WIRELESS TECHNOLOGY CORPORATIONS LTD, 20-F, 1999-06-25

WIRELESS TECHNOLOGY CORPORATIONS LTD
20-F, 1999-06-25

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

(MARK ONE)

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

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM
TO

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 333-5396-05

WIRELESS TECHNOLOGY CORPORATIONS LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

BRITISH VIRGIN ISLANDS
(JURISDICTION OF INCORPORATION OR ORGANIZATION)

P.O. BOX 660
TROPIC ISLE BUILDING
ROAD TOWN, TORTOLA
BRITISH VIRGIN ISLANDS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
NONE NONE
</TABLE>

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE
(TITLE OF CLASS)

SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
OF THE ACT:

GUARANTEE OF THE OUTSTANDING 14% SENIOR DISCOUNT NOTES DUE 2004 OF PLD TELEKOM
INC.

GUARANTEE OF THE OUTSTANDING 9% CONVERTIBLE SUBORDINATED NOTES DUE 2006 OF PLD
TELEKOM INC.
(TITLE OF CLASS)

Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report: 20,000,002 Ordinary Shares

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 [ ]
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WIRELESS TECHNOLOGY CORPORATIONS LIMITED

FORM 20-F ANNUAL REPORT FOR FISCAL YEAR ENDED DECEMBER 31, 1998

TABLE OF CONTENTS

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PAGE
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PART I
Item 1. Description of Business..................................... 1
Item 2. Description of Property..................................... 17
Item 3. Legal Proceedings........................................... 17
Item 4. Control of Registrant....................................... 17
Item 5. Nature of Trading Market.................................... 17
Item 6. Exchange Controls and Other Limitations Affecting Security
Holders..................................................... 17
Item 7. Taxation.................................................... 18
Item 8. Selected Financial Data..................................... 18
Item 9. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 19
Item 9A. Quantitative and Qualitative Disclosure About Market Risk... 24
Item 10. Directors and Officers of the Registrant.................... 25
Item 11. Compensation of Directors and Officers...................... 25
Item 12. Options to Purchase Securities from Registrant or
Subsidiaries................................................ 25
Item 13. Interest of Management in Certain Transactions.............. 25

PART II
Item 14. Description of Securities to be Registered.................. 25

PART III
Item 15. Defaults Upon Senior Securities............................. 25
Item 16. Changes in Securities, Changes in Security for Registered
Securities and Use of Proceeds.............................. 25

PART IV
Item 17. Financial Statements........................................ 26
Item 19. Financial Statements and Exhibits........................... 26
</TABLE>
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PART I

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

Wireless Technology Corporations Limited (the "Company") is an indirect
wholly owned subsidiary of PLD Telekom Inc. ("PLD") which serves as a holding
company for PLD's 50% interest in ALTEL (known until May 1998 as BECET
International), which provides national cellular service in Kazakhstan.

The Company is subject to the periodic reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), solely because
of the guarantees it has issued in respect of PLD's outstanding 14% Senior
Discount Notes due 2004 (the "Senior Notes") and 9% Convertible Subordinated
Notes due 2006 (the "Convertible Notes"). Upon the completion of PLD's merger
with Metromedia International Group, Inc. described below under "PLD Telekom
Inc.", the Company's guarantees will be terminated and it will cease to be
subject to the periodic reporting requirements of the Exchange Act.

The Company conducts no business other than the holding of its interest in
ALTEL.

PLD TELEKOM INC.

PLD, through its operating subsidiaries, is a major provider of local, long
distance and international telecommunications services in the Russian
Federation, Kazakhstan and Belarus. PLD's five principal operating businesses
are: (i) PeterStar Company Limited ("PeterStar"), which provides integrated
local, long distance and international telecommunications services in St.
Petersburg through a fully digital fiber optic network; (ii) Technocom Limited
("Technocom"), which, through Teleport-TP, provides dedicated international
telecommunications services to Russian and foreign businesses in Moscow and
operates a satellite-based pan-Russian long distance network; (iii) Baltic
Communications Limited ("BCL"), which provides dedicated international
telecommunications services in St. Petersburg; (iv) ALTEL; and (v)
Belarus-Netherlands Belcel Joint Venture ("BELCEL"), which provides the only
national cellular service in Belarus. In addition, PLD is developing a portfolio
of international long distance products and services, under the name
"PLDncompass", targeted at carriers and corporate customers in the United
States, the United Kingdom and Europe which require telecommunications services
to and from the countries of the former Soviet Union. PLD's Common Stock is
traded on the Nasdaq National Market under the symbol "PLDI" and the Toronto
Stock Exchange under the symbol "PLD".

In August 1998, News America Incorporated, through an affiliate ("News"),
acquired a 38% stake in PLD in a series of transactions with PLD and Cable and
Wireless plc ("Cable & Wireless"). Prior to the completion of these
transactions, Cable & Wireless had been, since 1994, PLD's principal
shareholder. As part of these transactions, PLD acquired an additional 11%
interest in PeterStar and its 50% interest in BELCEL.

On May 18, 1999, PLD entered into an agreement (the "Merger Agreement")
with Metromedia International Group, Inc. ("MMG") pursuant to which PLD would
merge with Moscow Communications, Inc., a newly formed, wholly owned subsidiary
of MMG. Upon consummation of the merger, PLD will become a wholly owned
subsidiary of MMG, and the holders of shares of common stock of PLD will receive
shares of MMG on the basis of an exchange ratio specified in the Merger
Agreement.

In connection with the merger, PLD's existing Senior Notes and Convertible
Notes, which are currently guaranteed by the Company, will be exchanged for
senior indebtedness of MMG and the Company's guarantees will be terminated. The
new MMG notes will not be guaranteed by the Company or any other subsidiary of
PLD.

MMG is a global communications company engaged in the development and
operation of a variety of communications businesses, including cellular
telecommunications, fixed telephony, international and long distance telephony,
cable television, paging and radio broadcasting, in Eastern Europe, the former
Soviet Union, China and other selected emerging markets. Its common stock is
listed on the American and Pacific Stock Exchanges, under the symbol MMG.
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TELECOMMUNICATIONS IN THE FORMER SOVIET UNION

In the Soviet era, telecommunications in the Russian Federation and other
republics of the former Soviet Union were government owned and designed
principally to serve the defense and security needs of the state. The telephone
network itself was highly centralized, reflecting the centralized nature of the
Soviet economy. Telephonic links were directed towards the center of the network
while neglecting inter-regional links. As a result, the ability to direct calls
between regions without going through the center remains limited, which in turn
has been a major constraint on economic growth in regional markets. Being
committed to a "hub and spoke" network, the former Soviet Union never developed
a trunk "backbone" capable of providing network expansion on a nationwide basis.

Consistent with a political philosophy which limited access to the world
outside the former Soviet Union, all international calls originating in the
former Soviet Union until 1992 were routed through a single international
exchange in Moscow which had a capacity of only 3,200 circuits. Due to the
inadequacies of the public network, as well as to ensure secrecy, many
individual ministries and security organizations, including the Communist Party
itself, established their own private nationwide networks. These private
networks absorbed a substantial amount of the relatively limited resources
available for investment in telecommunications. At the same time, these networks
currently present an opportunity for the development of a national network apart
from the existing public network.

With the break-up of the Soviet Union and the liberalization of the
economies of its former republics, the demand for telecommunications services
increased significantly. However, the governments of the countries of the former
Soviet Union did not have the significant capital necessary for the development
of the telecommunications infrastructure. As a result, they have actively
encouraged market liberalization, privatization and foreign investment in the
telecommunications sector. This has resulted in significant development in the
areas of fixed wire overlay systems, private networks and cellular and data
services. They have also made their own efforts to develop a basic
telecommunications infrastructure, but lack of capital, exacerbated by recent
difficult economic conditions, has made progress towards this goal slow.

TELECOMMUNICATIONS IN KAZAKHSTAN

At the time of Kazakhstan's independence in 1991, the Kazakh telephone
system consisted of the same outdated network equipment as the other telephone
systems in the former Soviet republics. Currently, only 11% of Kazakhstan's
population of approximately 17,000,000 has telephone lines. The existing
national telephone network consists of approximately 1,900,000 lines, of which
330,000 are in Almaty. Due to the poor condition of much of the
telecommunications infrastructure in Kazakhstan, basic telephone service is
characterized by poor transmission quality. However, some modernization has
taken place during the last few years and quality is improving. While the
installed exchange switching capacity has not increased significantly, the
introduction of digital exchanges will make for easier future expansion.

The national network is served by trunk switches in what were the 19
original regional centers throughout the country. New transit switches supplied
by Alcatel, Lucent and others have been installed in 15 of the 19 regional
centers, and three more will be installed by the summer of 1999. Some digital
local exchanges have been installed in 16 of the regional centers, although many
electromechanical exchanges are expected to remain in use throughout the country
for some time.

While the majority of inter-regional transmission capacity is still analog,
a limited amount of digital transmission has been added over some routes. Low
capacity digital microwave has been introduced on several routes, and a high
capacity microwave has been installed between Astana and Petropavlovsk. The
existing fiber optic cable between Astana and Karaganda will be extended to
Almaty by the summer of 1999, and there is a fiber optic spur from Petropavlovsk
to Omsk connecting to the Vladivostok-Moscow-Europe cable.

Until 1992, the sole means of international access to and from Kazakhstan
was through a central switch located in Moscow. Kazakhstan acquired its own
international gateway in August 1992 when a new AT&T 5ESS switch was installed
in Almaty. It now has approximately 800 direct international circuits via
satellite with 22 countries, including the United States, Japan, Australia,
Germany, France, Israel and Turkey and via analog

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cables to Moscow. Kazakhstan is also participating in the fiber optic link
between China and the countries of Central Asia and Europe, and this system is
already being used to provide inter-regional capacity between Almaty, Taraz and
Chimkent.

The Kazakh Law on Enterprises dated February 13, 1991 authorizes the
Cabinet of Ministers to issue licenses for certain types of activities in
Kazakhstan, including the provision of telecommunications services. The Cabinet
of Ministers delegated the authority to license telecommunication providers,
allocate frequencies and certify telecommunications equipment to the Kazakh
Ministry of Transport and Communications (the "KMOC"). Pursuant to this
delegation of authority, the KMOC adopted temporary procedures for the
consideration of applications for and the issuance of such licenses. In April
1995, President Nazarbayev issued a decree setting forth the licensing
procedures in greater detail. The decree also confirmed the authority of the
Cabinet of Ministers to grant licenses and the right of non-Kazakh companies and
individuals to equal treatment in the granting of licenses. However, apart from
these licensing procedures, there is virtually no other regulation in the
telecommunications sector, and no comprehensive regulatory framework.
Administration of the telecommunications sector is essentially left to the
discretion of the KMOC.

Actual operation of the public telephone network is carried out by
Kazakhtelekom, which was created for this purpose in June 1994, as well as
regional operators. A variety of functions previously carried out by other
governmental entities, including representation of the Kazakh government in
international telecommunications matters and the planning and development of the
network in Kazakhstan, have been transferred to Kazakhtelekom. Kazakhtelekom has
been granted a revised license giving it specific authority to act as the
exclusive operator of the Kazakh national network and to represent the Kazakh
government in international telecommunications matters, along with a broad
series of powers to enable it to fulfil this function. Kazakhtelekom carries out
its functions under the oversight and direction of the KMOC. In May 1997, the
Kazakh government announced that it had sold a 40% stake in Kazakhtelekom to
Daewoo. However, in March 1998, it was reported that Daewoo had sold a portion
of its stake (reported to be approximately 10%) to an unnamed third party. It
was later confirmed that Daewoo had sold its entire stake in Kazakhtelekom to
Kazcommertzbank, a commercial bank based in Kazakhstan. It is understood that
the Kazakh government is seeking to sell a 15% stake in Kazakhtelekom to private
investors.

ALTEL

OVERVIEW

ALTEL, in which the Company owns a 50% interest, currently operates the
only nationwide cellular network in Kazakhstan. ALTEL was formerly known as
BECET International, although marketing its services under the name "ALTEL". In
May 1998 ALTEL changed its corporate name to the name under which it was doing
business. Also in 1998, ALTEL introduced a prepaid cellular service (marketed
under the name "TUMAR") in Almaty which, as of December 31, 1998, had 6,964
active subscribers.

