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

                                 FORM 10-Q
                                -----------

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

                For the quarterly period ended June 30, 2002

                                     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. 000-30075
                                -----------

                           COMPLETEL EUROPE N.V.
           (Exact name of Registrant as specified in its charter)

               The Netherlands                                   98-0202823
      (State or other jurisdiction of                         (I.R.S. Employer
       incorporation or organization)                        Identification No.)
Blaak 16, 3011 TA Rotterdam, The Netherlands                       2132 NA
  (Address of principal executive offices)                       (Zip Code)

    Registrant's telephone number, including area code: (31) 20 666 1701

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

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

               ORDINARY SHARES, ((euro)) 0.10 NOMINAL VALUE,
                          TRADED ON EURONEXT PARIS
                                -----------

         Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

         The number of shares outstanding of the Registrant's common stock
as of July 1, 2002 was 160,555,222 ordinary shares.
================================================================================


                             TABLE OF CONTENTS

PART I.              FINANCIAL INFORMATION
Item 1.              Financial Statements (unaudited)
                     Consolidated Balance Sheets as of June 30, 2002
                     (unaudited) and December 31, 2001 Consolidated
                     Statements of Operations for the Three and Six Month
                     Periods Ended June 30, 2002 and 2001 (unaudited)
                     Consolidated Statement of Shareholders' Equity for the
                     Six Month Period Ended June 30, 2002 (unaudited)
                     Consolidated Statements of Cash Flows for Six Month
                     Periods Ended June 30, 2002 and 2001 (unaudited) Notes
                     to the Consolidated Financial Statements (unaudited)
Item 2.              Management's Discussion and Analysis of Financial
                     Condition and Results of Operations
Item 3.              Quantitative and Qualitative Disclosure about Market Risk
PART II.             OTHER INFORMATION
Item 1.              Legal Proceedings
Item 2.              Changes in Securities and Use of Proceeds
Item 3.              Defaults upon Senior Securities
Item 4.              Submission of Matters to a Vote of Security Holders
Item 5.              Other Information
Item 6.              Exhibits and Reports on Form 8-K
SIGNATURES



                       PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

<TABLE>
<CAPTION>
                   COMPLETEL EUROPE N.V. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
         (Stated in thousands of euro, except share and per share amounts)
                                (unaudited)
                                 ASSETS
                                                                           June 30,       December 31,
                                                                              2002               2001
                                                                              ----               ----
<S>                                                                     <C>                <C>
CURRENT ASSETS:
  Cash and cash equivalents                                             (euro)37,369       (euro)81,613
  Short-term investments, restricted                                          16,689             16,694
  Accounts receivable, net of allowance for doubtful receivables
     of (euro)919 and (euro)2,330, respectively                               17,438             18,357
  Affiliate receivables                                                          134              2,121
  VAT receivables                                                             14,411             24,472
  Prepaid expenses and other current assets                                    6,001             11,494
                                                                               -----             ------

           Total current assets                                               92,042            154,751
                                                                              ------            -------

NON-CURRENT ASSETS:
  Property and equipment, net                                                252,317            277,807
  Licenses, net of accumulated
       amortization of(euro)254 and(euro)335, respectively                       791              2,104
  Goodwill                                                                     5,793              5,793
  Deferred financing costs, net                                                7,092              7,525
  Non-current investments, restricted                                              -              8,085
  Other non-current assets                                                     1,382              2,525
                                                                               -----              -----
          Total non-current assets                                           267,375            303,839
                                                                             -------            -------

TOTAL ASSETS                                                           (euro)359,417      (euro)458,590
                                                                       =============      =============



                               LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Network vendor payables                                               (euro)12,588       (euro)37,356
  Accrued liabilities                                                         17,699             11,640
  Accrued payroll                                                              3,766             10,256
  Trade accounts payable                                                      28,186             48,294
  Affiliate payables                                                             354              1,393
                                                                               -----           --------

          Total current liabilities                                           62,593            108,939
                                                                              ------            -------

LONG-TERM DEBT                                                               222,422            227,735

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS' EQUITY:
   Ordinary shares, nominal value (euro).10 per share, 383,332,650
          shares authorized; 160,555,222 shares issued and
          outstanding at June 30, 2002 and
          December 31, 2001, respectively                                     16,055             16,055
   Additional paid-in capital                                                687,107            690,093
    Deferred compensation                                                    (5,290)           (11,192)
   Other cumulative comprehensive loss                                         1,226                747
    Accumulated deficit                                                    (609,143)          (558,234)
   Treasury stock, at cost                                                  (15,553)           (15,553)
                                                                            --------           --------

TOTAL SHAREHOLDERS' EQUITY                                                    74,402            121,916
                                                                              ------            -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                             (euro)359,417      (euro)458,590
                                                                       =============      =============
</TABLE>

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



<TABLE>
<CAPTION>
                   COMPLETEL EUROPE N.V. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
     (Stated in thousands of euro, except share and per share amounts)
                                (unaudited)

                                                        Three Months Ended June 30,                  Six Months Ended June 30,
                                                         2002                 2001                 2002                   2001
                                                         ----                 ----                 ----                   ----

<S>                                                   <C>                  <C>                  <C>                     <C>
REVENUE.......................................        (euro)24,094         (euro)18,599         (euro)47,046            (euro)34,202

OPERATING EXPENSES:
   Network costs..............................              15,471               15,192               31,515                  29,445
   Selling, general and administrative........              15,002               16,182               29,903                  31,839
   Non-cash compensation......................               2,464                1,733                2,915                       2
   Depreciation and amortization..............               7,501                6,698               15,227                  12,019
   Restructuring, impairment and other charges               5,139                1,489                9,012                   1,489
         Total operating expenses.............      --------------       --------------       --------------        ----------------
                                                            45,577               41,294               88,572                  74,794
                                                    --------------       --------------       --------------        ----------------

 OPERATING LOSS................................            (21,483)             (22,695)             (41,526)               (40,592)
OTHER INCOME (EXPENSE):
   Interest income............................                 669                3,531                1,228                   8,901
   Interest expense, net of capitalized interest..         (8,484)              (7,011)             (15,941)                (15,356)
   Foreign exchange loss and other expense....              12,259              (2,499)               12,078                 (5,602)
                                                    --------------       --------------        -------------        ----------------
         Total other income (expense).........               4,444              (5,979)               (2,635)               (12,057)
                                                    --------------       --------------        -------------        ----------------

NET LOSS FROM CONTINUING OPERATIONS...........            (17,039)             (28,674)             (44,161)                (52,649)
DISCONTINUED OPERATIONS:                                   (5,499)             (21,846)              (6,748)                (38,473)
                                                    ==============        =============        =============        ================
    Loss from discontinued operations

NET LOSS                                            (euro)(22,538)       (euro)(50,520)       (euro)(50,909)          (euro)(91,122)
                                                    ==============        =============        =============        ================

BASIC AND DILUTED LOSS PER ORDINARY SHARE             (euro)(0.14)         (euro)(0.32)         (euro)(0.32)            (euro)(0.58)
                                                    ==============        =============        =============        ================

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
    OUTSTANDING
                                                       157,419,330         157,418,830          157,419,330             157,416,311
                                                    ==============        =============        =============        ================
</TABLE>


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



<TABLE>
<CAPTION>
                   COMPLETEL EUROPE N.V. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
            (Stated in thousands of euro, except share amounts)
                                (unaudited)

                                                                                                                        Other
                                                                                                                       Cumulative
                                                              Ordinary Shares          Paid-in        Deferred        Comprehensive
                                                            Number         Amount      Capital        Compensation        Loss
                                                          ------------ ------------  -------------    -------------   ------------
<S>                                                       <C>          <C>           <C>               <C>            <C>
BALANCE, January 1, 2002..........................        160,555,222  (euro)16,055  (euro)690,093    (euro)(11,192)  (euro)747
 Deemed contributions by LLC related to
   allocation of non-cash compensation charges....                --            --         (3,433)         1,717             --
 Amortization of deferred compensation............                --            --             --          1,992             --
 Issuance of stock options........................                --            --           2,640           --              --
 Forfeitures of stock options....................                 --            --         (2,193)         2,193             --
 Cumulative translation adjustment ...............                --            --             --            --             479
 Net loss.........................................                                                           --              --
                                                        -------------- ------------  -------------  -------------    -----------
BALANCE, June 30, 2002............................        160,555,222 (euro) 16,055 (euro) 687,107 (euro)(5,290)     (euro)1,226
                                                        =============  ============  ============== =============    ============


<CAPTION>
(table continued)

                                                                                                   Total
                                                           Accumulated    Treasury Stock at     Comprehensive
                                                           Deficit          Cost (Note3)            Loss              Total
                                                        ---------------   ----------------      -------------     -------------
<S>                                                      <C>                 <C>                <C>                <C>
BALANCE, January 1, 2002..........................       (euro)(558,234)    (euro)(15,553)     (euro)(299,321)    (euro)121,916
 Deemed contributions by LLC related to
   allocation of non-cash compensation charges....                --                --                --            (1,716)
 Amortization of deferred compensation............                --                --                --             1,992
 Issuance of stock options........................                --                --                --             2,640
 Forfeitures of stock options....................                 --                --                --               --
 Cumulative translation adjustment ...............                --                --                479              479
 Net loss.........................................             (50,909)             --            (50,909)          (50,909)
                                                        ---------------    ----------------    ---------------  -----------------
BALANCE, June 30, 2002............................       (euro)(609,143)   (euro) (15,553)     (euro)(50,430)    (euro)74,402
                                                        ===============    ================    ===============  =================
</TABLE>

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



<TABLE>
<CAPTION>
                                                COMPLETEL EUROPE N.V. AND SUBSIDIARIES
                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (Stated in thousands of euro)
                                                              (unaudited)

                                                                   Six Months Ended             Six Months Ended
                                                                 ------------------          -------------------
                                                                      June 30, 2002                June 30, 2001
 OPERATING ACTIVITIES:
<S>                                                                  <C>                          <C>
   Net loss...................................................        (euro)(50,909)               (euro)(91,122)
     Loss from discontinued operations........................                6,748                       38,473
     Loss from continuing operations..........................              (44,161)                     (52,649)
   Adjustments to reconcile loss from continuing operations
   to net cash flows provided by continuing operating
   activities:
     Depreciation and amortization............................               15,227                       12,019
     Non-cash compensation....................................                2,915                            2
     Restructuring, impairment and other charges..............                9,012                        1,489
     Accretion of senior discount notes.......................                7,027                        6,402
     Amortization of deferred financing costs.................                  432                          894
     Foreign exchange loss (gain).............................              (12,078)                       5,602
     Changes in operating assets and liabilities:
       Increase in accounts receivable........................               (2,251)                      (1,504)
        Increase in prepaid expenses,
         VAT receivables
         and other current assets.............................               (8,911)                      (6,720)
       Decrease (increase) in other non-current assets........                    -                         (158)
       Increase in accrued liabilities and trade
         accounts payable.....................................               16,344                      (22,529)
       Change in net affiliate payables/
         receivables..........................................                  948                         (122)

       Net cash flows used in continuing operating activities.              (30,362)                     (43,518)

 INVESTING ACTIVITIES:
   Expenditures for property and equipment....................              (13,572)                     (99,837)
   Expenditures for licenses..................................                    -                         (934)
   Acquisitions, net of cash acquired.........................                   --                      (12,886)
         Net cash flows used in investing activities..........              (13,572)                    (113,657)

 FINANCING ACTIVITIES:
    Proceeds from exercise of stock options...................                   --                           17
   Deferred financing costs...................................                   --                         (197)
         Net cash flows provided by financing activities                         --                         (180)

   Effect of exchange rates on cash...........................                  310                        1,071


NET DECREASE IN CASH AND CASH EQUIVALENTS.....................              (44,244)                    (156,284)


CASH AND CASH EQUIVALENTS, beginning of period................               81,613                      361,698

CASH AND CASH EQUIVALENTS, end of period......................         (euro)37,369                (euro)205,414

SUPPLEMENTAL CASH FLOW DISCLOSURES:
 Cash paid for interest.......................................          (euro)8,531                 (euro)14,000
 Cash paid for taxes..........................................                    -                            -

                   The accompanying notes are an integral part of these unaudited consolidated financial statements.
</TABLE>



       COMPLETEL EUROPE N.V. AND SUBSIDIARIES NOTES TO CONSOLIDATED
                           FINANCIAL STATEMENTS



(1) Organization and Nature of Operations

The Company's Business and Financial Condition

         CompleTel Europe N.V. ("CompleTel Europe") (together with its
wholly-owned subsidiaries, the "Company") is a Dutch holding company
incorporated on December 14, 1998. The Company is a facilities-based
operator of a technologically advanced, high-capacity, fiber optic
communications infrastructure. A facilities-based operator uses mainly its
own telecommunications facilities to provide services, in contrast with
non-facilities-based resellers who purchase the services of other providers
and then retail the services to customers.

