<PAGE>   1

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

                                  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, 2000

                                       Or

          [ ] Transition Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                For the transition period from _______ to _______


                        Commission File Number 333-85503


                     TELECOMUNICACIONES DE PUERTO RICO, INC.
             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


      Commonwealth of Puerto Rico                      66-0566178
    (STATE OR OTHER JURISDICTION OF         (I.R.S. EMPLOYER IDENTIFICATION NO.)
    INCORPORATION OR ORGANIZATION)

      1515 F.D. Roosevelt Avenue
         Guaynabo, Puerto Rico                            00968
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)

         Registrant's telephone number, including area code 787-793-1818



              (Former name, former address and former fiscal year,
                         if changed since last report)

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 [ ]



<PAGE>   2



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


            TELECOMUNICACIONES DE PUERTO RICO, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                        (UNAUDITED)
                                                                          JUNE 30,       DECEMBER 31,
                                                                            2000            1999
                                                                       -------------    -------------

<S>                                                                    <C>              <C>
ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                         $      52,864    $      45,482
     Accounts receivable, net of allowance for doubtful accounts
       of $73,283 and $66,994 in 2000 and 1999, respectively                 328,206          329,320
     Inventory and supplies, net                                              33,200           31,370
     Prepaid expenses                                                          8,883            5,407
                                                                       -------------    -------------
         Total current assets                                                423,153          411,579
PROPERTY, PLANT AND EQUIPMENT, net                                         1,677,836        1,742,489
INTANGIBLES, net                                                             360,172          371,378
DEFERRED INCOME TAX                                                          216,998          256,559
OTHER ASSETS                                                                  48,423           45,742
                                                                       -------------    -------------
TOTAL ASSETS                                                           $   2,726,582    $   2,827,747
                                                                       =============    =============


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
      Short-term debt                                                  $     102,110    $       2,317
      Other current liabilities                                              327,141          348,368
                                                                       -------------    -------------
         Total current liabilities                                           429,251          350,685
LONG-TERM DEBT, excluding current portion                                  1,275,170        1,495,109
OTHER NON-CURRENT LIABILITIES                                                557,103          612,325
                                                                       -------------    -------------
          Total liabilities                                                2,261,524        2,458,119
                                                                       -------------    -------------
CONTINGENCIES
SHAREHOLDERS' EQUITY:
    Common stock                                                             699,284          699,284
    Deferred ESOP compensation                                               (26,100)         (26,100)
    Subscription receivable                                                 (135,845)        (170,363)
    Accumulated deficit                                                      (72,281)        (133,193)
                                                                       -------------    -------------
          Total shareholders' equity                                         465,058          369,628
                                                                       -------------    -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                             $   2,726,582    $   2,827,747
                                                                       =============    =============
</TABLE>


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



                                       2
<PAGE>   3



            TELECOMUNICACIONES DE PUERTO RICO, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                                        PREDECESSORS
                                                                          COMPANY                                        (COMBINED)
                                                     -------------------------------------------------------------------------------
                                                                                                             FOR THE 1999 PERIOD
                                                                                                        ----------------------------
                                                     FOR THE THREE    FOR THE THREE     FOR THE SIX       MARCH 2,        JANUARY 1,
                                                      MONTHS ENDED     MONTHS ENDED    MONTHS ENDED       THROUGH          THROUGH
                                                     JUNE 30, 2000    JUNE 30, 1999    JUNE 30, 2000      JUNE 30          MARCH 1
                                                     -------------    -------------    -------------    ------------    ------------
                                                                      (UNAUDITED)
                                                     -----------------------------------------------

<S>                                                  <C>              <C>              <C>              <C>             <C>
REVENUES AND SALES:
  Local services                                     $     145,686    $     124,802    $     285,896    $    164,229    $     82,012
  Long distance services                                    43,925           53,300           86,120          73,971          48,613
  Access services                                           94,794           93,097          186,633         119,147          49,517
  Cellular services                                         36,970           33,631           72,370          44,226          20,541
  Paging services                                            9,001           12,376           19,478          16,659           8,202
  Directory services                                         6,959            7,202           13,796           9,514           4,910
  Other services and sales                                  20,808           14,076           37,269          19,237           9,505
                                                     -------------    -------------    -------------    ------------    ------------
        Total revenues and sales                           358,143          338,484          701,562         446,983         223,300
                                                     -------------    -------------    -------------    ------------    ------------

OPERATING COSTS AND EXPENSES:
  Cost of services and sales                               100,307          135,829          202,668         179,518          91,723
  Selling, general and administrative                      104,065           83,298          209,272         106,471          49,414
  ESOP government grant                                         --               --               --              --          26,100
  Early retirement provision                                    --               --               --              --           4,226
  Depreciation and amortization                             75,016           65,316          148,833          99,484          50,393
                                                     -------------    -------------    -------------    ------------    ------------
        Total operating costs and expenses                 279,388          284,443          560,773         385,473         221,856
                                                     -------------    -------------    -------------    ------------    ------------

OPERATING INCOME                                            78,755           54,041          140,789          61,510           1,444

OTHER INCOME (EXPENSE):
  Interest income (expense), net                           (20,419)         (20,187)         (41,035)        (29,336)            407
  Equity income from joint venture                           1,000               --            1,000              --              --
                                                     -------------    -------------    -------------    ------------    ------------
        Total other income (expense), net                  (19,419)         (20,187)         (40,035)        (29,336)            407
                                                     -------------    -------------    -------------    ------------    ------------

INCOME BEFORE INCOME TAX                                    59,336           33,854          100,754          32,174           1,851

INCOME TAX EXPENSE                                          23,415           12,384           39,842          11,729              --
                                                     -------------    -------------    -------------    ------------    ------------

INCOME BEFORE EXTRAORDINARY CHARGE                          35,921           21,470           60,912          20,445           1,851
EXTRAORDINARY CHARGE-
  DISCONTINUANCE OF REGULATORY
  ACCOUNTING, net of income tax benefit of $38,750              --               --               --         (60,500)             --
                                                     -------------    -------------    -------------    ------------    ------------
NET INCOME (LOSS)                                    $      35,921    $      21,470    $      60,912    $    (40,055)   $      1,851
                                                     =============    =============    =============    ============    ============
</TABLE>


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



                                       3

<PAGE>   4



            TELECOMUNICACIONES DE PUERTO RICO, INC. AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                                PREDECESSORS
                                                                   COMPANY                                       (COMBINED)
                                                ----------------------------------------------------------------------------
                                                                                                     FOR THE 1999 PERIOD
                                                                                                ----------------------------
                                                FOR THE THREE   FOR THE THREE   FOR THE SIX       MARCH 2        JANUARY 1,
                                                 MONTHS ENDED   MONTHS ENDED    MONTHS ENDED      THROUGH         THROUGH
                                                JUNE 30, 2000   JUNE 30, 1999   JUNE 30, 2000     JUNE 30,        MARCH 1,
                                                -------------   -------------   -------------   ------------    ------------
                                                                 (UNAUDITED)
                                                ---------------------------------------------

<S>                                             <C>             <C>             <C>             <C>             <C>
NET INCOME (LOSS)                               $      35,921   $      21,470   $      60,912   $    (40,055)   $      1,851

 Minimum pension liability adjustment                      --              --              --             --           2,369
                                                -------------   -------------   -------------   ------------    ------------

COMPREHENSIVE INCOME  (LOSS)                    $      35,921   $      21,470   $      60,912   $    (40,055)   $      4,220
                                                =============   =============   =============   ============    ============
</TABLE>

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




                                       4
<PAGE>   5



            TELECOMUNICACIONES DE PUERTO RICO, INC. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                      ACCUMULATED
                                                         DEFERRED                                       OTHER
                                              COMMON       ESOP        SUBSCRIPTION    ACCUMULATED   COMPREHENSIVE
                                              STOCK     COMPENSATION    RECEIVABLE       DEFICIT         LOSS        TOTAL
                                             --------   ------------   ------------   ------------   -------------  ---------


<S>                                          <C>         <C>            <C>            <C>            <C>            <C>
(AUDITED)
BALANCE, MARCH 1, 1999..................     $      --   $         --   $         --   $         --   $         --   $        --
  Acquisition by GTE and Popular Inc.
     and partial step-up accounting ....       530,876        (26,100)                                      (9,903)      494,873
  ESOP capital contribution.............         8,700         (8,700)                                                        --
  Contribution receivable from PRTA.....       159,708                      (159,708)                                         --
  Net loss, March 2, 1999 to December
     31, 1999...........................                                                   (133,193)                    (133,193)
  Accretion of discount on subscription
     receivable.........................                                     (10,655)                                    (10,655)
  ESOP compensation expense.............                        8,700                                                      8,700
  Minimum pension liability adjustment..                                                                    9,903          9,903
                                             ---------   ------------   ------------   ------------   ------------   -----------

BALANCE, DECEMBER 31, 1999..............       699,284        (26,100)      (170,363)      (133,193)            --       369,628

(UNAUDITED)
  Net income, for the six months ended
     June 30, 2000......................                                                     60,912                       60,912
  Accretion of discount on subscription
     receivable.........................                                      (5,482)                                     (5,482)
  Government capital contribution.......                                      40,000                                      40,000
                                             ---------   ------------   ------------   ------------   ------------   -----------



