voting Class B Membership Interests
(aggregating 1,475,000) in CompleTel Holdings were issued substantially to
unrelated parties in connection with the Offering (see Note 6). The
restructuring was accounted for as a reorganization of entities under common
control, similar to a pooling of interests.

                                       38
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


   In November and December 1999, Parent received additional cash contributions
totaling approximately $42.1 million from new and existing investors. As of
December 31, 1999, Parent had contributed, through a series of planned
transactions, $40 million to CompleTel GmbH through intermediate subsidiaries in
exchange for one share of CompleTel GmbH, and contributed approximately $2.1
million to CompleTel Europe through intermediate subsidiaries in exchange for
ordinary shares of CompleTel Europe. Through this series of planned
transactions, an intermediate subsidiary of Parent received one share of
CompleTel GmbH, which was contributed to BVI in February 2000 in exchange for
one BVI class B share. Also, in February 2000 the BVI share was contributed to
CompleTel Europe in exchange for ordinary shares in CompleTel Europe. These
transactions have been accounted for as a reorganization of entities under
common control.

   The Company has been principally engaged in developing its business plans,
applying for and procuring regulatory and government authorizations, raising
capital, hiring management and other key personnel, working on the design,
development and construction of the Company's fiber optic networks and operation
support systems ("OSS"), negotiating equipment and facilities agreements, and
negotiating interconnection agreements and certain right-of-way agreements. As a
result of its development stage activities, the Company has experienced
significant operating losses and negative cash flows from operations. The
Company exited the development stage during the fourth quarter of 1999. The
Company expects to continue to generate negative cash flows from operations in
each market while it continues development, construction, and expansion of its
business and until the Company establishes a sufficient revenue generating
customer base in that market. The Company also expects to experience increasing
operating losses and negative cash flows from operations as it expands its
operations and enters new markets, even if and after it achieves positive cash
flow from operations in its initial markets.

   The Company's ultimate success will be affected by the problems, expenses and
delays encountered in connection with the formation of any new business and by
the competitive environment in which the Company intends to operate. The Company
currently offers its services in two markets in France and one market in Germany
and plans to deploy networks in six additional markets in France and three
additional markets in Germany. The Company is also developing an
Internet-related services business in these markets and the U.K. The Company's
performance will further be affected by its ability to obtain licenses, properly
assess potential markets, secure financing or raise additional capital, design
networks, acquire right-of-way and building access rights, implement
interconnection with incumbent public telecommunications operators ("PTOs"),
lease adequate trunking capacity from PTOs, purchase and install switches in
additional markets, implement efficient OSS and other back office systems,
develop a sufficient customer base, and attract, retain and motivate qualified
personnel. Delays or failure in receiving required regulatory approvals or the
enactment of new adverse regulations or regulatory requirements may have a
material adverse effect upon the Company. Although management believes that the
Company will be able to successfully mitigate these risks, there is no assurance
that the Company will be able to do so or that the Company will ever operate
profitably.

   The actual amount and timing of the Company's future capital requirements may
differ materially from the Company's current estimates, and additional financing
may be required in the event of departures from the Company's current business
plans and projections, including those caused by unforeseen delays, cost
overruns, engineering design changes, demand for the Company's services that
varies from that expected by the Company, and adverse regulatory, technological
or competitive developments. The Company may also require additional capital (or
require financing sooner than anticipated) if it alters the schedule or targets
of its roll-out plan in response to regulatory, technological or competitive
developments (including additional market developments and new opportunities in
and outside of its target markets). The Company intends to evaluate potential
joint ventures,

                                       39
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


strategic alliances, and acquisition opportunities on an ongoing basis as they
arise, and the Company may require additional financing if it elects to pursue
any such opportunities. The Company also will be required to seek additional
financing if it elects to deploy networks in other Western European markets
beyond its target markets. Sources of additional financing may include
commercial bank borrowings, vendor financing and/or the private or public sale
of equity or debt securities.

(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

   The accompanying consolidated financial statements of the Company have been
prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP"). The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The Company has adopted a calendar fiscal
year.

Principles of Consolidation

   The accompanying consolidated financial statements include the accounts of
Parent and its majority-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

   For purposes of reporting cash flows, the Company considers all marketable
securities and commercial paper with maturities of ninety days or less at
acquisition as cash equivalents.

Receivables

   Receivables consist primarily of amounts due to the Company's European
subsidiaries for value added taxes ("VAT") paid on purchased goods and services.
VAT receivables are recoverable through a netting of VAT payable on sales
revenue or by a request for reimbursement to the applicable taxing authority.

Prepaid Expenses and Other Current Assets

   Prepaid expenses consist of prepaid rent and prepaid insurance. Prepayments
are amortized on a straight-line basis over the life of the underlying
agreements. Other current assets consist primarily of deposits on office and
switch location premises.

                                       40
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Property and Equipment

   Property and equipment includes network equipment, office furniture and
equipment, computer equipment and software, leasehold improvements , buildings
and construction in progress. These assets are stated at cost and are being
depreciated when ready for their intended use on a straight-line basis over the
estimated useful lives of the related assets as follows:

<TABLE>
<CAPTION>
                                                                Estimated
                                                                ---------
                                                              Useful Life
                                                              ------------
<S>                                                           <C>
     Network equipment                                        3 to 8 years
     Office furniture and equipment                              5 years
     Computer equipment and software                          3 to 5 years
     Leasehold improvements                                   9 to 12 years
     Buildings                                                  20 years
</TABLE>

   Property and equipment consisted of the following (in thousands):

<TABLE>
<CAPTION>

                                                   December 31,    December 31,
                                                   ------------    ------------
                                                       1999            1998
                                                       ----            ----
<S>                                                <C>             <C>
     Network equipment                              $ 39,955         $   -
     Office furniture and equipment                    1,521              132
     Computer equipment and software                   5,582              688
     Leasehold improvements                            1,855               24
     Buildings                                           206             -

                                                    --------         --------
     Property and equipment, in service               49,119              844
     Less: accumulated depreciation                   (4,215)             (59)

                                                    --------         --------
     Property and equipment, in service, net          44,904              785
     Construction in progress                         47,968            2,656

                                                    --------         --------
     Property and equipment, net                    $ 92,872         $  3,441
                                                    ========         ========
</TABLE>

   The Company capitalized approximately $1.4 million and $0 of interest for the
year ended December 31, 1999 and for the period from commencement of operations
(January 8, 1998) to December 31, 1998, respectively.

Computer Software Costs

   The American Institute of Certified Public Accountants ("AICPA") recently
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"), which provides
guidance on accounting for the costs of computer software developed or obtained
for internal use. SOP 98-1 identifies the characteristics of internal-use
software and provides examples to assist in determining when computer software
costs should be capitalized and amortized versus expensed. This statement was
adopted at commencement of operations.

Start-Up Costs

   The Company expenses all start-up and organization costs as incurred, in
accordance with the provisions of AICPA Statement of Position 98-5, "Reporting
on the Costs of Start-up Activities."

                                       41
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Deferred Financing Costs

   Costs to obtain debt financing are capitalized and amortized over the life of
the related debt facility using the effective interest method. Costs to obtain
equity financing are capitalized and amortized through the date preferred units
are convertible to conversion securities (Note 4).

License Costs

   The Company capitalizes all third-party direct costs associated with
obtaining licenses. Capitalized license costs are amortized at commencement of
operations over the lives of the related licenses, ranging from 15 to 25 years.

Recoverability of Long-Lived Assets

   The Company evaluates the carrying value of its long-lived assets whenever
events or circumstances indicate the carrying value of assets may exceed their
recoverable amounts. An impairment loss is recognized when the estimated future
cash flows (undiscounted and without interest) expected to result from the use
of an asset are less than the carrying amount of the asset. If an asset which is
expected to be held and used is determined to be impaired, then the asset would
be written down to its fair market value based on the present value of the
discounted cash flows related to such asset. Measurement of an impairment loss
for an asset held for sale would be based on its fair market value less the
estimated costs to sell.

Revenue Recognition

   The Company recognizes revenue for its services in the period earned.

Stock-Based Compensation

   The Company accounts for stock-based compensation to employees using the
intrinsic value method prescribed in Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees." Deferred compensation is
amortized to expense over the vesting period of the related stock-based awards.
CompleTel Europe adopted an employee stock option plan in December 1999 (Note
8).

Income Taxes

   No provision has been made for federal, state or local income taxes related
to the Parent because they are the responsibility of the individual members.

   Certain subsidiaries of the Parent are subject to corporate income tax
requirements and, accordingly, the Company accounts for income taxes under the
asset and liability method which requires recognition of deferred tax assets and
liabilities for the expected future income tax consequences of transactions
which have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the
differences between the financial statement and income tax basis of assets,
liabilities and carryforwards using enacted tax rates in effect for the year in
which the differences are expected to reverse or the carryforwards are expected
to be utilized. Net deferred tax assets are then reduced by a valuation
allowance if management believes it is more likely than not they will not be
realized.

SAB No. 51 Accounting Policy--Sale of Stock by Subsidiaries

   The Company has adopted a policy of recording all gains attributable to
subsidiary common equity sales in the statement of operations, except for gains
on subsidiary equity sale transactions which must be recorded directly in equity
in accordance with the provision of Staff Accounting Bulletin Number 51 ("SAB
51.") In February 1999, as part of the Company's Senior Discount Notes and Class
B Membership Interests Offering, the gross proceeds of approximately $75 million
were allocated approximately $70.5 million to the Notes (issued by

                                       42
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


CompleTel Europe) and approximately $4.5 million to the Class B Interests (in
CompleTel Holdings LLC) representing a 7% interest in CompleTel Holdings, LLC.
This resulted in a $698,000 SAB No. 51 gain recorded directly in equity in
accordance with SAB 51.

Comprehensive Loss

   Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), requires that an enterprise (i) classify items of other
comprehensive income (loss) by their nature in the financial statements and (ii)
display the accumulated balance of other comprehensive income (loss) separately
from retained earnings (deficit) and additional paid-in capital in the equity
section of a balance sheet. The Company's other comprehensive loss, as set forth
in the accompanying consolidated statements of members' equity (deficit),
includes cumulative translation adjustments.


Basic and Diluted Loss Per Common Unit

   The Company computes earnings (loss) per common unit in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). Under SFAS 128, "basic earnings (loss) per share" is determined by
dividing net income (loss) by the weighted average number of common units
outstanding during each period. "Diluted earnings (loss) per common unit"
includes the effects of potentially issuable common units, but only if dilutive.
Because potentially issuable common units would be antidilutive, there are no
differences between basic and diluted loss per common unit for the Company
through December 31, 1999. The weighted average common units outstanding for the
1998 period assumes the initial capitalization of the Company (2,400 common
units) occurred as of January 8, 1998.

Foreign Operations and Foreign Exchange Rate Risk

   The functional currency for the Company's foreign operations is the
applicable local currency for the affiliate company. Assets and liabilities of
foreign subsidiaries for which the functional currency is the local currency are
translated at exchange rates in effect at period-end, and the consolidated
statements of operations are translated at the average exchange rates during the
period. Exchange rate fluctuations on translating foreign currency financial
statements into U.S. dollars that result in unrealized gains or losses are
referred to as translation adjustments. Cumulative translation adjustments are
recorded as a separate component of members' equity (deficit).