         The Company provides telecommunications and Internet-related
services to business and government end-users, carriers and Internet
service providers in targeted metropolitan areas, with a focus on network
deployment in France. It delivers these services primarily to connected,
on-net customers over its fiber optic metropolitan area networks, or MANs.
The Company has MANs in nine cities in France, including Paris, Lyon,
Marseille, Lille, Grenoble, Toulouse, Nice, Nantes and Strasbourg. The
construction of the Company's MANs was completed during the last quarter of
2001. The Company's MANs are connected by its leased inter-city network.

         Since its inception, the Company has generated operating losses
and negative cash flow from its operating activities. The Company expects
to continue to experience operating losses and negative cash flows from
operations until it establishes a sufficient revenue-generating customer
base. While the Company is experiencing growth in its core retail activity
in France, and believes that this trend will continue, during 2001 and
beginning of 2002 it observed signs of general weakness in the European
markets for carrier, dial-up Internet access and Internet data center
services. In light of these adverse market conditions, the Company has
implemented reorganization and restructuring measures in order to adjust
its operations to foreseeable market conditions, reducing ongoing operating
expenses and capital outlays. In particular, the Company has implemented a
major downsizing of its German operations in view of the slowdown in German
telecommunications markets (particularly in the carrier and ISP segments).
Furthermore, in April 2002, in connection with its planned recapitalization
as described below, the Company decided to sell its entire German
operations, which sale was completed in early May 2002. In addition, faced
with a significant downturn in the web hosting market, linked to the
collapse of the ".com" market and installed hosting overcapacity in Europe,
the Company decided to scale down its remaining Internet data center
operations it launched in France, Germany and the United Kingdom. In
France, the Company decided to integrate these activities with its retail
businesses, while in Germany and the United Kingdom the Company has exited
these markets by selling its entire operations in these countries in May
2002.

         While the Company previously estimated its funding gap (that is,
the additional financing required to bring it to cash flow breakeven) to be
approximately (euro)60 million to (euro)90 million, in light of (i) the
anticipated elimination of interest payments upon the exchange or
retirement of the Company's outstanding debt securities pursuant to the
recapitalization plan described below, (ii) the cash savings from the sale
of the Company's German and UK operations and cost reductions at the
Company's European headquarters, and (iii) the lower cash requirements
related to selling, general and administrative expenses and capital
expenditures resulting from the Company's restructuring efforts, the
Company currently estimates its funding gap to be approximately (euro)30
million. The Company expects that, upon the completion of the
recapitalization plan described below, its existing cash balances and the
additional equity infusion, together with the anticipated cash flow from
its operations, will be sufficient to fully fund its restructured
operations to cash flow breakeven.

The Company's Recapitalization Plan

         On May 15, 2002, the Company signed an agreement in support of a
recapitalization plan (the "Recapitalization") with an ad hoc committee of
holders of its 14% senior discount notes due 2009 and 14% senior notes due
2010 (collectively, the "Notes"), constituting over 75% of the Company's
outstanding Notes and with Meritage Private Equity Funds ("Meritage") and
DeGeorge Telcom Holdings ("DeGeorge Telcom"), two of the Company's
principal shareholders. The Recapitalization will involve:

o        a debt for equity swap in respect of the outstanding Notes,

o        the return to the holders of the senior notes due 2010 of the
         outstanding balance in the escrow account established to
         provide funds for interest payments on these senior notes,
         and

o        an equity investment in the aggregate of at least(euro)39.9 million.

         Means of implementation. The Company decided to effect the
Recapitalization by means of a pre-arranged Netherlands composition
proceeding known as an Akkoord, which requires, among other things, the
approval of 75% of the Company's admitted creditors, by value. To avail
itself of this proceeding, on May 29, 2002, CompleTel Europe N.V. filed
with the Dutch bankruptcy court for protection from its creditors, which
consist almost entirely of holders of its Notes. At the same time, it
submitted to the Dutch court a composition plan whereby the holders of the
Notes would receive Convertible Preferred B shares and Ordinary shares as
described below. On June 24, 2002, the meeting of its creditors approved
this composition plan, which approval remains subject to confirmation by
the Dutch court at a hearing to be held on August 21, 2002. Upon
confirmation of the composition plan by the Dutch court, the composition
plan would be binding on all of the Company's non-preferred unsecured
creditors. It would effectively eliminate the Company's outstanding
indebtedness while permitting its operating subsidiaries to continue
operations without disruption. The confirmation of the composition plan by
the Dutch court is subject, among other things, to the approval of the
recapitalization plan by the extraordinary general meeting of the Company's
shareholders, to be held on August 20, 2002.

         Exchange of the Notes for Convertible Preferred B shares and
Ordinary shares. The outstanding Notes will be exchanged for Convertible
Preferred B shares and Ordinary shares together representing between 37.0%
and 40.6% of the Company's share capital that it estimates would be
outstanding at the close of the Recapitalization (excluding the C shares
identified below). In connection with that exchange, the outstanding
balance in the escrow account established to provide funds for interest
payments on the Notes (approximately (euro)16.7 million) will be paid to
holders of the Notes.

         Equity investment of Meritage, DeGeorge Telcom and certain
Noteholders in exchange for convertible preferred shares and Ordinary
shares. The Recapitalization includes an equity investment of an aggregate
of (euro)30 million by Meritage and DeGeorge Telcom in return for the
issuance of convertible preferred A shares (the "Convertible Preferred A
Shares") and ordinary shares, together representing between 37.8% and 41.5%
of the Company's share capital that the Company estimates would be
outstanding at the close of the Recapitalization (excluding the C shares).
Meritage and DeGeorge Telcom will also be issued, on a pro rata basis, a
number of C shares that will cause them to hold, at the close of the
Recapitalization, the same number of shares for voting purposes as the
former holders of the Notes. In order to limit the effect of the C shares
strictly to the allocation of voting power, the C shares are structured in
a way that effectively gives them only nominal economic value.

         In addition, certain of the holders of the senior notes due 2010
have committed to make an equity investment of approximately (euro)9.9
million (reflecting a reinvestment of a portion of the escrow funds to be
released to these holders) in return for the issuance of Convertible
Preferred B Shares and ordinary shares, together representing between 13.3%
and 14.6% of the Company's share capital that the Company estimates would
be outstanding at the close of the Recapitalization (excluding the C
shares).

         The Company will pay a dividend equal to 11% per annum, compounded
quarterly, calculated over an amount of (euro)2,010.00 per share to the
holders of Convertible Preferred A and Convertible Preferred B shares
during the period commencing July 1, 2004, and until their cancellation or
conversion in accordance with their terms. Assuming 19,838 Convertible
Preferred A shares and 14,926 Convertible Preferred B shares are issued
(that is, after giving effect to the investment of (euro)30.0 million by
DeGeorge Telcom and Meritage and the reinvestment of (euro)9.9 million of
the escrow funds to be released to the holders of the senior notes due
2010, and after giving effect to a proposed 100-to-one reverse split of the
Preferred shares) and that none of the Convertible Preferred A shares and
Convertible Preferred B shares are converted or cancelled prior to July 1,
2004, the aggregate annual dividend payable in respect of the Convertible
Preferred A shares and Convertible Preferred B shares would be
approximately (euro)8 million.

         In accordance with their respective terms, in the event of a
liquidation of CompleTel Europe, the Preferred A Shares will rank senior to
the Preferred B Shares, which, will rank senior to CompleTel Europe's
ordinary shares. In addition, upon liquidation, the Preferred A Shares and
Preferred B Shares will be entitled to receive, prior to any distribution
in respect of the ordinary shares, an amount in cash equal to (euro)2010.00
per share (after giving effect to the Company's proposed reverse share
splits).

         Potential additional equity investments. The Recapitalization also
contemplates that up to an additional (euro)7.1 million may be invested
either in the form of the exercise of warrants for Ordinary shares (which
warrants are to be issued to the Company's existing shareholders), or in
return for the issuance of Convertible Preferred A shares and Ordinary
shares.

         Effect on share ownership and Supervisory Board composition.
Post-Recapitalization, assuming the Company does not receive the additional
(euro)7.1 million in cash investment indicated above, the former holders of
the Notes, Meritage and DeGeorge Telcom would own, in the aggregate,
approximately 97.3% of the economic interests in the Company's share
capital that would be outstanding at the completion of the
Recapitalization. The remaining shares (representing 2.7% of the economic
interests in the Company's share capital) would be held by the Company's
existing shareholders, other than Meritage and DeGeorge Telcom.
Furthermore, post-Recapitalization, the Company's Supervisory Board would
be reconstituted as a six-member board, comprising two designees of the
holders of the Convertible Preferred A Shares, two designees of the holders
of the Convertible Preferred B Shares, and two independent directors
mutually acceptable to the Noteholders and to Meritage and DeGeorge Telcom.

         Conditions.  The completion of the recapitalization is subject to,
among other things:

o        the approval of the Recapitalization by the Company's existing
         shareholders;

o        the approval of at least 75% of the Company's admitted creditors,
         by value, which approval took place at the meeting of creditors
         held on June 24, 2002;

o        the final sanction of the Dutch courts, scheduled to occur on
         August 21, 2002 (which sanction shall no longer be subject to
         appeal);

o        the closure or sale of the Company's operations outside of France,
         which has occurred in May 2002; and

o        other customary conditions.

         The Company believes that it has already obtained the level of
commitment from the holders of the Notes that would be required by the
Dutch courts to approve the composition plan and the retirement of all of
the outstanding Notes. The Company also believes that it has obtained the
required level of commitments from its existing shareholders to vote in
favor of the capital increase and other required actions. The Company's
Supervisory and Management Boards voted unanimously to approve the
Recapitalization.

         Going concern. The Company's ability to continue as a going
concern is dependent upon successful completion of the Recapitalization (or
obtaining alternative sources of financing if the Recapitalization is not
complete). There is no assurance that the Company will be able to effect
the Recapitalization, or that the Company will be able to secure
alternative sources of financing if the Recapitalization is not
consummated. If the Company fails to effect the Recapitalization, or to
obtain sufficient alternative financing, it will cease to be a going
concern and be forced into liquidation. In such event, the Company
anticipates, based on its internal analyses, that the proceeds of the
liquidation would not suffice to pay off its creditors and, therefore,
there would be nothing left for distribution to its shareholders. The
independent auditors' report of Deloitte & Touche Accountants on the
Company's consolidated financial statements for the year ended December 31,
2001, includes a paragraph that states that the Company has suffered
recurring losses from operations and expects to fully utilize its existing
cash resources by the end of the third quarter of 2002, which raises
substantial doubt about its ability to continue as a going concern.

(2) Basis of Presentation

         The accompanying interim unaudited consolidated financial
statements have been prepared in accordance with United States generally
accepted accounting principles ("U.S. GAAP") for interim financial
information and are in the form prescribed by the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by U.S. GAAP for complete financial statements. The
interim unaudited consolidated financial statements should be read in
conjunction with the restated audited financial statements of the Company
as of and for the year ended December 31, 2001.

         The Company has restated its annual financial statements, which
were originally included in its 2001 Annual Report on Form 10-K, filed with
the U.S. Securities and Exchange Commission (the SEC) on April 1, 2002. The
restated financial statements can be found in Appendix B to each of the
Company's definitive proxy statements filed on Schedule 14A with the SEC on
August 12, 2002 pursuant to the Company's annual and extraordinary general
shareholders meetings scheduled to be held on August 20, 2002. Operating
results for the three and six month periods ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2002. Certain amounts for prior periods have been
reclassified to conform to the current period presentation.

         In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation
of the interim unaudited consolidated financial statements have been
included. 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 disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of expenses during the reporting period. Actual results
could differ from those estimates.

(3)   Discontinued Operations

         On May 10, 2002, the Company completed the sale of its German
operations to a third party. Pursuant to the agreement governing the terms
of the sale, the Company transferred to the buyer the entire share capital
of CompleTel GmbH, which, until the sale, was an indirect wholly-owned
subsidiary of CompleTel Europe. Furthermore, the Company agreed to acquire
from CompleTel GmbH certain transmission equipment for (euro)500,000. In
addition, the Company agreed to provide the buyer free support billing and
financial IT services for a period of up to 12 months after the sale.
Following the sale of CompleTel GmbH, the Company no longer operates or
generates revenue in Germany. In connection with the sale of its German
operations, the Company entered into reciprocal agreements for terminating
traffic, which will allow the Company to service its French customers that
currently have, or will develop, operations in Germany.