The other 50% of ALTEL is held by Kazakhtelekom, the operator of the
national telephone network in Kazakhstan. In May 1997, the Kazakh government
announced the sale of a 40% stake in Kazakhtelekom, the state-owned
telecommunications company, to Daewoo. However, in March 1998, it was reported
that Daewoo had sold a portion of its stake (reported to be approximately 10% of
Kazakhtelekom) to an unnamed third party. It was later confirmed that Daewoo had
sold its entire stake in Kazakhtelekom to Kazcommertzbank, a commercial bank
based in Kazakhstan. It is understood that the Kazakh government is seeking to
sell a 15% stake in Kazakhtelekom to private investors. Kazakhtelekom recently
received a revised license specifically naming it as the exclusive national
network operator in Kazakhstan, and giving it a wide range of powers to carry
out this function. During 1998, the KMOC issued two GSM licenses for the
development of national GSM networks in Kazakhstan. The two license recipients
(one of which is a joint venture including Kazakhtelekom) commenced active
marketing of their services in February 1999.

The Company's primary objectives for ALTEL are to increase revenues and
cash flows through increased penetration, usage and network coverage. Cellular
service provides a rapid and relatively inexpensive way to overcome the
deficiencies of the wireline telecommunications infrastructure in Kazakhstan.
ALTEL's cellular telecommunications network in Kazakhstan currently consists of
separate systems in Almaty, South Kazakhstan
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(Chimkent), Karaganda, Pavlodar, Astana (formerly known as Akmola), Aktyubinsk,
Kustanai, East Kazakhstan (Ust-Kamenogorsk), Atyrau, Taraz, Petropavlovsk and
Kyzl Orda. As of December 31, 1998, ALTEL's cellular telecommunications network
covered a geographic area of approximately 4,200,000 people, representing 24% of
the total population, in 12 cities. ALTEL commenced cellular service in
September 1994 and has since experienced significant subscriber and revenue
growth. As of December 31, 1998, ALTEL had 21,395 active subscribers, of which
6,964 were customers of ALTEL's prepaid service. This compares with 11,102
subscribers as of December 31, 1997.

ALTEL, which began operations in September 1994, generated net income for
the year ended December 31, 1998 of $9.2 million on operating revenues of $39.5
million, as compared to net income of $7.2 million on operating revenues of
$30.0 million for the year ended December 31, 1997. The subscriber base grew
from 2,882 at the end of 1995 to 21,395 at December 31, 1998 (of which 6,964
were customers of ALTEL's prepaid service). ALTEL accounted for 27.2% of PLD's
operating revenues for the year ended December 31, 1998, as compared to 26.2%
for the year ended December 31, 1997.

ALTEL, a Kazakh closed joint stock company, was incorporated in 1994.

STRATEGY

The Company believes the development of a market economy in Kazakhstan is
likely to increase demand for modern telecommunications services, including
wireless communications, as demonstrated by the subscriber growth experienced to
date by ALTEL. While the Kazakh telephone network is slowly being modernized,
the Company believes this is likely to be an expensive and lengthy process. The
Company believes that this environment provides ALTEL with the opportunity to
provide customers in Kazakhstan with a viable, high quality alternative to
wireline telephone service during the period it will take to modernize the basic
public network. Management of ALTEL currently believes that, by virtue of its
cost structure and its market penetration to date, together with its recently
introduced prepaid service, it is in a good position to compete with the new GSM
operations. However, ALTEL is currently assessing the impact of the GSM licenses
on its business, and there can be no assurance that ALTEL will in fact be able
to compete successfully with the new licensees.

NETWORK AND FACILITIES

As of December 31, 1998, ALTEL's cellular telecommunications network in
Kazakhstan consisted of separate systems in Almaty, South Kazakhstan (Chimkent),
Karaganda, Pavlodar, Astana, Aktyubinsk, Kustanai, East Kazakhstan
(Ust-Kamenogorsk), Atyrau, Taraz, Petropavlovsk and Kyzl Orda. Further
installations remain dependent upon many factors including the successful
location of additional cell sites and the results of marketing and other
studies. As of December 31, 1998, investment in ALTEL's cellular network
infrastructure and support facilities totaled approximately $43.4 million. ALTEL
anticipates that its capital expenditure program in 1999 will total
approximately $8.6 million and will be used to develop new installations, expand
network capacity in the existing cities and to upgrade equipment. The Company
currently believes that this funding will be provided by internally generated
cashflows.

All ALTEL systems are connected to the local telephone network and the
regional trunk switch in the cities where they are located. The system in Almaty
is also linked to an international trunk exchange and the Astana system will be
linked to a new international switch in that city when it becomes operational.
Long distance and international calls are completed using the national and
international network of Kazakhtelekom. International calls are switched through
a digital exchange in Almaty.

Space for most ALTEL switches, cell sites and associated equipment is
provided by Kazakhtelekom. ALTEL also uses space in a Kazakhtelekom exchange
building in Almaty for office and administrative purposes and leases other
premises in Almaty which combines its central warehouse and a larger customer
service center and retail outlet. ALTEL has also established, and will continue
to establish, customer service centers in each city in which service is offered.
Virtually all space for customer service centers and equipment not provided by
Kazakhtelekom is leased, although ALTEL has purchased its facilities in Taraz,
one base station site and building in Chimkent and a base station building in
Karaganda.

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In November 1997, the official political capital of Kazakhstan was moved
from Almaty to Astana. Although ALTEL does have a presence in Astana, the
long-term effect of this move on ALTEL's business remains uncertain. For
example, ALTEL could need to incur the cost of moving its administrative
functions to Astana. Currently, both the number of customers in Astana and the
traffic between Almaty and Astana are increasing, but there is a risk that the
move could result in reduced cellular activity in Almaty in the future.

PRODUCTS AND SERVICES

ALTEL customers may choose from three types of cellular service: service
within a single city, service within Kazakhstan as a whole, and full service
including international access. Optional services include call waiting, three
party conferencing, call forwarding, voice mail and busy transfer. ALTEL markets
cellular telephones and related equipment manufactured by Motorola and Philips.

ALTEL offers a roaming facility between the home city of the subscriber and
other cities served by the ALTEL network. In addition, as of December 31, 1998,
ALTEL had established roaming agreements with a total of 18 other cellular
operators, including: (i) BEELINE (Vimpelcom) in Moscow and Samara; (ii) Fora in
St. Petersburg; (iii) Digital Sotovaya Svyaz in the Ukraine; (iv) Katel in
Kyrgyzstan; and (v) Uzdunrobita in Uzbekistan.

ALTEL introduced a prepaid cellular service in Almaty in August 1998 (under
the name "TUMAR"), thereby adding to its existing service offerings. ALTEL
expects to introduce the prepaid service in additional regions, include Astana,
during 1999. In addition to further reducing the potential for bad debts, this
system also permits ALTEL to market a portable unit having fewer features and
more economical pricing, thus enabling ALTEL to expand into a new and
potentially much larger market segment than that to which it has addressed its
marketing efforts to date. As of December 31, 1998, TUMAR had 6,964 active
subscribers.

ALTEL markets its cellular services through its own outside direct sales
force, which targets corporate and government accounts and high volume
consumers, together with customer service centers. Although ALTEL's standard
service includes individuals, it has most appeal to businesses which constitute
around 90% of the customer base. In contrast, the TUMAR prepaid services are
targeted almost exclusively to middle income domestic individuals (including
students). With this differentiation, ALTEL believes that it has broad appeal
across the community.

ALTEL does business under the registered trade names "ALTEL" and "TUMAR"
and features these names in all of its marketing and promotional activity. ALTEL
uses a variety of marketing channels to promote its services, including
television, radio, newspapers, billboards and sponsorship of concerts and other
popular events. ALTEL believes that both the identification of the "ALTEL" and
"TUMAR" trade names with its services, and its marketing activities, have been
effective in stimulating demand for its products and services.

OPERATIONS

Billing and Tariffs

Tariffs for ALTEL customers are posted in U.S. Dollars. Government
regulations determine the currency in which invoices may be paid, which depends
upon the residency status of the customer. Domestic subscribers may pay only in
Tenge, while foreign subscribers are permitted to pay in Tenge or U.S. Dollars.
Commencing March 1998, ALTEL is now required to issue a tax invoice with each
bill stating the amount in Tenge as of the billing date. However, to date, ALTEL
has still been able to receive payment in Tenge at the U.S. dollar exchange rate
on the date payment is made.

Under the terms of its license, ALTEL is free to establish the rates for
all cellular services provided on its network, without prior approval from the
KMOC. ALTEL's pricing is subject to review by the Kazakh Anti-Monopoly
Commission. ALTEL currently employs one pricing structure for all of its
customers, but Kazakh government agencies are offered a 25% discount on
activation and a 35-40% discount on monthly access fees and airtime charges.
Currently, ALTEL has 123 subscribers in this category and management does not
expect this number to increase significantly over time.

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A new ALTEL subscriber currently pays a one-time activation fee and makes a
security advance to cover monthly fees and usage charges which depends on
whether the subscriber has international, inter-city or local access,
respectively. Non-residents of Kazakhstan pay higher security advances. Monthly
access fees vary depending on whether the customer chooses local service alone,
inter-city service or full international service. Basic usage charges vary
between peak and off-peak calls, plus the applicable tariffs for international
and inter-city calls. In addition, there is a monthly fee for each optional
service, including call waiting, three party conferencing, call forwarding,
itemized billing and busy transfer. ALTEL also charges its subscribers a fee for
the ability to roam to other regional cities. ALTEL periodically offers special
tariff-related promotions which include discounts on certain elements of the
tariff schedule when packaged together. In addition, certain customers are
offered volume discounts on the tariff schedule. ALTEL has also introduced
air-time tariff plans, providing discounts to users, based on the periods that
they intend to use the phone and whether their calls are predominantly incoming
or outgoing. All tariffs include VAT at the rate of 20%.

The basic connection fee for the TUMAR prepaid service is a one time fee,
depending on whether the customer provides the handset or if the customer
purchases the handset from ALTEL. No monthly access fees are charged to TUMAR
customers, and the usage charges are higher for outgoing calls than they are for
incoming calls, but do not vary depending on the time the call is made or
received. TUMAR introduced a new tariff plan in February 1999, with a connection
fee, a per day usage charge and a charge for outgoing calls, but no charge for
incoming calls. TUMAR expects to introduce discounts to its air-time tariffs
during March 1999. TUMAR customers can currently only make local calls within
Almaty.

ALTEL's tariffs have been recently revised in light of competition from the
GSM licenseholders, which have offered low introductory tariffs to attract
customers. ALTEL expects that competition from the GSM operators will continue
to exert downward pressure on the tariffs for both ALTEL and TUMAR.

Interconnection

ALTEL is dependent on its interconnection to networks operated by
Kazakhtelekom for the completion of its local, long distance and international
calls. ALTEL pays an annual license fee to the KMOC in lieu of all frequency or
interconnection charges, equal to up to 6% of its after-tax profits as
calculated by the Kazakh statutory audit. ALTEL pays Kazakhtelekom a tariff in
respect of local calls, and enjoys a preferential tariff in respect of long
distance and international calls which provides ALTEL with an average margin of
25% on such calls. Kazakhtelekom has recently been authorized, in connection
with its appointment as the exclusive operator of the Kazakh national network,
to levy interconnection charges, and to do this on a basis which yields it a
profit. There can be no assurance that Kazakhtelekom will not use this authority
to start assessing interconnection charges against ALTEL, notwithstanding that
ALTEL is already paying a license fee expressly stated to be in lieu of
interconnection charges.

TELECOMMUNICATIONS LICENSE

ALTEL holds a 15-year renewable license issued in February 1994 for the
creation and operation of cellular communications networks in Kazakhstan for
local, long distance and international calling, using the 800 MHZ frequency band
and "AMPS" technology. Under the terms of the license ALTEL was required to
provide cellular services to Almaty and ten to twelve additional regional
centers by the end of 1996, a condition which has been met. See "-- Network and
Facilities."

The license specifies that ALTEL is to be the exclusive provider of
cellular service in Kazakhstan for the first five years of the license term, a
period which expired in February 1999. The license is transferable upon approval
by 75% of ALTEL's shareholders.