   Transactions denominated in currencies other than the local functional
currency of the Company's operating subsidiaries, including U.S. dollar
denominated intercompany accounts and notes payable to Parent and Management
Co., are recorded based on exchange rates at the time such transactions arise.
Subsequent changes in exchange rates result in transaction gains and losses
which are reflected in income as unrealized (based on period-end translations)
or realized upon settlement of the transactions.

   The Company's foreign subsidiaries can have payables that are denominated in
a currency other than their own functional currency. The Company has not
historically hedged foreign currency denominated transactions for receivables or
payables related to current operations. If the Company enters into hedging
transactions, there can be no assurance that any such hedging transactions would
be successful and that the exchange rate fluctuations would not have a material
adverse effect on the Company. Accordingly, the Company may experience economic
loss and a negative impact on earnings and equity with respect to its holdings
solely as a result of foreign currency exchange rate fluctuations, which include
foreign currency devaluation against the dollar.

   The Company adopted the euro as its functional currency effective January 1,
2000.

                                       43
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


New Accounting Standards

   Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), establishes
accounting and reporting standards for derivative instruments, including certain
instruments embedded in other contracts, and for hedging activities. SFAS 133
requires that an entity recognize all derivatives as either assets or
liabilities and measure those instruments at fair value. It also specifies the
accounting for changes in the fair value of a derivative instrument depending on
the intended use of the instrument and whether (and how) it is designated as a
hedge. SFAS 133 was effective for all fiscal quarters of fiscal years beginning
after June 15, 1999.

   During 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of SFAS 133" ("SFAS
137") which delayed the effective date of SFAS 133 until all fiscal quarters of
fiscal years beginning after June 15, 2000. Through December 31, 1999, the
Company had not entered into any transactions involving derivative financial
instruments and, therefore, cannot predict the financial statement impact of
adopting SFAS 133 with respect to transactions which have not yet been entered
into.

   In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 ("SAB 101") "Views on Selected Revenue
Recognition Issues" which provides the staff's views in applying generally
accepted accounting principles to selected revenue recognition issues. SAB 101
is effective March 31, 2000. The Company has evaluated SAB 101 and it believes
that there is no effect on the revenue recognition policies currently in place.

(3)    CAPITALIZATION

LLC Agreement

   On May 18, 1998, an affiliate of Madison Dearborn Partners, Inc. ("Madison
Dearborn Partners"), an affiliate of LPL Investment Group, Inc. ("LPL")(together
with Madison Dearborn Partners, the "Private Equity Investors") and certain
members of management (the "Management Investors") entered into an amended and
restated limited liability company agreement (the "LLC Agreement"), amending and
restating the original limited liability agreement of CableTel Delaware dated
January 8, 1998. The LLC Agreement, as amended, authorized the issuance of (i)
61,950 redeemable cumulative convertible preferred ownership interests (the
"Preferred Units"), (ii) 107,500 common ownership interests (the "Common
Units"), and (iii) certain other units (Class A Senior Units, Class B Senior
Units and Class C Senior Units) issuable only in limited circumstances and only
in exchange for other Units. The 61,950 Preferred Units have been issued to the
Private Equity Investors and Management Investors under an Equity Purchase
Agreement (the "Equity Purchase Agreement") (see Note 4). Of the 107,500 Common
Units, 82,500 are reserved for issuance upon conversion of the Preferred Units,
25,000 were issued, or are reserved for issuance, to the Management Investors
under executive securities agreements (the "Executive Securities Agreements").
Of the 25,000 Common Units issued or issuable to the Management Investors,
17,500 (the "Non-Performance Vesting Units") are subject to vesting through
the passage of time under the Executive Securities Agreements and 7,500 (the
"Performance Vesting Units") are subject to time vesting and to performance
vesting under a performance vesting agreement (the "Performance Vesting
Agreement"). An additional 798 common units were issued to employees subject to
time vesting and to performance vesting similar to that under the Performance
Vesting Agreement, but without any forfeiture requirements on holder of referred
units. Of the 25,000 Common Units issued or issuable to the Management
Investors, 2,250 were issued to LPL under the LPL Investor Purchase Agreement.
On January 22, 1999, the 2,250 immediately vested Common Units previously issued
to LPL were canceled. These units were then issued to one of the Management
Investors as additional Non-Performance Vesting Units. No Class A Senior Units,
Class B Senior Units or Class C Senior Units had been issued as of December 31,
1999. On January 28, 1999, the Company entered into the Second Amended and
Restated Limited Liability Company Agreement of CompleTel LLC, increasing the
authorized Preferred Units to 65,750 (see Note 4). On November 23, 1999, the
Company entered into the Third Amended and Restated Limited Liability Company
Agreement of CompleTel LLC, increasing the authorized Preferred Units to 84,070
and increasing the authorized number of common units To 131,494 (see Note 4).

                                       44
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Common Units

   The holders of Common Units are entitled to one vote for each Common Unit
held on all matters submitted to a vote of the members. Holders of Common Units
are entitled, subject to the preferences of the Preferred Units, to receive such
distributions, if any, as may be declared by Parent's Board of Directors out of
profits allocated to the members. The Indenture related to the Offering
restricts the ability of CompleTel Europe to pay dividends to Parent in order to
pay distributions with respect to the Common Units. In addition, Parent may not
make any distributions with respect to the Common Units without the prior
consent of the Private Equity Investors. In the event of a liquidation,
dissolution, or winding up of Parent, the holders of Common Units are entitled
to share ratably in the assets of Parent which are available for distribution,
if any, after the payment of all debts and liabilities of Parent and the
liquidation preference of any outstanding Preferred Units.

   Upon the affirmative vote of Parent's Board and the holders of a majority of
the Common Units (including the Preferred Units, on an as-if-converted basis),
Parent will be converted into a corporation (as that term is used in Subchapter
C of the Internal Revenue Code). In connection with such conversion, each holder
of Preferred Units or Common Units of Parent will receive comparable equity
securities of such corporation on the terms set forth in the LLC Agreement.

   Upon the initial formation of CableTel Delaware on January 8, 1998, the
founding members of CableTel Delaware each received a 25% member interest in
CableTel Delaware. The founding members were comprised of three of the
Management Investors and LPL. As part of the reorganization on May 18, 1998, the
founding members of CableTel Delaware were deemed to have received Common Units
of Parent in exchange for their interests in CableTel Delaware. For accounting
purposes, a portion of the fully vested Common Units (2,400 units) of Parent
received by the founders under the Executive Securities Agreements and the LPL
Investor Purchase Agreement were deemed to have been issued in exchange for
their prior member interests in CableTel Delaware. The remaining fully vested
Common Units (2,925 units) received by the founders were deemed to have been
issued in consideration for prior services provided. The intrinsic value of the
Common Units deemed received for prior services totaling approximately $115,000
was charged to general and administrative expense in the accompanying
consolidated statement of operations.

   As of December 31, 1999 and December 31, 1998, 14,472 and 10,797
Non-Performance Vesting Units had been issued to the Management Investors and
other employees, respectively. The Non-Performance Vesting Units issued to the
Management Investors vest ratably on each anniversary of the Executive
Securities Agreements over a four-year period. The Non-Performance Vesting Units
issued to other employees generally vest ratably over a four year period on each
December 31, with pro rata vesting in the year of employment and final vesting
on the fourth anniversary date of the applicable Employee Securities Agreement.
Vesting ceases upon the termination of employment with the Company, for any
reason and the related Common Units are subject to repurchase by Parent at fair
value for vested Common Units and at original cost for nonvested Common Units.
Vesting for Non-Performance Vesting Units is accelerated upon a Qualified Public
Offering or a Qualified Sale of Parent, as defined in the Executive Securities
Agreements. The Non-Performance Vesting Units are accounted for as issued Common
Units, subject to forfeiture, until vested. Accordingly, the intrinsic value of
the Non-Performance Vesting Units was accounted for at issuance as additional
paid-in capital, with an offsetting entry to deferred compensation. The
intrinsic value of the Common Units issued subject to forfeiture totaled
approximately $2,734,000 and $604,000 for the Non-Performance Vesting Units
issued through December 31, 1999 and 1998, respectively. This deferred
compensation is being amortized over the four year vesting period. As of
December 31, 1999 and 1998, 8,957 and 10,558 of the issued Non-Performance
Vesting Units are subject to forfeiture, respectively. The status of the issued
Non-Performance Vesting Units as of December 31, 1999 and 1998 are as follows.

                                       45
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


As of December 31, 1999:

<TABLE>
<CAPTION>
                                         Total Units (1)    Vested Units   Nonvested Units
                                         ---------------    ------------   ---------------
<S>                                          <C>               <C>             <C>
Units issued upon formation                   1,800            1,800                -
Units issued for services provided            2,213            2,213                -
Units issued subject to forfeiture           14,472            5,515            8,957
                                             ------            -----            -----
       Total                                 18,485            9,528            8,957
                                             ======            =====            =====
</TABLE>

(1)  Reflects the January 22, 1999 cancellation of the 2,250 immediately vested
     Common Units previously issued to LPL and the issuance of those units to
     one of the Management Investors as Non-Performance Vesting Units. Of the
     2,250 units issued to LPL, 600 were deemed issued upon formation and 1,650
     were issued for services provided.

As of December 31, 1998:

<TABLE>
<CAPTION>
                                           Total Units      Vested Units   Nonvested Units
                                           -----------      ------------   ---------------
<S>                                          <C>               <C>             <C>
Units issued upon formation                   2,400            2,400                -
Units issued for services provided            3,188            3,188                -
Units issued subject to forfeiture           10,797              209           10,558
                                             ------            -----           ------
       Total                                 16,385            5,797           10,558
                                             ======            =====           ======
</TABLE>

                                       46
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Performance Vesting Agreement

   The Private Equity Investors, the Management Investors, and Parent entered
into the Performance Vesting Agreement originally dated May 18, 1998 and amended
and restated January 28, 1999. Under the Performance Vesting Agreement, 7,500 of
the 25,000 Common Units issued or reserved for issuance to the Management
Investors (the "Performance Vesting Units") are subject to performance vesting
according to certain multiple-of-invested-capital tests calculated based upon
the valuation of Parent's equity implied by a Qualified Public Offering and/or
by actual sales of Parent's securities by Madison Dearborn Partners. If any
Performance Vesting Units remain unvested on May 18, 2005, there shall be deemed
to have occurred a sale of the Parent's securities by Madison Dearborn Partners
at fair market value. Any Performance Vesting Units that do not vest upon such a
deemed sale will be forfeited. In addition, up to 7,500 of the Common Units
issuable upon conversion of the Preferred Units (see Note 4) are subject to
forfeiture if and when Performance Vesting Units performance vest under the
terms of the Performance Vesting Agreement.

   For financial reporting periods ending prior to final determination of the
number of Performance Vesting Units that will vest, compensation cost will be
recorded based upon management's estimate of the number of such units that would
vest and the fair market value of those units as of the end of the reporting
period. As of December 31, 1999 and 1998, 7,422 and 6,981 Performance Vesting
Units were outstanding, respectively. As of December 31, 1999 and 1998 no
compensation cost has been recorded related to the Performance Vesting Units as
the number of units that will vest is not yet reasonably determinable.