BALANCE, JUNE 30, 2000..................     $ 699,284   $    (26,100)  $   (135,845)  $    (72,281)  $         --   $   465,058
                                             =========   ============   ============   ============   ============   ===========
</TABLE>


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



                                       5
<PAGE>   6




            TELECOMUNICACIONES DE PUERTO RICO, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                        PREDECESSORS
                                                                               COMPANY                   (COMBINED)
                                                                        ---------------------------------------------
                                                                                             FOR THE 1999 PERIOD
                                                                                         ----------------------------
                                                                        FOR THE SIX        MARCH 2        JANUARY 1
                                                                        MONTHS ENDED       THROUGH         THROUGH
                                                                        JUNE 30, 2000      JUNE 30,        MARCH 1,
                                                                        -------------    ------------    ------------
                                                                         (UNAUDITED)

<S>                                                                      <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                      $     60,912    $    (40,055)   $      1,851
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
    Depreciation and amortization                                             148,833          99,484          50,393
    Deferred income tax                                                        39,561          11,729
    Extraordinary charge                                                                       60,500
    Accretion of discount on subscription receivable                           (5,482)         (2,100)
    Equity income in joint venture                                             (1,000)
    ESOP government grant                                                                                      26,100
    Changes in assets and liabilities:
        Accounts receivable                                                     1,114          12,556         (14,496)
        Inventory and supplies                                                 (1,830)         (4,027)         (1,306)
        Prepaid expenses and other assets                                      (4,989)        (14,754)          2,374
        Other current and non-current liabilities                             (21,987)         (7,023)        (13,901)
        Pension and other post-employment benefit liability                   (54,462)          7,506           4,842
                                                                         ------------    ------------    ------------
              Net cash provided by operating activities                       160,670         123,816          55,857
                                                                         ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures, including removal costs                              (75,626)        (71,072)        (33,237)
   Net salvage on retirements                                                   2,484           3,995              73
                                                                         ------------    ------------    ------------
              Net cash used in investing activities                           (73,142)        (67,077)        (33,164)
                                                                         ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Capital contributions                                                       40,000                         110,577
   Dividends                                                                                                  (83,116)
   ESOP contribution                                                                                          (26,100)
   Net issuance of short-term debt                                            100,000       1,034,711       1,583,044
   Debt repayments                                                           (220,146)     (1,100,266)
   Special PRTA dividend                                                                                   (1,570,182)
                                                                         ------------    ------------    ------------
              Net cash provided by (used in) financing activities             (80,146)        (65,555)         14,223
                                                                         ------------    ------------    ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                7,382          (8,816)         36,916

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                               45,482          72,527          35,611
                                                                         ------------    ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                               $     52,864    $     63,711    $     72,527
                                                                         ============    ============    ============
</TABLE>



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



                                       6
<PAGE>   7



TELECOMUNICACIONES DE PUERTO RICO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

1.  THE ACQUISITION, RELATED CORPORATE RESTRUCTURING AND CHANGES IN ACCOUNTING
    BASIS

    THE ACQUISITION AND CORPORATE RESTRUCTURING

    On April 7, 1997, the Government of the Commonwealth of Puerto Rico (the
    "Government") announced a plan, which resulted in the privatization of the
    Puerto Rico Telephone Company, Inc. ("PRTC") and Celulares Telefonica, Inc.
    ("CT"), through a competitive bidding process. On July 21, 1998, after the
    conclusion of the bidding process, a consortium led by GTE Corporation (the
    "GTE Group") was awarded the right to purchase a controlling interest in
    Telecomunicaciones de Puerto Rico, Inc. (the "Company" or the "Successor")
    and entered into the acquisition agreement (the "Acquisition"). Under the
    provisions of the Acquisition agreement, the Company, a Puerto Rico
    corporation, was utilized for the purpose of acquiring the stock of PRTC and
    CT from the Puerto Rico Telephone Authority ("PRTA"), a public corporation
    and an instrumentality of the Government. On March 1, 1999, pursuant to the
    terms of the Acquisition agreement, the Company acquired 100% of the common
    stock of PRTC and CT (the "Predecessors"). Prior to the Acquisition, the
    Company had no operations, assets or liabilities, and operated as a
    holding company formed in connection with the efforts to privatize the
    Predecessors and to consummate the sale of a controlling interest in the
    Predecessors to the GTE Group under the Acquisition agreement.

    The PRTA received approximately $2.0 billion as part of the Acquisition. A
    portion of this amount was paid as a special dividend amounting to
    approximately $1.6 billion.

    The closing of the sale occurred on March 2, 1999, under the following
    terms:

    o   A subsidiary of GTE Corporation (member of the GTE Group) acquired
        40.01% plus one share of the Company stock and Popular Inc. ("Popular")
        acquired 9.99% of the Company stock.

    o   The PRTA obtained a forty-three percent (43%) interest less one share of
        the stock of the Company in exchange for its remaining interests in PRTC
        and CT. In the Acquisition agreement, the PRTA agreed to contribute cash
        or stock worth a total of $200 million as a capital contribution in even
        installments over five years beginning on March 2, 2000. The Company
        will use the $200 million to fund its unfunded pension and other
        post-employment benefit obligations. The contribution must be in cash
        for the first two installments and cash or stock of the Company for the
        last three installments. Future receipts have been recorded at their
        discounted present value of $159.7 million (at a 8% discount rate).

    In conjunction with the Acquisition, PRTA contributed 3% of the Company's
    shares to a newly created employee stock ownership plan (the "ESOP") valued
    at $26.1 million, and the GTE Group purchased an additional 1% of the
    Company's shares from the PRTA for $8.7 million, and contributed them to the
    ESOP. The shares for the $26.1 million fully vested to employees on March 2,
    1999. The ESOP also acquired an additional 3% with funds borrowed from the
    Company, amounting to $26.1 million, for the purpose of establishing a newly
    created contributory investment benefit plan for current and future
    employees.

    On June 30, 2000, the Company's managing shareholder, GTE Corporation,
    entered into a merger with Bell Atlantic Corporation. The new merged company
    is called Verizon Communications ("Verizon"). The Company is now an indirect
    affiliate of Verizon.

    PARTIAL STEP-UP IN ACCOUNTING BASIS

    The Acquisition was accounted for following rules governing partial step-up
    in accounting basis under the Accounting Principles Board Opinion ("APB")
    No.16, Business Combinations, and Emerging Issues Task Force Consensus
    ("EITF") 88-16, "Basis in Leveraged Buyout Transactions". The Acquisition
    resulted in a purchase of 100% of the common stock of PRTC and CT by the
    Company, a purchase of a controlling interest in the Company by a new group
    of controlling investors with the shareholders of the Predecessors





                                       7
<PAGE>   8


    maintaining a minority interest in the new company. Under EITF 88-16, a
    partial step-up is required to reflect the difference between the book value
    of the portion of the assets and liabilities purchased by the GTE Group and
    the fair value on the Acquisition date. In accordance with EITF 88-16, no
    step-up is recorded for the portion of the assets and liabilities owned by
    the PRTA.

    The excess of the purchase price over the basis in the assets and
    liabilities has been allocated to the net assets reflecting the 50% interest
    acquired by the GTE Group and Popular as follows (amounts in thousands):

<TABLE>

<S>                                                                   <C>
              Goodwill and other long-term intangibles                $  336,118
              Deferred tax assets                                        171,356
              Property, plant and equipment                              (99,250)
              Employee benefit plan liabilities                         (180,740)
              Other intangibles, net                                         (98)
                                                                      ----------
              Total increase in paid-in capital                       $  227,386
                                                                      ==========
</TABLE>

    These adjustments consider the effect of a change in the status of the
    Company to a tax paying enterprise after March 2, 1999, as required by the
    provisions of Statement of Financial Accounting Standards ("SFAS") No. 109,
    "Accounting for Income Taxes".

    DISCONTINUATION OF SFAS NO. 71, "ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES
    OF REGULATION"

    PRTC discontinued the application of SFAS No. 71 with the consummation of
    the Acquisition on March 2, 1999, due to changes in regulation, the
    competitive environment and the terms of the Acquisition. A write-down of
    plant and equipment of $199 million was recorded of which $99.5 million was
    accounted for as a purchase price adjustment consistent with partial step-up
    accounting to reflect the fair value of the acquired assets. The remaining
    $99.5 million was recorded as an extraordinary charge (approximately $60.5
    million after-tax).

2.  BASIS OF PRESENTATION

    The unaudited condensed consolidated financial statements have been prepared
    pursuant to rules and regulations of the Securities and Exchange Commission
    ("SEC"). Certain information and footnote disclosures normally included in
    financial statements prepared in accordance with accounting principles
    generally accepted in the United States have been condensed or omitted
    pursuant to such rules and regulations. Management believes the financial
    statements include all adjustments and recurring accruals necessary to
    present fairly the financial information and changes in the basis of
    accounting to properly account for the acquisition as explained in Note 1.
    The December 31, 1999 condensed consolidated balance sheet was derived from
    audited financial statements, but does not include all disclosures required
    by generally accepted accounting principles. These financial statements
    should be read in conjunction with the audited financial statements and
    notes thereto included in the Company's 1999 Annual Report on Form 10-K.