         On May 15, 2002, the Company completed the sale of its U.K.
operations to a third party. Pursuant to the agreement governing the terms
of the sale, the Company transferred to the buyer the entire share capital
of CompleTel UK Limited, which, until the sale, was an indirect
wholly-owned subsidiary of CompleTel Europe. Following the sale of
CompleTel U.K. Limited, the Company no longer operates or generates revenue
in the United Kingdom.

         The Company has accounted for these transactions in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"). While SFAS 144 supercedes APB Opinion 30 "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," it retains the presentation of discontinued operations but
broadens that presentation to include a component of an entity (rather than
a segment of a business). In the sale transactions of both the German
operations and U.K. operations, both conditions of qualifying as a
component of an entity are met, that is, (a) the operations and cash flows
of the component have been eliminated from the ongoing operations of the
Company as a result of the disposal transaction, and (b) the Company will
not have any significant continuing involvement in the operations of the
component after the disposal transaction.

         The following table presents the components of discontinued
operations, as reflected in the accompanying unaudited consolidated
statements of operations (in thousands):


<TABLE>
<CAPTION>
                                                   Three Months Ended June 30,       Six Months Ended June 30,
                                                   --------------------------        ------------------------
                                                        2002             2001            2002             2001
                                                        ----             ----            ----             ----
<S>                                                     <C>              <C>             <C>             <C>
Revenue                                           (euro)2,656      (euro)5,897     (euro)8,830      (euro)9,950
Operating expenses                                     (4,177)         (25,146)        (11,276)         (43,409)
                                                   --------------- ---------------- --------------- ----------------
                                                   --------------- ---------------- --------------- ----------------
  Operating loss                                       (1,521)         (19,249)         (2,446)         (33,459)
Other income (expense)                                    (45)          (2,597)           (369)          (5,014)
Loss on disposal of discontinued operations            (3,933)              -           (3,933)              -
                                                   --------------- ---------------- --------------- ----------------
                                                   --------------- ---------------- --------------- ----------------
Loss from discontinued operations                (euro)(5,499)   (euro)(21,846)   (euro)(6,748)   (euro)(38,473)
                                                   =============== ================ =============== ================
</TABLE>


(4)   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 historical cost and are being depreciated when ready for their
intended use on a straight-line basis over their estimated useful lives.

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

<TABLE>
<CAPTION>
                                                                                 June 30,    December 31,
                                                                                   2002            2001
                                                                                   ----            ----

<S>                                                                            <C>               <C>
Network equipment............................................................  (euro)276,770     (euro)276,206
Office furniture and equipment...............................................          3,224             3,602
Computer equipment and software..............................................          5,827             7,152
Leasehold improvements.......................................................          3,527             4,096
Materials and supplies .....................................................              --             5,525
Buildings....................................................................                              205
                                                                                   ---------     -------------
                                                                                         205

Property and equipment, in service...........................................        289,553           296,786
Less: accumulated depreciation...............................................        (61,604)         (49,573)
                                                                              ---------------       ----------

Property and equipment, in service, net......................................        227,949           247,213
Construction in progress.....................................................         24,368            30,594
                                                                              -------------- -       ---------

Property and equipment, net..................................................(euro) 252,317      (euro)277,807
                                                                             ===============     =============
</TABLE>


        The Company capitalized approximately (euro)0.9 million and
(euro)7.7 million of interest for the six-month periods ended June 30, 2002
and 2001, respectively.

         Expenditures for maintenance and repairs are expensed as incurred.

(5) Related Party Transaction

         In December 2000, the Company loaned William Pearson, its then
President and Chief Executive Officer, the principal amount of U.S.$1.5
million. The principal amount, together with accumulated interest at the
annual rate of 7% was secured by a pledge of 958,000 of Mr. Pearson's
ordinary shares in the Company and was originally scheduled to be due and
payable on the earlier of December 31, 2001, or 180 days after any
termination of employment. Effective as of December 11, 2001, the maturity
date for this loan was extended to December 31, 2002, or 180 days after any
termination of employment. As a result of Mr. Pearson's resignation on
February 22, 2002, the loan is currently due and payable on August 19,
2002. However, Mr. Pearson has indicated that he is unable to repay the
full amount owed and has asserted that the loan was made to him solely with
recourse to the collateral. Accordingly, as a result of the current fair
market value of the collateral, reflecting the anticipated dilution to the
currently outstanding ordinary shares as part of the Company's planned
Recapitalization (see Note 1), the Company has recorded a (euro)1.9 million
reserve for the full loan amount and accrued interest. The Company intends
to fully pursue the collection of this loan when it becomes due.

(6) Indebtedness

         Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                      June 30,        December 31,
                                                                                        2002              2001
                                                                                        ----              ----
      <S>                                                                             <C>                 <C>
      14% Senior Discount Notes, face amount $120.5 million, due 2009,
          effective interest rate of 15.1%, converted to euro at June 30,
          2002 and December 31, 2001 at exchange rates of 0.9921 and
          0.8901,
          respectively...........................................................      (euro)94,437      (euro)99,333
      14% Senior Notes, due 2010.................................................           121,870           121,870
      Other long-term debt.......................................................             6,115             6,532
                                                                                       ------------       -----------
                                                                                      (euro)222,422     (euro)227,735
</TABLE>

(7) Commitments and Contingencies

Legal Proceedings

         The syndicate of co-owners of a building in which CompleTel France
installed certain telecommunications equipment, brought an action against
the Company before the Tribunal de Grande Instance of Paris alleging that
the equipment was installed without obtaining the necessary authorizations
and caused disturbances in the building. On May 11, 2001, the tribunal
issued a decision, following a preliminary injunction hearing (a) ordering
the Company to restore the premises to their original state, and (b)
appointing an expert with the mandate of determining the liability, if any,
the damages sustained, if any, and the work which the Company may have to
undertake with respect to the equipment to cease the disturbances. The
Company appealed against this decision and the proceeding is currently in
progress. The Company is also involved in discussions to settle this matter
out of court, but there can be no assurance that the Company will be able
to reach a settlement. If the negotiations to settle out of court are
unsuccessful, the Company may be required to move the equipment and may be
required to do so in a short period of time. In such an event, the Company
could suffer disturbances to its network, which could have an impact on its
activities. Although at this stage, the Company is not in a position to
predict the outcome of the negotiations, the Company estimates that the
costs of either moving the equipment or settling this dispute would not
have a material adverse effect on its financial condition or results of
operations.

         The Company is not party to any other pending legal proceedings
that it believes would, individually or in the aggregate, have a material
adverse effect on its financial condition, results of operations or its
cash flows.

(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.

         Historically, management has evaluated the Company's development
efforts and results according to the geographic location of its markets in
France, Germany and the UK. The key operating performance measures used by
management in this evaluation include revenue growth and a measure the
Company refers to as "Adjusted EBITDA." In calculating Adjusted EBITDA, the
Company excludes (in addition to interest, taxes, depreciation and
amortization) non-cash compensation charges and foreign exchange loss and
other expenses, including restructuring, impairment and other charges, as
well as other non-recurring operating expenses. The Company believes that
Adjusted EBITDA provides both management and investors with a measure of
operating results that is unaffected by the financing and accounting
effects of gains and losses that are either of a non-recurring nature or
are not closely related to the performance of its core business.

         Adjusted EBITDA is not derived pursuant to generally accepted
accounting principles and therefore should not be considered as an
alternative to operating income (loss), as an alternative to cash flows
from operating activities, or as a measure of liquidity. Furthermore, the
Company is 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, the
Company's reported Adjusted EBITDA may not be comparable to similarly
titled measures used by other companies.

         As discussed in Note 3, the Company sold and discontinued its
operations in Germany and the United Kingdom in May 2002. Consequently, the
Company currently operates in a single geographic segment. Presented below,
is certain financial information concerning the Company's performance in
France, the Company's sole geographic segment. In addition, the tables
below include certain financial information concerning CompleTel Europe and
Others. This information includes costs that are comprised of the Company's
corporate headquarters, including IT expenses and assets, including
primarily cash, property and equipment.

As of and for the three months ended June 30, 2002 (euro, in thousands):

<TABLE>
<CAPTION>
                                                                         CompleTel
                                                         CompleTel      Europe and
                                                            France           Other              Total
           <S>                                             <C>                <C>               <C>
           Revenue:
               Retail: voice                                12,964                -             12,964
               Retail: Internet & data                       4,350                -              4,350
                                                ---          -----                  ---          -----
             Total retail                                   17,314                -             17,314
             Carrier                                         3,578                -              3,578
             ISP                                             3,202                -              3,202
                                                -------------------------------------------------------
               Total                                        24,094                -             24,094
           Adjusted EBITDA                                 (2,414)          (3,965)            (6,379)
              Depreciation and amortization
                                                                                               (7,501)
              Interest expense, net of
                  interest income                                                              (7,815)
              Foreign exchange gain/loss and
                  other expense                                                                 12,259
              Non-cash compensation charges
                                                                                               (2,464)
              Restructuring, impairment and
                  other charges                                                                (5,139)
                                                                                               -------
              Net loss from continuing
                  operations                                                                  (17,039)
           Total long-lived assets, net                    235,919           16,398            252,317
           Total assets                                    291,140           68,277            359,417
           Expenditures for long-lived
                Assets                                       4,737              117              4,854
</TABLE>


As of and for the three months ended June 30, 2001 (in thousands):
<TABLE>
<CAPTION>

                                                          CompleTel      CompleTel
                                                             France     Europe and
                                                                             Other              Total
           Revenue:
              <S>                                             <C>         <C>                    <C>
               Retail: voice                                  6,238               -              6,238
               Retail: Internet & data                        2,234               -              2,234
                                                              -----                              -----
             Total retail                                     8,472               -              8,472
             Carrier                                          2,323               -              2,323
             ISP                                              7,804               -              7,804
                                                -------------------------------------------------------
               Total                                         18,599               -             18,599
           Adjusted EBITDA                                  (7,189)         (5,586)           (12,775)
              Depreciation and amortization
                                                                                               (6,698)
              Interest expense, net of
                  interest income                                                              (3,480)
              Foreign exchange gain/loss and
                  other expense                                                                (2,499)
              Non-cash compensation charges
                                                                                               (1,733)
              Restructuring, impairment and
                  other charges                                                                (1,489)
                                                                                               -------
              Net loss from continuing
                  operations                                                                  (28,674)
           Total long-lived assets, net                     214,989          25,068            240,057
           Total assets                                     279,099         280,014            559,113
           Expenditures for long-lived
                assets                                       28,865           4,208             33,073
</TABLE>


As of and for the six months ended June 30, 2002 (in thousands):

<TABLE>
<CAPTION>
                                                         CompleTel       CompleTel
                                                            France      Europe and
                                                                             Other               Total
           <S>                                  <C>         <C>              <C>               <C>
           Revenue:
               Retail: voice                                24,706                -             24,706
               Retail: Internet & data                       8,182                -              8,182
                                                ----         -----                  ---          -----
             Total retail                                   32,888                -             32,888
             Carrier                                         7,169                -              7,169
             ISP                                             6,989                -              6,989
                                                -------------------------------------------------------
               Total                                        47,046                -             47,046
           Adjusted EBITDA                                  (6,448)          (7,924)           (14,372)
              Depreciation and amortization
                                                                                               (15,227)
              Interest expense, net of
                  interest income                                                              (14,713)
              Foreign exchange gain/loss and
                  other expense                                                                 12,078
              Non-cash compensation charges
                                                                                                (2,915)
              Restructuring, impairment and
                  other charges                                                                 (9,012)
                                                                                    ---        -------
              Net loss from continuing
                  operations                                                                   (44,161)
           Total long-lived assets, net                    235,919           16,398            252,317
           Total assets                                    291,140           68,277            359,417
           Expenditures for long-lived
                Assets                                      12,952              620             13,572
</TABLE>

As of and for the six months ended June 30, 2001 (euro, in thousands):
<TABLE>
<CAPTION>

                                                                          CompleTel
                                                          CompleTel      Europe and
                                                           France             Other              Total
           <S>                                              <C>               <C>               <C>
           Revenue:
               Retail: voice                                 11,346               -             11,346
               Retail: Internet & data                        4,013               -              4,013
                                                              -----                              -----
             Total retail                                    15,359               -             15,359
             Carrier                                          4,215               -              4,215
             ISP                                             14,628               -             14,628
                                                -------------------------------------------------------
               Total                                         34,202               -            34,202
           Adjusted EBITDA                                 (16,017)        (11,065)           (27,082)
              Depreciation and amortization
                                                                                              (12,019)
              Interest expense, net of
                  interest income                                                              (6,455)
              Foreign exchange gain/loss and
                  other expense                                                                (5,602)
              Non-cash compensation charges
                                                                                                   (2)
              Restructuring, impairment and
                  other charges                                                                (1,489)
              Net loss from continuing
                  operations                                                                  (52,649)
           Total long-lived assets, net                     214,989          25,068            240,057
           Total assets                                     279,099         280,014            559,113
           Expenditures for long-lived
                assets                                       57,970           8,166             66,136
</TABLE>


(9) Restructuring, Impairment and Other Charges

         In connection with the Company's restructuring efforts during the
second half of 2001, the Company recognized approximately (euro)164.5
million in restructuring, impairment and other charges. During the first
six months of 2002, the Company recognized an additional (euro)9.0 million
in restructuring related charges.