   As discussed in Note 12, CompleTel Europe has commenced an Initial Public
Offering of its ordinary shares. Assuming an IPO price per ordinary share of
$15.91 (euro 16.50), the Company will record compensation expense of
approximately $38.2 million due to the anticipated vesting of certain
Performance Vesting Units in connection with what is anticipated to be a
Qualified Public Offering as defined in the Performance Vesting Agreement and
the applicable Executive Securities Agreements. For each $1 increase in the
anticipated IPO price per ordinary share, additional compensation expense and
deferred compensation of approximately $7.2 million will be recorded. In
addition, based upon the valuation of Parent's equity implied by the IPO value
of the Company as indicated above, the Company will record additional
compensation expense and deferred compensation of approximately $18.5 million
and $57.9 million, respectively, for performance vesting units that will not
vest as a result of the IPO but which may vest upon a qualified sale by MDP or
in May 2005 based on a deemed vesting date as defined. The additional deferred
compensation will be amortized to expense over the remaining vesting period to
May 18, 2005 (deemed vesting date if not prior due to a qualified sale by MDP as
defined in the executive securities agreements). The recorded amount of
compensation expense and deferred compensation for these awards will be adjusted
at each reporting date to reflect management's estimate of the number of such
units that will ultimately vest and the fair market value of those units as of
the end of each reporting period based on the then current market value of the
CompleTel Europe's ordinary shares, assuming the successful completion of the
CompleTel Europe's anticipated IPO.


Securityholders Agreement

   The Private Equity Investors, the Management Investors and Parent are parties
to a securityholders agreement dated May 18, 1998 (the "Securityholders
Agreement"). The Securityholders Agreement established the size of Parent's
Board of Directors at six and established a voting agreement among the investors
with respect to the election of the members of that board (the Executive
Committee of which acts as the board of directors of certain of Parent's
subsidiaries). On January 28, 1999, the Securityholders Agreement was amended
and restated to increase the size of Parent's Board of Directors to eight and
make corresponding changes in the voting agreement among the investors. Pursuant
to the terms of the Securityholders Agreement, the Private

                                       47
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Equity Investors may not transfer any Preferred Units (or securities issued upon
exercise thereof or otherwise in connection therewith) ("Preferred Securities")
prior to May 18, 1999, other than to their affiliates or as part of a sale of
Parent. The Management Investors may not transfer any Preferred Securities prior
to May 18, 2000, other than to their affiliates, family members or estate
planning entities, or as part of a sale of Parent. Transfers of Preferred
Securities by the Private Equity Investors after May 18, 1999, and by the
Management Investors after May 18, 2000, (in each case other than to their
affiliates, family members or estate planning entities, to the public, or as
part of a sale of Parent) are subject to first refusal rights in favor of the
other holders of Preferred Securities, and to "tag-along" rights of the holders
of Preferred Securities [and of the Management Investors with respect to their
Common Units that have vested under the Executive Securities Agreements and (if
applicable) performance vested under the Equity Purchase Agreement] to
participate pro rata in such transfer. In the event a sale of Parent is approved
by the holders of a majority of the Preferred Securities (which currently is
held by Madison Dearborn Partners), each of the Private Equity Investors and
Management Investors (and their transferees) agrees to approve and, if
requested, sell its Parent securities in such sale.

Registration Rights Agreement

   The Private Equity Investors, the Management Investors and Parent are parties
to a registration rights agreement originally dated May 18, 1998 and amended and
restated January 28, 1999 (the "Registration Agreement"). Under the terms of the
Registration Agreement, the holders of a majority of the Preferred Securities
(which currently is held by Madison Dearborn Partners) may require Parent to
consummate an initial public offering. After Parent's initial public offering,
Madison Dearborn Partners is entitled to demand two long-form registrations, LPL
is entitled to demand one long-form registration, and the holders of at least
10% of the Preferred Securities then outstanding may request unlimited
short-form registrations. In addition, the Private Equity Investors and the
Management Investors are entitled to "piggyback" on primary or secondary
registered public offerings of Parent's securities. Each Private Equity Investor
and Management Investor is subject to holdback restrictions in the event of an
initial public offering or other public offering of Parent securities (See Note
12).

(4)   REDEEMABLE CUMULATIVE CONVERTIBLE PREFERRED UNITS

   On May 18, 1998, the Private Equity Investors, the Management Investors and
Parent entered into the Equity Purchase Agreement. Under the Equity Purchase
Agreement, the Private Equity Investors purchased 60,000 Preferred Units for an
initial aggregate purchase price of $3.5 million and a commitment to make
subsequent capital contributions to Parent of up to an additional $56.5 million
(for a total commitment of $60 million) on the terms and conditions set forth in
the Equity Purchase Agreement. Certain of the Management Investors purchased 750
Preferred Units for an initial aggregate purchase price of $44,000 and a
commitment to make capital contributions to Parent of up to an additional
$706,000 (for a total commitment of $750,000) on the terms and conditions set
forth in the Equity Purchase Agreement. As of July 15, 1998, Parent entered into
Additional Investor Equity Purchase and Joinder and Rights Agreements for the
issuance of 500 Preferred Units in exchange for a capital commitment of $500,000
by each of two new investors. As of November 11, 1998, Parent entered into an
Additional Preferred Units Purchase Agreement with one of the Management
Investors for the issuance of an additional 150 Preferred Units in exchange for
a capital commitment of $150,000. On December 2, 1998, Parent entered into an
Additional Investor Equity Purchase and Joinder and Rights Agreement with a new
management investor for the issuance of 50 Preferred Units in exchange for a
capital commitment of $50,000. On January 28, 1999, the Equity Purchase
Agreement was amended and restated to supersede the Equity Purchase Agreement
and the agreements referred to above dated July 15, 1998, November 11, 1998 and
December 2, 1998 and to admit the new management investor (included together
with other "Management Investors") and other investors (included together with
Madison Dearborn Partners and LPL as the "Private Equity Investors"). The First
Amended and Restated Equity Purchase Agreement increased the total number of
Preferred Units to 64,743 and 1,007, and total equity commitments to $64.7
million and $1 million, by the Private Equity Investors and the Management
Investors, respectively. Additionally, Parent's Board approved the drawdown of
the remaining commitment under the Equity Purchase Agreement, which was funded
in connection with, and as a condition to the closing of the Offering.

                                       48
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


   Pursuant to a Second Amended and Restated Equity Purchase Agreement, dated
November 23, 1999, additional Preferred Units were purchased by the existing
Private Equity Investors, the Management Investors and a new Private Equity
Investor, increasing the number of outstanding Preferred Units to 84,070. Of the
additional 18,320 Preferred Units, 17,862 Preferred Units were issued to the
Private Equity Investors and 458 Preferred Units were issued to the Management
Investors in exchange for capital contributions totaling approximately $41.1
million and approximately $1.0 million, respectively.

   The Preferred Units accrue a preferred yield at a per-annum rate of 8% of the
sum of the Liquidation Value thereof and all accumulated and unpaid preferred
yield thereon. "Liquidation Value" for any Preferred Unit is equal to (i) the
initial price paid to Parent for such Preferred Unit on its date of issuance,
plus (ii) the aggregate contributions to the capital of Parent made pursuant to
the Equity Purchase Agreement with respect to such Preferred Unit after its date
of issuance, minus (iii) all distributions constituting a return of capital with
respect to such Preferred Unit after its date of issuance. The Indenture related
to the Offering restricts the ability of CompleTel Europe to pay dividends to
Parent in order to pay the preferred yield on the Preferred Units.

   No distributions out of earnings and profits may be made to the holders of
Common Units unless Parent has first made distributions to the holders of
Preferred Units to pay the full amount of accrued preferred yield on the
Preferred Units. Upon any liquidation, dissolution or winding up of Parent
(whether voluntary or involuntary), each holder of Preferred Units will be
entitled to receive, before any distribution is made with respect to any other
class of Parent's equity, distributions in cash equal to the aggregate
Liquidation Value of all Preferred Units held by such holder plus all accrued
and unpaid preferred yield thereon.

   The Preferred Units are convertible at any time and from time to time into
Common Units at the election of the holder thereof. In addition, all holders of
Preferred Units will be required to convert their Preferred Units into Common
Units upon (i) a Qualified Public Offering of Parent's common equity, as
defined, or (ii) the affirmative vote of the holders of a majority of the
outstanding Preferred Units. Upon any conversion of Preferred Units, the holder
thereof has the right to receive a distribution in cash equal to the amount of
accrued but unpaid preferred yield on the Preferred Units being converted
(provided that if the conversion occurs in connection with an initial public
offering of Parent's common equity, the converting holder may elect to receive
such payment in the form of Parent securities at the initial public offering
price). The 84,070 currently outstanding Preferred Units are convertible into
105,487 Common Units (7,500 of which are subject to forfeiture upon the vesting
of the Performance Vesting Units - see Note 3), which conversion ratio is also
subject to adjustment on a weighted-average basis upon any issuance or deemed
issuance of Common Units (or securities convertible into or exercisable for
Common Units) that otherwise would dilute the economic interests of the holders
of Preferred Units. The holders of Preferred Units are entitled to vote their
Preferred Units with the holders of Common Units on an as-if-converted basis on
all matters submitted to a vote of the members.

   The Equity Purchase Agreement provides the Private Equity Investors with
certain restrictive covenants. The Private Equity Investors have the right to
approve or disapprove Parent's taking or agreeing to take certain actions,
including, among other things, (i) making distributions with respect to
redeeming, or issuing any equity securities, any securities convertible into or
exercisable for equity securities, or any debt with equity features, (ii)
loaning monies, (iii) disposing of significant assets, (iv) making acquisitions
or entering into joint ventures, (v) entering into any merger, consolidation,
liquidation, recapitalization or reorganization, (vi) entering into transactions
with affiliated persons, (vii) incurring significant indebtedness, and (viii)
entering into or modifying any employment arrangement with Parent's Chief
Executive Officer. The Private Equity Investors have approved the Company's
consummation of the Senior Credit Facility and the Offering (see Note 5).

   The Equity Purchase Agreement also provides the Private Equity Investors and
the Management Investors with certain anti-dilutive rights prior to consummation
of a Qualified Public Offering or a Sale of Parent, as defined in the Equity
Purchase Agreement.

                                       49
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


   If a Qualified Public Offering or Sale of Parent has not occurred by May 18,
2005, each holder of Preferred Units or Common Units issued or issuable upon
conversion of the Preferred Units ("Purchaser Securities") will have the right
to require Parent to take all actions necessary to purchase the Purchaser
Securities held by such holder for fair market value (or, in the case of
Preferred Units to be repurchased, the greater of fair market value and the
Liquidation Value (together with all accrued but unpaid preferred yield) of such
Preferred Units). Fair market value is defined as the amount agreed to by the
holders of the Preferred Units to be repurchased and the holders of the Parent's
Common Units, excluding Unvested Performance Units. If mutual agreement cannot
be reached within twenty days of the issuance of the repurchase notice, the fair
market value for (a) publicly traded securities generally means the average of
the closing prices of such securities for the 21 day period preceding the filing
of the repurchase notice and (b) non-publicly traded securities generally means
a valuation determined by an appraisal mechanism. The Indenture related to the
Offering limits the ability of CompleTel Europe to pay dividends or take certain
other actions that may be necessary to effectuate the repurchase of any such
securities.

   In the event the repurchase options are exercised, Parent is obligated to do
everything within its power to satisfy its repurchase obligations, which may
involve the sale of some or all of its subsidiaries, or a portion or all of its
assets. Accordingly, as required by the Securities and Exchange Commission
("SEC") accounting standards, the Company is recognizing the accretion of the
value of the Preferred Units to reflect the estimated future redemption value of
the Preferred Units payable in the event the repurchase provisions are
exercised. Due to the significant uncertainty regarding the market value of the
Preferred Units on May 18, 2005, the Preferred Units are being accreted using
the 8% per annum preferred yield. The accretion rate will be adjusted
prospectively through May 18, 2005 (the earliest redemption date) upon any event
reasonably indicating a higher fair value as of that date. The accretion is
recorded each period as an increase in the balance of Preferred Units
outstanding and a non-cash increase in the net loss applicable to common units.
As of December 31, 1999 and 1998, the value of the Preferred Units has been
accreted approximately $5.2 million and $363,000, respectively.