    The condensed consolidated financial statements of the Predecessors for the
    two-month period ended March 1, 1999, reflect the historical cost of its
    assets and liabilities and results of its operations prior to completion of
    the Acquisition and are referred to as the Predecessors' condensed
    consolidated financial statements. Accordingly, the accompanying financial
    statements of the Predecessors and the Company are not comparable in all
    material respects, since the Company's financial condition, results of
    operations, and cash flows use a new accounting basis. PRTC and CT are
    wholly owned subsidiaries, and fully and unconditionally guarantee payment
    of the senior notes, as set forth in the Indenture.

    Separate financial statements for PRTC and CT have not been included because
    the aggregate net assets, earnings and equity of PRTC and CT are
    substantially equivalent to the aggregate net assets, earnings and equity of
    the Company on a consolidated basis. Management believes that separate
    financial statements and other disclosures concerning PRTC and CT are not
    material to investors. In addition, the Company's other subsidiaries; Puerto
    Rico Telephone Directories, Inc. and Datacom Caribe, Inc. (which are not
    guarantors of the senior notes) are inconsequential to the condensed
    consolidated financial statements.




                                       8
<PAGE>   9



3.  SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

    The SEC issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue
    Recognition in Financial Statements," which changes the recognition of
    non-recurring revenues such as installation charges and related direct
    expenses. This SAB must be implemented by year-end 2000 with the cumulative
    effect of this change in accounting principle measured as of December 31,
    1999, with a resulting restatement of revenues and expenses for the year
    2000. The Company is currently assessing the impact of the adoption of this
    SAB.

4.  PRO FORMA INFORMATION

    The following unaudited pro forma summary represents the consolidated
    results of operations of the Company as if the Acquisition had occurred at
    the beginning of 1999, after giving effect to certain adjustments. This pro
    forma information is presented for informational purposes only and may not
    be indicative of the results of operations as they would have been if the
    Company had been a single entity during the entire 1999, nor is it
    indicative of the results of operations which may occur in the future.


<TABLE>
<CAPTION>

                                                  FOR THE SIX       FOR THE SIX         YEAR ENDED
                                                 MONTHS ENDED      MONTHS ENDED        DECEMBER 31,
                                                 JUNE 30, 2000     JUNE 30, 1999          1999
                                                ---------------   ---------------    ---------------
                                                                  (In thousands)

<S>                                             <C>               <C>                <C>
Revenues and sales                              $       666,562   $       635,283    $     1,279,566
                                                ---------------   ---------------    ---------------
Income (loss) before income tax                 $        65,754   $       (32,977)   $      (221,537)
                                                ---------------   ---------------    ---------------
Income (loss) before extraordinary charge       $        39,562   $       (20,116)   $      (135,138)
                                                ---------------   ---------------    ---------------
</TABLE>


    The pro forma amounts reflect adjustments for interest expense, property,
    municipal and unemployment taxes, management and technology fees,
    amortization expense, and an anticipated loss in the long-term support from
    the National Exchange Carriers Association ("NECA").

5.  PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment consist of:

<TABLE>
<CAPTION>

                                                     JUNE 30,     DECEMBER 31,
                                                      2000            1999
                                                --------------   --------------
                                                         (In thousands)

<S>                                             <C>              <C>
Outside plant                                   $    1,858,029   $    1,836,360
Central office and transmission equipment            1,180,879        1,125,272
Other equipment                                        368,002          365,254
Buildings                                              324,904          322,431
Land                                                    22,925           23,441
                                                --------------   --------------
Gross plant in service                               3,754,739        3,672,758
Less accumulated depreciation                        2,169,992        2,056,432
                                                --------------   --------------
Net plant in service                                 1,584,747        1,616,326
Construction in progress                                93,089          126,163
                                                --------------   --------------
Total                                           $    1,677,836   $    1,742,489
                                                ==============   ==============
</TABLE>




                                       9
<PAGE>   10



6.  INTANGIBLES

    Intangibles consist of:

<TABLE>
<CAPTION>

                                         JUNE 30,    DECEMBER 31,
                                           2000          1999
                                      ------------   ------------
                                             (In thousands)

<S>                                   <C>            <C>
Goodwill                              $    150,236   $    150,236
Franchise-wireline                          96,000         96,000
Franchise-wireless                          60,000         60,000
Brand                                       50,900         50,900
Customer base                               21,100         21,100
Deferred pension asset                       6,290          6,290
Other                                        2,310          1,879
                                      ------------   ------------
     Total cost                            386,836        386,405
Less accumulated amortization               26,664         15,027
                                      ------------   ------------
Total                                 $    360,172   $    371,378
                                      ============   ============
</TABLE>

7.  DEFERRED ESOP COMPENSATION

    The ESOP acquired a 3% interest amounting to $26.1 million with funds
    borrowed from the Company in order to establish a contributory investment
    fund plan for current and future employees. Shares are maintained in a
    suspense account until released to a participant. The release of shares is
    determined by multiplying the number of shares in the suspense account by
    the ratio of annual debt service to total debt service. Compensation expense
    is recorded based on the release of shares at market value, based on an
    annual appraisal, with an offsetting reduction to deferred compensation and
    paid-in-capital.

8.  OTHER CURRENT LIABILITIES

    Other current liabilities consist of:

<TABLE>
<CAPTION>

                                        JUNE 30,     DECEMBER 31,
                                          2000           1999
                                      ------------   ------------
                                             (In thousands)
<S>                                   <C>            <C>
Accrued expenses                      $    113,574   $    131,843
Accounts payable                            98,001        111,582
Employee accruals                           55,527         40,564
Carrier payables                            40,669         32,102
Taxes                                        8,607         20,684
Interest                                    10,763         11,593
                                      ------------   ------------
Total                                 $    327,141   $    348,368
                                      ============   ============

</TABLE>





                                       10
<PAGE>   11



9.  LONG-TERM DEBT

    Long-term debt consists of:

<TABLE>
<CAPTION>

                                                              JUNE 30,         DECEMBER 31,
                                                                2000              1999
                                                           ---------------   ---------------
                                                                     (In thousands)

<S>                                                        <C>               <C>
Senior notes
   Due May 20, 2002 at 6.15%                               $       299,955   $       299,944
   Due May 20, 2006 at 6.65%                                       399,871           399,863
   Due May 20, 2009 at 6.80%                                       299,846           299,839
Bank note facility due March 2, 2004                               275,000           495,000
Working capital facility                                           100,000                --
Capital leases                                                       2,608             2,780
                                                           ---------------   ---------------
Total                                                            1,377,280         1,497,426
Less short-term debt                                               102,110             2,317
                                                           ---------------   ---------------
Long-term debt                                             $     1,275,170   $     1,495,109
                                                           ===============   ===============
</TABLE>

    The senior notes are unconditionally guaranteed by PRTC and CT with no
    financial covenants. The 2006 and 2009 notes can be prepaid at a 15 basis
    point penalty. The bank note consists of a $500 million syndicated five year
    revolving credit facility with prepayment at the option of the Company and
    bears interest at LIBOR plus 72.5 basis points, approximating a 7.25%
    interest rate at June 30, 2000. The bank debt is subject to financial
    covenants, with the most significant being debt that must be less than 4
    times adjusted Earnings Before Interest, Taxes, Depreciation, and
    Amortization ("EBITDA"), as defined in the facility agreement. All of the
    debt is unsecured and non-amortizing.

    The Company executed two new working capital lines of credit facilities with
    Banco Bilbao Vizcaya ("BBV") and Popular, Inc. for $50 million each on May
    4, 2000 and June 2, 2000, respectively. These facilities replaced a $200
    million facility with Popular, Inc., which was initiated on March 2, 1999
    and expired on March 2, 2000. The interest rate on these facilities is LIBOR
    plus 50 basis points, approximating a 7% interest rate at June 30, 2000.


10. OTHER NON-CURRENT LIABILITIES

    Other non-current liabilities consist of:

<TABLE>
<CAPTION>

                                                              JUNE 30,         DECEMBER 31,
                                                                2000               1999
                                                           ---------------   ---------------
                                                                    (In thousands)

<S>                                                        <C>               <C>
Pension and other post-employment benefit liability        $       492,578   $       547,040
Customer deposits                                                   29,257            28,990
Other liabilities                                                   35,268            36,295
                                                           ---------------   ---------------
Total                                                      $       557,103   $       612,325
                                                           ===============   ===============
</TABLE>



                                       11
<PAGE>   12



11. SHAREHOLDERS' EQUITY

    COMMON STOCK

    Common stock consisted of 50 million authorized and 25 million shares
    outstanding of no par value at June 30, 2000 and December 31, 1999. A 25 to
    1 stock split was approved and became effective on December 31, 1999 to
    decrease the per share market price in order to increase their affordability
    to ESOP participants.

    SUBSCRIPTION RECEIVABLE

    The subscription receivable reflects future receipts at their discounted
    present value (at an 8% discount rate) to be contributed by the PRTA in even
    installments over five years to fund a portion of the unfunded pension and
    other post-employment benefit obligations. During the six month period ended
    June 30, 2000, the Company received from the Government $40 million under
    this agreement.