In 1998, before the expiration of the exclusivity period, ALTEL commenced
discussions with the KMOC on substituting a new license with revised terms for
its existing license. One aspect of such new license would have been the
elimination of the exclusivity provisions in return for other concessions,
including an extension of the basic term of the license. Although the
exclusivity period has since expired according to the terms of the license,
ALTEL and the KMOC are continuing to discuss the terms of a new license for
ALTEL.

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EQUIPMENT AND OTHER OPERATING AGREEMENTS

ALTEL purchased from Motorola the infrastructure equipment required for the
cellular systems to be installed in Almaty and eighteen other regional centers
throughout Kazakhstan. Pursuant to a separate agreement, Motorola agreed to
furnish services with respect to the equipment, which included system design,
installation, optimization, system engineering, program management, software
maintenance and on-site switch maintenance.

Both agreements expire in May 1999. Motorola and ALTEL are currently in
discussions regarding a new agreement.

EMPLOYEES

As of December 31, 1998, ALTEL had 340 employees, all of whom were
full-time. Of these employees, 337 were Kazakh nationals and three were
expatriate managers. The number of employees involved in branch operations was
140. None of its employees is subject to a collective bargaining agreement.
ALTEL believes that its relations with its employees are good.

COMPETITION

Until 1998, ALTEL was the only licensed national cellular operator in
Kazakhstan. In 1998, the KMOC awarded two licenses for the development of a
national GSM network in Kazakhstan. One license was issued to Kcell, a joint
venture of TurkCell and Kazakhtelekom, and the other license was issued to
Kmobile, a joint venture of Telsim, a Turkish company, and local Kazakh
interests. Active marketing was begun by Kcell in early February 1999 and by
Kmobile in mid-February 1999. Management of ALTEL currently believes that, by
virtue of its cost structure and its market penetration to date, together with
its recently introduced prepaid service, it is in a good position to compete
with the new GSM operations. However, ALTEL is currently assessing the impact of
the GSM licenses on its business, and there can be no assurance that ALTEL will
in fact be able to compete successfully with the new licensees.

OWNERSHIP AND MANAGEMENT

Ownership Structure

The other 50% interest in ALTEL is currently held by Kazakhtelekom, a joint
stock company which is owned by the government of Kazakhstan and which operates
the public telephone network in that country (the authority to operate such
network having been recently confirmed by the grant to Kazakhtelekom of specific
authority to act as the exclusive operator of the public network in Kazakhstan
and as representative of the Kazakh government in international
telecommunications matters).

Relationship with Other Equity Holders

The relationship between the Company and Kazakhtelekom is governed
principally by the terms of a joint venture agreement entered into in December
1993. The agreement sets forth the respective capital contributions of the
parties. In the case of the Kazakh partner, these consisted of the cellular
license and frequencies, as well as all physical facilities required for the
operation of the cellular network. As required, the Company contributed cash,
equipment, property and services with an aggregate value of $20.0 million by
February 1995. The Company has no obligation to make any additional
contributions. Should the board of directors of ALTEL determine that ALTEL
requires an additional capital contribution, then each shareholder will be
required to contribute its proportionate share of the capital contribution or
face dilution.

Each ALTEL shareholder has the same voting, distribution and liquidation
rights, except that upon a liquidation, the Company is entitled to receive out
of any distributions the first $20.0 million for its capital contribution plus
any subsequent capital contributions not matched by Kazakhtelekom.

Under current Kazakh legislation, neither party is permitted to sell,
assign, pledge or otherwise transfer its equity interest in ALTEL without first
offering such interest to the other party.

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<PAGE> 10

ALTEL and Kazakhtelekom entered into an interconnection agreement pursuant
to which Kazakhtelekom agreed to provide ALTEL with access to the public
switched telephone network in Kazakhstan for the fifteen year term of ALTEL's
current license free of charge (but subject to payment of certain charges to
local operators for carriage and termination of calls from ALTEL's network).
While there is no reason to suppose that Kazakhtelekom will not honor this
commitment, the loss of, or any significant limitation on its access to the
network could have a material adverse effect on the operations of ALTEL.

While the Company may have the power, pursuant to the management structure
described below, to direct the operations or determine the strategies of ALTEL,
management believes that it is unlikely, in view of the pivotal importance of
Kazakhtelekom to the business of ALTEL, that any significant initiatives would
be undertaken by the Company without the consent of Kazakhtelekom. To date,
Kazakhtelekom has not used its position to undermine initiatives proposed by the
Company, nor to cause ALTEL to take any action to the Company's detriment;
however, there can be no assurance that it will not do so in the future.

It is not known what effect on ALTEL, or its license or business, the
recent designation of Kazakhtelekom as the exclusive operator of the public
network will have. In addition, Kazakhtelekom is a participant in one of the
joint ventures which was recently granted a national GSM license in Kazakhstan
and it remains unclear what impact this participation will have on ALTEL's
business. All of these developments will present new uncertainties and
challenges for ALTEL. See "-- Risk Factors -- Risks Involving ALTEL."

In connection with the grant of its telecommunications license in 1994, the
Company agreed to lend the KMOC up to $3 million on commercial terms for use for
various KMOC projects. During 1995, PLD advanced $3 million to Monogram Finance
Group Limited ("MFGL") in exchange for a convertible promissory note due on
February 20, 2000. The note is convertible at any time prior to February 29,
2000 into common stock of MFGL representing 50% of its total issued and
outstanding common stock. Its sole asset is an agreement to acquire a 50%
interest in Monogram Telecommunications Limited, a Bermuda company ("MTL"). MTL
has an agreement to acquire 100% of an Irish company known as Kazakhstan
Telecommunications Development Corporation Limited ("KTDC"). KTDC has agreed in
principle with the government of Kazakhstan to assist the government in
connection with the privatization of Kazakhtelekom. While the Company believes
that this arrangement satisfies the commitment given by the Company to the KMOC,
there can be no assurance that the KMOC will not still call upon the Company to
advance, and that the Company will not be obligated to pay, the $3 million.

Management

ALTEL is currently managed by a board of directors consisting of six
members, three designated by Kazakhtelekom and three by the Company. The Company
designates the Chairman of the Board who has a casting vote in the event of a
tie vote. At least four members of the board are required to approve any of the
following actions: amendment of ALTEL's charter, dissolution, voluntary
bankruptcy, approval of the annual budget, acquisition of assets or businesses
in excess of $5 million or any disposition or transfer of the ALTEL license,
other investments in excess of $1 million or incurring indebtedness in excess of
$2 million. These arrangements cannot be changed without the Company's consent.
Accordingly, while there may be some question about the enforceability of these
arrangements, the Company believes that it has the ongoing ability to make all
significant strategic, operating, financing and investing decisions on behalf of
ALTEL through the arrangements described above, although it is not likely that
it would choose to take action without the approval of Kazakhtelekom.

ALTEL has two co-chief executive officers ("Co-CEOs") and a treasurer who
is also the chief financial officer ("CFO"), and may appoint other officers as
the board determines. In addition, ALTEL has a chief Kazakh financial officer
("CKFO") who reports directly to the CFO and who is responsible for accounting
matters under Kazakh law as well as serving as a liaison between ALTEL and the
Kazakh tax authorities. One of the Co-CEOs and the CKFO are appointed by the
directors who are designees of Kazakhtelekom and the other Co-CEO and the CFO
are appointed by the directors who are designees of the Company. The Co-CEO
appointed by the Company directors has the ultimate responsibility for the
management of ALTEL, subject to the authority of the board of directors.

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<PAGE> 11

The current officers are as follows:

<TABLE>
<S> <C>
Rex Power................................................. Co-Chief Executive Officer
Maxut Sauranbekov......................................... Co-Chief Executive Officer
Michael Leaver............................................ Chief Financial Officer
</TABLE>

Rex Power joined ALTEL in June 1997. He is a registered chartered engineer
and a registered European engineer. Prior to joining ALTEL, he worked for Cable
& Wireless for over 30 years, mostly in overseas assignments, including
management positions in Nigeria, Saudi Arabia and Macau. Additional positions
with Cable & Wireless included Regional Business Manager for the Bermuda,
Caribbean and Atlantic Islands Region and General Manager, Eastern
Russia/Director, Special Projects in the Northeast Asia Region, Hong Kong and
Japan.

Maxut Sauranbekov became Co-Chief Executive Officer of ALTEL in June 1997.
He joined ALTEL in October 1994 as Vice President for Marketing, Sales and
Customer Service and then served as Vice President for Corporate Affairs. Prior
to joining ALTEL, he worked for eight years in various other commercial and
financial ventures.

Michael Leaver joined ALTEL as Chief Financial Officer in April 1998. From
1995 until joining ALTEL, he was Deputy General Director of Uralwestcom, a
cellular telephony operator in Yekaterinburg. Previously, Mr. Leaver was the
Financial Director for Kiev Tetra Pak, a Ukrainian joint venture, for three
years during its start-up phase.

Recent changes in applicable Kazakh legislation will require that the
management arrangements described above will need to be revised. However,
although it seems clear that the existing arrangements cannot be completely
preserved in their present form, because of the imprecision in some of the
drafting and also because of the lack of precedents due to the newness of the
legislation, it is difficult to state to what extent these arrangements will
need to be revised. In addition, ALTEL is actively exploring the option of
converting to a different legal form which may permit the preservation of, if
not all, at least a substantial portion of the management arrangements described
above in their current form. ALTEL does not expect to resolve this issue before
the middle of 1999.

ALTEL entered into Consulting and Information Services Agreements with PLD
and Kazakhtelekom, each dated January 1, 1998, pursuant to which such parties
provide certain consulting, information, management services and personnel
expertise to ALTEL. In consideration for these services, ALTEL pays consulting
fees, in the case of PLD, of $25,000 per month plus 3.4% of ALTEL's gross
revenues, and, in the case of Kazakhtelekom, of 300,000 Tenge per month plus 1%
of ALTEL's gross revenues. These contracts are each for a one year term
automatically renewable for successive one year periods unless terminated by
either party.

RISK FACTORS

This document contains certain forward-looking statements that are subject
to risks and uncertainties. Forward-looking statements include certain
information relating to political, social and economic conditions in the
countries of the former Soviet Union and the Commonwealth of Independent States,
the commencement of certain programs and the proposed offering of certain
services by the Company's operating subsidiaries, proposed changes in the
Company's corporate structure and centers of operations and interpretations and
actions of certain regulatory authorities, including in Kazakhstan, as well as
information contained elsewhere in this Report where statements are preceded by,
followed by or include the words "believes," "expects," "anticipates" or similar
expressions. For such statements the Company claims the protection of the safe
harbor for forward-looking statements contained in the private Securities
Litigation Reform Act of 1995. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including without limitation, those discussed elsewhere in this Report
and in the documents incorporated herein by reference. Furthermore, this
document constitutes a Year 2000 Readiness Disclosure Statement, and the
statements herein are subject to the Year 2000 Information and Readiness
Disclosure Act, and the Company hereby claims the protection of such Act for
this document and all information contained herein.

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<PAGE> 12

COUNTRY RISKS

General. Foreign companies conducting operations through affiliates in
Kazakhstan face significant political, economic, currency, legal and social
risks. For example, a report released February 20, 1997 by the United States
Embassy in Moscow on the commercial environment in the Russian Federation listed
the following general difficulties affecting trade and investment in the Russian
Federation, most of which are also encountered in Kazakhstan, and some or all of
which could affect the ability of the Company or ALTEL to conduct or realize
income from their businesses:

- ownership disputes

- high taxes, and a frequently changing tax regime

- high operating costs

- lack of systematic and accessible credit information

- corruption and commercial crime

- financial illiquidity of many firms

- changing requirements from regulatory bodies

- lack of market information

- an infant commercial legal framework

- cultural and language differences

- infrastructure problems

- payments, arrears and frozen accounts

- frequent changes in governmental personnel

Political Risks. The political situation in Kazakhstan is characterized by
one-man rule by President Nursultan Nazarbayev who demonstrates considerable
political power. While such concentration of power may at times be perceived as
providing a stabilizing influence, it also increases the risk of nepotism,
arbitrary decision-making and significant policy changes in the event of
succession.