   Upon a Qualified Public Offering, the Preferred Units would automatically
convert to Common Units and the amounts accreted would be adjusted to the
indicated fair value as a non-cash increase in the net loss applicable to common
units and the carrying value of the Redeemable Cumulative Convertible Preferred
Units would be reclassified as a component of additional paid-in capital in the
members' deficit section of the consolidated balance sheet.

   Certain terms of the Second Amended and Restated Equity Purchase Agreement
were amended in March 2000 (See Note 12).

(5)   INDEBTEDNESS

Senior Discount Notes

   In February 1999, CompleTel Europe and CompleTel Holdings completed an
Offering of 147,500 units (the "Units") consisting of $147.5 million aggregate
principal amount of 14% Senior Discount Notes due 2009 (the "Notes") issued by
CompleTel Europe and 1,475,000 non-voting Class B Membership Interests of
CompleTel Holdings. CompleTel Europe issued the Notes at a substantial discount
from their principal amount at maturity on February 16, 2009. A principal
investor in Parent acquired 400 Units in the Offering. The proceeds of the
Offering, net of offering fees and costs, were approximately $72.6 million and
were held in an escrow account until CompleTel Europe received a minimum
commitment of $90 million in senior credit facilities, which was received in
April 1999. To comply with Netherlands laws, the Notes are guaranteed by Parent
on a senior unsecured basis. As Parent is a holding company with no operations
other than the operations to be conducted by CompleTel Europe and its
subsidiaries, it is unlikely that Parent would have sufficient funds to satisfy
CompleTel Europe's obligations on the Notes if CompleTel Europe is unable to
satisfy its own obligation on the Notes. Of the $75 million gross proceeds from
the Offering, approximately $70.5 million was attributed to the Notes and
approximately $4.5 million was attributed to the 1,475,000 Class B Membership
Interests of CompleTel Holdings. The $4.5 million allocated to the Class B
Membership Interests represents additional discount on the Notes.

                                       50
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



   Cash interest will not accrue on the Notes prior to February 15, 2004, with
the Notes accreting to their stated principal amount at maturity at an effective
interest rate of approximately 15.1%. The accretion will be charged to interest
expense. Commencing February 15, 2004, cash interest on the Notes will accrue at
14% per annum and will be payable in cash on August 15 and February 15 of each
year. The Notes mature February 15, 2009.

Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                December 31,    December 31,
                                                                                    1999            1998
                                                                                    ----            ----
     <S>                                                                          <C>               <C>
     14% Senior Discount Notes, face amount $147.5 million, due 2009,
        effective interest rate of 15.1%                                          $ 79,922        $      -
                                                                                   =======         =======
</TABLE>

 (6)   COMMITMENTS AND CONTINGENCIES

Operating Leases, Including Rights-of-Way Agreements

   The Company has entered into various operating lease agreements for network
switch locations, office space, employee residences and vehicles. In addition,
during 1999, the Company entered into various rights-of-way agreements. Future
minimum lease obligations related to the Company's operating leases are as
follows for the years subsequent to December 31, 1999 and 1998, respectively (in
thousands):

                                December 31,      December 31,
                                   1999              1998
                                   ----              ----

     December 31, 2000           $ 6,167           $   855
     December 31, 2001             6,119               966
     December 31, 2002             6,001               974
     December 31, 2003             5,766               955
     December 31, 2004             5,679               948
     Thereafter                   16,726             4,975
                                 -------           -------
          Total                  $46,458           $ 9,673
                                 =======           =======

   Total rent expense for the period from commencement of operations (January 8,
1998) through December 31, 1998 was approximately $160,000 and for the year
ended December 31, 1999 was approximately $1.6 million.

Management Employment Agreements

   Certain employees of Management Co. that have been seconded to CompleTel
Europe's subsidiaries are parties to employment agreements. The agreements
generally provide for a specified base salary, as well as a bonus set as a
specified percentage of the base salary. The bonus is based on attainment of
certain identified performance measures. The employment agreements generally
provide for cost of living differentials, relocation and moving expenses,
automobile allowances and income tax equalization payments, if necessary, to
keep the employee's tax liability the same as it would be in the United States.

Service Licenses

France

   On December 13, 1998 the Secretaire d'Etat a l'Industrie, based on the
recommendation of the Autorite de Regulation des Telecommunications ("ART"),
awarded the Company's French operating subsidiary a fixed wireline license and
service license for network deployment in four regions and six cities and the
provision of services in four regions and six departments in France that the
Company intends to serve. The term of these

                                       51
<PAGE>

licenses is 15 years from December 13, 1998. Under French law, these licenses
entitle the Company, among other things, to obtain rights-of-way to establish
network infrastructure along public roads, to obtain easements on private
property and to obtain certain rights on public domain property other than
roads.

                                       52
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


United Kingdom

   On January 11, 1999, the Secretary of State for Trade and Industry at the
Department of Trade and Industry granted CompleTel UK an individual license to
operate fixed public telecommunications systems of any kind in the United
Kingdom. To provide international services in the United Kingdom, the Company
has also obtained an international simple voice resale license.

Germany

   On March 8, 1999, the Regulierungsbehorde fur Telekommunikation und Post
granted CompleTel Germany class 3 (general infrastructure license) and class 4
(license required for operation of voice telephony services based on
self-operated telecommunications networks) licenses for three markets in
Germany, including the Company's initial target market, which were subsequently
amended in July 1999 and January 2000, to include among others, CompleTel
Germany's additional markets. These licenses are of unlimited duration.

 (7)   INCOME TAXES

United States

   In general, a United States limited liability company, treated as a
partnership for U.S. federal income tax purposes, will not be subject to U.S.
federal income tax. Instead, the income, gain, and loss (including Subpart F
income or foreign personal holding company income recognized) will be allocated
to its members. Any direct foreign income taxes paid on the remittance of
dividends from its foreign subsidiaries will likewise pass to Parent's members.
The LLC Agreement provides for distributions to its members to cover income
taxes in the event Parent recognizes any income or gain (including Subpart F
income or foreign personal holding company income). Such distribution would be
contingent upon a distribution of cash from its foreign subsidiaries. Taxable
income of Management Co. is subject to tax at the regular U.S. Federal income
tax rate.

Netherlands

   In general, a Dutch holding company may benefit from the so-called
"participation exemption." The participation exemption is a facility in Dutch
corporate tax law which allows a Dutch company to exempt, from Dutch income tax,
any dividend income and capital gains in relation to its participation in
subsidiaries which are legal entities residing in The Netherlands or in a
foreign country. Capital losses are also exempted, apart from liquidation losses
(under stringent conditions). Any costs in relation to participations, to the
extent these participations do not realize Dutch taxable profit, are not
deductible. These costs include costs to finance such participation. For Dutch
corporate income tax purposes, net operating loss ("NOL") carryforwards may be
carried forward indefinitely.

Germany

   As of December 31,1999, CompleTel Germany had generated NOL carryforwards for
income tax purposes totaling approximately $8.2 million. For German income tax
purposes, NOL carryforwards may be carried forward indefinitely. The current
statutory tax rate for Germany is 52.38%.

France

   As of December 31, 1999, CompleTel France had generated NOL carryforwards for
income tax purposes totaling approximately $31.5 million. For French income tax
purposes NOL carryforwards may generally be carried forward for a period of up
to five years. Start-up costs will be capitalized for French tax purposes. The
Company considers the majority of these costs as eligible for the deferred
depreciation regime for French tax purposes, resulting in an indefinite
carryforward life of the corresponding amortization expense.

                                       53
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The Company has recorded a valuation allowance equal to the total net deferred
tax assets as of December 31, 1999 and 1998, due to the uncertainty of
realization through future operations. The valuation allowance will be reduced
at such time as management believes it is more likely than not that the net
deferred tax assets will be realized. Any reductions in the valuation allowance
will reduce future provisions for income tax expense.

   The difference between income tax expense provided in the consolidated
financial statements and the expected income tax benefit at statutory rates
related to the Company's corporate and foreign subsidiary operations for the
year ended December 31, 1999 and for the period from commencement of operations
(January 8, 1998) to December 31, 1998, is reconciled as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                   Commencement
                                                                                   of Operations
                                                                 Year Ended      (January 8, 1998)
                                                                December 31,      to December 31,
                                                                   1999                1998
                                                                   ----                ----
<S>                                                              <C>                 <C>
Expected income tax benefit at the U.S. statutory rate
   of 38.25%                                                     $ 18,491            $  3,095
Parent operating income (loss) passed
  through to its members                                            1,360                (153)
International rate differences                                        683                (369)
Stock Based Compensation                                             (272)                 --
Other non-deductible expenses                                          80                 (99)
Valuation allowance                                               (20,342)             (2,474)
                                                                 --------            --------
     Total income tax benefit                                    $      -            $      -
                                                                 ========            ========

Deferred tax assets are as follows:

                                                               December 31,          December 31,
                                                                   1999                 1998
                                                                   ----                 ----
Deferred tax assets:
     Operating loss carryforwards                                $ 19,615            $  1,222
     Capitalized start-up costs                                       932               1,214
     Net unrealized foreign exchange loss                             611                  20
     Depreciation and amortization                                  1,648                  16
     Other                                                             10                   2
                                                                 --------            --------
     Total deferred tax assets                                     22,816               2,474
     Less valuation allowance                                     (22,816)             (2,474)
                                                                 --------            --------
     Net deferred taxes                                          $      -            $      -
                                                                 ========            ========
</TABLE>

                                       54
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Y)(Continued)


(8)   SEGMENT REPORTING

   Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"), establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. Operating segments are components of
an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance.

   Through December 31, 1999, a significant portion of the Company's
expenditures were associated with its network deployment in France and Germany.
A significant portion of the Company's revenues through December 31, 1999 have
been generated by an indirect subsidiary of the Company's UK subsidiary.

Management currently evaluates the Company's development efforts according to
the geographic location of its markets. Certain financial information reflecting
the Company's development efforts is presented below.

   As of December 31, 1998 and for the period from inception (January 8, 1998)
to December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
                                                                                       Company
                                                                          CompleTel   (Including
                                       CompleTel   CompleTel   CompleTel    Europe    Management
                                          SAS        GmbH      UK Ltd.    and Other      Co.)     Consolidated
                                          ---        ----      -------    ---------    -------    ------------
<S>                                    <C>         <C>         <C>        <C>         <C>         <C>
Revenues                                 $    -      $   -       $   -      $    -      $    -        $     -
Depreciation                                 46          -           -           -          13             59
Management Fee (Expense) Income          (2,661)         -           -        (302)      2,963              -
Net Loss Applicable to Common Units      (5,949)      (300)       (400)       (912)       (894)        (8,455)
Total Assets                              6,180         19          21       1,650       2,172         10,042
Expenditures for Long-Lived Assets        3,647         19          21         681          67          4,435

<CAPTION>
   As of December 31, 1999 and for the year ended December 31, 1999 (in thousands):

                                                                                       Company
                                                                          CompleTel   (Including
                                       CompleTel   CompleTel   CompleTel    Europe    Management
                                          SAS        GmbH      UK Ltd.    and Other      CO.)     Consolidated
                                          ---        ----      -------    ---------    -------    ------------
<S>                                    <C>         <C>         <C>        <C>         <C>         <C>
Revenues                               $  1,986    $     -     $   999      $    -    $      -        $ 2,985
Depreciation                              3,445        671          72         301          45          4,534
Management Fee (Expense) Income          (5,297)      (557)       (208)       (402)      6,464              -
Net Loss Applicable to Common Units     (34,684)    (8,181)     (1,548)     (7,543)     (1,607)       (53,563)
Total Assets                             81,250     68,000       1,732      31,115          --        182,097
Expenditures for Long-Lived Assets       71,850     28,628         892           -         472        101,842
</TABLE>

                                       55
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(9)   PARENT COMPANY ONLY FINANCIAL INFORMATION

   The following financial information reflects the parent company only
condensed statement of operations data, condensed balance sheet data, and
condensed cash flows data.