12. SEGMENT REPORTING

    The Company has two reportable segments: Wireline and Wireless. The Wireline
    segment provides:

    o   Local services including basic voice, telephone and telecommunications
        equipment rentals, value-added services, high speed private line
        services, Internet access, public phone service, and line installations;

    o   Long distance services both on-island and off-island;

    o   Access services provided to long distance carriers, competitive local
        exchange carriers, and cellular and paging operators to originate and
        terminate calls on its network;

    o   Directory publishing right revenues; and

    o   Telecommunications equipment sales and billing and collection services
        to competing long distance operators in Puerto Rico.

    The Wireless segment provides cellular and paging services.

    The Company measures and evaluates the performance of its segments based on
    EBITDA, which is a common industry profitability and liquidity measure.
    The accounting policies of the segments are the same as those followed by
    the Company. The Company accounts for intersegment revenues at market
    prices.



                                       12
<PAGE>   13


    Segment results for the Company and its Predecessors were as follows (in
thousands):

<TABLE>
<CAPTION>

                                                                           PREDECESSORS
                                                      COMPANY               (COMBINED)
                                           ----------------------------   -------------
                                            FOR THE SIX      MARCH 2,        JANUARY 1,
                                           MONTHS ENDED      THROUGH         THROUGH
                                              JUNE 30,       JUNE 30,        MARCH 1,
                                               2000            1999           1999
                                           ------------    ------------   ------------

<S>                                        <C>             <C>            <C>
WIRELINE:
  Revenues and sales:
    Local services                         $    287,670    $    164,229   $     82,012
    Long distance services                       86,387          73,971         48,613
    Access services                             188,982         119,147         49,517
    Directory services and other                 44,849          25,214         11,135
                                           ------------    ------------   ------------
  Total revenues and sales                 $    607,888    $    382,561   $    191,277
                                           ============    ============   ============

EBITDA                                     $    270,524    $    134,736   $     43,723
                                           ============    ============   ============

Capital Expenditures                       $     68,096    $     57,982   $     31,427
                                           ============    ============   ============


WIRELESS:
  Revenue and sales:
     Cellular services                     $     72,794    $     44,226   $     20,541
     Paging services                             19,504          16,659          8,202
     Equipment sales                              6,216           3,537          3,280
                                           ------------    ------------   ------------
Total revenues and sales                   $     98,514    $     64,422   $     32,023
                                           ============    ============   ============

EBITDA                                     $     19,098    $     16,763   $      8,114
                                           ============    ============   ============

Capital Expenditures                       $      5,528    $      4,815   $      5,388
                                           ============    ============   ============

CONSOLIDATED:
Revenues for reportable segments           $    706,402
Elimination of intersegment revenues             (4,840)
                                           ------------
Consolidated revenues                      $    701,562    $    446,983   $    223,300
                                           ============    ============   ============

EBITDA                                     $    289,622    $    151,499   $     51,837
                                           ============    ============   ============
</TABLE>



<TABLE>
<CAPTION>

                                              JUNE 30,     DECEMBER 31,
              ASSETS                            2000           1999
    -------------------------              ------------    ------------

<S>                                        <C>             <C>
    Wireline                               $  2,545,452    $  2,591,170
    Wireless                                    258,196         296,550
                                           ------------    ------------
    Segment                                $  2,803,648    $  2,887,720
    Elimination of intersegment assets          (77,066)        (59,973)
                                           ------------    ------------
    Consolidated assets                    $  2,726,582    $  2,827,747
                                           ============    ============

</TABLE>



                                       13
<PAGE>   14



13. CONTINGENCIES

    The Company is a defendant in various legal matters arising in the ordinary
    course of business. The Company's management, after consultation with legal
    counsel, believes that the resolution of these matters will not have a
    material adverse effect on the Company's financial position and results of
    operations. In connection with the Acquisition, the PRTA agreed to
    indemnify, defend and hold the Company harmless for specified significant
    litigation, including one environmental matter.

14. RECLASSIFICATIONS

    Reclassifications of prior periods' data have been made to conform to the
    current presentation.




                                       14
<PAGE>   15


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    In this Management's Discussion and Analysis of Financial Condition and
Results of Operations, the Company has made forward-looking statements. These
statements are based on the Company's estimates and assumptions and are subject
to certain risks and uncertainties. Forward-looking statements include
information concerning possible or assumed future results of operations, as well
as those statements preceded or followed by the words "anticipates," "believes,"
"estimates," "expects," "hopes," "targets" or similar expressions.

    Future results could be affected by subsequent events and could differ
materially from those expressed in the forward-looking statements. If future
events and actual performance differ from the Company's assumptions, the actual
results could vary significantly from the performance projected in the
forward-looking statements.

    The following important factors could affect future results and could cause
those results to differ materially from those expressed in the forward-looking
statements: (1) materially adverse changes in economic conditions in Puerto
Rico; (2) material changes in available technology; (3) the final resolution of
regulatory initiatives and proceedings, including arbitration proceedings,
pertaining to, among other matters, the terms of interconnection, access
charges, universal service, unbundled network elements and resale rates; and (4)
the extent, timing, success and overall effects of competition from others in
the Puerto Rico telecommunications service industry.

THE ACQUISITION AND CHANGE IN ACCOUNTING BASIS

    Our results of operations and financial position as of June 30, 2000 reflect
the adoption of a new accounting basis for our assets and liabilities and the
consequences of becoming a tax paying enterprise as a result of the Acquisition.
The revaluation of assets and liabilities reflects the value paid by the GTE
Group to acquire their 50% plus one share interest in the Company in excess of
the historical book value of the assets and liabilities acquired. As a result of
this Acquisition, our results of operations and financial position for periods
ending after March 2, 1999 differ materially from those previously reported by
our Predecessors primarily due to the items discussed above and the following:

o   The incurrence of $1.6 billion of debt and related interest expense in
    connection with the Acquisition;

o   The accrual of management fees owed to Verizon;

o   The introduction of dialing parity in the on-island long distance market and
    our entrance into the off-island long distance market; and

o   The discontinuation of regulatory accounting principles


RESULTS OF OPERATIONS

    Our discussion of results for the quarter and the six months ended June 30,
2000 and 1999 is based upon the Company's results from March 2, 1999 to June 30,
1999, and the Predecessor results from January 1, 1999 to March 1, 1999. In the
discussion, references to the Company also include our Predecessors. The
comparability of revenues before and after the Acquisition was not affected by a
change in accounting basis. Accordingly, in the discussion of revenue trends, we
have not distinguished between the operations of the Predecessors before March
1, 1999 and after this date.

    We have two reportable segments, Wireline and Wireless. See Note 12 to the
condensed consolidated financial statements for additional information on our
segments. Reclassifications of prior years' data have been made to conform to
the 2000 presentation.



                                       15
<PAGE>   16



    The Wireline segment provides:

    o   Local services including basic voice, telephone and telecommunications
        equipment rentals, value-added services, high speed private line
        services, Internet access, public phone service and line installations;

    o   Long distance services including direct dialed on-island and off-island,
        operator assisted, calling card and high-speed private line revenues;

    o   Access services provided to long distance carriers, competitive local
        exchange carriers, and cellular and paging operators to originate and
        terminate calls on its network;

    o   Directory publishing right revenues; and

    o   Telecommunications equipment sales and billing and collection services
        to competing long distance operators in Puerto Rico.

    The Wireless segment includes cellular and paging services.

    REVENUES

<TABLE>
<CAPTION>

                                 THREE MONTHS ENDED JUNE 30,            SIX MONTHS ENDED JUNE 30,
                             ----------------------------------    ----------------------------------
                                   2000              1999                2000              1999
                             ---------------    ---------------    ---------------    ---------------
                                  (DOLLARS IN MILLIONS)                   (DOLLARS IN MILLIONS)

<S>                          <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>
WIRELINE:
Local                        $  146       41%   $  125       37%   $  286       41%   $  246       37%
Network Access                   95       27        93       28       187       27       169       25
Long Distance                    44       12        53       16        86       12       122       18
Directory and Other              24        6        19        5        45        6        36        5
                             ------   ------    ------   ------    ------   ------    ------   ------
   Total Wireline            $  309       86%      290       85%   $  604       86%      573       85%
                             ------   ------    ------   ------    ------   ------    ------   ------

WIRELESS:
Cellular                         37       10%       34       10%       72       10%       65       10%
Paging                            9        3        12        4        20        3        25        4
Wireless Equipment                3        1         2        1         6        1         7        1
                             ------   ------    ------   ------    ------   ------    ------   ------
  Total Wireless                 49       14%       48       15%       98       14%       97       15%
                             ------   ------    ------   ------    ------   ------    ------   ------

 Revenues and Sales          $  358      100%   $  338      100%   $  702      100%   $  670      100%
                             ======   ======    ======   ======    ======   ======    ======   ======

</TABLE>




                                       16
<PAGE>   17


         EXPENSES AND CHARGES

<TABLE>
<CAPTION>

                                                   THREE MONTHS           SIX MONTHS
                                                   ENDED JUNE 30,        ENDED JUNE 30,
                                                -------------------   -------------------
                                                   2000      1999        2000       1999
                                                --------   --------   --------   --------
                                               (DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)