         These charges consist of the following (in millions):
<TABLE>
<CAPTION>

                                                                            Six Months Ended           Year Ended
                                                                                    June 30,         December 31,

                                                                                        2002                 2001
                                                                                        ----                 ----
<S>                                                                               <C>                 <C>
Write-down of German and United Kingdom assets...........................                --          (euro)142.7
Write-down of materials and supplies.....................................                --                  6.0
Restructuring charges....................................................               9.0                 15.8
                                                                                        ---               ------
Total....................................................................         (euro)9.0          (euro)164.5
                                                                                  =========          ===========
</TABLE>

Impairment charges

         In light of adverse market conditions and the Company's efforts to
reduce its ongoing operating expenses and capital outlays, in the fourth
quarter of 2001 the Company decided to significantly scale-back its
operations in Germany and exit the market in the United Kingdom. As a
result of its decision, and in light of the adverse conditions in these
markets, the Company determined, in accordance with its policy relating to
recoverability of long-lived assets, that it was unlikely to recover its
investment in these assets (whether by utilizing these assets in its
business or through disposition) and thus, that the values of its German
and U.K. assets (comprising network property and equipment, including
switches, network plant, customer access equipment and operational support
systems) were impaired as of December 31, 2001. Accordingly, the Company
recorded charges to write-down the carrying values of these assets to their
estimated fair market values using a discounted cash flow approach.

         In addition, as a result of its decision to significantly
scale-back operations in Germany, the Company had materials and supplies in
excess of what it needed in order to complete construction of its networks
under its revised business plan. Accordingly, the Company revalued these
excess materials and supplies, resulting in the write-down of all these
excess materials and supplies to the lower of cost or market value, as of
December 31, 2001.

Restructuring charges

         The restructuring charges relate primarily to severance costs
associated with the reductions in the size of the Company's workforce in
France, Germany and the United Kingdom during 2001, and charges incurred as
a result of lease terminations and the renegotiation of interconnection
agreements in connection with the Company's decision to significantly
scale-back its operations in Germany and to exit the market in the United
Kingdom. The 2002 restructuring charges relate primarily to costs
associated with the Company's recapitalization efforts (Note 1).

         The restructuring charges can be detailed as follows (in
thousands):
<TABLE>
<CAPTION>

                      Summary of Restructuring Charges
                                                                                    Europe HQ
                                        France         Germany            UK        and other               Total
                                        ------         -------            --        ---------               -----
<S>                                    <C>             <C>               <C>             <C>           <C>
Severance (1)...................       (euro)1,151     (euro)2,399       (euro)527       (euro)603     (euro)4,680
Facilities and Network (2)......             1,558           5,194             992               -           7,744
Other (3).......................                20             601              50           2,694           3,365
                                     -------------   -------------   -------------   -------------   -------------
Accrual Balance,
   December 31, 2001............             2,729           8,194           1,569           3,297          15,789
   less: payments through
         June 30, 2002..........            (1,994)         (6,340)         (1,294)         (2,518)        (12,146)
   add: change in accruals
        through June 30, 2002...             2,359          (1,854)           (275)          8,782           9,012
                                     -------------   -------------   -------------   -------------   -------------
Accrual balance,
 June 30, 2002..................       (euro)3,094         (euro)-         (euro)-     (euro)9,561    (euro)12,655
                                     =============   =============   =============   =============   =============
</TABLE>
-------------------------------
     (1)    Severance charges relate to estimated termination salaries and
            benefits in connection with the termination of employees,
            related outplacement fees and other related benefits.
     (2)    Facilities and network charges relate to costs to terminate or
            renegotiate facilities and equipment leases and interconnection
            agreements.
     (3)    Other charges primarily relate to legal and consulting costs
            expected to be incurred in connection with the restructuring.

         Other charges

         Other charges of (euro)1.9 million are related to a reserve made
in connection with the decrease in value of the collateral for a loan
extended by us to William Pearson, our former President and Chief Executive
Officer.

(10)New Accounting Standards

         In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" ("SFAS 141") and SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 141 requires the use of the purchase method of
accounting for all business combinations initiated after June 30, 2001.
SFAS 142 requires intangible assets to be recognized if they arise from
contractual or legal rights or are "separable", i.e., it is feasible that
they may be sold, transferred, licensed, rented, exchanged or pledged. As a
result, it is likely that more intangible assets will be recognized under
SFAS 142 than its predecessor, APB Opinion No. 16, although in some
instances previously recognized intangibles will be subsumed into goodwill.

         Under SFAS 142, goodwill will no longer be amortized on a straight
line basis over its estimated useful life, but will be tested for
impairment on an annual basis and whenever indicators of impairment arise.
The goodwill impairment test, which is based on fair value, is to be
performed on a reporting unit level. A reporting unit is defined as a SFAS
No. 131 (see Note 8) operating segment or one level lower. Goodwill will no
longer be allocated to other long-lived assets for impairment testing under
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." Additionally, goodwill on equity
method investments will no longer be amortized; however, it will continue
to be tested for impairment in accordance with APB Opinion No. 18, "The
Equity Method of Accounting for Investments in Common Stock." Under SFAS
142, intangible assets with indefinite lives will not be amortized.
Instead, they will be carried at the lower of cost or market value and be
tested for impairment at least annually. All other recognized intangible
assets will continue to be amortized over their estimated useful lives.

         The Company adopted SFAS 141 and 142 effective January 1, 2002.
Accordingly, the Company discontinued amortizing its remaining balance of
goodwill of approximately (euro)5.8 million effective January 1, 2002. The
Company estimates that the adoption of these statements did have a material
impact on its results of operations, financial position or cash flows.

         The goodwill amortization expense and net loss of the Company for
the three and six month periods ended June 30, 2002 and 2001 are as follows
(euro, in thousands):

<TABLE>
<CAPTION>
                                            Three Months Ended June 30,           Six Months Ended June 30,
                                              2002               2001              2002               2001
                                              ----               ----              ----               ----
<S>                                         <C>               <C>                <C>                <C>
Reported net loss                           (22,538)          (50,520)           (50,909)           (91,122)
Add back: goodwill amortization                  --                74                 --                155
Adjusted net loss                           (22,538)          (50,446)           (50,909)           (90,967)

Reported net loss per share                   (0.14)            (0.32)             (0.32)             (0.58)
Adjusted net loss per share                   (0.14)            (0.32)             (0.32)             (0.58)
</TABLE>



         The carrying amount of the Company's licenses as of June 30, 2002,
was approximately (euro)1.0 million, with corresponding accumulated
amortization of (euro)0.2 million. The carrying amount of the Company's
goodwill as of June 30, 2002, was (euro)5.8 million.

         In June 2001, the Financial Accounting Standards Board issued SFAS
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). SFAS
143 establishes accounting requirements for retirement of obligations
associated with tangible long-lived assets, including (1) the timing of the
liability recognition, (2) initial measurement of the liability, (3)
allocation of cost to expense, (4) subsequent measurement of the liability,
and (5) related financial statement disclosure. SFAS 143 requires that the
fair value of the liability for an asset retirement obligation be
recognized in the period during which it is incurred, if a reasonable
estimate of fair value can be made. The associated asset retirement costs
are capitalized as part of the carrying value of the asset and depreciated
over life of the associated asset. SFAS 143 requires to measure changes in
the liability for an asset retirement obligation due to the passage of time
by applying an interest method of allocation to the amount of the liability
at the beginning of a reporting period. The interest rate used to measure
that change is the credit-adjusted-risk-free rate that existed when the
liability was initially measured. Finally, SFAS 143 requires such changes
in liability for asset retirement obligations to be recognized as an
increase in the carrying amount of the liability and as an expense
classified as an operating item in the statement of income. SFAS 143
applies to fiscal years beginning after June 15, 2002. The Company does not
anticipate that the adoption of SFAS 143 will have a material impact on its
results of operations, financial position, or cash flows.

         In August 2001, the Financial Accounting Standards Board issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 establishes a single accounting model for
long-lived assets to be disposed of by sale consistent with the fundamental
provisions of SFAS 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." While it supersedes APB
Opinion 30 "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions," it retains the
presentation of discontinued operations but broadens that presentation to
include a component of an entity (rather than a segment of a business).
However, discontinued operations are no longer recorded at net realizable
value and future operating losses are no longer recognized before they
occur. Under SFAS 144 there is no longer a requirement to allocate goodwill
to long-lived assets to be tested for impairment. SFAS 144 also establishes
a probability weighted cash flow estimation approach to deal with
situations in which there is a range of cash flows that may be generated by
the asset being tested for impairment. SFAS 144 also establishes criteria
for determining when an asset should be treated as held for sale.

         SFAS 144 is effective for fiscal years beginning after December
15, 2001 and interim periods within those fiscal years, with early
application encouraged. The provisions of the Statement are generally to be
applied prospectively. The adoption of SFAS 144 on January 1, 2002 did not
have a material impact on the Company's results of operations, financial
position, or cash flows.

         In April 2002, the Financial Accounting Standards Board issued
SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections" ("SFAS 145"). SFAS 145
rescinds SFAS 4 "Reporting Gains and Losses from Extinguishment of Debt"
and also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings or describe their applicability
under changed conditions. SFAS 145 applies to fiscal years beginning after
May 15, 2002. The adoption of SFAS 145 did not have a material impact on
the Company's results of operations, financial position, or cash flows.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

         All assumptions, anticipations, expectations and forecasts
contained in the following discussion regarding our future business plans
and products and services, financial results, Adjusted EBITDA forecasts,
performance, and the telecommunications industry and operating environment,
and future events are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The forward-looking statements are generally
identified by the use of forward-looking words such as "plan", "estimate",
"believe", "expect", "anticipate", "will", "should" and "may" or other
variations of such terms, or by discussion of strategy that involves risks
and uncertainties. The forward-looking statements contained herein
represent a good-faith assessment of our future performance for which we
believe there is a reasonable basis. These forward-looking statements
represent our view only as of the dates they are made, and we disclaim any
obligation to update forward-looking statements contained herein, except as
may be otherwise required by law. The forward-looking statements contained
in this report involve known and unknown risks, uncertainties and other
factors that could cause our actual future results, performance and
achievements to differ materially from those forecasted or suggested
herein. The most important of such factors is our potential inability to
effect our recapitalization plan on the terms described in this report.
With respect to revenue forecasts, such factors include, but are not
limited to: (a) decline in demand for our telecommunications services; (b)
pricing pressures from our direct competitors as well as from providers of
alternative services; (c) failures, shutdowns or service disturbances with
respect to our networks; (d) worsening carrier and Internet data market
weakness; (e) major changes in market conditions and (f) completion of any
acquisition or disposition transactions. In addition to these risks,
Adjusted EBITDA forecasts and other forward-looking information in this
report are subject to such risks as: (a) unforeseen delays or increased
expenditures incurred in the construction of our operations; (b) our
inability to develop and maintain efficient operations support; (c)
regulatory developments adverse to us or difficulties we may face in
maintaining necessary telecommunications licenses or other governmental
approvals; and (d) our inability to obtain required financing on
satisfactory terms. For a more detailed discussion of such risks affecting
us, please refer to our prospectuses and annual reports filed with the U.S.
Securities and Exchange Commission.

         All statements made herein are accurate only as of the date of
filing this Form 10-Q with the Securities and Exchange Commission and may
be relied upon only as of that date. Unless otherwise indicated, all share
numbers reflect the five-for-one split effected on February 25, 2000.

Overview

         Our Business and Financial Condition.