Russian Economic and Political Turmoil. During 1998 there was considerable
turmoil and uncertainty in the Russian financial markets, prompted in large part
by a drop in commodity prices and economic problems in Russia, together with the
crisis in the Asian financial markets which began in late 1997. These
developments were accompanied by a substantial decline in the Russian stock
market. These developments led the Russian government to raise interest rates
significantly and to seek special assistance from the International Monetary
Fund. In August 1998, the Russian government announced a substantial widening of
the trading band in which the Russian Rouble would be permitted to float,
together with a moratorium on certain foreign debt payments. Thereafter the
Rouble dropped substantially in value and traded outside of the high end of the
band, and the Russian government did not intervene to stop this trading, thereby
effectively acquiescing to a major devaluation of the Rouble. In the latter part
of 1998 and the first months of 1999, the Rouble has further declined in value
and this process is expected to continue.

Also in August 1998 the Russian government announced a 90-day moratorium on
debt repayments. This moratorium caused considerable difficulties for Russian
banks and businesses with hard currency obligations, as well as significantly
impairing the ability of such banks and businesses, as well as the Russian
government itself, to access the Western capital markets. The difficulties
experienced by the Russian banks in turn caused difficulties for their
customers, as bank transfers and deposits were frozen in many cases. The Russian
government itself has effectively defaulted on substantial amounts of its debt,
and is engaged in negotiations with Western banks and institutions (which reach
back several months) to restructure this indebtedness. Continuation of these
conditions for any significant period of time could have serious long-term
effects on the Russian economy. At the present time, it is impossible to predict
whether or when any resolution of these problems is likely.

In August 1998, the Russian government experienced a significant upheaval,
with the dismissal of the reformist government led by Sergei Kiriyenko and its
replacement by one led by Yevgeny Primakov. The Primakov government did not
propose a plan to address Russia's economic and financial difficulties, one
result of
10
<PAGE> 13

which has been to cause the International Monetary Fund to delay further
assistance to the Russian government. In May 1999, another political upheaval
occurred, when President Boris Yeltsin dismissed the Primakov government and
selected Sergei Stepashin as the new Prime Minister. It is too soon to predict
what policies will be adopted by the new Stepashin government. This most recent
governmental reshuffling creates increased uncertainty about the future
political situation in Russia, which in turn creates additional concern about
the ability of the government to deal with the many problems currently
afflicting the Russian economic system.

At the present time, it is not possible to predict the complete effect of
the continuing economic, financial and political difficulties in Russia,
although they have made for a difficult business environment in Russia and
Kazakhstan. The Company is not yet able to predict the effects of the ongoing
difficulties on its results for 1999, but the continuing economic difficulties
in Russia will likely continue to have an adverse effect on the Company in
current and future reporting periods, and there can be no assurance that such
adverse effects will not be material.

Economic Risks -- Uncertain Pace of, and Difficulties Experienced in,
Economic Reform; Reliance on Foreign Economic Aid. Until recently, the Kazakh
economy was administered by the central authorities of the former Soviet Union.
Following the collapse of those authorities and the command economy they
managed, the government of Kazakhstan sought to implement policies designed to
introduce a free market economy into its country. While these policies have met
with some success, the economy of Kazakhstan has been characterized by high
unemployment, high rates of business failure, the deterioration of certain
sectors of the economy, high government debt relative to gross domestic product
and declining real wages. Real economic improvement has been limited to Almaty.
No assurance can be given that policies to introduce or support a free market
economy will continue to be implemented in Kazakhstan, that it will remain
receptive to foreign investment or that the Kazakh economy will stabilize. The
failure of any of these to occur could have a material adverse effect on the
Company.

-- Limited Experience with Free Market Economy. Kazakh businesses have
limited operating history in free market conditions and have had limited
experience compared with Western companies with the entering into and
performance of contractual obligations. Accordingly, as compared to Western
companies, such businesses are often characterized by management that lacks
experience in responding to changing market conditions and limited capital
resources with which to develop their operations. In addition, Kazakhstan has
limited infrastructure to support a market system, and banks and other financial
systems are not well developed or well regulated. Businesses therefore may
experience difficulty in obtaining working capital facilities. Moreover, the
Kazakh banking system has faced and may encounter in the future liquidity crises
as well as other problems arising as a result of under-capitalization of the
banking sector as a whole. The experiences gained from the financial and banking
crisis in Russia in the last two quarters of 1998 demonstrate how fragile the
Russian banking system is, and at the same time how dependent Western investors
are on such system. While Kazakhstan has not experienced a similar crisis, there
is the potential for such a crisis in that country and the effects of any such
crisis would likely be as severe.

Restrictions on Currency Conversion; Historical Volatility in Currency
Prices. The Kazakh Tenge is not convertible outside of Kazakhstan.

In Kazakhstan, a market exists for the conversion of Tenge into other
currencies, but it is limited in size and is subject to rules limiting the
purposes for which conversion may be effected. The history of trading in the
Kazakh Tenge against the U.S. Dollar has been characterized by significant
declines in value and considerable volatility, although the Kazakh Tenge
experienced relative stability against the U.S. dollar during 1996 and 1997.
However, after remaining relatively stable during 1998, the Kazakh Tenge has
lost significant value in the first six months of 1999, reflecting concerns
about the health of the country's economy and a decision by the government of
Kazakhstan to cease providing support for its currency.

In general, ALTEL posts its tariffs in U.S. Dollars, and receives payment
in Tenge at the U.S. dollar exchange rate prevailing on the date of payment.
ALTEL faces an exchange risk to the extent that it experiences any difficulty in
converting the Tenge payment received into U.S. Dollars. In addition, it faces a
risk that the Tenge weakens against the U.S. Dollar during the period between
the customer instructing its bank to pay ALTEL

11
<PAGE> 14

and the day the payment is actually received by ALTEL. Historically, this time
period has been short and the exchange risks arising from this particular issue
have therefore been minimal.

All of these factors, and others, may serve to increase the Company's
exposure to foreign exchange losses in the future, the effect of which cannot
currently be predicted. No assurance can be given that ALTEL will be able to
continue to post its tariffs in U.S. Dollars and collect payments in Tenge in
amounts determined by reference to the value of the U.S. Dollar, or that it will
continue be able to process such payments without banking delays or to exchange
Tenge for U.S. Dollars without significant difficulties, delays or costs.

It is not practical or economical for the Company to hedge its exchange
risks. See "Quantitative and Qualitative Disclosure About Market Risk." Any of
these factors, in conjunction with further declines, or volatility, in the value
of the Tenge against the U.S. Dollar, could have a material adverse effect on
the Company. See also "-- Risks Involving the Company -- Currency Controls."

Legal Risks -- Underdeveloped Legal System. Kazakhstan lacks a fully
developed legal system. Kazakh law is evolving rapidly and in ways that may not
always coincide with market developments, resulting in ambiguities,
inconsistencies and anomalies, and ultimately in investment risk that would not
exist in more developed legal systems. Furthermore, effective redress in Kazakh
courts in respect of a breach of law or regulation, or in an ownership dispute,
may be difficult to obtain.

Risks associated with the Kazakh legal system includes: (i) the untested
nature of the independence of the judiciary and its immunity from economic,
political or nationalistic influences; (ii) the relative inexperience of judges
and courts in commercial dispute resolution, and generally in interpreting legal
norms; (iii) inconsistencies among laws, presidential decrees and governmental
and ministerial orders and resolutions; (iv) often times conflicting local,
regional and national laws, rules and regulations; (v) the lack of judicial or
administrative guidance on interpreting the applicable rules; (vi) retroactive
changes in laws and regulations; and (vii) a high degree of discretion on the
part of government authorities and arbitrary decision-making which increases,
among other things, the risk of property expropriation. The result has been
considerable legal confusion, particularly in areas such as company law,
property, commercial and contract law, securities law, foreign trade and
investment law and tax law. No assurance can be given that the uncertainties
associated with the existing and future laws and regulations of Kazakhstan will
not have a material adverse effect on the Company. In addition, there is no
guarantee that a foreign investor would obtain effective redress in any court.
No treaty exists between the United States and Kazakhstan for the reciprocal
enforcement of foreign court judgments.

Furthermore, the relative infancy of business and legal cultures in
Kazakhstan are reflected in the inadequate commitment of local business people,
government officials, agencies and the judicial system to honor legal rights and
agreements, and generally to uphold the rule of law. Accordingly, the Company
may, from time to time, confront threats of, or actual, arbitrary or illegal
revision or cancellation of its licenses and agreements, and face uncertainty or
delays in obtaining legal redress, any of which could have a material adverse
effect on the Company.

Social Risks. The political and economic changes in Kazakhstan since the
break-up of the former Soviet Union have resulted in significant social
dislocations, as existing governing structures have collapsed and new ones are
only beginning to take shape. The resulting broad decline in the standard of
living has often resulted in substantial political pressure on the government to
slow or even reverse the economic policies currently being pursued. In addition,
such decline in the standard of living has led in the past, and could lead in
the future, to labor and social unrest. Such labor and social unrest may have
political, social and economic consequences, such as increased support for a
renewal of centralized authority, increased nationalism (with restrictions on
foreign investment in the Kazakh economy) and increased violence, any of which
could have a material adverse effect on the Company.

In addition, the local and international press have reported significant
organized criminal activity, particularly in large metropolitan centers,
directed at revenue-generating businesses, and an increased integration of
organized crime with major international criminal organizations. A substantial
increase in property crime in large cities has also been reported. Finally, the
local and international press have reported high levels of official corruption
in Kazakhstan. No assurance can be given that organized or other crime or claims
that the Company or

12
<PAGE> 15

ALTEL has been involved in official corruption will not in the future have a
material adverse effect on the Company.

Official Data Reliability. The official data published by the Kazakh
government and its agencies are substantially less complete or reliable than
those of Western countries, and there can be no assurance that the official
sources from which certain of the information set forth herein has been drawn
are reliable. Official statistics may also be produced on different bases than
those used in Western countries. Any discussion of matters relating to
Kazakhstan herein must therefore be subject to uncertainty due to concerns about
the completeness or reliability of available official and public information.

RISKS INVOLVING THE COMPANY

Guarantee of PLD Debt. As it has disclosed in its Annual Report on Form
10-K, PLD has significant debt service requirements, including the payment of
interest on the Senior Notes and the Convertible Notes and amounts owing to The
Travelers Insurance Company and The Travelers Indemnity Company (together, the
"Travelers Parties"), and PLD does not presently have sufficient funds on hand
to meet its current debt obligations. The Company is a guarantor of the Senior
Notes and the Convertible Notes under the terms of the related indentures and of
the amounts owing to the Travelers Parties.

While an agreement has been reached with the holders of the Senior Notes
and the Convertible Notes and with the Travelers Parties on a restructuring of
PLD's indebtedness to such parties, those agreements are conditioned upon the
closing of PLD's merger with MMG. If the merger did not close, PLD would remain
obligated to pay the interest on the Senior Notes and the Convertible Notes and
there can be no assurance that the Travelers Parties would not demand payment in
full of PLD's obligations to them. PLD's failure to make the interest payments
on the Senior Notes and the Convertible Notes could result in a default under
and acceleration of those Notes for which the Company serves as guarantor. In
addition, PLD's failure to make payment in full to the Travelers Parties could
result in a claim being made against the Company under its guarantee of the
amounts due to the Travelers Parties, as well as resulting in a cross-default
under and acceleration of the Senior Notes and the Convertible Notes.

Any such events would have a material adverse effect on the Company and
would raise substantial doubt about the Company's ability to continue as a going
concern.

Year 2000. While the Company believes that ALTEL should not encounter
material problems as a result of its own equipment not being Year 2000
compliant, it may encounter disruptions in service as a result of noncompliance
on the part of other traffic carriers, particularly those in Russia and other
C.I.S. countries on which it is dependent for the completion of its calls. The
Company believes that the Year 2000 compliance of the Russian and other C.I.S.
parties with which ALTEL interacts appears to be substantially behind that of
Western parties, and that it is unlikely that those parties will be able to
become fully Year 2000 compliant, given the limited amount of time left for
this, and the severe funding constraints faced by those parties. Accordingly,
there is a significant risk that the ALTEL may experience disruptions in its
operations as a result of its C.I.S. interconnect partners not being able to
complete calls or pass traffic to ALTEL. Additionally, the billing systems of
those interconnect partners may also be disrupted, resulting in those partners
being unable to make timely settlements with ALTEL. All of these items have the
potential to adversely impact the operations of ALTEL, and such adverse impact,
on both the business of ALTEL and the Company's own financial results, may be
material. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000 Issues."