<S>                                             <C>        <C>        <C>        <C>
WIRELINE:
Cost of services and sales                      $     82   $    126   $    173   $    250
Selling, general and administrative                   72         62        148        116
                                                --------   --------   --------   --------
   Total Wireline                                    154        188        321        366

WIRELESS:
Cost of services and sales                      $     19   $     10   $     30   $     21
Selling, general and administrative                   31         22         61         42
                                                --------   --------   --------   --------
   Total Wireless                                     50         32         91         63

OTHER:
ESOP compensation expense                       $     --   $     --   $     --   $     26
Early retirement provision                            --         --         --          4
Depreciation and amortization                         75         65        149        150
Interest and others                                   20         20         40         27
Income tax expense                                    23         12         40         11
Extraordinary item (FAS #71) - net of tax             --         --         --         61
                                                --------   --------   --------   --------
Net income (loss)                               $     36   $     21   $     61   $    (38)
                                                ========   ========   ========   ========
</TABLE>


OPERATING DATA

<TABLE>
<CAPTION>

                                                   THREE MONTHS           SIX MONTHS
                                                   ENDED JUNE 30,        ENDED JUNE 30,
                                                -------------------   -------------------
                                                   2000      1999        2000       1999
                                                --------   --------   --------   --------

<S>                                             <C>        <C>        <C>        <C>
Access Lines in Service (000's):
    Residential                                      964        963        964        963
    Business                                         308        299        308        299
                                                --------   --------   --------   --------
Total                                              1,272      1,262      1,272      1,262

On-island LD Minutes (millions)                      243        319        499        725
Off-island LD Minutes (millions)(1)                   36         11         67         13

Cellular Customers (000's):
    Postpaid                                         194        177        194        177
    Prepaid                                          117         77        117         77
                                                --------   --------   --------   --------
Total                                                311        254        311        254

Cellular ARPU                                   $     38   $     47   $     39   $     48
Paging Customers (000's)                             168        204        168        204
</TABLE>



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

(1)  Off-island long distance service commenced February 1, 1999.




                                       17
<PAGE>   18


THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH QUARTER ENDED JUNE 30, 1999

         REVENUES AND SALES. Revenues for the quarter ended June 30, 2000
increased $20 million, or 6%, to $358 million from $338 million in the
comparable 1999 period.

    WIRELINE:

         Local service revenues include revenue generated from basic voice,
telephone and telecommunications equipment rental, value-added services,
high-speed private line services, Internet access, public phone service, and
line installation services. Local service revenues for the quarter ended June
30, 2000 increased $21 million, or 17%, to $146 million from $125 million in the
same 1999 period, resulting primarily from increases in measured services, basic
rent, private line and Internet access of $8 million, $5 million, $4 million and
$4 million, respectively.

         The increase in basic rent of $5 million is primarily due to a shift in
access lines toward higher priced flat rated service caused by Internet usage.
Access line growth for the quarter ended June 30, 2000 and 1999 was 1%. The
waiting list of orders for new installations decreased to 35,442 at June 30,
2000 in comparison with 41,400 at March 31, 2000. The decrease in the waiting
list was due to the Company's effort to restore services after the contractor's
work actions. The increase in local measured service is primarily due to higher
business usage.

         Network access revenues include service provided to long distance,
competitive local exchange carriers, and cellular and paging operators to
originate and terminate calls on the Company's network. Network access revenues
for the quarter ended June 30, 2000 increased $2 million, to $95 million
compared to $93 million for the quarter ended June 30, 1999. We received $8
million of additional access revenues from long distance carriers to originate
on-island calls, due to on-island long distance market share loss. This increase
was partially offset by a decrease of $6 million due to reductions in common
carrier line rates.

         Long distance revenues include direct dialed on-island and off-island,
operator-assisted, calling card and on-island private line revenues. Long
distance revenues decreased $9 million, or 17%, to $44 million for the quarter
ended June 30, 2000 from $53 million in the same quarter in 1999. The decrease
was attributable to 24% lower on-island minutes of use, which was partially
offset by an increase in off-island minutes-of-use and higher operator assisted
set-up fees. Our market share decreased to 55% as of June 30, 2000 due to
competition in the on-island market as a result of introducing dialing parity in
February 1999. The increase in off-island traffic for the total market has
mitigated some of this decrease. For the quarter ended June 30, 2000, new
revenues as a result of our entrance in the off-island long distance market were
$5 million higher than for the same period in 1999.

         Directory and other revenues include directory publishing rights,
telecommunication equipment and billing and collection services to competitor
long distance operators. Directory and other revenues for the quarter ended June
30, 2000 increased $5 million, or 26%, to $24 million, from $19 million in the
quarter ended June 30, 1999 mainly due to higher billing, collection and
miscellaneous services to carriers.

    WIRELESS:

         Revenues from cellular and paging services and related equipment sales
for the quarter ended June 30, 2000 increased $1 million, to $49 million from
$48 million in the same quarter in 1999. Cellular service revenues increased $3
million, or 9%, as a result of the net addition of approximately 13,000
customers during the quarter. Cellular average revenue per unit per month of $38
for the quarter ended June 30, 2000 decreased by $9 from the similar period in
1999. The reduction is the result of competitive pricing actions and a larger
portion of prepaid customers, which have lower average revenue per unit. Prepaid
customers increased 52% at June 30, 2000 as compared to the same 1999 period.


         Paging revenues declined $3 million, or 25%, to $9 million during the
quarter ended June 30, 2000 from $12 million in the same 1999 period. The
decrease was due to lower customers related to non-payments and migration to
cellular prepaid plans.




                                       18
<PAGE>   19

         Other revenues include equipment sales, which increased $1 million to
$3 million during the quarter ended June 30, 2000 from $2 million in the same
1999 period. This was a result of higher gross customer additions.

    OPERATING COSTS AND EXPENSES. Operating costs and expenses for the quarter
ended June 30, 2000 decreased $16 million, or 7%, to $204 million from the $220
million incurred in the same 1999 period.

    WIRELINE:

         Wireline expenses for the quarter ended June 30, 2000 decreased $34
million, or 18%, to $154 million from the $188 million incurred in the same 1999
quarter. Costs of services and sales decreased $44 million, or 35%, to $82
million from $126 million, mainly due to decreases in labor of $18 million,
contractor expenses of $3 million, the absence of Hurricane Georges repair
expenses of $15 million, line installations of $4 million, cost of equipment
sold of $2 million and maintenance of $2 million. Labor savings resulted from a
workforce reduction of 1,342 employees related to the 1999 early retirement
program.

         Selling, general and administrative expenses of $72 million increased
$10 million, or 16%, compared to the same 1999 period. The principal component
of the increase relates to management fees of $3 million and higher advertising
expenses of $4 million.

    WIRELESS:

         Wireless expenses for the quarter ended June 30, 2000, increased $18
million, or 56%, to $50 million from the $32 million reported in the same period
of 1999. Costs of services and sales increased $9 million, to $19 million from
$10 million in the same quarter of 1999. The increase was mainly due to higher
cost of equipment sold of $4 million, labor of $1 million, and maintenance costs
of $1 million.

          Selling, general and administrative expenses increased $9 million to
$31 million from the $22 million reported in the same 1999 period. The principal
components of this increase were higher commissions of $2 million, bad debt
provisions of $1 million, higher advertising of $1 million, utilities and
postage of $1 million, transportation and travel of $1 million, and software and
license fees of $1 million.

ESOP COMPENSATION EXPENSES. A $26 million non-cash expense was recorded in the
quarter ended March 31, 1999 representing the PRTA's grant, with an offsetting
credit to paid-in-capital.

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization of $75
million for the quarter ended June 30, 2000 was $10 million higher than the
prior year's quarter due to lower depreciation related to the discontinuation of
regulatory accounting principles.

INTEREST EXPENSE. Interest expense of $20 million for the quarter ended June 30,
2000 primarily resulted from privatization related borrowings. Debt decreased
from $1.6 billion on March 2, 1999 to $1.3 billion at June 30, 2000.

EQUITY INCOME IN JOINT VENTURE. Earnings of $1 million were generated from the
Company's approximately 25% share in AXESA, the largest yellow page publishing
company in Puerto Rico. The Company's share of the earnings commenced in January
2000.

INCOME TAXES. A $23 million tax provision for the second quarter of 2000
reflects a 39% statutory rate, excluding some non-tax deductible goodwill
amortization.



                                       19
<PAGE>   20



SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999

    REVENUES AND SALES. Revenues for the six months ended June 30, 2000
increased $32 million, or 5%, to $702 million from $670 million in the
comparable 1999 period.

    WIRELINE:

         Local service revenues include basic voice, telephone and
telecommunications equipment rental, value-added services, high-speed private
line services, Internet access, public phone service, and installation services.
Local service revenues for the six months ended June 30, 2000 increased $40
million, or 16%, to $286 million from $246 million in the same 1999 period,
resulting primarily from increases in high-speed private lines, basic rent,
measured services, Internet access, value-added services and line installation
charges of $12 million, $11 million, $7 million, $6 million, $3 million and $1
million, respectively.