<TABLE>
<CAPTION>
                                                                                                Commencement
                                                                                                of Operations
                                                                                                 (January 8,
                                                                              Year Ended            1998)
                                                                             December 31,      to December 31,
                                                                                1999                1998
                                                                            --------------     ---------------
<S>                                                                         <C>                <C>
STATEMENT OF OPERATIONS:
    Interest income                                                             $     255          $      11
    Interest expense                                                                 (368)                 -
    General and administrative expense                                                (84)              (400)
    Equity in losses of subsidiaries                                              (48,147)            (7,703)
                                                                              -----------        -----------
    Net loss                                                                    $ (48,344)         $  (8,092)
                                                                              ===========        ===========

<CAPTION>
                                                                             December 31,        December 31,
                                                                                1999                1998
                                                                            --------------     ---------------
<S>                                                                         <C>                <C>
BALANCE SHEET DATA:
    Cash and cash equivalents                                                   $     293          $   1,743
    Receivables from affiliates                                                     5,714              9,492
    Other current assets                                                               10                 42
                                                                              -----------        -----------
           Total current assets                                                     6,017             11,277
    Investments in subsidiaries                                                    42,936             (6,185)
    Deferred financing costs, net                                                   1,249                  -
                                                                              -----------        -----------
           Total assets                                                         $  50,202          $   5,092
                                                                              ===========        ===========


Current liabilities                                                             $   1,093          $     322
                                                                              -----------        -----------
Redeemable cumulative convertible preferred units:
    No par value, 84,070 units authorized;  84,070 and 61,950 units
      issued and outstanding                                                      113,469             13,188
                                                                              -----------        -----------
Common units, no par value, 131,494 units authorized;
    18,485 and 16,385 units issued and outstanding                                 30,065                737
Deferred compensation                                                             (28,495)              (540)
Other cumulative comprehensive loss                                                (3,912)              (160)
Accumulated deficit                                                               (62,018)            (8,455)
                                                                              -----------        -----------
           Total members' deficit                                                 (64,360)            (8,418)
                                                                              -----------        -----------
           Total liabilities and members' deficit                               $  50,202          $   5,092
                                                                              ===========        ===========
</TABLE>

                                       56
<PAGE>

                         COMPLETEL LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Y)(Continued)


PARENT COMPANY ONLY FINANCIAL INFORMATION (Continued)

<TABLE>
<CAPTION>

                                                                                       Commencement
                                                                         Year         of Operations
                                                                         Ended      (January 8, 1998)
                                                                      December 31,    to December 31,
                                                                         1999              1998
                                                                   ---------------    ---------------
<S>                                                                      <C>              <C>
CASH FLOWS DATA:
 Cash flows from operating activities:
    Net loss                                                             $(48,344)        $ (8,092)
    Equity in losses of subsidiaries                                       48,147            7,703
    Amortization of deferred financing costs                                  334               --
    Changes in-
       Other current assets                                                    32              (10)
       Receivables from affiliates                                          3,778           (9,492)
                                                                      -----------      -----------
Net cash provided by (used in)                                              3,947           (9,891)
                                                                      -----------      -----------
Cash flows from investing activities:
    Investment in subsidiaries                                            (98,533)          (1,518)
                                                                      -----------      -----------
Net cash from investing activities                                        (98,533)          (1,518)
                                                                      -----------      -----------
Cash flows from financing activities:
    Issuance of redeemable cumulative convertible Preferred Units          94,716           12,113
    Loan from member                                                            -            1,300
    Payment of loan from member                                                 -             (266)
    Issuance of Common Units                                                    3                5
    Deferred financing costs                                               (1,583)          (1,583)
                                                                      -----------      -----------
Net cash from financing activities                                         93,136           13,152
                                                                      -----------      -----------
Net increase (decrease) in cash and cash equivalents                       (1,450)           1,743
Cash and cash equivalents, beginning of period                              1,743                -
                                                                      -----------      -----------
Cash and cash equivalents, end of period                                 $    293         $  1,743
                                                                      ===========      ===========
</TABLE>


(10)   EMPLOYEE INCENTIVE PLANS



Stock Option Plan

   In December 1999, CompleTel Europe adopted the CompleTel Europe N.V. 2000
Stock Option Plan (the "Option Plan"). The Option Plan provides for the grant of
options to purchase ordinary shares of CompleTel Europe to employees of the
Company.

   Options granted are subject to vesting as follows. Options granted to
employees resident in France vest in an increment of 60% of the ordinary shares
subject to the option on the third anniversary of the date of the grant and in
two increments of 20% on the fourth and fifth anniversaries of the date of the
grant. Options granted to employees resident in the United Kingdom, Germany and
the U.S. vest in annual increments of 25% of the ordinary shares subject to the
option, commencing on the first anniversary date of the grant. Options granted
to

                                       57
<PAGE>

employees resident in the United Kingdom, Germany and the U.S. vest in annual
increments of 25% of the ordinary shares subject to the option, commencing on
the first anniversary date of the grant.

                         COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


   The number of options to acquire shares under the Option Plan totals
18,919,960, or 15.0% of the Company's ordinary shares issued and outstanding as
of December 31, 1999. The first grant, which took place on December 30, 1999,
included 2,035,230 options granted, or approximately 1.6% of the share capital
of the Company. These options have an exercise price of $2.60 per ordinary
share. Deferred compensation was recorded in December 1999 totaling
approximately $26.5 million which represents the estimated intrinsic value of
such options at that date. The deferred compensation will be amortized to
expense over the applicable vesting period related to the individual awards.

Pro Forma Fair Value Disclosures

   The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"), which defines a fair value based method of accounting for employee stock
options and similar equity instruments. However, as allowed by SFAS 123, the
Company has elected to account for its stock-based compensation plans using the
intrinsic value based method of APB 25 and provide pro forma disclosures of net
income (loss) and earnings (loss) per share as if the fair value based method
had been applied.

   For pro forma disclosure purposes, the Company has computed the fair value of
each option as of the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions.

                                                       Year Ended
                                                       ----------
                                                      December 31,
                                                      ------------
                                                          1999
                                                          ----
     Risk-free interest rate                              6.4%
     Expected dividend yield                               0%
     Expected lives outstanding                         5.5 years
     Expected volatility                                  17.1%

   The estimated fair value of options granted is amortized to expense over the
option vesting period. Cumulative compensation costs recognized in pro forma net
income or loss with respect to options that are forfeited prior to vesting are
adjusted as a reduction of pro forma compensation expense in the period of
forfeiture.

   Had compensation cost for the Option Plan been determined based upon the fair
value of options on their date of grant, the Company's net loss for the year
ended December 31, 1999 and for the period from inception (January 8, 1998) to
December 31, 1998, would have been increased by $54,000 and $0, respectively.

(11) ASI ACQUISITION

   On March 24, 1999, CompleTel SAS acquired all of the outstanding stock of
Acces et Solutions Internet ("ASI"), an Internet service provider based in Lyon,
for approximately $2.1 million in cash. The transaction was recorded under the
purchase method of accounting as of March 31, 1999. The purchase price was first
allocated to the fair value of the net tangible assets acquired of $73,000,
which is classified as property and equipment in the accompanying consolidated
balance sheet. The resulting excess cost over the fair value of tangible net
assets acquired, or goodwill, was recorded in the amount of approximately $2.0
million and is being amortized under the straight-line method over a ten year
period. The goodwill is classified as other intangibles in the accompanying
consolidated balance sheet.

   The following unaudited pro forma condensed consolidated operating results
for the year ended December 31, 1999 and for the period from commencement of
operations (January 8, 1998) to December 31, 1998, reflect the pro forma effects
of the ASI acquisition as if the acquisition occurred on January 8, 1998. For
purposes of the

                                       58
<PAGE>

pro forma condensed consolidated operating results, the acquisition is assumed
to have been financed through an equity contribution from Parent.

                        COMPLETEL LLC AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

   The unaudited pro forma condensed consolidated operating results are based on
the historical consolidated financial statements of the Company and ASI, giving
effect to certain assumptions and adjustments that management believes are
reasonable based upon currently available information. This pro forma condensed
consolidated financial data is presented for illustrative purposes and does not
purport to represent what the Company's results of operations would actually
have been if the acquisition had been consummated as of January 8, 1998:

<TABLE>
<CAPTION>
                                                                                     For the period from
                                                                                     -------------------
                                                                                 Commencement of Operations
                                                                                 --------------------------
                                                   For the Year Ended               (January 8, 1998) to
                                                   ------------------               --------------------
                                                   December 31, 1999                  December 31, 1998
                                                   -----------------                  -----------------
                                              Historical       Pro Forma         Historical       Pro Forma
                                              ----------       ---------         ---------        ----------
<S>                                           <C>              <C>               <C>              <C>
Revenues ..............................        $  2,985         $  3,242         $     --         $  1,020
                                               ========         ========         ========         ========

Net loss applicable to common units ...        $(53,563)        $(56,660)        $ (8,455)        $ (8,593)
                                               ========         ========         ========         ========

Basic and diluted loss per common units        $ (6,908)        $ (7,307)        $ (1,940)        $ (1,971)
                                               ========         ========         ========         ========

Weighted average number of common units
   outstanding ........................           7,754            7,754            4,359            4,359
                                               ========         ========         ========         ========
</TABLE>

(12)   SUBSEQUENT EVENTS

Credit Agreement

   In January 2000, we executed an agreement for a 265 million senior secured
credit facility with Goldman Sachs International and Paribas as co-arrangers of
the facility. The funds will be available to our subsidiaries, initially to
include CompleTel ECC, CompleTel Services S.A.S., CompleTel France, and
CompleTel Germany, in two tranches, including a euro term facility available
until December 31, 2000, in the aggregate amount of Euro 105 million and a euro
revolving loan facility available until December 31, 2002, in the aggregate
amount of Euro 160 million. The Euro 160 million tranche will become available
after May 31, 2000, if the euro term facility is fully drawn, and other
conditions are satisfied. Following December 31, 2002, up to Euro 141 million of
the outstanding advances under the euro revolving loan facility will first be
converted into a term loan, and any other outstanding advances will become part
of a Euro 19 million working capital facility. The facility matures on December
31, 2006.

   This agreement terminates, supersedes and replaces, without penalty, the
original commitment from Paribas for $90 million in senior credit (see Note 6).
Additionally, the commitment with Nortel Networks for $20 million in vendor
financing has been terminated. No termination fees are payable to Nortel
Networks or Paribas.