Holding Company Structure; Barriers to Realizing Cash from Subsidiaries. As
a holding company that conducts virtually all of its business through ALTEL, the
Company has essentially no source of cash other than distributions and other
payments from ALTEL. The ability of ALTEL to make payments to the Company may be
constrained by: (i) its own ability to generate sufficient cash from its
operations; (ii) the level of taxation, particularly corporate profits and
withholding taxes, in Kazakhstan; (iii) exchange controls and repatriation
restrictions in effect in Kazakhstan; and (iv) the ownership interests of the
other investors in ALTEL.

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<PAGE> 16

Taxation. Taxes payable by Kazakh companies are substantial and include
value-added taxes ("VAT"), excise taxes, export taxes and income taxes. The tax
risks of investing in Kazakhstan can be substantial. Obtaining the benefits of
any relevant tax treaties can be extremely difficult due to the documentary and
other requirements imposed by the Kazakh authorities and the unfamiliarity of
those administering the tax system with the international tax treaty system or
their unwillingness to recognize the treaty system. The need to deal with these
issues may negate or impair tax planning initiatives undertaken by the Company
to reduce its and its subsidiaries' overall tax obligations. Furthermore, the
taxation system in Kazakhstan is at an early stage of development and is subject
to varying interpretations, frequent changes and inconsistent and arbitrary
enforcement. In certain instances, new taxes and tax regulations have been given
retroactive effect.

Currency Controls -- Risks of Changing Regulatory and Administrative
Environment. While applicable legislation in Kazakhstan currently permits the
repatriation of profits and capital and the making of other payments in hard
currency, the ability of the Company to repatriate such profits and capital and
to make such other payments is dependent upon the continuation of the existing
legal regimes for currency control and foreign investment, administrative
policies and practices in the enforcement of such legal regimes and the
availability of foreign exchange in sufficient quantities in Kazakhstan.

The Company's ability to repatriate distributions and other payments in
hard currency will be dependent upon the continued ability of ALTEL to bill its
customers in the U.S. dollars or the equivalent amount of Tenge, as well as its
ability to exchange freely Tenge receipts into U.S. dollars. There can be no
assurance that, because of changes in Kazakh currency regulations, and/or
because of a recurrence of the financial, banking and currency crises which
afflicted the Russian Federation in the latter part of 1998, the Company's
ability to fully and/or on a timely basis realize benefits from ALTEL through
the receipt of hard currency payments will continue.

-- Possible Effects of Currency Controls and Regulations on the Company's
Ability to Meet its Obligations. There can be no assurance that, due to the
risks outlined above, the Company will not experience difficulties or delays in
receiving cash flows from ALTEL. Any such difficulties or delays could
materially affect the Company's ability to make payments on its outstanding
obligations (including its guarantees of PLD's Senior Notes and Convertible
Notes) and could result in defaults under those obligations. In addition, the
Company's ability to meet its working capital requirements or to declare and pay
dividends to its shareholder could be adversely affected by any cash flow
restrictions experienced by the Company.

Absence of Complete Control; Dependence on Local Partners. The Company's
principal asset is its 50% interest in ALTEL. While PLD and the Company may have
the ability to direct the operations or determine the strategies of ALTEL under
the terms of its constituent documents, the enforceability of some of the
Company's rights is uncertain. See "-- Country Risks -- Legal Risks." Further,
the other shareholders may, as a practical matter, be able to impede the
Company's ability to exercise effective control. In addition, PLD and the
Company would be unlikely to take significant initiatives without the approval
of Kazakhtelekom. See "-- Ownership and Management." ALTEL is dependent on
continued access, on favorable terms, to the facilities of Kazakhtelekom, and
this may adversely affect the Company's ability to rely on its legal rights to
influence the conduct of the business of ALTEL. In summary, the absence of
complete legal control by PLD and the Company over the operations of ALTEL,
coupled with the dependence of ALTEL on continued access to the facilities of
Kazakhtelekom, could have a material adverse effect on the Company. Finally,
ALTEL is a restricted subsidiary under the Senior Note Indenture and the
Convertible Note Indenture, and PLD is required by the terms of such indentures
not to permit its restricted subsidiaries to violate the various covenants
contained in such Indentures. There can be no assurance that the Company will
always be in a position to comply with this obligation, and its failure to do so
could cause a default under the Senior Note Indenture or the Convertible Note
Indenture.

Susceptibility to Political and Other Pressures. Although the Kazakh
government may be limited in the extent to which it can legally direct the
Company's policies, in practice it may be able to exercise significant
influence. As a consequence, not only may the Company's activities be restrained
if a governmental entity is not supportive, but the Company may be forced to
take action to support policies or agendas of the government which are not in
its commercial or other interests. In addition, in order to maintain good
working relationships with its partners, the Company may need to take certain
actions which may not necessarily be in its commercial or business interests.

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<PAGE> 17

Competition. ALTEL is developing and operating its business in a highly
competitive environment. A number of companies compete with ALTEL, many of which
have access to greater financial and technical resources than ALTEL. There can
be no assurance that ALTEL will be able to overcome successfully the competitive
pressures to which it is subject, both in the markets in which it currently
operates and in markets into which it might expand. ALTEL's cellular network in
Kazakhstan could be seen as being in competition with the national network
operated by Kazakhtelekom. ALTEL also faces substantial competition from
operators which were recently awarded GSM licenses in Kazakhstan, one of which
is a consortium which includes Kazakhtelekom.

Potential Conflicts of Interest. The Company's principal partner in ALTEL
has interests that may conflict with those of the Company. Kazakhtelekom, the
public switched telephone network operator and the Company's partner in ALTEL,
may be a significant competitor for ALTEL's cellular operations when it improves
the telephony services it provides in Kazakhstan by upgrading its fixed wire
telecommunications network. In addition, Kazakhtelekom is a participant in one
of the joint ventures which was recently awarded a national GSM license in
Kazakhstan.

In light of these competing interests, and, in particular, the extent of
the legal and practical control that Kazakhtelekom has over the affairs of
ALTEL, Kazakhtelekom may use its influence, through the directors it appoints to
the board of ALTEL or otherwise, to benefit itself or other businesses in which
it has an interest at the expense of the Company and ALTEL, subject to such
limited fiduciary duties as it may have under applicable law. Moreover,
Kazakhtelekom is not obliged (except for such obligations as it may have under
applicable law) to allocate to ALTEL corporate opportunities of which it becomes
aware through the directors referred to above or otherwise. No assurance can be
given that the fiduciary duty and corporate opportunity doctrines that exist
under United States law will provide adequate protections to the Company against
the pursuit of such conflicting interests. Kazakh law currently provide no
protection in this regard. The pursuit of conflicting interests by the persons
referred to above could have a material adverse effect on the Company.

Regulatory Uncertainties. ALTEL operates in an uncertain regulatory
environment. The Kazakh telecommunications system is currently regulated by the
KMOC, largely through the issuance of licenses. There is currently no
comprehensive legal framework with respect to the provision of
telecommunications services in Kazakhstan, although a number of laws, decrees
and regulations govern or affect the telecommunications sector. Further, the
recently announced appointment of Kazakhtelekom as the exclusive operator of the
public telephone network in Kazakhstan and/or the participation of Kazakhtelekom
in one of the joint ventures recently granted a national GSM license in
Kazakhstan, may lead to restructuring of the telecommunications sector in
Kazakhstan, the effects of which are difficult to predict at the present time.

The absence of adequate regulation in the telecommunications sector has
meant that decisions, including the granting and renewal of licenses, may at
times be made by governmental officials without reference to precedent or
procedure.

Furthermore, the introduction of regulation of tariffs, or any other type
of regulation, could have far-reaching, and potentially materially adverse,
effects on the Company. See "Telecommunications in the Former Soviet Union."

Limitations on Ability to Transfer Interests. The terms of the ALTEL
shareholder and joint venture agreements impose restrictions on the Company's
ability to transfer its interests in ALTEL and give the other shareholder in
ALTEL certain pre-emptive and other similar rights. It is likely that the
Company's ability to transfer its interests in other future investments will be
similarly limited. The restrictions on, and other provisions relating to the
sale of these interests, and the lack of liquidity in the market for interests
the Company now holds or may acquire, may impede their resale by the Company.
While it may be possible to arrange for negotiated sales with one or more
buyers, the Company may not be able to realize value from these interests, on
acceptable terms, in a timely manner or at all.

15
<PAGE> 18

RISKS INVOLVING ALTEL

Limited Operating History. ALTEL was formed in January 1994 and commenced
commercial operations in September 1994. Although ALTEL generated profits for
the years ended December 31, 1997 and 1998, there can be no assurance that ALTEL
will be able to generate sufficient revenues or control its costs sufficiently
to remain profitable in the future.

Reliance on Telecommunications License. ALTEL's business is dependent on
the 15-year renewable license issued in February 1994 for the creation and
operation of cellular communications networks in Kazakhstan for local, long
distance and international calling, using the 800 MHZ frequency band and "AMPS"
technology. Under the terms of the license ALTEL was required to provide
cellular services to Almaty and ten to twelve additional regional centers by the
end of 1996, a condition which has been met. The license specifies that ALTEL is
to be the exclusive provider of cellular service in Kazakhstan for the first
five years of the license term, which period expired in February 1999. In 1998,
before the expiration of the exclusivity period, ALTEL commenced discussions
with the KMOC on substituting a new license with revised terms for its existing
license. One aspect of any such new license would have been the elimination of
the exclusivity provisions in exchange for other concessions. Although such
exclusivity has since terminated according to the terms of the license, ALTEL
and the KMOC are continuing to discuss the terms of a new license for ALTEL. See
"-- ALTEL -- Telecommunications License." Although such discussions are
continuing, there can be no assurance that any new license issued by the KMOC
will not contain revised terms which are detrimental to ALTEL's business.

Issuance of Additional Telecommunications Licenses. Until 1998, ALTEL was
the only licensed national cellular operator in Kazakhstan. In 1998, the KMOC
awarded two licenses for the development of a national GSM network in
Kazakhstan. One license was issued to Kcell, a joint venture of included
TurkCell and Kazakhtelekom, and the other license was issued to Kmobile, a joint
venture of Telsim, a Turkish company, and local Kazakh interests. Active
marketing was begun by Kcell in early February 1999 and by Kmobile in mid-
February 1999. Management of ALTEL currently believes that, by virtue of its
cost structure and its market penetration to date, it is in a good position to
compete with the new GSM operations. However, ALTEL has already experienced some
downward pressure on its tariffs as a result of competition from the new
licensees. ALTEL is currently assessing its response to the new competition, and
there can be no assurance that it will in fact be able to compete successfully
with the new licensees.

Effect of Network Expansion on Management Resources; Management of
Growth. ALTEL has engaged in a significant expansion of its cellular network,
from its initial base of operations in Almaty to a total of 12 cities throughout
Kazakhstan as of December 31, 1998. The timing of such expansion was dictated by
the terms of the license, so that in some regions it occurred at a time when
economic activity in those regions was still at a sufficiently low level as to
raise a question as to whether, and if so, when, cellular service in such
regions will be commercially viable. Furthermore, because of the distances
involved, the difficulty of hiring, training and supervising staff at remote
locations and the underdeveloped nature of the business infrastructure, such as
banks and professional advisers in many of the proposed locations for expansion,
the establishment and provision of cellular service have presented, and will
continue to present, significant challenges to the management of ALTEL, and
there can be no assurance that these challenges will be met successfully in all
cases. In addition, further network development is planned on a targeted basis
to address key market sectors. Failure to manage the ALTEL network, and any
future expansion of the network, successfully could have a material adverse
effect on the Company.