         The increase in basic rent of $11 million is primarily due to a shift
in access lines toward higher priced flat rated service caused by Internet
usage. Access line growth in the six months ended June 30, 2000 was 0.6%,
compared to 2% for the comparable 1999 period due to facilities based local
exchange competition. The waiting list of orders for new installations increased
to 35,442 at June 30, 2000 in comparison to 22,200 at December 31, 1999 and
24,600 at June 30, 1999. The increase in the waiting list was related to
contractor work actions during the first quarter of 2000. The increase in local
measured service is primarily due to higher business usage.

         Network access revenues include services provided to long distance
carriers, competitive local exchange carriers, and cellular and paging operators
to originate and terminate calls on its network. Network access revenues for the
six months ended June 30, 2000 increased $18 million, or 11%, to $187 million
compared to $169 million for the comparable 1999 period. We received $21 million
of additional access revenues from long distance carriers to originate on-island
calls, which was the result of our on-island long distance market share loss. An
additional $5 million was realized from higher off-island access revenues due to
higher competitor off-island traffic. This increase was offset by a decrease of
$8 million due to reductions in carrier common line rates.

         Long distance revenues include direct dialed on-island and off-island,
operator-assisted, calling card and on-island private line revenues. Long
distance revenues decreased $36 million, or 30%, to $86 million for the six
months ended June 30, 2000 from $122 million in the same 1999 period. The
decrease was attributable to 31% lower on-island minutes of use, which was
partially offset by an increase in off-island minutes-of-use and higher operator
assisted set-up fees. Our market share decreased to 55% as of June 30, 2000 due
to competition in the on-island market as a result of introducing dialing parity
in February 1999. The increase in off-island traffic for the total market has
mitigated some of this decrease. For the six months ended June 30, 2000, new
revenues as a result of our entrance in the off-island long distance market were
$10 million higher than for the same 1999 period. We commenced off-island long
distance service in February 1999.

         Directory and other revenues include directory publishing rights,
telecommunication equipment and billing and collecting services to competitor
long distance operators. Directory and other revenues for the six months ended
June 30, 2000 increased $9 million or 25%, to $45 million, from $36 million in
the comparable 1999 period mainly due to higher billing, collection and
miscellaneous services to carriers.

    WIRELESS:

         Revenues from cellular and paging services and related equipment sales
for the six month period ended June 30, 2000 increased $1 million to $98 million
from $97 million for the comparable 1999 period. Cellular service revenues
increased $7 million, or 11%, as a result of the net addition of approximately
57,000 customers versus the same period last year, representing a 22% increase
in net customers. Cellular average revenue per unit per month of $39 decreased
by $9 as a result of competitive pricing actions and a larger portion of prepaid
customers, which have lower average revenue per unit.

         Paging revenues declined $5 million, or 20%, to $20 million during the
six months period ended June 30, 2000 from $25 million for the comparable
1999 period. The decrease was due to a reduction of 36,000 customers versus the
same 1999 period because of disconnections related to non-payment and the
migration to cellular prepaid plans.



                                       20
<PAGE>   21


         Other revenues include equipment sales, which decreased $1 million to
$6 million during the six months period ended June 30, 2000 from $7 million in
the comparable 1999 period. This was a result of lower gross additions.

    OPERATING COSTS AND EXPENSES. Operating costs and expenses for the six
months period ended June 30, 2000 decreased $17 million, or 4%, to $412 million
from the $429 million for in the same 1999 period.

    WIRELINE:

         Wireline expenses for the six months period ended June 30, 2000
decreased $45 million, or 12%, to $321 million from the $366 million incurred in
the comparable 1999 period. Costs of services and sales decreased $77 million,
or 31%, to $173 million from $250 million in the same period of 1999, mainly due
to decreases in labor of $31 million, the absence of Hurricane Georges repair
expenses of $28 million, decreases in cost of equipment of $4 million,
installations of $4 million, rent and maintenance of $4 million, contractor
expenses of $4 million and contributions to the universal service fund of $2
million. Labor savings resulted from a workforce reduction of 1,342 employees
related to the 1999 early retirement program.

         Selling, general and administrative expenses of $148 million increased
$32 million, or 28%, compared to the same 1999 period. The increase is due to
higher management fees of $12 million, advertising expenses of $5 million,
transportation and travel of $4 million, utilities and postage of $4 million,
commissions of $1 million and bad debt provisions of $1 million.

    WIRELESS:

         Wireless expenses for the six months period ended June 30, 2000,
increased $28 million, or 44%, to $91 million from the $63 million reported in
the same 1999 period. Costs of services and sales increased $9 million to $30
million from $21 million in 1999. The principal components of this increase are
higher cost of equipment sold of $3 million, labor of $3 million, rent of $2
million and property and municipal taxes of $1 million.

         Selling, general and administrative expenses increased $19 million to
$61 million from the $42 million reported in the same 1999 period. The principal
components of this increase were higher bad debt provisions of $5 million,
commissions of $4 million, utilities and postage of $2 million and advertising
of $2 million. These increases reflect an intense competitive market.

ESOP COMPENSATION EXPENSES. A $26 million non-cash expense was recorded in the
first quarter of 1999 representing the PRTA's grant, with an offsetting credit
to paid-in-capital.

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization of $149
million for the six months ended June 30, 2000 was $1 million lower than the
prior year period.

INTEREST EXPENSE. Interest expense of $40 million for the six months ended June
30, 2000 primarily resulted from privatization related borrowings. Debt
decreased from $1.6 billion on March 2, 1999 to $1.3 billion at June 30, 2000.

EQUITY INCOME IN JOINT VENTURE. Earnings of $1 million were generated from the
Company's approximate 25% share in AXESA, the largest yellow page publishing
company in Puerto Rico. The Company's share of the earnings commenced in January
2000.

INCOME TAXES. A $40 million tax provision for the six months period ended June
30, 2000 reflects a 39% statutory rate, excluding some non-tax deductible
goodwill amortization.




                                       21
<PAGE>   22

CONSOLIDATED FINANCIAL CONDITION

<TABLE>
<CAPTION>

                                       SIX MONTHS ENDED JUNE 30,
                                 --------------------------------------
                                    2000          1999         CHANGE
                                 ----------    ----------    ----------
                                        (DOLLARS IN MILLIONS)

<S>                              <C>           <C>           <C>
Cash flows from (used in):
  Operations                     $      161    $      180    $      (19)
  Investing                             (73)         (100)           27
  Financing                             (80)          (51)          (29)
</TABLE>

         Cash from operations is sufficient to meet working capital needs and a
capital expenditures budget for 2000 of $228 million. Current liabilities
exceeded current assets at June 30, 2000 by $6 million due to borrowings of $100
million under a short-term working capital facility the proceeds of which were
used for the prepayment of $100 million of bank debt. The $100 million
refinancing decreased borrowing costs by 22.5 basis points.

OPERATIONS

          Cash from operations decreased $19 million, mainly due to
approximately $82 million in pension payments made in 2000 compared to $18
million in 1999. The acquisition agreement states that $66 million of pension
payments must be made on March 2nd for each of five consecutive years starting
in 2000. This is funded in part by a $40 million government capital
contribution, which is reflected in financing activities. High pension payments
were offset by higher revenues of $32 million and carrier collections of $9
million.

INVESTING

         Capital spending was $27 million lower due to the timing of supplier
equipment deliveries and contractor work actions.

FINANCING

         Debt reduction for 2000 was $120 million. Outstanding borrowings under
bank loans and working capital facilities decreased from $495 million at
December 31, 1999 to $375 million at June 30, 2000. The Company executed two new
working capital line of credit facilities with BBV and Popular for $50 million
each on May 4, 2000 and June 2, 2000, respectively. These facilities replace a
$200 million facility with Popular, which was initiated on March 2, 1999 and
expired on March 2, 2000. The interest rate on the credit facilities is LIBOR
plus 50 basis points, approximating a 7% interest rate at June 30, 2000. This is
22.5 basis points lower than the bank notes.



                                       22
<PAGE>   23




REGULATORY MATTERS

LONG DISTANCE CALLING PLANS

         Telefonica Larga Distancia ("TLD") has asserted to the
Telecommunications Regulatory Board ("TRB") that several of our bundled long
distance calling plans are below cost. One of these plans includes competitive
prices for off-island and on-island long distance and free weekend on-island
calls with a minimum monthly fee. The TRB found the plan was based on cost in a
March 2000 ruling, but required us to submit a new cost study by October 2000 to
reflect weekend traffic. In April 2000, TLD filed a motion to reconsider and
then we filed an opposition to TLD's motion. The TRB has not ruled on the
motions.

         A similar plan was also challenged by TLD. The plan adds Internet
access and replaces the monthly minimum with a monthly service charge. The TRB
dismissed the complaint in May 2000 after the service charge was increased from
$15 to $18.

ON-ISLAND ACCESS RATE DISPUTE

         All the elements of our intrastate access rates were set at the same
amounts as our interstate access rates prior to October 1998. We changed our
intrastate rate elements in October 1998 based on a cost study. The change
involved increasing the common carrier line ("CCL") rate element by 2 cents per
minute and decreasing other elements with no change in total revenue
requirements.