         We are a facilities-based operator of a technologically advanced,
high-capacity, fiber optic communications infrastructure. A
facilities-based operator uses mainly its own telecommunications facilities
to provide services, in contrast with non-facilities-based resellers who
purchase the services of other providers and then retail the services to
customers.

         We provide telecommunications and Internet-related services to
business and government end-users, carriers and Internet service providers
in targeted metropolitan areas, with a focus on network deployment in
France. We deliver these services primarily to connected, on-net customers
over our fiber optic metropolitan area networks, or MANs. We have MANs in
nine cities in France, including Paris, Lyon, Marseille, Lille, Grenoble,
Toulouse, Nice, Nantes and Strasbourg. The construction of our MANs was
completed during the last quarter of 2001. Our MANs are connected by our
leased inter-city network.

We have generated operating losses and negative cash flow from our
operating activities to date, and we expect to continue to experience
operating losses and negative cash flows from operations until we establish
a sufficient revenue-generating customer base. We are experiencing growth
in our core retail activity in France, and believe that this trend will
continue. However, during 2001 and the beginning of 2002, we observed signs
of general weakness in the European markets for carrier, dial-up Internet
access and Internet data center services. In light of these adverse market
conditions, we have implemented reorganization and restructuring measures
to adjust our operations to foreseeable market conditions, reducing ongoing
operating expenses and capital outlays. In particular, in the last quarter
of 2001, we have implemented a major downsizing of our German operations in
view of the slowdown in German telecommunications markets (particularly in
the carrier and ISP segments). This restructuring significantly reduced our
operating expenses and capital outlays. Finally, in April 2002, in
connection with our planned recapitalization as described below, we decided
to sell our entire German operations. We completed this sale in early May
2002. In addition, faced with a significant downturn in the web hosting
market, linked to the collapse of the ".com" market and installed hosting
overcapacity in Europe, we decided to scale down the Internet data centers
operations we have launched in France, Germany and the United Kingdom. In
France, we decided to integrate these activities with our retail
businesses, while in Germany and the United Kingdom, we have exited these
markets by selling our entire operations in these countries in May 2002.

         While we previously estimated our funding gap (that is, the
additional financing required to bring us to cash flow breakeven) to be
approximately (euro)60 million to (euro)90 million, based on (i) the
anticipated elimination of interest payments upon the exchange or
retirement of our outstanding debt securities pursuant to the
recapitalization plan described below, (ii) the cash savings from the sale
of our German and UK operations and cost reductions at our European
headquarters, and (iii) the lower cash requirements related to selling,
general and administrative expenses and capital expenditures resulting from
our restructuring efforts, we currently estimate our funding gap to be
approximately (euro)30 million. We expect that, upon the completion of the
recapitalization plan described below, our existing cash balances and the
additional equity infusion, together with the anticipated cash flow from
our operations, will be sufficient to fully fund our restructured
operations to cash flow breakeven.


         Our Recapitalization Plan

         On May 15, 2002, we signed an agreement in support of a
recapitalization plan (the "Recapitalization") with an ad hoc committee of
holders of our 14% senior discount notes due 2009 and 14% senior notes due
2010 (collectively, the "Notes"), constituting over 75% of our outstanding
Notes and with Meritage Private Equity Funds ("Meritage") and DeGeorge
Telcom Holdings ("DeGeorge Telcom"), two of our principal shareholders. The
Recapitalization will involve:

o        a debt for equity swap in respect of our outstanding Notes,

o        the return to the holders of the senior notes due 2010 of
         the outstanding balance in the escrow account established
         to provide funds for interest payments on these senior
         notes, and

o        an equity investment in the aggregate of at least(euro)39.9 million.

         Means of implementation. We decided to effect the Recapitalization
by means of a pre-arranged Netherlands composition proceeding known as an
Akkoord, which requires, among other things, the approval of 75% of our
admitted creditors, by value. To avail ourselves of this proceeding, on May
29, 2002, we filed with the Dutch bankruptcy court for protection from our
creditors, which consist almost entirely of holders of our Notes. At the
same time, we submitted to the Dutch court a composition plan whereby the
holders of the Notes would receive Convertible Preferred B shares and
Ordinary shares as described below. On June 24, 2002, the meeting of our
creditors approved this composition plan, which approval remains subject to
confirmation by the Dutch court at a hearing to be held on August 21, 2002.
Upon confirmation of the composition plan by the Dutch court, the
composition plan would be binding on all our non-preferred unsecured
creditors. It would effectively eliminate our outstanding indebtedness
while permitting our operating subsidiaries to continue operations without
disruption. The confirmation of the composition plan by the Dutch court is
subject, among other things, to the approval of the recapitalization plan
by the extraordinary general meeting of our shareholders, to be held on
August 20, 2002.

         Exchange of the Notes for Convertible Preferred B shares and
Ordinary shares. The outstanding Notes will be exchanged for Convertible
Preferred B shares and Ordinary shares together representing between 37.0%
and 40.6% of our share capital that we estimate would be outstanding at the
close of the Recapitalization (excluding the C shares identified below). In
connection with that exchange, the outstanding balance in the escrow
account established to provide funds for interest payments on the Notes
(approximately (euro)17.0 million) will be paid to holders of the Notes.

         Equity investment of Meritage, DeGeorge Telcom and certain
Noteholders in exchange for convertible preferred shares and ordinary
shares. The Recapitalization includes an equity investment of an aggregate
of (euro)30 million by Meritage and DeGeorge Telcom in return for the
issuance of convertible preferred A shares (the "Convertible Preferred A
Shares") and ordinary shares, together representing between 37.8% and 41.5%
of our share capital that we estimate would be outstanding at the close of
the Recapitalization (excluding the C shares). Meritage and DeGeorge Telcom
will also be issued, on a pro rata basis, a number of C shares that will
cause them to hold, at the closing of the Recapitalization, the same number
of shares for voting purposes as the former holders of the Notes. In order
to limit the effect of the C shares strictly to the allocation of voting
power, the C shares are structured in a way that effectively gives them
only nominal economic value.

         In addition, certain of the holders of the senior notes due 2010
have committed to make an equity investment of approximately (euro)9.9
million (reflecting a reinvestment of a portion of the escrow funds to be
released to these holders) in return for the issuance of Convertible
Preferred B Shares and ordinary shares, together representing between 13.3%
and 14.6% of our share capital that we estimate would be outstanding at the
close of the Recapitalization (excluding the C shares).

         We will pay a dividend equal to 11% per annum, compounded
quarterly, calculated over an amount of (euro)2,010.00 per share to the
holders of Convertible Preferred A and Convertible Preferred B shares
during the period commencing July 1, 2004, and until their cancellation or
conversion in accordance with their terms. Assuming 19,838 Convertible
Preferred A shares and 14,926 Convertible Preferred B shares are issued
(that is, after giving effect to the investment of (euro)30.0 by DeGeorge
Telcom and Meritage and the reinvestment of (euro)9.9 million of the escrow
funds to be released to the holders of the senior notes due 2010, and after
giving effect to a proposed 100-to-one reverse split of the Preferred
shares) and that none of the Convertible Preferred A shares and Convertible
Preferred B shares are converted or cancelled prior to July 1, 2004, the
aggregate annual dividend payable in respect of the Convertible Preferred A
shares and Convertible Preferred B shares would be approximately (euro)8
million.

         In accordance with their respective terms, in the event of a
liquidation of CompleTel Europe, the Preferred A Shares will rank senior to
the Preferred B Shares, which, will rank senior to CompleTel Europe's
ordinary shares. In addition, upon liquidation, the Preferred A Shares and
Preferred B Shares will be entitled to receive, prior to any distribution
in respect of the ordinary shares, an amount in cash equal to (euro)2010.00
per share (after giving effect to the Company's proposed reverse share
splits).

         Potential additional equity investment. The Recapitalization also
contemplates that up to an additional (euro)7.1 million may be invested
either in the form of the exercise of warrants for Ordinary shares (which
warrants are to be issued to our existing shareholders), or in return for
the issuance of Convertible Preferred A shares and Ordinary shares.

         Effect on share ownership and Supervisory board composition.
Post-Recapitalization, assuming we do not receive the additional (euro)7.1
million in cash investment indicated above, the former holders of the
Notes, Meritage and DeGeorge Telcom would own, in the aggregate,
approximately 97.3% of the economic interests in our share capital that
would be outstanding at the completion of the Recapitalization. The
remaining shares (representing 2.7% of the economic interests in our share
capital) would be held by our existing shareholders, other than Meritage
and DeGeorge Telcom. Furthermore, post-Recapitalization, our Supervisory
Board would be reconstituted as a six-member board, comprising two
designees of the holders of the Convertible Preferred A Shares, two
designees of the holders of the Convertible Preferred B Shares, and two
independent directors mutually acceptable to the Noteholders and to
Meritage and DeGeorge Telcom.

         Conditions.  The completion of the recapitalization is subject to,
among other things:

o        the approval of the Recapitalization by our existing shareholders;

o        the approval of at least 75% of our admitted creditors, by value,
         which approval took place at the meeting of creditors held on June
         24, 2002;

o        the final sanction of the Dutch courts, scheduled to occur on
         August 21, 2002 (which sanction shall no longer be subject to
         appeal);

o        the closure or sale of our operations outside of France, which has
         occurred in May, 2002; and

o        other customary conditions.

         We believe that we have already obtained the level of commitment
from the holders of the Notes that would be required by the Dutch courts to
approve the composition plan and the retirement of all of the outstanding
Notes. We also believe that we have obtained the required level of
commitments from our existing shareholders to vote in favor of the capital
increase and other required actions. Our Supervisory and Management Boards
voted unanimously to approve the Recapitalization.

         Going concern. The Company's ability to continue as a going
concern is dependent upon successful completion of the Recapitalization (or
obtaining alternative sources of financing if the Recapitalization is not
complete). There is no assurance that we will be able to effect the
Recapitalization, or that we will be able to secure alternative sources of
financing if the Recapitalization is not consummated. If we fail to effect
the Recapitalization, or to obtain sufficient alternative financing, we
will effectively cease to be able to conduct our business and be forced
into liquidation. In such event, we anticipate, based on our internal
analyses, that the proceeds of the liquidation would not suffice to pay off
our creditors and, therefore, there would be nothing left for distribution
to our shareholders. The independent auditors' report of Deloitte & Touche
Accountants on the Company's consolidated financial statements for the year
ended December 31, 2001, includes a paragraph that states that the Company
has suffered recurring losses from operations and expects to fully utilize
its existing cash resources by the end of the third quarter of 2002, which
raises substantial doubt about its ability to continue as a going concern.

Revenue and Expenses

         Following are descriptions of our revenue service offerings,
operating expenses and other income and expense items. Financial data
included in this section and in Results of Operations, unless otherwise
noted, represents financial information from continuing operations. The
operating results of our German and United Kingdom operations are included
in discontinued operations for all periods presented due to their sale to
third parties in May 2002. Certain prior period amounts have been
reclassified to conform to current period presentation.

         Revenue

         Our revenue consists of revenue from three principal categories of
service offerings, as follows:

         Retail Services

         We generate revenue from the voice, data and Internet services we
provide primarily to our directly connected retail customers. We expect
revenue from retail services to represent an increasing percentage of our
total revenue.

         o        Voice services. We derive substantially all our voice
                  revenue from the switched voice communications services
                  we provide to customers directly connected to our
                  networks through our owned fiber and leased lines. This
                  revenue is based primarily on traffic minutes billed.
                  Revenue from voice products accounted for (euro)13.0
                  million and (euro)24.7 million, or approximately 54% and
                  52%, of our total revenue for the three month and six
                  month period ended June 30, 2002, compared to (euro)6.2
                  million and (euro)11.4 million, or approximately 34% and
                  33%, of our total revenue for the corresponding periods
                  in 2001.

         o        Data and Internet services. We derive revenue from the
                  local dedicated access and private line services we
                  provide customers for data connections over our MANs.
                  This revenue is based primarily on transmission capacity
                  provided. We also derive revenue by providing
                  high-capacity Internet protocol-based services and
                  interconnection between local area networks in each of
                  the cities in which our MANs operate. Revenue from these
                  services accounted for(euro)3.7 million and (euro)6.9
                  million, or approximately 15% and 15%, of our total
                  revenue for the three month and six month period ended
                  June 30, 2002, compared to(euro)1.9 million and(euro)3.3
                  million, or approximately 10% and 10%, of total revenue
                  for the corresponding periods in 2001.

         Wholesale services.