Effect of Sale of Stake in Kazakhtelekom on ALTEL and the
Telecommunications Market in Kazakhstan. Since its formation, ALTEL has been 50%
owned, directly or indirectly, by the government of Kazakhstan. ALTEL believes
that the attitude of the government towards its operations has generally been
favorable and that this has derived in some part from the government's interest
in ALTEL. Currently, the government's 50% interest in ALTEL is held through
Kazakhtelekom, which until May 1997 was owned 100% by the government. In May
1997, the Kazakh government announced that it had sold a 40% interest in
Kazakhtelekom to Daewoo, creating considerable uncertainty as to the
government's attitude towards Kazakhtelekom. In March 1998, it was reported that
Daewoo had sold a portion of its stake (reported to be approximately 10%) to an
unnamed third party. It was later confirmed that Daewoo had sold its entire
stake in Kazakhtelekom to Kazcommertzbank, a

16
<PAGE> 19

commercial bank based in Kazakhstan. It is understood that the Kazakh government
is seeking to sell a 15% stake in Kazakhtelekom to private investors. In
addition, the KMOC recently issued a revised license to Kazakhtelekom
specifically naming it as the exclusive national network operator in Kazakhstan,
and giving it a wide range of powers to carry out this function. The Company has
not yet fully assessed what impact these matters may or will have on ALTEL and
its business. There can be no assurance that the government's favorable attitude
towards ALTEL will continue to the same degree. Any significant change in the
government's attitude toward ALTEL could have a material adverse effect on the
Company.

Dependence on Interconnect Parties. Under the terms of its license, ALTEL
is entitled to interconnection free of charge to networks operated by
Kazakhtelekom, the public switched telephone network operator, for the
completion of its local, long distance and international calls. The loss of, or
any significant limitation on, its access to such network could have a material
adverse effect on the Company. Further, under its revised license, Kazakhtelekom
was directed to assess interconnection charges for connection to its network,
and to levy such charges on a basis which will yield it a profit. Kazakhtelekom
may try to use this authority to endeavor to assess interconnection charges on
ALTEL, notwithstanding the fact that its license exempts it from payment of such
charges. The imposition of such interconnection charges would impact ALTEL's
profitability, perhaps materially.

ITEM 2. DESCRIPTION OF PROPERTY

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. CONTROL OF REGISTRANT

All of the issued and outstanding ordinary shares of the Company are held
by NWE Capital (Cyprus) Limited, which in turn is 100% directly owned by PLD.

ITEM 5. NATURE OF TRADING MARKET

None.

ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

Exchange Controls. Kazakhstan currently has in place relatively liberal
policies governing hard currency transfers by Kazakh residents to non-residents.
Residents (which generally includes all Kazakh companies and citizens resident
in Kazakhstan) can use hard currency to pay non-residents (which generally
includes all non-Kazakh companies and their branch offices and representative
offices in Kazakhstan) for current currency transactions (generally those where
payment is made within 180 days of the provision of goods or services). Payments
in U.S. Dollars classified as movements of capital (which generally includes
direct investments, portfolio investments, payments with respect to real estate
and payments made after 180 days for goods and services) are subject to
licensing by the National Bank of Kazakhstan.

Payments between Kazakh residents must generally be made in Tenge. Kazakh
companies may exchange Tenge for U.S. Dollars if they can document U.S.
Dollar-denominated liabilities that are due and payable within specified
periods. The National Bank of Kazakhstan does not currently require the
conversion of hard currency earnings into Tenge. Tenge may not be lawfully
exported from Kazakhstan or converted into other currencies outside of
Kazakhstan.

17
<PAGE> 20

Availability of Hard Currency for Conversion Purposes. The ability of
foreign investors to convert Tenge into hard currency is also subject to the
availability of hard currency in the Kazakh currency markets. Although there is
an existing market within Kazakhstan for the conversion of Tenge into other
currencies, including the interbank currency exchange and the over-the-counter
markets, the development of this market is uncertain.

Exchange Rates. Significant fluctuations in the value of the Tenge against
the U.S. Dollar and other hard currencies can also have a material impact on the
value of a foreign investor's Tenge dividend income or Tenge proceeds for the
sale of Tenge-denominated securities. In Kazakhstan a market exists for the
conversion of Tenge into other currencies, but it is limited in size and is
subject to rules limiting the purposes for which conversion may be effected. The
history of trading in the Kazakh Tenge against the U.S. Dollar has been
characterized by significant declines in value and considerable volatility,
although the Kazakh Tenge experienced relative stability against the U.S. dollar
during 1996 and 1997. After remaining relatively stable during 1998, the Kazakh
Tenge has lost significant value in the first six months of 1999, reflecting
concerns about the health of the country's economy as a result of Russia's
economic and financial problems, and a decision by the government of Kazakhstan
to cease providing support for its currency.

Repatriation. Kazakhstan's foreign investment legislation provides that
earnings from investments made by foreign investors may be freely repatriated
provided that all applicable fees and taxes have been paid. However, the
exchange control regime in Kazakhstan may materially affect an investor's
ability to do so and may increase the cost of such repatriation. See "Business
- -- Risk Factors -- Risks Involving the Company -- Currency Controls."

Impact upon the Company. The Company has not experienced particular
difficulties with the Kazakh exchange control regime. Both dividends and
management fees have been received by the Company and PLD from ALTEL during
1998. While there are paperwork requirements in relation to hard currency
transfers, these have not delayed the making of such transfers.

ITEM 7. TAXATION

The Company is not subject to tax in the British Virgin Islands or
elsewhere. ALTEL is subject to a number of taxes in Kazakhstan (including
withholding taxes on distributions by ALTEL). Obtaining the benefits of
applicable tax treaties can be extremely difficult due to the documentary and
other requirements imposed by the Kazakh authorities. For example, the Kazakh
tax authorities require withholding on almost any kind of out-payment, including
management fees and expense reimbursements, not just items of income, and
additionally specify that an exemption application be submitted in respect of
every payment made (as opposed to permitting blanket exemptions), while at the
same time requiring non-standard certifications from the home country taxing
authority. The need to comply with these provisions may negate or impair tax
planning initiatives undertaken by the Company to reduce its and ALTEL's overall
tax obligations in Kazakhstan.

In general, ALTEL is faced with a wide variety of taxes, including property
taxes, advertising taxes, road taxes, housing taxes, transport taxes and
education taxes. In addition, ALTEL is subject to corporate profits taxes of
approximately 30%. The tax system in Kazakhstan has changed rapidly in recent
years and may undergo additional changes, which may have a material adverse
effect on the Company.

ITEM 8. SELECTED FINANCIAL DATA

The following summary consolidated financial and operating data was derived
from, and should be read in conjunction with, the audited Consolidated Financial
Statements of the Company and the related notes thereto, and Management's
Discussion and Analysis of Financial Condition and Results of Operations,
contained elsewhere herein.

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<PAGE> 21

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Operating revenues..................... $39,548 $30,012 $19,305 $ 9,340 $ 1,198
Operating expenses..................... 26,234 21,233 15,135 11,962 1,772
Operating income/(loss)................ 13,314 8,779 4,170 (2,622) (2,114)
Income/(loss) before income taxes and
minority interest................... 13,090 8,786 4,032 (2,007) (2,123)
Income taxes........................... 5,916 3,648 1,547 247 --
Income/(loss) before minority
interest............................ 7,174 5,138 2,485 (2,254) (2,123)
Minority interest...................... 4,613 3,611 1,878 -- --
------- ------- ------- ------- -------
Net income/(loss)...................... $ 2,561 $ 1,527 $ 607 $(2,254) $(2,123)
======= ======= ======= ======= =======
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 1,642 $ 5,294 $ 2,733 $ 1,130 $ 254
Non-cash working
capital/(deficiency)................ 254 (300) (1,964) 1,354 (412)
Property and equipment, net............ 29,746 23,362 22,342 16,164 4,843
Telecommunication licenses, net........ 21,581 23,693 25,800 27,906 30,013
Total assets........................... 59,008 58,249 54,784 50,144 35,911
Long-term debt (including advances from
other group companies).............. -- -- -- -- 6,120
Shareholder's equity................... 47,121 47,560 47,033 46,426 28,680
</TABLE>

ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This document contains certain forward-looking statements that are subject
to risks and uncertainties. Forward-looking statements include certain
information relating to political, social and economic conditions in the
countries of the former Soviet Union and the Commonwealth of Independent States,
the commencement of certain programs and the proposed offering of certain
services by the Company's operating subsidiaries, the impact of Year 2000 issues
on the Company's operations and interpretations and actions of certain
regulatory authorities, including in Kazakhstan, as well as information
contained elsewhere in this report where statements are preceded by, followed
by, or include the words "believes," "expects," "anticipates," and similar
expressions. For such statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including without limitation, those discussed elsewhere in the Report.

Furthermore, this document constitutes a Year 2000 Readiness Disclosure
Statement, and the statements herein are subject to the Year 2000 Information
and Readiness Disclosure Act, and the Company hereby claims the protection of
such Act for this document and all information contained herein.

BASIS OF PRESENTATION

The Company's sole investment at December 31, 1998 is a 50% equity interest
in ALTEL, which provides cellular services in Kazakhstan.

The Company's ultimate parent is PLD. The parent's investment in the
Company has been pushed down into the Company's consolidated financial
statements and allocated to the cost of ALTEL's telecommunications license. The
Company's consolidated balance sheets as at December 31, 1998 and 1997 reflect
the effect of this push down accounting treatment. The cost of ALTEL's
telecommunications license is amortized on a straight line basis over its term
which expires in 2009.

EBITDA is used as a measure of operating performance and is defined as
earnings (or loss) from continuing operations before income taxes and minority
interest plus net interest (interest expense less interest and other income)
plus depreciation and amortization. It is presented as supplemental disclosure
because it assists in understanding the Company's operating results. EBITDA,
however, may not be comparable to similarly titled

19
<PAGE> 22

measures of other companies and should not be considered in isolation or as a
substitute for net income, cash flow provided by operating activities, or other
income or cash flow data prepared in accordance with generally accepted
accounting principles, or as a measure of a company's profitability or
liquidity.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1998 VERSUS YEAR ENDED DECEMBER 31, 1997

Overview. For the year ended December 31, 1998, the Company reported net
income of $2.6 million and operating income of $13.3 million earned on revenues
of $39.5 million compared to net income of $1.5 million and operating income of
$8.8 million earned on revenues of $30.0 million in 1997. EBITDA of $19.2
million in 1998 compared to $13.9 million in 1997.

Revenues. Revenues increased 31.7% from $30.0 million to $39.5 million in
1998 reflecting the continued strong year-on-year growth in revenues achieved
within ALTEL. ALTEL's number of subscribers increased to 21,395, up 10,293 over
1997. Much of ALTEL's revenue growth can be attributed to the introduction of
prepaid cellular service in August 1998.

Although still significant, ALTEL's 1998 revenue growth rate of 31.7% was
down from the 55.4% achieved in 1997. The reduced rate was largely the result of
a slow down in revenue growth late in the year attributable to the beginning of
economic difficulties in Kazakhstan. The crisis resulted in the loss of some
customers as well as reduced calling activity among businesses and individuals
that remained customers.

Management believes that revenues in 1999 are unlikely to grow at the same
rate as they have in recent years given the many uncertainties in the Kazakh
political and economic landscape at present. Further deterioration in the Kazakh
economic situation would likely impact the Company's business adversely. See
"Risk Factors". While management believes that it is taking all available
measures to protect its business from the negative effects of any further
problems in Kazakhstan, there can be no assurance that those measures will be
successful.

Gross profit. Gross profit increased 36.4% to $31.5 million in 1998 from
$23.1 million in 1997 reflecting the revenue growth discussed above, as well as
an increase in the Company's gross margin, as a percentage of revenues, from
77.0% in 1997 to 79.7% in 1998. Margins are generally expected to come under
pressure in 1999 due to increased competition faced by ALTEL.

General and administrative expenses and management fees. General and
administrative expenses include salaries, sales and marketing and overhead
expenses. Management fees were paid to PLD and Kazakhtelekom. Combined, these
expenses increased 31.0% from $8.7 million in 1997 to $11.4 million in 1998 and
were required to fuel continued revenue growth and expand product offerings
within ALTEL.