         In February 1999, the TRB ordered us to decrease the terminating CCL
element without increasing other elements. We appealed the order, and continued
billing the rate through November 1999, at which time the increase was replaced
with a pre-subscribed inter-exchange carrier charge. In May 2000, the TRB
ordered a 2 cents per minute refund from July to November 1999 and imposed a
fine of $250,000. We filed a motion to reconsider the fine in May 2000. The
settlement is not expected to be significant in relation to our financial
condition and results of operations.

INTERNET TRAFFIC

         A competitive local exchange carrier ("CLEC") brought an action before
the TRB complaining that we did not compensate them for local Internet traffic
originating from our customers and terminating on their network. The CLEC claims
that the traffic is subject to a reciprocal compensation agreement. We have been
negotiating this matter through a TRB selected arbitrator while challenging the
legality of the claim with the FCC. We reached an agreement in April 2000. The
settlement for prior period claims was not significant in relation to our
financial condition or results of operations.

PUBLIC TELEPHONE ACCESS RATES

         In June 2000, the Puerto Rico Supreme Court upheld a TRB order of May
1998 to reduce access rates to public phone service providers. We will reduce
these rates in August 2000 and are negotiating settlements with the public phone
service providers. The settlement is not expected to be significant in relation
to our financial condition and results of operations.

RATE MAKING CONSIDERATIONS RELATED TO THE CREATION OF WIRELESS AFFILIATE

         Our Predecessors transferred their net wireless assets on September 1,
1998 to CT, a new subsidiary. Our Predecessors later filed a waiver request with
the FCC to record this transfer at book value instead of fair value. Our
Predecessors did not include the assets in the measurement of cost in the rate
setting process with the FCC. Accordingly, we believe that ratepayers did not
bear the cost of our Predecessor's wireless investment and the FCC should grant
the waiver.



                                       23
<PAGE>   24
 The FCC denied our Predecessors' waiver request in a November 1999 order. The
order concluded that the asset transfer resulted in a gain of $74 million. Of
this amount approximately $18.5 million is manifested as interstate access
charges. Under FCC rules, we could be required to pass on an equal amount to
carries through reduced rates beginning in 2000.

         We filed a petition for reconsideration with the FCC in December 1999
stating that we believe that the FCC did not make the right conclusion based
upon the rate setting process. The FCC requested, and received from one carrier,
public comments regarding this issue in June 2000.

         We cannot provide any assurance that the FCC will grant a favorable
ruling or that we will be able to recover any of our losses or damages resulting
from our Predecessor's actions or unfavorable rulings by the FCC or the Puerto
Rico Telecommunications Regulatory Board.



                                       24
<PAGE>   25




RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which established accounting and reporting standards for derivative and hedging
instruments. SFAS No. 133 is effective for fiscal years beginning after June 15,
2000. The statement requires entities that use derivatives to measure and record
these instruments at fair value as assets or liabilities on the balance sheet.
It also requires entities to reflect gains or losses associated with changes in
fair value, either in earnings or as a separate component of comprehensive
income, depending on the nature of the underlying transaction. We do not use
derivative instruments. Therefore, the adoption of SFAS No. 133 is not expected
to have a significant effect on our results of operations or our financial
condition.

         The SEC issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements," which changes the recognition of
non-recurring revenues such as installation charges and related direct selling
expenses. This SAB must be implemented by year-end 2000 with the cumulative
effect of this change in accounting principle measured as of December 31, 1999,
with a resulting restatement of revenues and expenses for the year 2000. The
Company is currently assessing the impact of the adoption of this SAB.





                                       25
<PAGE>   26



ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE SENSITIVITY

         The table below provides information about debt at June 30, 2000. The
table presents the estimated interest requirement for each of the next five
years and in the aggregate thereafter as well as the related average interest
rates.

<TABLE>
<CAPTION>

                                          INITIAL INTEREST REQUIREMENT                                            INITIAL
                    ----------------------------------------------------------                         PRINCIPAL  MATURITY
                      2000      2001      2002      2003      2004      2005    THEREAFTER     TOTAL    AMOUNT     DATE   FAIR VALUE
                    --------  --------  --------  --------  --------  --------  ----------   --------- --------  -------- ----------

FIXED RATE
SENIOR NOTES

<S>                 <C>       <C>       <C>       <C>       <C>       <C>       <C>          <C>        <C>        <C>    <C>
Due 2002(1)         $ 18,450  $ 18,450  $ 20,200  $ 21,450  $ 21,450  $ 23,200   $ 58,069    $ 181,269  $300,000   2002   $  297,180

Interest Rate          6.15%     6.15%     6.73%     7.15%     7.15%     7.73%      8.15%

Due 2006            $ 26,600  $ 26,600  $ 26,600  $ 26,600  $ 26,600  $ 26,600   $  9,975    $ 169,575  $400,000   2006   $  384,172

Interest Rate          6.65%     6.65%     6.65%     6.65%     6.65%     6.65%      6.65%

Due 2009            $ 20,400  $ 20,400  $ 20,400  $ 20,400  $ 20,400  $ 20,400   $ 68,850    $ 191,250  $300,000   2009   $  281,448

Interest Rate          6.80%     6.80%     6.80%     6.80%     6.80%     6.80%      6.80%

FLOATING RATE DEBT

Five-year(2)        $ 21,384  $ 39,880  $ 40,880  $ 41,880  $ 42,880  $ 43,880   $138,661    $ 369,445  $275,000   2004

Interest Rate          7.77%     7.97%     8.17%     8.37%     8.57%     8.77%      8.77%

364-day BBV(3)      $  2,160  $  3,875  $  3,975  $  4,075  $  4,175  $  4,275   $  4,275    $  26,813  $ 50,000   2001


Interest Rate          7.55%     7.75%     7.95%     8.15%     8.35%     8.55%      8.55%


364-day BPPR(3)     $  2,160  $  3,875  $  3,975  $  4,075  $  4,175  $  4,275   $  4,275    $  26,813  $ 50,000   2001

Interest Rate          7.75%     7.95%     8.15%     8.35%     8.55%     8.55%      7.55%
</TABLE>


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

Assumptions:

<TABLE>
<CAPTION>

(1)  Senior Notes 2002:                                           (3)  364-day Revolving Credit Facilities:

<S>                                                               <C>
       o To be refinanced for an additional three years                 o  Started using the facilities on June 7, 2000
         in 2002 and again in 2005
                                                                        o  Used June 30, 2000 balance of $50 million
       o The 2002 refinancing is based on a 6.15% rate
         up to May and 7.15% rate thereafter                            o  To be refinanced on a yearly basis

       o The 2005 refinancing is based on a 7.15% rate                  o  Company forecast based on a 20 basis point increase per
         up to May and 8.15% rate thereafter                               year

                                                                        o  No principal payments throughout the year

(2)  Five-year Revolving Credit Facility:

       o Used June 30, 2000 balance of $275 million; 2001
         and thereafter $500 million

       o To be refinanced in 2004

       o Company forecast based on a 20 basis point
         increase per year

       o No principal payments throughout the year
</TABLE>



                                       26
<PAGE>   27

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are a defendant in various legal and administrative proceedings arising in
the ordinary course of business. We believe the resolution of these matters will
not have a material adverse effect on our financial position and results of
operations. See the Regulatory Matters section of Management's Discussion and
Analysis for more information regarding this matter. In connection with the
Acquisition, the PRTA agreed to indemnify, defend and hold us harmless for
specified significant litigation, including one environmental matter.

Item 5. Other Information

On June 30, 2000, the Company's managing shareholder, GTE Corporation, entered
into a merger with Bell Atlantic Company. The new merged company is called
Verizon Communications ("Verizon"). As a result of the merger, the Company is
now an indirect affiliate of Verizon.

Item 6. Exhibits and Reports on Form 8-K

a)      Exhibits required by Item 601 of Regulation S-K

        10) Material Contracts

            .21) Working capital revolving credit agreement between
                 Telecomunicaciones de Puerto Rico, Inc. and Banco Bilbao
                 Vizcaya.

            .22) Working capital revolving credit agreement between
                 Telecomunicaciones de Puerto Rico, Inc. and Banco Popular de
                 Puerto Rico.

        12) Statement re: Calculation of the Consolidated Ratio of Earnings to
            Fixed Charges

        27) Financial Data Schedule

b)      No reports on Form 8-K were filed during the second quarter of 2000.



<PAGE>   28




                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

    TELECOMUNICACIONES DE PUERTO RICO, INC.

                                             By:  /s/ Jon Slater
                                                 ------------------------------
                                                 Name:  Jon Slater
                                                 Title: Chief Executive Officer
                                                 Date:  August 11, 2000



                                             By: /s/ Frank P. Gatto
                                                 -----------------------------
                                                 Name:  Frank P. Gatto
                                                 Title: Chief Financial Officer
                                                 Date:  August 11, 2000



                                             By: /s/ Robert P. Huberty
                                                 ------------------------------
                                                 Name:  Robert P. Huberty
                                                 Title: Chief Accounting Officer
                                                 Date:  August 11, 2000

<PAGE>   29




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

      EXHIBIT
      NUMBER     DESCRIPTION
      -------    -----------

<S>              <C>
        3.1      Certificate of Incorporation of Telecomunicaciones de Puerto
                 Rico, Inc (Incorporated by reference to Exhibit 3.1 of the
                 Company's Registration Statement filed on Form S-4 (File
                 333-85503).