         We derive revenue by providing transmission capacity on a
wholesale basis to other carriers, as well as dial-up Internet access to
our Internet service provider customers.

         o        Carrier and termination services. We derive revenue from
                  the services we provide on a wholesale basis to other
                  telecommunications service providers that require
                  transmission capacity to support gaps in their networks,
                  need additional capacity, require alternate routing, or
                  do not have their own transmission facilities. We also
                  terminate traffic for other operators. This revenue,
                  which is based primarily on transmission capacity
                  provided and traffic minutes terminated, accounted
                  for(euro)3.6 million and(euro)7.2 million, or
                  approximately 16% and 15%, of our total revenue in the
                  three period and six month period ended June 30, 2002,
                  compared to(euro)2.3 million and(euro)4.2 million, or
                  approximately 12% and 12%, of our total revenue for the
                  corresponding periods in 2001. We expect revenue from
                  carrier and termination services to represent a
                  decreasing portion of our total revenue.

         o        Internet dial-up. We also derive revenue from dial-up
                  Internet access to our ISP customers delivering the
                  traffic. This revenue, which is based primarily on
                  traffic minutes, accounted for (euro)3.2 million and
                  (euro)7.0 million, or approximately 13% and 15%, of our
                  total revenue in the three month and six month period
                  ended June 30, 2002, compared to (euro)7.8 million and
                  (euro)14.6 million, or approximately 42% and 43%, of our
                  total revenue for the corresponding periods in 2001. We
                  expect our Internet dial-up services revenue to represent
                  a decreasing proportion of our total revenue, as our
                  revenue from our retail services increases.

          Internet data centers, web hosting, Internet access and other
Internet-related services

         We derive a small portion of our revenue from the web hosting,
Internet access and other value-added Internet services we provide at our
Internet data centers. We also offer web site creation and maintenance
services, as well as miscellaneous dial-up services to certain of our
Internet data centers customers. Revenue from our Internet data centers,
web hosting, Internet access and other Internet-related services accounted
for (euro)0.6 million and (euro)1.2 million, or approximately 2% and 3%, of
our total revenue for the three month and six month period ended June 30,
2002, compared to (euro)0.4 million and (euro)0.7 million, or approximately
2% and 2%, of our total revenue for the corresponding periods in 2001. We
expect revenue from our Internet data centers, web hosting, Internet access
and other Internet-related services to remain a small portion of our total
revenue.

         Operating expenses

         Our primary operating expenses consist of:

         o   network costs,
         o   selling, general and administrative expenses,
         o   (until January 1, 2002), allocated costs from an affiliate,
         o   non-cash compensation charges,
         o   depreciation and amortization expenses, and
         o   restructuring, impairment and other charges.

         Network costs

         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, switch site rental and operating
and maintenance costs, as well as costs associated with our Internet data
centers, web hosting and other Internet-related services. We lease fiber
and conduit on a limited basis to establish and augment our MANs in certain
markets. We incur other fixed costs, such as switch site rent and network
and switch maintenance expenses, that normally are incurred at the time of
interconnection in anticipation of future revenue. To date, we have been
able to deploy our networks faster than we initially anticipated in our
business plans. As a result, we have experienced relatively high
incremental costs of network deployment. As we continue to expand our
customer base and revenue increases, we believe that the incremental costs
of deployment will decrease as a percentage of our network costs.

         Selling, general and administrative expenses

         Our selling, general and administrative expenses include costs
relating to our sales and marketing department, customer care, billing,
corporate administration, salaries and other personnel costs, as well as
legal and consultant fees. We expect that selling, general and
administrative expenses are likely to continue to decline as a portion of
our total revenue and are undertaking efforts to control these expenses
through various means, such as restructuring and shifting expenditures away
from dependence on consultants towards the use of internal resources.

         We have a relatively 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. As of June 30,
2002, we had 427 employees, compared to 696 employees at December 31, 2001.
This decrease is primarily attributable to workforce reductions in
connection with the sale of United Kingdom and Germany operations, the
closure of our London offices and the simplification of our corporate
headquarters structure. Although our total headcount decreased, the number
of our sales employees increased by 21 during the first half of 2002.

         Non-cash compensation charges

         We incur stock-based compensation expense under our fixed stock
option plan based on the deferred compensation recorded on the date of
grant. In addition, some of our employees have purchased common units of
CompleTel LLC, our former ultimate parent, for which CompleTel LLC incurs
non-cash compensation charges. 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. The non-cash compensation charges are
attributable to employees whose salary and benefits were otherwise
classified as selling, general and administrative expenses.

         Depreciation and amortization expense

         We record depreciation and amortization expense for our property
and equipment, including network equipment, office furniture and equipment,
computer equipment and software, leasehold improvements and other
properties. Assets are stated at cost and are depreciated when ready for
their intended use on a straight-line basis over their estimated useful
life. Network equipment is depreciated on a straight-line basis over an
estimated useful life of three to eight years.

         Other income and expense

         Other income includes interest income on the investment of the
proceeds from our debt and equity offerings.

         Interest expense recorded reflects interest on our 14% senior
notes due 2010, the accretion of our 14% senior discount notes due 2009 and
the amortization of deferred financing costs. We capitalized 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." We no longer capitalize interest as a
result of our completion of the construction of our MANs.

         Foreign exchange loss and other expense

         Our revenue, costs, assets and liabilities are, for the most part,
denominated in euro, which is our functional and reporting currency. We
invest all excess cash in euro-denominated accounts. Therefore, we are
exposed to changes in currency exchange rates primarily due to our 14%
senior discount notes due 2009. These notes expose us to exchange rate
fluctuations as the payment of principal and interest on these notes will
be made in U.S. dollars, while a substantial portion of our future cash
flow used to service these payments will be denominated in other
currencies, primarily the euro. While we believe that our exposure to
exchange rate risks is otherwise limited, there can be no assurance that we
will not be materially adversely affected by variations in currency
exchange rates.

Results of operations

         The operating results of our German and United Kingdom operations
are included in discontinued operations for all periods presented due to
their sale to third parties in May 2002.

         Revenue

         Our revenue for the three month period ended June 30, 2002 totaled
(euro)24.1 million, compared to (euro)18.6 million for the corresponding
period in 2001. Our revenue for the six month period ended June 30, 2002
totaled (euro)47.0 million, compared to (euro)34.2 million for the
corresponding period in 2001. We attribute this increase in revenue to our
overall growth. Specifically, the increase resulted from significant growth
of our customer base, an increase in traffic over our networks and a
continued demand for additional services from our existing customers.
Notable developments during the second quarter of 2002 were the (a) the
introduction of new services, such as intercity LAN-to-LAN and IP-VPN, (b)
the penetration of higher value national accounts, such as Societe Generale
and SNCF (French Railways), and (c) our entry into new contracts with
public sector entities, including the Paris Chamber of Commerce, the
University Robert Schuman in Strasbourg, and the National Science Research
Centre (CNRS).

         The following table summarizes our revenue by category of service
offering (in thousands):
<TABLE>
<CAPTION>

                                                     Three Months Ended June 30,         Six Months Ended June 30,

Revenue Category                                           2002               2001            2002              2001
----------------                                           ----               ----            ----              ----
<S>                                                        <C>                <C>              <C>              <C>
Retail Voice..................................       (euro)12,964       (euro)6,238      (euro)24,706     (euro)11,346
Retail Data and Internet......................              4,350             2,234             8,182            4,013
Carrier.......................................              3,578             2,323             7,169            4,215
ISP...........................................              3,202             7,804             6,989           14,628
                                                            -----             -----             -----           ------
Total.........................................       (euro)24,094    (euro) 18,599      (euro) 47,046    (euro) 34,202
                                                    =============   ===============    ==============   =============
</TABLE>


         Retail revenue accounted for 72% of total revenue for the second
quarter of 2002 compared to 45% for the second quarter of 2001,
significantly reducing our exposure to the volatile ISP market and weaker
carrier market. Both the carrier and the ISP dial up business are becoming
smaller as a percentage of revenues as the company continues to focus on
retail activity. Together as a percentage of revenue, the carrier and ISP
businesses respectively were 54% of total revenue for the second quarter of
2001, 32% for the first quarter of 2002 and 28% for the second quarter of
2002.

         Operating expenses

         Network costs

         Our network costs for the three-month period ended June 30, 2002
increased to(euro)15.5 million from (euro)15.2 million for the
corresponding period in 2001. Our network costs for the six-month period
ended June 30, 2002 totaled(euro)31.5 million, compared to(euro)29.4
million for the corresponding period in 2001. These increases resulted
primarily from increased customer traffic, which resulted in higher
interconnection payments to the incumbent telecommunications operators.
Network costs as a percent of revenue totaled 64% for the three months
ended June 30,2002, compared to 82% for the corresponding period in 2001.
For the six months ended June 30, 2002, network costs as a percent of
revenue totaled 67%, compared to 86% for the corresponding period in 2001.
Our incremental costs of network deployment are decreasing as a percent of
our total network costs.

         Selling, general and administrative expenses

         For the three-month period ended June 30, 2002, our selling,
general and administrative expenses totaled (euro)15.0 million, compared to
(euro)16.2 million for the corresponding period in 2001. Our selling
general and administrative expenses for the six-month period ended June 30,
2002 totaled (euro)29.9 million, compared to (euro)31.8 million for the
corresponding period in 2001. This decrease primarily resulted from the
effect of our restructuring measures taken in the second half of 2001. In
particular, given our decision to concentrate our efforts only in France,
our London offices were closed and our corporate headquarters structure was
simplified at the end of the second quarter of 2002. Furthermore, because
our hosting activity has been integrated into our core telecom activities
and hosting products and services are now sold by the telecom sales force,
the overhead costs associated with this activity have been lowered. We have
launched ongoing actions to generate further reductions in selling, general
and administrative expenses before the end of the year in specific,
targeted areas.

         Our selling, general and administrative expenses represented 62%
of our total revenue for the three month period ended June 30, 2002,
compared to 87% for the corresponding period in 2001. For the six-month
period ended June 30, 2002, our selling, general and administrative
expenses represented 64% of our total revenue, compared to 93% for the
corresponding period in 2001. We expect our selling, general and
administrative expenses as a percentage of our total revenue to continue to
decrease in future periods, as our revenue increases and our restructuring
and other cost saving measures take effect.

         Gross Margin

         Calculated as the difference between revenue and the sum of
network costs and selling, general and administrative expenses, divided by
revenue, our gross margin was 36% in the second quarter of 2002 compared to
30% in the first quarter of 2002 and 18% in the second quarter of 2001.
This improvement is primarily the result of (1) a continued focus on, and
sales of, higher margin products, (2) an improved network cost efficiency
as a result of increase in traffic carried on the network and (3) a
reduction in average customer fixed network costs due to an increase in
total number of on-network customers. We expect our gross margin to
continue to improve as additional customers are added, network utilization
improves with increased on-network traffic and customers continue to move
towards higher margin products and services.

         Non-cash compensation charges

         We incurred non-cash stock-based compensation expense of(euro)0.8
million under our fixed stock option plan for the three months ended June
30, 2002. This amount was based on deferred compensation at the date of
grant totaling(euro)25.1 million. Additionally, we incurred a one-time,
non-cash stock-based compensation expense of(euro)2.6 million related to
option grants to our former CEO and former CFO, upon their resignations in
May 2002. We also recorded a compensation credit of(euro)1.0 million, based
on the closing price per share on June 30, 2002 related to our performance
vesting and time vesting shares. The non-cash compensation charges are
attributable to employees whose salary and benefits were otherwise
classified within selling, general and administrative expenses.

         Depreciation and amortization

         Depreciation and amortization increased to(euro)7.5 million for
the three-month period ended June 30, 2002, compared to(euro)6.7 million
for the corresponding period in 2001. Depreciation and amortization for the
six-month period ended June 30, 2002 totaled(euro)15.2 million, compared
to(euro)12.0 million for the corresponding period in 2001. The majority of
these increases resulted from the substantial completion of our MANs in
late 2001, resulting in a higher depreciable asset base.

         Restructuring, impairment and other charges

         In light of adverse market conditions and our efforts to reduce
our ongoing operating expenses and capital outlays, in the fourth quarter
of 2001 we decided to significantly scale-back our operations in Germany
and exit the market in the United Kingdom. As a result of our decision, and
in light of the adverse conditions in these markets, we determined, in
accordance with our policy relating to recoverability of long-lived assets,
that we were unlikely to recover our investment in these assets (whether by
utilizing these assets in its business or through disposition) and thus,
that the values of our German and U.K. assets (comprising network property
and equipment, including switches, network plant, customer access equipment
and operational support systems) were impaired as of December 31, 2001.
Accordingly, we recorded charges to write-down the carrying values of these
assets to their estimated fair market values using a discounted cash flow
approach.