   The notes are structurally subordinated to any debt incurred under the senior
secured credit facility. Additionally, the terms of the agreement require that
the senior secured credit facility be guaranteed to the extent allowed by law by
CompleTel Europe and each of its subsidiaries. The terms of the agreement
further require that the senior secured credit facility be secured by a
perfected security interest in all of the Company's present and future material
assets and revenue and those of its subsidiaries and by a pledge of the stock of
each of the borrowers.

   The funds are to be used substantially to deploy our networks in France and
Germany. Advances under the facility cannot exceed certain limits that increase
with time, and are subject to other conditions, including that

                                       59
<PAGE>

the subsidiaries must be operational in designated cities in France and Germany,
and satisfy a debt to capital test. In addition, the facility includes various
financial and other covenants and restrictions that limit our ability to pay
dividends, dispose of assets, and effect merger and consolidation transactions.
The facility also limits the use of proceeds of an initial public offering,
other equity investments, or a high yield debt issue as it provides that any
such proceeds be held as cash equivalent investments or used to develop our
telecommunications businesses in France and Germany.

   The rate of interest will be variable based on EURIBOR, plus a margin of up
to 3.75% per annum for the term loan facility or 3.00% per annum for the
revolving loan facility that will be determined based on a senior debt leverage
ratio test, and costs. Upon an event of default, advances may accelerate and
become immediately due and payable and the undrawn portion of the facilities
will be cancelled and the commitments of the banks reduced to zero. The facility
is secured by our assets and the assets of our subsidiaries and the stock in
certain of our subsidiaries, and we and several of our subsidiaries have agreed
to guarantee the payments under the facility and to indemnify the banks against
certain losses.

Initial Public Offering

Subsequent to December 31, 1999, CompleTel Europe filed a registration statement
on Form F-1 with the Securities and Exchange Commission covering CompleTel
Europe's proposed issuance of up to 27,200,000 of its ordinary shares to the
public (the "Proposed IPO"). If consummated, the proceeds from the Proposed IPO
will be used to (i) fund the further deployment of the Company's networks in
existing markets and an additional six cities in France and Germany, (ii) fund
the expansion of the Company's Internet-related services, (iii) develop
complementary local access systems, (iv) fund net operating losses and (v) for
general and corporate purposes.

Senior Notes Offering

In March 2000, the Company commenced an offering of an aggregate 300 million
Euro senior notes due 2010 (the "Senior Notes"). If consummated, the proceeds
from the proposed senior notes offering will be used to (i) fund the further
deployment of the Company's networks in existing markets and an additional six
cities in France and Germany, (ii) fund the expansion of the Company's Internet-
related services, (iii) develop complementary local access systems, (iv) fund
net operating losses and (v) for general and corporate purposes.

Amendments of Corporate and Investor Agreements

On March 23, 2000, the Company and certain of its investors approved amendments
to certain agreements that will become effective only if the Proposed IPO is
consummated on or before April 30, 2000, with net proceeds to CompleTel Europe
(after underwriting discounts and commissions) equal to at least $60 million.
Additionally, the price per share in the Proposed IPO must equal at least three
times the amount of capital contributed by the Private Equity Investors and the
Management Investors per share of CompleTel Europe beneficially owned by such
investors on a fully diluted, as if converted basis.

Under the approved amendments to the LLC Agreement (see Note 3) and the Equity
Purchase Agreement (see Note 4), the Proposed IPO will be deemed a Qualified
Public Offering. Accordingly, the Preferred Units will be converted into Common
Units and the rights of Preferred Unit holders to require the repurchase by
Parent of their Purchaser Securities will terminate. In connection with the
conversion of the Preferred Units, Parent is required to pay each converting
holder in cash and amount equal to the accrued but unpaid preferred yield with
respect to each of their converted Preferred Units. Under an approved amendment
to the LLC Agreement, Parent may satisfy such payment obligation by issuing
additional Common Units representing a beneficial ownership in CompleTel Europe
ordinary shares having a value (based on the per share amount received in the
Proposed IPO) equal to the accrued but unpaid yield payable.

Under the approved amendments to the Performance Vesting Agreement and the
Executive Securities Agreements (see Note 3), the Proposed IPO will be deemed a
Qualified Public Offering. Accordingly, one-third of the Performance Vesting
Units will vest or be forfeited under the multiple-of-invested-capital tests
calculated based on the price per share received in the Proposed IPO.
Additionally, for such Performance Vesting Units that vest as a result of the
Proposed IPO, a corresponding number of Common Units otherwise issuable upon the
conversion of Preferred Units described above, will be forfeited.

                                       60
<PAGE>

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

         None.

                                       61
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

     CompleTel LLC was formed as a Delaware limited liability company on
January 8, 1998. We are managed by a board of directors that have appointed our
officers.

     The following tables show the composition of and position held by each
member of our Board of Directors and our Officers, as well as other significant
employees:

<TABLE>
<CAPTION>
         Name                               Age        Position(s)
         ----                               ---        -----------
         <S>                                <C>        <C>
         James E. Dovey                     56         Chairman of the Board of Directors, Secretary
         William H. Pearson                 44         Director, President and Chief Executive Officer
         James C. Allen                     53         Director
         Lawrence F. DeGeorge               53         Director
         Paul J. Finnegan                   47         Director
         Royce J. Holland                   49         Director
         James H. Kirby                     32         Director
         James N. Perry, Jr.                39         Director
         Richard N. Clevenger               53         Chief Technology Officer and Senior Vice President
         David E. Lacey                     53         Chief Financial Officer, Treasurer and Senior Vice
                                                       President
</TABLE>

     The following list includes significant employees and officers and
employees of our subsidiaries and affiliates who are involved in our business
affairs and operations.

<TABLE>
<CAPTION>
         Name                               Age      Position(s)
         ----                               ---      -----------
         <S>                                <C>      <C>
         John M. Hugo                       39       Corporate Controller and Chief Accounting Officer
         Anna Lascar                        51       Vice President of CompleTel Europe
         John T. Puhl                       50       Chief Information Officer
         Hansjorg Rieder                    57       Managing Director of CompleTel Europe
                                                      and CompleTel GmbH
         Martin Rushe                       31       Managing Director of CompleTel Europe,
                                                     President of CompleTel UK Limited
         Jerome de Vitry                    38       President of CompleTel S.A.S.
</TABLE>

     James E. Dovey, one of the co-founders of CompleTel LLC, has over 30 years'
experience in the telecommunications industry. He has served as the Chief
Executive Officer of CompleTel Europe from inception through December 1999 and
as Chief Executive Officer of CompleTel LLC from January 1998 through December
1999 and as chairman of its board since January 2000. In 1987, Mr. Dovey founded
United Cable International, a joint venture between United Cable and United
Artists, where he served as CEO until 1990 when that company (by then renamed
TCI International) merged with the United Kingdom assets of U S WEST Inc. to
form TeleWest Communications, plc. Mr. Dovey continued to serve as CEO of
TeleWest until his return to the U.S. in late 1992. From 1992 to 1994, Mr. Dovey
acted as a private consultant on a variety of U.S. and international
telecommunications and cable television projects for TCI, U S WEST Inc., and
other clients. From 1992 to 1995, Mr. Dovey served as Deputy Chairman for the
United Kingdom communications company, IVS Cable International, which developed
switched voice and data services in areas such as Oxford, Salisbury, and Andover
until the business was sold in 1995. In 1994, Mr. Dovey co-founded SPD CableTel
Management, Inc., where he actively explored various entrepreneurial
opportunities in the U.S. for providing converged cable and telephony services
prior to co-founding CompleTel LLC in January 1998.

     James C. Allen has served as a Director of CompleTel LLC since December
1998. From March 1993 to January 1998, Mr. Allen was the CEO and Vice-Chairman
of Brooks Fiber Properties, Inc. Since June 1998, Mr. Allen has acted as an
investment director and member of Meritage Investment Partners LLC, a
Denver-based private equity firm that invests exclusively in telecommunication
companies. Mr. Allen also presently serves on the boards of directors of MCI
WorldCom Inc., a publicly traded U.S. and international telecommunications
company, Verio Inc., a publicly traded Internet and Web hosting company, and
Open Access Broadband Networks, Inc., a privately held company. Mr. Allen also
serves on the board of directors of David Lipscomb University in Nashville,
Tennessee.

                                       62
<PAGE>

     Lawrence F. DeGeorge has served as a Director of CompleTel LLC since
January 1998. Mr. DeGeorge is a private investor who has managed and
participated in a number of principal equity investments in technology and
communications companies, including, since December 1995, as President and Chief
Executive Officer of LPL Investment Group, Inc., LPL Management Group, Inc., and
DeGeorge Holdings Ltd. From June 1987 to January 1991, Mr. DeGeorge held various
positions with Amphenol Corporation, including serving as President from May
1989 to January 1991, as Executive Vice President and Chief Financial Officer
from June 1987 to May 1989, and as a director from June 1987 until January 1991.
Mr. DeGeorge also presently serves as a director of Advanced Display
Technologies which is publicly traded.

     Paul J. Finnegan has served as a Director of CompleTel LLC since May 1998.
Mr. Finnegan is a Managing Director of Madison Dearborn Partners, Inc., a
Chicago-based private investment firm where he specializes in investing in
companies in the communications industry. Prior to co-founding Madison Dearborn
Partners in 1993, Mr. Finnegan was an investment officer at First Chicago
Venture Capital for 11 years. He presently serves on the boards of directors of
Allegiance Telecom, Inc. and Focal Communications Corporation, each of which is
publicly traded, and of several private companies, @link Networks Inc.,
Enews.com, Madison River Telephone Company, LLC, Reiman Holding Company, LLC and
Wireless One Network, L.P. He is a member of the board of trustees of The
Skyline Fund, a small-cap mutual fund.

     Royce J. Holland has served as a Director of CompleTel LLC since August
1998. Mr. Holland is a co-founder and the Chairman and CEO of Allegiance
Telecom, Inc. Prior to founding Allegiance Telecom, Inc., Mr. Holland was one of
several co-founders of MFS Communications Company, Inc., where he served as
President and Chief Operating Officer from April 1990 until September 1996 and
as Vice Chairman from September 1996 to February 1997. In January 1993, Mr.
Holland was appointed by President George Bush to the National Security
Telecommunications Advisory Committee. Mr. Holland also presently serves on the
boards of directors of Allegiance Telecom, Inc., and CSG Systems, which are
publicly traded, and Choice One Communications, a private company.

     James H. Kirby has served as a Director of CompleTel LLC since May 1998.
Mr. Kirby is a Director of Madison Dearborn Partners, Inc., a Chicago-based
private investment firm where he specializes in investing in companies in the
communications industry. Prior to joining Madison Dearborn Partners in 1996, Mr.
Kirby worked in investment banking and private equity investing at Lazard Freres
& Co. LLC and The Beacon Group LLC. He presently serves on the boards of
directors of several private companies including Wireless One Network, L.P.,
Orblynx, Inc. and Reiman Holding Company, LLC.

     James N. Perry, Jr. has served as a Director of CompleTel LLC since May
1998. Mr. Perry is a Managing Director of Madison Dearborn Partners, Inc., a
Chicago-based private investment firm where he specializes in investing in
companies in the communications industry. Prior to co-founding Madison Dearborn
Partners in 1993, Mr. Perry was an investment officer at First Chicago Venture
Capital for eight years. He presently serves on the boards of directors of
Allegiance Telecom, Inc., Focal Communications Corporation, VoiceStream Wireless
Corporation and Clearnet Communications, each of which is publicly traded.