        3.2      Certificate of Amendment to the Certificate of Incorporation of
                 Telecomunicaciones de Puerto Rico, Inc. (Incorporated by
                 reference to Exhibit 3.2 of the Company's Annual Report filed
                 on Form 10-K (File 333-85503).

        3.3      By-Laws of Telecomunicaciones de Puerto Rico, Inc.
                 (Incorporated by reference to Exhibit 3.4 of the Company's
                 Registration Statement filed on Form S-4 (File 333-85503).

        4.1      Trust Indenture dated as of May 20, 1999 between
                 Telecomunicaciones de Puerto Rico, Inc. and The Bank of New
                 York. (Incorporated by reference to Exhibit 4.1 of the
                 Company's Registration Statement filed on Form S-4 (File
                 333-85503).

        10.1     Amended and Restated Stock Purchase Agreement, dated as of May
                 27, 1998 and Amended and Restated as of July 21, 1998 by and
                 among Puerto Rico Telephone Authority, Puerto Rico Telephone
                 Company, GTE Holdings (Puerto Rico) LLC and GTE International
                 Telecommunications Incorporated. (Incorporated by reference to
                 Exhibit 10.1 of the Company's Registration Statement filed on
                 Form S-4 (File 333-85503).

        10.2     First Amendment to the Stock Purchase Agreement, dated as of
                 January 4, 1999, by and among Puerto Rico Telephone Authority,
                 Puerto Rico Telephone Company, GTE Holdings (Puerto Rico) LLC
                 and GTE International Telecommunications Incorporated.
                 (Incorporated by reference to Exhibit 10.2 of the Company's
                 Registration Statement filed on Form S-4 (File 333-85503).

        10.3     Second Amendment to the Stock Purchase Agreement, dated as of
                 January 29, 1999, by and among Puerto Rico Telephone Authority,
                 Puerto Rico Telephone Company, GTE Holdings (Puerto Rico) LLC
                 and GTE International Telecommunications Incorporated.
                 (Incorporated by reference to Exhibit 10.3 of the Company's
                 Registration Statement filed on Form S-4 (File 333-85503).

        10.4     Third Amendment to the Stock Purchase Agreement, dated as of
                 March 2, 1999, by and among Puerto Rico Telephone Authority,
                 Puerto Rico Telephone Company, GTE Holdings (Puerto Rico) LLC,
                 GTE International Telecommunications Incorporated,
                 Telecomunicaciones de Puerto Rico, Inc. and Celulares
                 Telefonica, Inc. (Incorporated by reference to Exhibit 10.4 of
                 the Company's Registration Statement filed on Form S-4 (File
                 333-85503).

        10.5     Shareholders Agreement, dated as of March 2, 1999, by and among
                 Telecomunicaciones de Puerto Rico, Inc., GTE Holdings (Puerto
                 Rico) LLC, GTE International Telecommunications Incorporated,
                 Popular, Inc, Puerto Rico Telephone Authority and the
                 shareholders of Telecomunicaciones de Puerto Rico, Inc., who
                 shall from time to time be parties thereto as provided therein.
                 (Incorporated by reference to Exhibit 10.5 of the Company's
                 Registration Statement filed on Form S-4 (File 333-85503).

        10.6     Amended and Restated Puerto Rico Management Agreement, dated as
                 of March 2, 1999, by and among Telecomunicaciones de Puerto
                 Rico, Inc., Puerto Rico Telephone Company, and GTE
                 International Telecommunications Incorporated. (Incorporated by
                 reference to Exhibit 10.6 of the Company's Registration
                 Statement filed on Form S-4 (File 333-85503).
</TABLE>


<PAGE>   30

<TABLE>

<S>              <C>
        10.7     Amended and Restated U.S. Management Agreement, dated as of
                 March 2, 1999, by and among Telecomunicaciones de Puerto Rico,
                 Inc., Puerto Rico Telephone Company, and GTE International
                 Telecommunications Incorporated. (Incorporated by reference to
                 Exhibit 10.7 of the Company's Registration Statement filed on
                 Form S-4 (File 333-85503).

        10.8     Amended and Restated Technology Transfer Agreement, dated as of
                 March 2, 1999, by and among Telecomunicaciones de Puerto Rico,
                 Inc., Puerto Rico Telephone Company, and GTE International
                 Telecommunications Incorporated. (Incorporated by reference to
                 Exhibit 10.8 of the Company's Registration Statement filed on
                 Form S-4 (File 333-85503).

        10.9     Non-Competition Agreement, dated as of March 2, 1999, by and
                 among Telecomunicaciones de Puerto Rico, Inc, GTE Holdings
                 (Puerto Rico) LLC, GTE International Telecommunications
                 Incorporated, Popular, Inc., Puerto Rico Telephone Authority,
                 and the Government Development Bank for Puerto Rico.
                 (Incorporated by reference to Exhibit 10.9 of the Company's
                 Registration Statement filed on Form S-4 (File 333-85503).

        10.10    Share Option Agreement, dated as of March 2, 1999, by and among
                 Puerto Rico Telephone Authority, Telecomunicaciones de Puerto
                 Rico, Inc, GTE Holdings (Puerto Rico) LLC, and GTE
                 International Telecommunications Incorporated. (Incorporated by
                 reference to Exhibit 10.10 of the Company's Registration
                 Statement filed on Form S-4 (File 333-85503).

        10.11    Stock Purchase Agreement, dated as of March 1, 1999, by and
                 between Telecomunicaciones de Puerto Rico, Inc and Puerto Rico
                 Telephone Authority. (Incorporated by reference to Exhibit
                 10.11 of the Company's Registration Statement filed on Form S-4
                 (File 333-85503).

        10.12    Trust Agreement of the Employee Stock Ownership Plan of
                 Telecomunicaciones de Puerto Rico, Inc., dated as of March 2,
                 1999, by and between U.S. Trust, National Association and
                 Telecomunicaciones de Puerto Rico, Inc. (Incorporated by
                 reference to Exhibit 10.12 of the Company's Registration
                 Statement filed on Form S-4 (File 333-85503).

        10.13    ESOP Loan Agreement, dated as of March 2, 1999, by and between
                 the Trust of the Employee Stock Ownership Plan of
                 Telecomunicaciones de Puerto Rico, Inc. and Telecomunicaciones
                 de Puerto Rico, Inc. (Incorporated by reference to Exhibit
                 10.13 of the Company's Registration Statement filed on Form S-4
                 (File 333-85503).

        10.14    Stock Purchase Agreement, dated as of March 2, 1999, by and
                 between Puerto Rico Telephone Authority and the Trust of the
                 Employee Stock Ownership Plan of Telecomunicaciones de Puerto
                 Rico, Inc. (Incorporated by reference to Exhibit 10.14 of the
                 Company's Registration Statement filed on Form S-4 (File
                 333-85503).

        10.15    Pledge Agreement, dated as of March 2, 1999, by and between the
                 Trust of the Employee Stock Ownership Plan of
                 Telecomunicaciones de Puerto Rico, Inc. and Telecomunicaciones
                 de Puerto Rico, Inc. (Incorporated by reference to Exhibit
                 10.15 of the Company's Registration Statement filed on Form S-4
                 (File 333-85503).

        10.16    Tag Along Agreement, dated as of March 2, 1999, by and among
                 GTE Holdings (Puerto Rico) LLC, GTE International
                 Telecommunications Incorporated, and the Trust of the Employee
                 Stock Ownership Plan of Telecomunicaciones de Puerto Rico, Inc.
                 (Incorporated by reference to Exhibit 10.16 of the Company's
                 Registration Statement filed on Form S-4 (File 333-85503).
</TABLE>


<PAGE>   31

<TABLE>

<S>              <C>
        10.17    $500,000,000 Five-Year Credit Agreement, dated as of March 2,
                 1999, among Telecomunicaciones de Puerto Rico, Inc., as
                 Borrower, Puerto Rico Telephone Company and Celulares
                 Telefonica, as Guarantors, the Initial Lenders named therein,
                 Citibank, N.A., as Administrative Agent, Bank of America
                 National Trust and Savings Association, as Syndication Agent,
                 and The Chase Manhattan Bank and Morgan Guaranty Trust Company
                 of New York, as Documentation Agents. (Incorporated by
                 reference to Exhibit 10.17 of the Company's Registration
                 Statement filed on Form S-4 (File 333-85503).

        10.18    Letter Amendment to the Five-Year Credit Agreement, dated May
                 7, 1999. (Incorporated by reference to Exhibit 10.18 of the
                 Company's Registration Statement filed on Form S-4 (File
                 333-85503).

        10.21    $50,000 working capital revolving credit agreement dated as of
                 May 4, 2000, among Telecomunicaciones de Puerto Rico, Inc., as
                 borrower, and Banco Bilbao Vizcaya Argentaria S.A. and Banco
                 Bilbao Vizcaya Puerto Rico, as lenders.

        10.22    $50,000 working capital revolving credit agreement dated as of
                 June 2, 2000, among Telecomunicaciones de Puerto Rico, Inc., as
                 borrower, and Banco Popular de Puerto Rico, as lender.

        12       Statement Regarding Computation of Ratio of Earnings to Fixed
                 Charges.

        27       Financial Data Schedule as of June 30, 2000.
</TABLE>