         In addition, as a result of our decision to significantly
scale-back operations in Germany, we had materials and supplies in excess
of what we needed in order to complete construction of our networks under
our revised business plan. Accordingly, we revalued these excess materials
and supplies, resulting in the write-down of all these excess materials and
supplies to the lower of cost or market value, as of December 31, 2001.

         Restructuring charges

         The restructuring charges relate primarily to severance costs
associated with the reductions in the size of our workforce in France,
Germany and the United Kingdom during 2001, and charges incurred as a
result of lease terminations and the renegotiation of interconnection
agreements in connection with our decision to significantly scale-back our
operations in Germany and to exit the market in the United Kingdom. The
2002 restructuring charges relate primarily to costs associated with the
Company's recapitalization efforts.

         The restructuring charges can be detailed as follows (in
thousands):

<TABLE>
<CAPTION>
                      Summary of Restructuring Charges
                                                                                      Europe HQ
                                        France         Germany            UK          and other           Total
                                        ------         -------            --          ---------           -----
<S>                                      <C>             <C>               <C>             <C>           <C>
Severance (1)...................       (euro)1,151     (euro)2,399       (euro)527       (euro)603     (euro)4,680
Facilities and Network (2)......             1,558           5,194             992               -           7,744
Other (3).......................                20             601              50           2,694           3,365
                                    ---------------- -------------  --------------  -------  -----   -------------
Accrual Balance,
   December 31, 2001............             2,729           8,194           1,569           3,297          15,789
   less: payments through
      June 30, 2002.............           (1,994)         (6,340)         (1,294)         (2,518)        (12,146)
   add: change in accruals
       through June 30, 2002....             2,359         (1,854)           (275)           8,782           9,012
                                             -----  -----  -------  -------- -----  -------  -----  --------------
Accrual balance,
 June 30, 2002..................       (euro)3,094          (euro)-         (euro)-    (euro)9,561    (euro)12,655
                                     =============  =============== =============== ==============    ============
</TABLE>
-------------------------------
     (1)    Severance charges relate to estimated termination salaries and
            benefits in connection with the termination of employees,
            related outplacement fees and other related benefits.
     (2)    Facilities and network charges relate to costs to terminate or
            renegotiate facilities and equipment leases and interconnection
            agreements.
     (3)    Other charges primarily relate to legal and consulting costs
            expected to be incurred in connection with the restructuring.

         Other charges

         Other charges of (euro)1.9 million are related to a reserve made
in connection with the decrease in value of the collateral for a loan
extended by us to William Pearson, our former President and Chief Executive
Officer.

         Other income and expense

         We recorded interest income of (euro)0.7 million during the three
month period ended June 30, 2002, compared to (euro)3.5 million for the
corresponding period in 2001. We recorded interest income of (euro)1.2
million during the six month period ended June 30, 2002, compared to
(euro)8.9 million for the corresponding period in 2001. These decreases are
the result of decreasing cash and cash equivalents balances.

         We incurred interest expense of (euro)8.5 million during the
three-month period ended June 30, 2002, compared to interest expense for
the corresponding period in 2001 of (euro)7.0 million, net of capitalized
interest expense of (euro)3.5 million. We incurred interest expense, net of
(euro)0.9 million of capitalized interest expense, of (euro)15.9 million
during the six month period ended June 30, 2002, compared to interest
expense, of (euro)15.4 million for the corresponding period in 2001. The
interest expense recorded reflects interest on our senior notes due 2010,
the accretion of our senior discount notes due 2009 and the amortization of
deferred financing costs.

         Foreign exchange gain (loss) and other expense

         For the three-month period ended June 30, 2002, we recorded
foreign exchange gain and other expenses of (euro)12.3 million, compared to
a loss of (euro)2.5 million in the corresponding period in 2001. For the
six-month period ended June 30, 2002, we recorded foreign exchange gain and
other expenses of (euro)12.1 million, compared to a loss of (euro)5.6
million in the corresponding period in 2001. The foreign exchange gain and
other expenses in the three and six month periods ended June 30, 2002 and
2001 resulted primarily from an unrealized foreign exchange gains and
losses related to our dollar-denominated senior discount notes due 2009.

         Net loss from continuing operations

         Our net loss from continuing operations for the three-month period
ended June 30, 2002 was (euro)17.0 million, compared to a net loss from
continuing operations of approximately (euro)21.8 million for the
corresponding period in 2001. This change resulted primarily from the
increase in our revenue and the effect of our restructuring efforts, as
described above. Our net loss from continuing operations for the six-month
period ended June 30, 2002 was (euro)44.2 million, compared to a net loss
from continuing operations of (euro)52.6 million for the corresponding
period in 2001.


Statements of Cash Flows

         We had cash and cash equivalents of approximately (euro)37.4
million as of June 30, 2002, a decrease of (euro)44.2 from approximately
(euro)81.6 million as of December 31, 2001. Additionally, as of June 30,
2002, we had approximately (euro)16.7 million of restricted investments
placed in escrow for debt service.

         Details of the change in cash and cash equivalents are set forth
in the table below (in thousands).

<TABLE>
<CAPTION>
                                                                          Six Months Ended June 30,
                                                                             2002           2001
                                                                             ----           ----

<S>                                                                           <C>             <C>
Cash flows from continuing operating activities......................   (euro)(30,362)  (euro)(43,518)

Cash flows from investing activities.................................         (13,572)       (113,657)

Cash flows from financing activities.................................              --            (180)

Effect of exchange rates on cash.....................................             310            1071
                                                                        -----------           --------



Net increase decrease in cash and cash equivalents...................         (44,244)       (156,284)

Cash and cash equivalents at beginning of period.....................           81,613         361,698
                                                                         -------------         -------


Cash and cash equivalents at end of period...........................     (euro)37,369   (euro)205,414
                                                                         =============   =============
</TABLE>



         Cash flows from operating activities

         During the six month period ended June 30, 2002, we used
approximately (euro)24.3 million in operating activities, a (euro)12.2
million decrease from the approximately (euro)36.5 million used in
operating activities for the corresponding period in 2001. This decrease in
cash used for operating activities was primarily related to the increase in
revenues and to the operating cost savings resulting from our restructuring
efforts.

         Cash flows from investing activities

         We used approximately (euro)13.6 million in investing activities
during the six month period ended June 30, 2002, compared to using
approximately (euro)113.7 million for the six month period ended June 30,
2001. The decrease was primarily due to lower capital expenditure as we
completed the build out of our MANs.

         Cash flows from financing activities

         We did not utilize cash for financing activities during the six
months ended June 30, 2002. In comparison, (euro)1.1 million of cash flows
was used in financing activities for the corresponding period in 2001.

Liquidity and Capital Resources

         The telecommunications business is capital intensive. We used and
will continue to need large amounts of capital to fund capital
expenditures, working capital, debt service and operating losses. Until we
establish a sufficient revenue-generating customer base, we will continue
to depend on external sources for cash (that is, invested equity and/or
borrowing) to fund our business. As of June 30, 2002, we had (euro)37.4
million of unrestricted cash and cash equivalents, and (euro)16.7 million
of restricted investments. We estimate that our need for additional cash
funding to bring us to cash flow breakeven is approximately (euro)30
million and that our existing consolidated cash resources would have been
sufficient to fund our operations until the fourth quarter of 2002. Had we
not undertaken steps to obtain this additional funding pursuant to the
Recapitalization, we would have used up our available cash resources and
consequently would have been required to liquidate our operations.

         As of June 30, 2002, our long-term debt, which consists almost
entirely of our Notes, was approximately (euro)222.4 million. The debt
servicing obligations relating to the Notes do not place an immediate
burden on our cash flow, (since the interest payments on our 14% senior
discount notes due 2009 will not commence until August 2004, and we had
placed sufficient funds in escrow to fund the interest payments on our 14%
senior notes due 2010 due in October 2002 and April 2003. However, we
believe that our significant debt load effectively prevented us from
obtaining additional funding, since potential investors were reluctant to
invest funds given our level of financial leverage.

         The following table presents our contractual obligations and
commercial commitments for the periods indicated, as of June 30, 2002:


<TABLE>
<CAPTION>
               Description                                     Payments due by period
              of obligation                                    (in thousands of euro)
              or commitment



                                               Total             2002          2003-2004      thereafter

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

<S>                                               <C>                 <C>          <C>             <C>
Long-term debt, principal                         216,307                 -              -         216,307
Long-term debt, interest                              231                15             44             172
Operating leases                                   45,142             5,076         12,726          27,340
Other long-term debt                                6,115               200            609           5,306
------------------------------------------ --------------- ----------------- -------------- ---------------

Total obligations/commitments                     267,795             5,291         13,379         249,125
------------------------------------------ --------------- ----------------- -------------- ---------------
</TABLE>




         Information concerning our financial condition and debt servicing
obligations are presented in the following table (amounts in thousands):
<TABLE>
<CAPTION>

                                                   At June 30, 2002        At December 31, 2001
                                                 ---------------------- ---------------------------


<S>                                              <C>                                      <C>
Cash and cash equivalents                        37,369                                   81,613

Other current assets                             54,673                                   73,138
                                                 ---------------------- ---------------------------
              Total current assets                                                      154,751
                                                 92,042

Non-current assets                               267,375                                303,839
                                                 ---------------------- ---------------------------

              Total assets                       359,417                                458,590
                                                 ====================== ===========================


Current Liabilities                              62,593                                 108,939

Long-term debt (1)                               222,422                                227,735
                                                 ---------------------- ---------------------------

              Total liabilities                  285,015                                336,674
                                                 ====================== ===========================
</TABLE>

(1) Long-term debt consists of (a) 14% Senior Discount Notes due 2009, with
    interest payable semi-annually commencing August 15, 2004, and (b) 14%
    Senior Notes due 2010, with interest payable every April 15 and October
    15. Through April 15, 2003, the interest payments on our Senior Notes
    due 2010 were funded by an interest escrow account established at the
    time of issuance of those securities, and (c) long term Capital lease
    obligations acquired in our purchase of one of our France Subsidiaries
    in 2001

         Our filing for a suspension of payments in the Netherlands has
placed further constraints on our liquidity, because the approval of the
administrator appointed by the Dutch bankruptcy court in connection with
the suspension of payments and Akkoord proceedings is now required for the
downstreaming of funds from Completel ECC, our Dutch subsidiary that exists
solely for the purpose of holding our consolidated cash balances, to
Completel SAS, our operating subsidiary. The administrator has approved a
limited downstreaming of funds from our Dutch subsidiary, Completel ECC to
Completel SAS. However, were the Extraordinary General Meeting not to occur
prior to the confirmatory hearing described in the following paragraph, or
if the recapitalization proposals were not approved, we believe that the
administrator would cease to grant permission for the downstreaming of
operational funds. In that event, we anticipate that, by the end of August,
2002, Completel SAS would fully utilize its existing cash resources, become
insolvent and be required to be liquidated, which would effectively also
result in our liquidation. In addition, there is a significant risk that
the Supervising Judge would, in any event, order our liquidation if we were
unable to obtain the approval of the recapitalization by our shareholders.
We have obtained, however, commitments from our three principal
shareholders to vote in favor of the recapitalization proposals, thus
ensuring their approval.

         On June 24, 2002 a meeting of our creditors approved the terms of
a proposed Akkoord composition plan, which approval remains subject to
confirmation by the Dutch bankruptcy court at a hearing to be held on
Wednesday, August 21, 2002 and the expiry of applicable appeals periods.
Thereafter, we will no longer be subject to the administration of the Dutch
bankruptcy court and will have normal corporate discretion to use our
consolidated funds (including funds received as part of the
recapitalization) for the purpose of funding our operations.

Capital Expenditures

         We made capital expenditures of approximately (euro)13.6 million
during the six month period ended June 30, 2002. These capital expenditures
were primarily for connecting customers to our MAN. During the six month
period ended June 30, 2001, we made capital expenditures of approximately
(euro)99.8 million for property and equipment necessary to deploy networks
in our initial markets. The decrease in capital expenditures during the six
month period ended June 30, 2002 compared to the six month period ended
June 30, 2001 is attributable to the completion of the build out of our
MANs during 2001 and our current focus on network development to connect
new customers to our existing MANs, which generally involves lower expenses
in comparison to deployment of new MANs.