Depreciation and amortization. Depreciation and amortization increased
18.9% in 1998 to $6.3 million from $5.3 million in 1997. The increase reflects
the investment of over $10.5 million in capital equipment in 1998 as well as a
full year's depreciation on assets placed in service in 1997. Depreciation will
continue to grow as a result of further anticipated investments in capital
equipment in 1999, albeit at a slower pace than seen in prior years. Included in
both the 1998 and 1997 figures is a $2.1 million amortization charge related to
the telecommunications license held by ALTEL which is being amortized over its
remaining term which expires in 2009. As a percentage of revenues, these
expenses decreased from 17.7% in 1997 to 15.9% in 1998 and should continue to
decrease as ALTEL completes the build-out of its network.

Taxes other than income taxes. Taxes other than income taxes, which include
road tax, property tax, employee-related taxes, etc., increased 25.0% from $0.4
million in 1997 to $0.5 million in 1998. This reflects the overall growth during
the year in the operating businesses' revenues, earnings, number of employees,
etc. on which such taxes are based.

Interest and other income. Interest and other income earned in 1998,
primarily on cash balances held by ALTEL, remained unchanged from 1997 at $0.2
million.

Foreign exchange loss. The foreign exchange loss in 1998 of $0.4 million
compared with the $0.2 million loss recorded in 1997 and was the result of
unfavorable movements in the tenge, vis-a-vis the U.S. dollar, as

20
<PAGE> 23

applied to ALTEL's tenge denominated net monetary assets. The Company has
sought, and will continue to seek, to limit the effects of such conditions by
minimizing the amount of tenge balances held by ALTEL and by taking measures to
accelerate collection and currency conversion procedures in so far as this is
possible in the current banking and legislative environment.

Income taxes. Income taxes increased from $3.6 million in 1997 to $5.9
million in 1998 reflecting the overall improvement in the pre-tax earnings of
ALTEL in 1998.

Minority interest. Minority interest of $4.6 million in 1998 was based on
the 50% minority interest in ALTEL applied to its post-tax earnings. This
compared with $3.6 million in minority interest recorded in 1997.

YEAR ENDED DECEMBER 31, 1997 VERSUS YEAR ENDED DECEMBER 31, 1996

Overview. For the year ended December 31, 1997, the Company reported net
income of $1.5 million and operating income of $8.8 million on revenues of $30.0
compared to $0.6 million in net income and $4.2 million in operating income
earned on revenues of $19.3 million in 1996. EBITDA of $13.9 million in 1997
compared to $8.0 million in 1996.

Revenues. Revenues increased 55.4% from $19.3 million to $30.0 million in
1997 reflecting the strong year-on-year growth in revenues achieved within
ALTEL. ALTEL's number of subscribers increased to 11,102, up from 6,957 in 1996.

Gross profit. Gross profit increased 66.2% to $23.1 million in 1997 from
$13.9 million in 1996 reflecting the revenue growth discussed above, as well as
an increase in the Company's gross margin, as a percentage of revenues, from
72.0% in 1996 to 77.0% in 1997.

General and administrative expenses and management fees. General and
administrative expenses include salaries, sales and marketing and overhead
expenses. Management fees were paid to PLD and Kazakhtelekom. Combined, these
expenses increased 64.2% from $5.3 million in 1996 to $8.7 million in 1997 and
were required to expand ALTEL's revenue base into new regional centers within
Kazakhstan.

Depreciation and amortization. Depreciation and amortization increased
29.3% in 1997 to $5.3 million from $4.1 million in 1996. The increase reflects
the investment of over $4.2 million in capital equipment in 1997 as well as a
full year's depreciation on assets placed in service in 1996. Included in both
the 1997 and 1996 figures is a $2.1 million amortization charge related to the
telecommunications license held by ALTEL. As a percentage of revenues, these
expenses decreased from 21.2% in 1996 to 17.7% in 1997.

Taxes other than income taxes. Taxes other than income taxes in 1997
remained relatively unchanged from 1996 at $0.4 million.

Interest and other income. Interest and other income earned in 1997,
primarily on cash balances held by ALTEL, remained unchanged from 1996 at $0.2
million.

Foreign exchange loss. A foreign exchange loss in 1997 of $0.2 million was
down marginally from the $0.3 million loss recorded in 1996 and was the result
of unfavorable movements in the tenge, vis-a-vis the U.S. dollar, as applied to
ALTEL's tenge denominated net monetary assets.

Income taxes. Income taxes increased from $1.5 million in 1996 to $3.6
million in 1997 reflecting the overall improvement in the pre-tax earnings of
ALTEL during 1997.

Minority interest. Minority interest of $3.6 million in 1997 was based on
the 50% minority interest in ALTEL applied to its post-tax earnings. This
compared with a total of $1.9 million recorded in 1996. The increase is a direct
result of the overall improvement in the post-tax earnings of ALTEL during 1997.

LIQUIDITY AND CAPITAL RESOURCES

For the year ended December 31, 1998, a total of $12.9 million in cash was
generated from operations (1997 -- $8.8 million; 1996 -- $9.8 million), $10.5
million was used in net investing activities (1997 -- $4.2 million; 1996 -- $8.2
million) and $6.0 million was used in net financing activities (1997 -- $2.0
million;

21
<PAGE> 24

1996 -- nil). Investments consisted of capital expenditures almost exclusively
on telecommunications equipment within ALTEL, while cash used in net financing
activities consisted exclusively of dividends paid by the Company to its parent
company, NWE Capital (Cyprus) Ltd.

As of December 31, 1998, the Company reported working capital of $1.9
million (1997 -- $5.0 million) and consolidated total assets of $59.0 million
($58.2 million as of December 31, 1997) which consisted primarily of $7.7
million in current assets (including $1.6 million in cash and cash equivalents),
net property and equipment of $29.7 million and unamortized telecommunications
licenses of $21.6 million.

Shareholder's equity of $47.1 million as of December 31, 1998, which
consisted of $50.9 million in share, contributed and reserve capital and a $3.8
million accumulated deficit, compared to shareholder's equity of $47.6 million
recorded at the end of 1997.

The ongoing cash requirements of the Company, as a stand alone holding
company for its investment in ALTEL, are nominal. In addition, ALTEL is now a
self-sustaining business with the ability to source third party supplier and
bank financing on its own without recourse to the Company or its ultimate
parent, PLD. However, to the extent that ALTEL experiences lower than expected
revenues, higher operating costs, or higher development costs in connection with
the build-out of its network or as a result of continuing economic difficulties
in Kazakhstan, the Company may need to seek other sources of financing to fund
its operations.

As it has disclosed in its Annual Report on Form 10-K, PLD has significant
debt service requirements, including the payment of interest on the Senior Notes
and the Convertible Notes and amounts owing to the Travelers Parties, and PLD
does not presently have sufficient funds on hand to meet its current debt
obligations. The Company is a guarantor of the Senior Notes and the Convertible
Notes under the terms of the related indentures and of the amounts owing to the
Travelers Parties.

While an agreement has been reached with the holders of the Senior Notes
and the Convertible Notes and with the Travelers Parties on a restructuring of
PLD's indebtedness to such parties, those agreements are conditioned upon the
closing of PLD's merger with MMG. If the merger did not close, PLD would remain
obligated to pay the interest on the Senior Notes and the Convertible Notes and
there can be no assurance that the Travelers Parties would not demand payment in
full of PLD's obligations to them. PLD's failure to make the interest payments
on the Senior Notes and the Convertible Notes could result in a default under
and acceleration of those Notes for which the Company serves as guarantor. In
addition, PLD's failure to make payments in full to the Travelers Parties could
result in a claim being made against the Company under its guarantee of the
amounts due to the Travelers Parties, as well as resulting in a cross-default
under and acceleration of the Senior Notes and the Convertible Notes. Any such
events would have a material adverse effect on the Company and would raise
substantial doubt about the Company's ability to continue as a going concern.

In connection with the Merger Agreement with MMG and the transactions
contemplated thereunder, the holders of the Senior and Convertible Notes have
agreed, subject to completion of the merger and other transactions contemplated
by the Merger Agreement, to exchange their outstanding notes for new notes
issued by MMG which will not be guaranteed by the Company.

EFFECTS OF NEWLY-ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, Statement of Financial Accounting Standards No. 133 ("SFAS
133"), "Accounting for Derivative Instruments and Hedging Activities", was
issued. SFAS 133 established accounting and reporting standards for derivative
instruments and for hedging activities. SFAS requires that an entity recognize
all derivatives as either assets or liabilities and measure those instruments at
fair value. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. SFAS 133 cannot be applied retroactively to
financial statements of prior periods. At the current time the Company has not
evaluated the impact SFAS 133 will have, if any.

The American Institute of Certified Public Accountants issued Statement of
Position No. 98-1 (SOP 98-1) "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," and Statement of Position No. 98-5 (SOP
98-5) "Reporting on the Costs of Start-Up Activities" in 1998. SOP 98-1 requires
that certain costs related to the development or purchase of internal-use
software be capitalized and amortized over
22
<PAGE> 25

the estimated useful life of the software. SOP 98-5 requires costs of start-up
activities and organization costs to be expensed as incurred. The Company was
required to adopt both new statements in the first quarter of 1999. The adoption
of these statements did not have a material effect on the Company's consolidated
financial statements.

YEAR 2000 ISSUE

The Year 2000 issue exists because many computer systems and applications,
particularly older systems and applications, use a two-digit, rather than a
four-digit, date field to designate a particular year. As a result of the
century change, date-sensitive systems may recognize dates in the twenty-first
century (i.e., after 2000) as dates in the twentieth century (i.e., the
corresponding year commencing with the prefix 19--). Equally, such systems may
not recognize dates in the twenty-first century at all. All of this could lead
to system failures or miscalculations which could lead to disruption of
operations such as data being lost, an inability to process transactions,
incorrect data being generated and critical deadlines being overlooked. The
impact of these disruptions could be significant.

PLD has conducted, and has caused each of its operating subsidiaries to
conduct a survey of the equipment and software used by them.

The Company's business involves the supply of services. To the very limited
extent that it maintains actual inventory for sale (e.g., cellular telephone
equipment sold to subscribers for its cellular telephony services), it does not
manufacture such inventory itself but resells goods supplied by recognized
manufacturers of such goods.

Its survey has involved testing of equipment as well as contacting the
manufacturers of equipment and producers of software (or review of materials
published by such parties, including websites) to assess such parties' Year 2000
readiness. Such survey has indicated that, except in a few instances, the
equipment and software which it uses are Year 2000 compliant. The Company is
taking steps to upgrade or replace those items which are not compliant. In many
cases the items required to be upgraded or replaced were due to be upgraded or
replaced in any event, so that the Company's exposure has been the acceleration
of already planned expenditures, rather than new or unanticipated expenditures.
The Company expects that essentially all of its upgrading and replacement work,
and any remaining testing required, will be complete by the end of the third
quarter of 1999.

To date, PLD has expended approximately $400,000 for remediation efforts
and expects that its total remediation costs, including scheduled upgrades and
replacements of approximately $3,100,000, will be approximately $4,000,000.

Starting in January 1998, all operating businesses were required to use
their best efforts to obtain specific warranties of Year 2000 compliance from
parties with which they contract for products or services thereafter. While
almost all new contracts for products or services entered into since that date
have contained some form of warranty, these have generally been limited to
recovering of direct losses, and not indirect or consequential losses, such as
loss of revenues or profits. In consequence, the actual efficacy of such
warranties may be somewhat limited.

Additionally, all operating businesses have been required to review the
terms under which they have heretofore supplied products and/or services to
third parties. No case has been identified in which any operating business has
specifically guaranteed Year 2000 compliance, and the Company has instituted a
policy regarding the giving of such guarantees in the future in order to control
and limit possible exposure thereunder. Further, since none of the operating
businesses manufacture equipment or produce proprietary software for customers
other than in exceptional cases, virtually all such transactions involve the
re-sale or assignment of products and services supplied by others. Accordingly,
the Company believes that, to the extent that such products and services are
either warranted or shown to be Year 2000 compliant, its own exposure is
commensurately reduced.

While there can be no assurances that equipment failures will not occur,
the effect of such failures may be ameliorated by the fact that such equipment
is usually part of a network of facilities and equipment maintained by the
Company. This means that a failure in an individual component will not
necessarily cause a substantial disruption to the network as a whole, because no
individual item is critical to the operation of the network as a whole, and the
network also provides opportunities to by-pass the failure.