     William H. Pearson, one of the co-founders of CompleTel LLC, has served as
President of European Operations of CompleTel LLC since its inception and as its
Chief Executive Officer since January 2000. In 1994, Mr. Pearson co-founded SPD
CableTel Management, Inc. with Mr. Dovey. Between 1980 and 1994, Mr. Pearson
held a variety of senior management positions with U S WEST Inc. From 1983 to
1989, Mr. Pearson worked in U S WEST's cellular division, including starting up
its marketing department in 1983, becoming head of strategic planning in 1986,
and managing the Rocky Mountain region from 1987 to 1988. In 1989, Mr. Pearson
relocated to the United Kingdom, and he served as Senior Vice President of
Marketing and Planning for TeleWest from 1990 to 1992, where he worked to
develop U S WEST's cable telephony strategy, and as Executive Director of
Business Development for U S WEST International from 1993 to 1994, where he
evaluated numerous local loop opportunities in Western Europe and Latin America.
In 1992, Mr. Pearson was an adjunct professor of graduate-level marketing at the
University of Wisconsin-Madison School of Business.

     Richard N. Clevenger, one of the co-founders of CompleTel LLC, has served
as Senior Vice President and Chief Technology Officer of CompleTel LLC since its
inception in January 1998, and as its Acting Chief Operating Officer since
August 1999. Mr. Clevenger has served in various market development and
technology management positions in domestic and international telecommunications
for over 30 years. Prior to co-founding CompleTel in 1998, Mr. Clevenger worked
from 1996 to 1997 as an independent management consultant on several business
strategy, technology, and implementation matters relating to cable television,
wireless cable, business and residential telephony, and business video,
including for SPD CableTel Management, Inc., which he

                                       63
<PAGE>

joined full time in 1997. Mr. Clevenger served as Senior Vice President and
Chief Technology Officer for KBLCOM, Inc. from 1987 to 1995, during which time
his duties included (i) serving as President and Chief Operating Officer of
KBLCOM's business services subsidiary, Paragon Business Systems; (ii) working as
Vice President of Market Development for KBLCOM's cable television subsidiary,
KBL Ventures; and (iii) founding and serving as President and Chief Operating
Officer of the KBLCOM subsidiary, FIBRCOM, a successful competitive access
provider. From 1982 to 1987, Mr. Clevenger was Vice President of Engineering and
Technology for Cox Cable Communications, Inc. From 1973 to 1982, Mr. Clevenger
served as Vice President of Engineering for United Cable Television of Colorado.
From 1968 to 1973, Mr. Clevenger held a variety of positions at Cablecom
General, Inc., including Division Engineer, General Manager, and Vice President
of Engineering.

     David E. Lacey joined CompleTel LLC in December 1998 and was appointed
Chief Financial Officer and Treasurer of CompleTel LLC at that time. Prior to
joining CompleTel LLC, Mr. Lacey served in a variety of positions for Storage
Technology Corporation including, from June 1996 to December 1998, as Executive
Vice President and Chief Financial Officer, from February 1995 to May 1996 as
Interim Chief Financial Officer and Corporate Vice President, and from October
1989 to February 1995, as Corporate Controller.

     Anna Lascar has served as Directeur Juridique for CompleTel SAS since July
1998 and General Counsel of CompleTel Europe March 30, 2000. Prior to joining
us, Ms. Lascar was Special Counsel in the Paris office of the law firm of
Willkie Farr & Gallagher from 1994 to 1998. From 1984 through 1993, Ms. Lascar
was a partner in the law firm of Salans Hertzfeld & Heilbronn in Paris.

     John M. Hugo joined CompleTel LLC as its Corporate Controller in April
1999. Prior to joining CompleTel LLC, Mr. Hugo was the Assistant Corporate
Controller for Jones Intercable, Inc. from 1994 to 1999. From 1988 to 1993, Mr.
Hugo was employed with Arthur Andersen LLP's audit and business advisory
services division. Mr. Hugo is a certified public accountant in the state of
Colorado.

     John T. Puhl has been CompleTel LLC's Chief Information Officer since
September 1998. Prior to joining CompleTel LLC, Mr. Puhl worked from December
1996 to September 1998 as Managing Director and Vice President of Tanning
Technology Europe, a telephony consultant. From May 1995 to November 1996, Mr.
Puhl was Managing Director and Vice President of SageComm International, a
telephony consultant. From February 1992 to March 1995, Mr. Puhl was Vice
President of AT&T Europe.

     Hansjorg Rieder has been with us since January 1999 and was appointed
Managing Director of CompleTel GmbH in April 1999 and of CompleTel Europe March
30, 2000. Prior to joining CompleTel GmbH, Mr. Rieder was a Managing Director of
COLT Telecom GmbH from March 1997 until March 1999. Mr. Rieder was the Chief
Executive Officer and a Managing Director of GLOBEX GmbH and the Chief Executive
Officer of Jorg Rieder Consulting from January 1993 until March 1997. From April
1972 until December 1992, Mr. Rieder was a Vice President and Managing Director
Germany for Digital Equipment.

     Martin Rushe has been with us since June 1999 and was appointed President
of CompleTel UK Limited, in January 2000 and Managing Director of CompleTel
Europe March 30, 2000. Prior to joining CompleTel UK Limited, Mr. Rushe was
Managing Director of Web International Networks Limited from April 1995 until
its acquisition by CompleTel and is currently the President. Prior to that, Mr.
Rushe was a scientist with European Space Agency.

     Jerome de Vitry joined in February 1999 and has been the President of
CompleTel S.A.S. since March 1999. Prior to joining CompleTel S.A.S., Mr. de
Vitry was Vice President of Radio Communications France for Alcatel Access
System Division from January 1995 until December 1999. From January 1993 until
December 1995, Mr. de Vitry was Vice President Marketing, and Research and
Development for Alcatel Radio Transmissions Systems.

Election of directors; voting agreement; executive audit, and compensation
committees

     CompleTel LLC's limited liability company agreement provides that
representatives serving on CompleTel LLC's board will be appointed and removed
by a majority vote of CompleTel LLC's equity holders (without cumulative
voting).

     Pursuant to a voting agreement, the current equity holders of CompleTel LLC
have each agreed to vote all of their interests in CompleTel LLC in such a
manner as to elect the following persons to serve as Directors:

                                       64
<PAGE>

     .    four representatives designated by Madison Dearborn Partners,
     .    two representatives designated by LPL Investment Group, Inc.,
     .    one representative designated by the holders of a majority of the
          common interests of CompleTel LLC held by members of our management
          that continue to be employees of CompleTel LLC, to whom we refer to as
          our "management investors," and
     .    one outside representative designated by our management investors.

The number of representatives designated by Madison Dearborn Partners will be
reduced

     .    to three representatives if Madison Dearborn Partners ceases to hold a
          majority of CompleTel LLC's preferred equity but continues to hold at
          least 70% of its original position,
     .    to two if it holds less than 70% but at least 55% of its original
          position,
     .    to one if it holds less than 55% but at least 40% of its original
          position, and
     .    to none if it ceases to hold at least 40% of its original position.

The number of representatives designated by LPL Investment Group's will be
reduced

     .    to one representative if LPL Investment Group holds less than 70% but
          at least 40% of its original position, and
     .    to none if it ceases to hold at least 40% of its original position.

Upon a reduction in the number of representatives designated by Madison Dearborn
Partners from four to three as described above, the vacancy will not be filled
and the board will be reduced to seven representatives. Any other vacancies
created by reductions in the number of representatives that Madison Dearborn
Partners or LPL Investment Group are entitled to designate will be filled by the
holders of a majority of the preferred equity. Under the terms of the voting
agreement and the limited liability company agreement of CompleTel LLC, the four
representatives designated by Madison Dearborn Partners are entitled to five
votes so that such representatives possess a majority of the voting power of all
of the representatives on the board. This additional voting power will cease
when Madison Dearborn Partners no longer has the right to designate four
representatives.

Committees of the board of CompleTel LLC

     CompleTel LLC's board has three committees:

     .    the Executive Committee,
     .    the Audit Committee, and
     .    the Compensation Committee.

     The executive committee. The members of the Executive Committee are
James E. Dovey, Paul J. Finnegan and Lawrence F. DeGeorge. The Executive
Committee acts as the board of directors of CompleTel LLC's operating
subsidiaries. In addition, the Executive Committee is authorized to take certain
actions on behalf of the board, but such actions must be approved unanimously by
the members of the Executive Committee or they will be referred to the full
board.

     The audit committee. The members of the Audit Committee are James H. Kirby
and Lawrence F. DeGeorge. The Audit Committee is responsible for making
recommendations to the board regarding the selection of independent auditors,
reviewing the results and scope of the audit and other services provided by
CompleTel LLC's independent accountants and reviewing and evaluating CompleTel
LLC's audit and control functions and year 2000 issues.

     The compensation committee. The members of the Compensation Committee are
Paul J. Finnegan, James C. Allen, Lawrence F. DeGeorge, and Royce J. Holland.
The Compensation Committee is responsible for reviewing, and as it deems
appropriate, recommending to the board, policies, practices and procedures
relating to the compensation of the officers and other managerial employees of
CompleTel and the establishment and administration of employee benefit plans.
The Compensation Committee exercises all authority under any director or
employee stock option, stock purchase or other rights plans of CompleTel, unless
the board appoints any other committee to exercise such authority, and advises
and consults with the officers of CompleTel as may be requested regarding
managerial personnel policies.

                                       65
<PAGE>

Item 11.  Executive Compensation

     The following table sets forth in summary form all compensation paid during
the years ended December 31, 1999 and December 31, 1998, to the Chief Executive
Officer and each Executive Officer of CompleTel LLC whose annual salary and
bonus exceeded $100,000 during such year:

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                            Annual Compensation
                                                                            -------------------
Name and principal position                               Fiscal Year     Salary ($)     Bonus ($)    Compensation ($)(1)
---------------------------                               -----------     ----------     ---------    -------------------
<S>                                                       <C>             <C>            <C>          <C>
James E. Dovey .....................................         1999          $183,750       $183,750            $  --
Chairman of the Board and Chief Executive Officer(2)         1998           175,000         95,000               --
William H. Pearson .................................         1999          $183,750       $183,750           $78,576
President of European Operations ...................         1998           175,000         96,250            45,407
Richard N. Clevenger ...............................         1999          $157,500       $157,500           $33,768
Senior Vice President and Chief Technology Officer .         1998           150,000         82,500            32,987
David E. Lacey .....................................         1999          $170,000       $ 85,000            $  --
Senior Vice President and Chief Financial Officer(3)         1998             7,083           --                 --
</TABLE>

-------------
(1)  Includes perquisites and other benefits paid in excess of 10% of the total
     annual salary and bonus received by such officer during the last fiscal
     year. These amounts consist of housing allowances, moving expenses and
     travel expenses associated with the relocation of these executives to Paris
     and their ongoing foreign service.
(2)  Mr. Dovey resigned as Chief Executive Officer effective December 31, 1999.
     He currently holds the positions of Chairman of the Board of CompleTel LLC
     and Managing Director of CompleTel Europe.
(3)  Mr. Lacey joined us in December 1998.

Employment agreements

     In May 1998, CompleTel LLC's wholly owned subsidiary, CableTel Management,
Inc., entered into employment agreements with each of Messrs. Pearson and
Clevenger, subsequently amended in February 2000, which include the following
terms:

     Salary. During the course of their employment, Mr. Pearson is to receive an
annual base salary of $175,000, and Mr. Clevenger is to receive an annual base
salary of $150,000. These salaries may be adjusted upward by the board. In 1999,
they were increased to $183,750 and $157,500, respectively.