         Assuming we obtain the additional funding we need, we currently
estimate that we will make aggregate capital expenditures of approximately
(euro)25 million to (euro)35 million for the year ending December 31, 2002,
most of which will be expended to connect new customers to our MANs. The
actual amount and timing of our future capital requirements may differ
materially from our current estimates, and additional financing may be
required in the event of departures from our current business plans and
projections, including those caused by unforeseen delays, cost overruns,
engineering design changes, demand for our services that varies from our
expectations, adverse regulatory, technological or competitive
developments, difficulties or delays in obtaining necessary rights-of-way,
or major changes in market conditions.

New Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board authorized
the issuance of Statement of Financial Accounting Standards ("SFAS") No.
141, "Business Combinations" ("SFAS 141") and SFAS No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"). SFAS 141 requires the use of the
purchase method of accounting for all business combinations initiated after
June 30, 2001. SFAS 142 requires intangible assets to be recognized if they
arise from contractual or legal rights or are "separable", i.e., it is
feasible that they may be sold, transferred, licensed, rented, exchanged or
pledged. As a result, it is likely that more intangible assets will be
recognized under SFAS 142 than its predecessor, APB Opinion No. 16,
although in some instances previously recognized intangibles will be
subsumed into goodwill.

         Under SFAS 142, goodwill will no longer be amortized on a
straight-line basis over its estimated useful life, but will be tested for
impairment on an annual basis and whenever indicators of impairment arise.
The goodwill impairment test, which is based on fair value, is to be
performed on a reporting unit level. A reporting unit is defined as a SFAS
No. 131 operating segment or one level lower. Goodwill will no longer be
allocated to other long-lived assets for impairment testing under SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Additionally, goodwill on equity method
investments will no longer be amortized; however, it will continue to be
tested for impairment in accordance with APB Opinion No. 18, "The Equity
Method of Accounting for Investments in Common Stock." Under SFAS 142,
intangible assets with indefinite lives will not be amortized. Instead,
they will be carried at the lower of cost or market value and be tested for
impairment at least annually. All other recognized intangible assets will
continue to be amortized over their estimated useful lives.

         We adopted SFAS 141 and 142 effective January 1, 2002.
Accordingly, we discontinued amortizing our remaining balance of goodwill
of approximately (euro)5.8 million effective January 1, 2002. We estimate
that the adoption of these statements did have a material impact on our
results of operations, financial position or cash flows.

         Our goodwill amortization expense and net loss for the three and
six month periods ended June 30, 2002 and 2001 are as follows (amounts in
thousands):

<TABLE>
<CAPTION>
                                            Three Months Ended June 30,           Six Months Ended June 30,
                                              2002               2001              2002           2001
                                              ----               ----              ----           ----
<S>                                           <C>               <C>            <C>            <C>
Reported net loss                             (22,538)          (50,520)       (50,909)       (91,122)
Add back: Goodwill amortization                    --                74             --            155
Adjusted net loss                             (22,538)          (50,446)       (50,909)       (90,967)

Reported net loss per share                     (0.14)            (0.32)         (0.32)         (0.58)
Adjusted net loss per share                     (0.14)            (0.32)         (0.32)         (0.58)
</TABLE>


         In June 2001, the Financial Accounting Standards Board issued SFAS
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). SFAS
143 establishes accounting requirements for retirement of obligations
associated with tangible long-lived assets, including (1) the timing of the
liability recognition, (2) initial measurement of the liability, (3)
allocation of cost to expense, (4) subsequent measurement of the liability,
and (5) related financial statement disclosure. SFAS 143 requires that the
fair value of the liability for an asset retirement obligation be
recognized in the period during which it is incurred, if a reasonable
estimate of fair value can be made. The associated asset retirement costs
are capitalized as part of the carrying value of the asset and depreciated
over the life of the associated asset. SFAS 143 require the measurement of
changes in the liability for an asset retirement obligation due to the
passage of time by applying an interest method of allocation to the amount
of the liability at the beginning of a reporting period. The interest rate
used to measure that change is the credit-adjusted-risk-free rate that
existed when the liability was initially measured. Finally, SFAS 143
requires such changes in liability for asset retirement obligations to be
recognized as an increase in the carrying amount of the liability and as an
expense classified as an operating item in the statement of income. SFAS
143 applies to fiscal years beginning after June 15, 2002. We do not
anticipate that the adoption of SFAS will have a material impact on our
results of operations, our financial position, or our cash flows.

         In August 2001, the Financial Accounting Standards Board issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 establishes a single accounting model for
long-lived assets to be disposed of by sale consistent with the fundamental
provisions of SFAS 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." While it supersedes APB
Opinion 30 "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions," it retains the
presentation of discontinued operations, but broadens that presentation to
include a component of an entity (rather than a segment of a business).
However, discontinued operations are no longer recorded at net realizable
value and future operating losses are no longer recognized before they
occur. Under SFAS 144 there is no longer a requirement to allocate goodwill
to long-lived assets to be tested for impairment. SFAS 144 also establishes
a probability weighted cash flow estimation approach to deal with
situations in which there is a range of cash flows that may be generated by
the asset being tested for impairment. SFAS 144 also establishes criteria
for determining when an asset should be treated as held for sale.

         SFAS 144 is effective for fiscal years beginning after December
15, 2001 and interim periods within those fiscal years. The provisions of
the Statement are generally to be applied prospectively. The adoption of
SFAS 144 on January 1, 2002 did not have a material impact on our results
of operations, our financial position, or our cash flows.

         In April 2002, the Financial Accounting Standards Board issued
SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections" ("SFAS 145"). SFAS 145
rescinds SFAS 4 "Reporting Gains and Losses from Extinguishment of Debt"
and also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings or describe their applicability
under changed conditions. SFAS 145 applies to fiscal years beginning after
May 15, 2002. We anticipate that the adoption of SFAS 145 will not have a
material impact on our results of operations, financial position, or cash
flows.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Investment portfolio and interest rate sensitivity

         Our investment policy is limited by the indentures for our
outstanding notes. We are restricted to investing in financial instruments
with a maturity of one year or less (with certain limited exceptions). We
are required to utilize investments that meet high credit quality
standards, such as obligations of the U.S. government 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.

         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.

Impact of foreign currency rate changes

         Our revenue, costs, assets and liabilities are, for the most part,
denominated in euro, which is our functional and reporting currency.
Therefore, we are exposed to changes in currency exchange rates due to our
U.S. dollar denominated debt. The senior discount notes which we issued in
February 1999 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 euro. We intend to manage exchange rate risk by
incurring financing liabilities denominated in the currency of the country
of operations.

         Based on the total June 30, 2002, US dollar borrowings under the
senior discount notes, a hypothetical 10% variance in the US dollar to euro
exchange rate would create additional foreign exchange results of
approximately (euro)9.4 million.

         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.


December 31, 1998......................................   U.S.$1.181(1)
December 31, 1999......................................   U.S.$1.007
December 31, 2000......................................   U.S.$0.942
December 31, 2001......................................   U.S.$0.8901
June 30, 2002..........................................   U.S.$0.9921
-----------

(1)      Based on the exchange rate as of January 4, 1999, the date on
         which the Euro Noon Buying Rate was first quoted.



PART II           OTHER INFORMATION

Item 1. Legal Proceedings

         The syndicate of co-owners of a building in which CompleTel France
installed certain telecommunications equipment, brought an action against
the Company before the Tribunal de Grande Instance of Paris alleging that
the equipment was installed without obtaining the necessary authorizations
and caused disturbances in the building. On May 11, 2001, the tribunal
issued a decision, following a preliminary injunction hearing (a) ordering
the Company to restore the premises to their original state, and (b)
appointing an expert with the mandate of determining the liability, if any,
the damages sustained, if any, and the work which the Company may have to
undertake with respect to the equipment to cease the disturbances. The
Company appealed against this decision and the proceeding is currently in
progress. The Company is also involved in discussions to settle this matter
out of court, but there can be no assurance that the Company will be able
to reach a settlement. If the negotiations to settle out of court are
unsuccessful, the Company may be required to move the equipment and may be
required to do so in a short period of time. In such an event, the Company
could suffer disturbances to its network, which could have an impact on its
activities. Although, at this stage the Company is not in a position to
predict the outcome of the negotiations, the Company estimates that the
costs of either moving the equipment or settling this dispute would not
have an adverse effect on its financial condition, results or operations of
cashflows.

         The Company is not party to any other pending legal proceedings
that it believes would, individually or in the aggregate, have a material
adverse effect on its financial condition, results of operations or cash
flows.

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable.

Item 3.  Defaults upon Senior Securities

         Not applicable.

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

         Not applicable.

Item 5.  Other Information

         Effective May 31, 2002, we voluntarily delisted our Ordinary
shares from the Nasdaq National Market. We made arrangements to enable
those shareholders who hold their shares in the form of New York shares
(the form formerly traded on Nasdaq) to trade their shares on Euronext
Paris. In this regard, as a courtesy to our shareholders, we have agreed to
pay the exchange fees in connection with the transfer of Ordinary shares
from our New York register to our Dutch register (the form in which trades
in our Ordinary shares are settled on Euronext Paris).

Item 6. Exhibits and Reports on Form 8-K

Exhibits


Exhibit No.       Description

4.1(1)   14% Senior Discount Notes Indenture, dated February 16, 1999,
         among CompleTel Europe N.V. as issuer, CompleTel ECC B.V. as
         guarantor and U.S. Bank Trust National Association as trustee

4.2(2)   14% Senior Notes Indenture, dated April 13, 2000, between
         CompleTel Europe N.V. as issuer and The Chase Manhattan Bank as
         trustee

10.1(3)  CompleTel Europe NV 2000 Stock Option Plan, as amended

10.2     Resignation Agreement, dated May 17, 2002, among CompleTel Europe
         N.V., CableTel Management Inc. and Timothy A. Samples

10.3     Non-Qualified Stock Option Agreement, dated May 17, 2002, between
         CompleTel Europe N.V. and Timothy A. Samples

10.4     Resignation Agreement, dated May 17, 2002, between CompleTel
         Europe N.V., CableTel Management, Inc. and J. Lyle Patrick

10.5     Non-Qualified Stock Option Agreement, dated May 17, 2002, between
         CompleTel Europe N.V. and J. Lyle Patrick

99.1     Certifications pursuant to 18 U.S. C. Section 1350

-----------

(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.

(2) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the period ended March 31, 2000 and incorporated herein by
reference.

(3) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the period ended September 30, 2001 and incorporated herein
by reference.


Reports on Form 8-K

         On May 15, 2002, we filed a Current Report on Form 8-K,
in which we reported our financial results for the quarter ended March 31,
2002. No financial statements were filed with that report.

         On May 23, 2002, we filed a Current Report on Form 8-K, in which
we included as an exhibit the Restructuring Agreement we entered into on
May 15, 2002. No financial statements were filed with that report.

         On May 28, 2002, we filed a Current Report on Form 8-K, in which
we (i) reported the sale of our operations in Germany and provided pro
forma financial statements pursuant to article 11 of Regulation S-X; and
(ii) reported the voluntary delisting of our Ordinary shares form the
Nasdaq National Market.

         On May 30, 2002, we filed a Current Report on Form 8-K, in which
we reported, under Item 9 of that report, our commencement of Akkoord
composition plan proceedings in The Netherlands. No financial statements
were filed with that report.

         On June 7, 2002, we filed a Current Report on Form 8-K, in which
we reported the grant, by the District Court of Amsterdam, The Netherlands,
of a suspension of payments decree. No financial statements were filed with
that report.

         On June 12, 2002, we filed a Current Report on Form 8-K, in which
we reported, under Item 3 to that report, the commencement of Akkoord
composition plan proceedings relating to CompleTel Europe N.V. in The
Netherlands, the grant by the Dutch bankruptcy court of a suspension of
payment decree and the appointment of an administrator in the suspension of
payments proceedings and a supervising judge in respect of the Akkoord
proceedings. No financial statements were filed with that report.

On June 26, 2002, we filed a Current Report on Form 8-K, in which we
reported the resignation of Arthur Andersen as our independent auditor. No
financial statements were filed with that report.


SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of
1934, CompleTel Europe N.V. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on August 14, 2002.

COMPLETEL EUROPE N.V.
By:      /s/  Jerome de Vitry

        ---------------------------
        Name: Jerome de Vitry
        Title: Managing Director, President and Chief Executive Officer


By:     /s/  Alexandre Westphalen

        ---------------------------
        Name: Alexandre Westphalen
        Title: Vice President, Finance



By:     /s/  John M. Hugo

        ---------------------------
        Name:  John M. Hugo
        Title:  Chief Accounting Officer and Corporate Controller