     Bonus. At the end of each calendar year, each of Messrs. Pearson and
Clevenger will be entitled to receive an incentive bonus of up to 55% of his
annual salary if we achieve certain performance benchmarks set by the board
during the year. For 1999, CableTel Management, Inc.'s board augmented the bonus
awards for each of these individuals.

     Tax equalization. As expatriates, Messrs. Pearson and Clevenger are subject
to additional taxes and different taxes than if they lived and worked in the
U.S. Consequently, their employment agreements contain tax equalization
provisions designed to ensure that they will be placed in substantially the same
economic position as if they were employed in the U.S.

     Severance. Messrs. Pearson and Clevenger will receive severance benefits if
their employment is terminated due to death, disability, or nonperformance in an
amount equal to their base salary and benefits for nine months. Each is entitled
to receive severance benefits equal to his base salary and benefits for 24
months after the date of termination if he is terminated without cause or if he
is terminated or constructively terminated within six months after a change in
control. If the employee resigns or is terminated for cause, he will not be
entitled to severance benefits.

     In December 1998, CableTel Management, Inc. entered into an employment
agreement with Mr. Lacey, Senior Vice President and Chief Financial Officer,
including, the following terms, among others:

     Salary. During the course of his employment, Mr. Lacey is to receive an
annual base salary of $170,000, which salary may be adjusted upward by the
board.

                                       66
<PAGE>

     Bonus. At the end of each calendar year, beginning in 1999, Mr. Lacey will
be entitled to receive an incentive bonus of up to 50% of his annual salary if
he achieves during the year certain performance benchmarks set by the board.

     Severance. Mr. Lacey will receive severance benefits in an amount equal to
his base salary and benefits for three months in the event his employment is
terminated due to his death or disability, for nonperformance, by us, without
cause, or within six months after a change of control. If his employment is
terminated for cause or he resigns, he will not be entitled to severance
benefits.


Compensation of members of the board of managers

     We will reimburse the members of the board of managers for their reasonable
out-of-pocket expenses incurred in connection with attending board or committee
meetings for CompleTel LLC or any of its subsidiaries. Additionally, we have
agreed to maintain existing levels of directors' and officers' indemnity
insurance coverage. Except Mr. Dovey, who is compensated as an employee of
CableTel Management, Inc., the members receive no other compensation for
services provided as a member of the board of managers, as a member of the board
of any of our subsidiaries, or as a member of any board committee.


Compensation committee interlocks and insider participation

     The members of the Compensation Committee include Messrs. Allen, DeGeorge,
Finnegan and Holland. Messrs. Finnegan and DeGeorge are Supervisory Directors of
CompleTel Europe and Managing Directors of each of its principal subsidiaries.
Mr. Dovey, who is Chairman of the Board, currently is a supervisory director of
CompleTel Europe and managing director of its principal subsidiaries. Mr.
Pearson a member of the Board is a managing director of CompleTel Europe.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth the security ownership as of December 31,
1999 by each of the managers and named executive officers, all managers and
executive officers as a group and each owner of more than 5% of our equity
securities.

<TABLE>
<CAPTION>
                                                                                    Percentage
                                                                                    of Common
     Name of beneficial owner                                        Common Units     Units
     ------------------------                                        ------------   ----------
     <S>                                                             <C>            <C>
     Directors and Named Executive Officers:
     James E. Dovey(1)                                                  6,806           5.3%
     William H. Pearson                                                 6,835           5.3%
     Richard N. Clevenger                                               5,840           4.6%
     David E. Lacey                                                     1,172            *
     James C. Allen                                                       858            *
     Royce J. Holland                                                     858            *
     Lawrence F. DeGeorge(2)                                           27,204          21.2%
     Paul J. Finnegan                                                    ---            ---
     James H. Kirby                                                      ---            ---
     James N. Perry, Jr.                                                 ---            ---
     All directors and executive officers as a group (10 persons)      48,401          38.7%
     5% Owners:
     Madison Dearborn Partners(3)                                      65,808          51.3%
     DeGeorge Telecom Holdings Limited Partnership(2)                  27,204          21.2%
</TABLE>
-------
* Less than 1%
(1)  These common interests are held by Mr. Dovey, Dovey Company LLC and Dovey
     Family Partners LLP.
(2)  Mr. DeGeorge is the Chairman and Chief Executive Officer of LPL Investment
     Group, Inc., the general partner of DeGeorge Holdings Limited Partnership,
     and his address is c/o LPL Investment Group, Inc., 140 Intracoastal Pointe,
     Suite 410, Jupiter, Florida 33477. Mr. DeGeorge has sole voting and
     investment power over the units owned by DeGeorge Telecom Holdings Limited
     Partnership.
(3)  These common interests are held by Madison Dearborn Capital Partners II,
     L.P. The address of Madison Dearborn Partners, Inc. is Three First National
     Plaza, Suite 3800, Chicago, Illinois 60602.

                                       67
<PAGE>

Item 13.  Certain Relationships and Related Transactions

January 1999 Equity contribution

     In January 1999, in connection with a corporate restructuring, Madison
Dearborn Partners and DeGeorge Holdings, each a beneficial owner of more than 5%
of outstanding shares of CompleTel Europe, purchased additional CompleTel LLC
preferred interest for $2.51 million and $1.06 million, respectively. Messrs.
Pearson, Clevenger and Lacey purchased additional CompleTel LLC preferred
interests for an aggregate of $57,000.

November 1999 equity contribution

     In November 1999, Madison Dearborn Partners and DeGeorge Holdings, each a
beneficial owner of more than 5% of our outstanding interests, purchased
CompleTel LLC preferred interests for $20.21 million and $8.34 million,
respectively. Additionally, Messrs. Dovey, Pearson, Allen and Holland, each of
whom are members of the board of CompleTel LLC, purchased CompleTel LLC
preferred interests for $0.48 million, $0.20 million, $0.23 million and $0.23
million, respectively; and Messrs. Clevenger and Lacey, each of whom are an
executive officer, purchased CompleTel LLC preferred interests for $0.17 million
and $0.20 million respectively.

                                       68
<PAGE>

                                     Part IV

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

(a)      Index to Financial Statements

(b)      Reports on Form 8-K

         None.

(c)      Exhibits

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

3.1(1)   Amended and Restated Certificate of Formation of CompleTel LLC
3.2(1)   Second Amended and Restated Limited Liability Company Agreement of
         CompleTel LLC dated January 28, 1999
10.1(1)  Employment Agreement by and between CableTel Management, Inc. and
         William H. Pearson, dated as of May 18, 1998
10.2(1)  Employment Agreement by and between CableTel Management, Inc. and
         Richard N. Clevenger, dated as of May 18, 1998
10.3(1)  Employment Agreement by and between CableTel Management, Inc. and David
         Lacey dated as of December 16, 1998
10.4(1)  Employment Agreement by and between CableTel Management, Inc. and James
         E. Dovey dated as of May 18, 1999
10.5(1)  Amended and Restated CompleTel LLC Guaranty Agreement, dated as of July
         14, 1999 by CompleTel LLC in favor of the noteholders
10.6(1)  Executive Securities Agreement by and between CableTel Europe LLC and
         James E. Dovey, dated as of May 18, 1998
10.7(1)  First Amended and Restated Executive Securities Agreement by and
         between CableTel Europe LLC and Richard N. Clevenger, dated as of
         January 28, 1999
10.8(1)  Executive Securities Agreement by and between CableTel Europe LLC and
         William H. Pearson, dated as of May 18, 1998
10.9(1)  Executive Securities Agreement by and between CompleTel LLC and David
         Lacey dated as of December 2, 1998
10.10(1) Joinder and Rights Agreement by and between CompleTel LLC and David
         Lacey dated as of December 2, 1998.
10.11(1) First Amended and Restated Equity Purchase Agreement, dated as of
         January 28, 1999, by and among CompleTel LLC and Madison Dearborn
         Capital Partners II, LP, DeGeorge Holdings Limited Partnership, James
         C. Allen, Royce J. Holland, George T. Laub, Reed E. Hundt, Dovey
         Company LLC, William H. Pearson, Richard Clevenger and David A. Lacey.
10.12(1) First Amended and Restated Securityholders Agreement dated as of
         January 28, 1999, by and among CompleTel LLC and Madison Dearborn
         Capital Partners II, LP, DeGeorge Holdings Limited Partnership,
         James C. Allen, Royce J. Holland, George T. Laub, Reed E. Hundt, Dovey
         Company LLC, William H. Pearson, Richard Clevenger and David A. Lacey.
10.13(1) First Amended and Restated Performance Vesting Agreement dated as of
         January 28, 1999, by and among CompleTel LLC and Madison Dearborn
         Capital Partners II, LP, DeGeorge Holdings Limited Partnership, James
         C. Allen, Royce J. Holland, George T. Laub, Reed E. Hundt, Dovey
         Company LLC, William H. Pearson, Richard Clevenger and David A. Lacey.
10.14(1) Management Agreement, dated as of February 25, 1999, by and between ING
         Trust, CompleTel Europe N.V. and CompleTel LLC
10.15    First Amendment to CompleTel Europe N.V. 2000 Stock Option Plan
12.1     Computation of Ratio of Earnings to Fixed Charges
21.1     Subsidiaries
27.1     Financial Data Schedule

-----------

                                       69
<PAGE>

(1)  Previously filed as an exhibit to the Registrant's Registration Statement
     on Form S-4, file number 333-82305, filed with the Securities and Exchange
     Commission on July 2, 1999 and incorporated herein by reference.


     (b) Financial Statement Schedules:

     Schedules have been omitted because the information required to be shown in
the schedules is not applicable or is included elsewhere in our financial
statements or the notes thereto.

                                       70
<PAGE>

                                   SIGNATURES

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

                                             COMPLETEL LLC


Date: March 29, 2000                         By: /s/ William H. Pearson
                                                --------------------------------
                                                      William H. Pearson
                                                      Chief Executive Officer
                                                      and President

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

<TABLE>
<CAPTION>
                  Signature                          Title                              Date
                  ---------                          -----                              ----
<S>                                                  <C>                                <C>
         /s/ James E. Dovey                          Chairman and Secretary             March 29, 2000
-----------------------------------------
              James E. Dovey

                                                     Manager                            March 29, 2000
-----------------------------------------
              James C. Allen

         /s/ Royce J. Holland                        Manager                            March 29, 2000
-----------------------------------------
              Royce J. Holland

         /s/ Lawerence F. DeGeorge                   Manager                            March 29, 2000
-----------------------------------------
              Lawrence F. DeGeorge

         /s/ Paul J. Finnegan                        Manager                            March 29, 2000
-----------------------------------------
              Paul J. Finnegan

         /s/ James H. Kirby                          Manager                            March 29, 2000
-----------------------------------------
              James H. Kirby

         /s/ James N. Perry, Jr.                     Manager                            March 29, 2000
-----------------------------------------
              James N. Perry, Jr.

         /s/ William H. Pearson                      Chief Executive Officer            March 29, 2000
-----------------------------------------            and President
              William H. Pearson                     (Principal Executive Officer)


         /s/ David E. Lacey                          Senior Vice President, Treasurer   March 29, 2000
-----------------------------------------            and Chief Financial Officer
              David E. Lacey

         /s/ John M. Hugo                            Corporate Controller               March 29, 2000
-----------------------------------------
              John M. Hugo
</TABLE>

                                      71