23
<PAGE> 26

The foregoing indicates that, to the extent that its business depends upon
equipment, software, facilities and networks under its control, the Company
believes that, by the year 2000, it will have taken all steps reasonably
required to ensure that those items are Year 2000 compliant, and that it has
reasonable contingency arrangements to deal with failures.

The Company's principal Year 2000 risks arise from the fact that it is
dependent for the completion of its calls upon a variety of other traffic
carriers who provide interconnection and termination services. Since in many
cases there are a variety of routes over which traffic can be carried, it is
simply not possible for the Company to verify that each entity which could be
involved in providing telecommunications services to its operating subsidiaries
will be Year 2000 compliant. To a large extent, the Company is reliant in these
circumstances on the actions of the other telecommunications operators and
service providers to ensure that their counterparts are Year 2000 compliant.
While the Company believes that the parties providing these services which are
based in the United States and other Western countries are expected to be
substantially Year 2000 compliant, the Year 2000 compliance and readiness of the
Kazakh and other C.I.S. parties with which ALTEL interacts appears to be
substantially behind that of Western parties. The Company has been unable to
determine with any degree of certainty the extent to which ALTEL's interconnect
partners in the C.I.S. are non-compliant because those parties have generally
been reluctant to share this information. Nevertheless the Company believes,
based on such reluctance and anecdotal and other evidence, that many of those
partners, particularly in those in the less developed regions of Kazakhstan or
the C.I.S., are substantially non-compliant.

Furthermore, the likelihood that those parties will be able to become Year
2000 compliant seems problematical, given the limited amount of time left for
this, the severe funding constraints faced by those parties, principally as a
result of poor economic conditions in their home countries, and the possible
lack of governmental pressure on those parties.

Accordingly, there is a significant risk that ALTEL may experience
disruptions in their operations as a result of its C.I.S. interconnect partners
not being able to complete calls or pass traffic to ALTEL. While the Company is
unable to predict the extent or duration of such disruptions, the possibility
exists that they could be extensive, and also take considerable time, perhaps
even months, to correct.

An additional risk is the likelihood that the billing systems of those
interconnect partners may also be disrupted, resulting in those partners being
unable to collect from their customers or to make timely settlements with ALTEL.

Accordingly, the Company believes that there is a considerable risk that it
will experience disruptions in providing telecommunications services to and from
the countries of the C.I.S. which it serves, and that those disruptions may be
substantial. Given its inability to obtain an accurate assessment of the extent
to which its C.I.S. partners may be non-compliant, it is impossible for the
Company to predict either the extent or the magnitude of those disruptions.
Nevertheless, they have the potential to adversely impact the operations of its
operating subsidiaries, and such adverse impact may be material.

The Company has investigated the possibility of obtaining insurance against
liability arising out of claims that products or services supplied are not Year
2000 compliant, but has determined that such insurance is not obtainable upon
terms which are sufficiently comprehensive and/or is only obtainable upon terms
which are uneconomical given the level of perceived risk, and accordingly has
elected not to pursue such insurance.

ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

PLD's finance department is responsible for the evaluation and, to the
extent practicable, management of the Company's exposure to market risks.

The Company's primary market risk is related to the movement in foreign
currency exchange rates in Kazakhstan. See "Risk Factors -- Country Risks --
Restrictions on Currency Conversion; Historical Volatility in Currency Prices"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Currency Controls." PLD and the Company periodically evaluate the
materiality of their foreign exchange exposures and the financial instruments
available to mitigate this exposure. However, PLD and the Company do

24
<PAGE> 27

not currently believe that it is practical or economical to hedge these foreign
currency exchange risks and as a result will continue to experience foreign
currency gains and losses.

The Company does not use any derivative instruments, either as a trading or
non-trading activity.

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

Gordon Owen has been a Director of the Company since 1994.

Robert Smith has been a Director of the Company since 1994. He is a former
Director of PLD and was formerly the Chairman of ALTEL.

Clayton A. Waite has been a Director of the Company since 1996. Mr. Waite
is currently a consultant to PLD and has previously served as Vice President -
Administration and Group Financial Controller of PLD.

None of the directors of the Company are citizens or residents of the
United States.

The directors of the Company are elected for an unspecified term, until
their successors are elected and duly qualified.

There are no officers of the Company.

ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS

The directors of the Company are not compensated by the Company or its
subsidiary.

ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

None.

ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

PART II

ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED

None.

PART III

ITEM 15. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 16. CHANGES IN SECURITIES, CHANGES IN SECURITY FOR REGISTERED SECURITIES
AND USE OF PROCEEDS

None.

25
<PAGE> 28

PART IV

ITEM 17. FINANCIAL STATEMENTS

The consolidated financial statements of the Company and its subsidiaries
are attached to this Report beginning on page F-1.

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

(i) Consolidated balance sheets of the Company as of December 31, 1998
and 1997;

(ii) Consolidated statements of operations of the Company for the years
ended December 31, 1998, 1997 and 1996;

(iii) Consolidated statements of accumulated deficit of the Company for
the years ended December 31, 1998, 1997 and 1996; and

(iv) Consolidated statements of cash flows of the Company for the years
ended December 31, 1998, 1997 and 1996.

(b) Exhibits

4.1 Indenture, dated as of May 31, 1996, among PLD Telekom Inc., as
Issuer, NWE Capital (Cyprus) Limited, PLD Asset Leasing Limited,
PLD Capital Limited, Baltic Communications Limited and the Company
as Guarantors, and The Bank of New York, as Trustee, with respect
to $123,000,000 aggregate principal amount at stated maturity of
14% Senior Discount Notes due 2004 (the "Senior Note Indenture")
(Exhibit 4.1)(1)

4.2 Indenture, dated as of May 31, 1996, among PLD Telekom Inc. as
Issuer, NWE Capital (Cyprus) Limited, PLD Asset Leasing Limited,
PLD Capital Limited, Baltic Communications Limited and the Company
as Guarantors, and The Bank of New York, as Trustee, with respect
to $26,500,000 aggregate principal amount of 9% Convertible
Subordinated Notes due 2006. (Exhibit 4.1)(2)

4.3 First Supplemental Indenture, Amendment Agreement, Consent and
Waiver, dated as of March 20, 1998, among PLD Telekom Inc., as
Issuer, NWE Capital (Cyprus) Limited, PLD Asset Leasing Limited,
PLD Capital Limited, Baltic Communications Limited and the
Company, as Guarantors, Clayton A. Waite and Apropos Investments
Ltd., as nominee shareholders, and The Bank of New York, as
Trustee. (Exhibit 4.3)(1)

99.1 Consent of KPMG.
- ---------------

(1) Incorporated by reference to the Company's Registration Statement on Form
S-4 (File No. 333-5398).

(2) Incorporated by reference to the Company's Registration Statement on Form
S-3 (File No. 333-5396).

26
<PAGE> 29

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized, in New York, New York on
June 25, 1999.

WIRELESS TECHNOLOGY CORPORATIONS
LIMITED

By: /s/ CLAYTON A. WAITE
------------------------------------
Clayton A. Waite
Director

27
<PAGE> 30

WIRELESS TECHNOLOGY CORPORATIONS LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
ITEM PAGE
- ---- --------
<S> <C>
Independent auditors' report................................ F-2
Consolidated balance sheets as of December 31, 1998 and
1997...................................................... F-3
Consolidated statements of operations for the years ended
December 31, 1998, 1997 and 1996.......................... F-4
Consolidated statements of accumulated deficit for the years
ended December 31, 1998, 1997 and 1996.................... F-5
Consolidated statements of cash flows for the years ended
December 31, 1998, 1997 and 1996.......................... F-6
Notes to consolidated financial statements.................. F-7
</TABLE>

F-1
<PAGE> 31

INDEPENDENT AUDITORS' REPORT

Shareholder and Board of Directors of
Wireless Technology Corporations Limited:

We have audited the accompanying consolidated balance sheets of Wireless
Technology Corporations Limited and subsidiary as of December 31, 1998 and 1997,
and the related consolidated statements of operations, accumulated deficit, and
cash flows for each of the years in the three year period ended December 31,
1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Wireless
Technology Corporations Limited and subsidiary as of December 31, 1998 and 1997
and the results of their operations and their cash flows for each of the years
in the three year period ended December 31, 1998 in conformity with generally
accepted accounting principles in the United States.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in note
9(d) to the consolidated financial statements, the Company's parent, PLD Telekom
Inc. (PLD) does not presently have sufficient funds on hand to meet its current
debt obligations. The Company is a guarantor of such obligations. PLD's failure
to make payment in full when required could result in a claim being made against
the Company under its guaranty and a cross-default under and acceleration of
other debt obligations for which the Company is also a guarantor. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

KPMG

Almaty, Kazahkstan
February 17, 1999

F-2
<PAGE> 32

WIRELESS TECHNOLOGY CORPORATIONS LIMITED

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(THOUSANDS OF UNITED STATES DOLLARS)

<TABLE>
<CAPTION>
1998 1997
------- ------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,642 5,294
Trade receivables, net of allowance of $1,143 and $1,139
respectively........................................... 3,811 3,462
Due from related parties (note 6)......................... 20 --
Inventory................................................. 1,495 1,640
Prepaid expenses and other current assets................. 713 798
------- ------
Total current assets.............................. 7,681 11,194
------- ------
Property and equipment, net (note 3)...................... 29,746 23,362
Telecommunications license, net (note 4).................. 21,581 23,693
------- ------
Total assets...................................... $59,008 58,249
======= ======
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 939 1,197
Due to related parties (note 6)........................... 602 1,875
Customer deposits and advances (note 7)................... 4,244 3,070
Income tax payable........................................ -- 58
------- ------
Total current liabilities......................... 5,785 6,200
------- ------
Commitments and contingencies (note 9)
Minority interest......................................... 6,102 4,489
Shareholder's equity:
Share capital (note 5)................................. 20,000 20,000
Contributed capital.................................... 30,803 30,803
Reserve capital (note 5)............................... 100 --
Accumulated deficit.................................... (3,782) (3,243)
------- ------
Total shareholder's equity........................ 47,121 47,560
------- ------
Total liabilities and shareholder's equity........ $59,008 58,249
======= ======
</TABLE>

See accompanying notes to consolidated financial statements.
F-3
<PAGE> 33

WIRELESS TECHNOLOGY CORPORATIONS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(THOUSANDS OF UNITED STATES DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Telecommunications revenues................................. $39,548 30,012 19,305
Direct costs (note 6)....................................... 8,076 6,873 5,376
------- ------ ------
Gross profit................................................ 31,472 23,139 13,929
Operating expenses:
General and administrative (note 6)....................... 9,709 7,501 4,387
Management fees (note 6).................................. 1,649 1,155 885
Depreciation and amortization............................. 6,267 5,325 4,133
Taxes other than income tax............................... 533 379 354
------- ------ ------
Total operating expenses.......................... 18,158 14,360 9,759
------- ------ ------
Operating income............................................ 13,314 8,779 4,170
Other income/(expense):
Interest and other income................................. 151 249 203
Foreign exchange loss..................................... (375) (242) (341)
------- ------ ------
Net income before income
taxes and minority interest.......................... 13,090 8,786 4,032
Income taxes (note 8)....................................... 5,916 3,648 1,547
------- ------ ------
Net income before minority interest.................... 7,174 5,138 2,485
Minority interest........................................... 4,613 3,611 1,878
------- ------ ------
Net income.................................................. $ 2,561 1,527 607
======= ====== ======
</TABLE>

See accompanying notes to consolidated financial statements.
F-4
<PAGE> 34

WIRELESS TECHNOLOGY CORPORATIONS LIMITED

CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICIT
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(THOUSANDS OF UNITED STATES DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Accumulated deficit at beginning of year.................... $(3,243) (3,770) (4,377)
Net income.................................................. 2,561 1,527 607
Reserve capital (note 5).................................... (100) -- --
Dividends................................................... (3,000) (1,000) --
------- ------ ------
Accumulated deficit at end of year.......................... $(3,782) (3,243) (3,770)
======= ====== ======
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE> 35

WIRELESS TECHNOLOGY CORPORATIONS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(THOUSANDS OF UNITED STATES DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 2,561 1,527 607
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 6,267 5,325 4,133
Bad debt expense..................................... 247 449 415
Minority interest.................................... 4,613 3,611 1,878
Changes in operating assets and liabilities:
Increase in trade receivables..................... (600) (1,329) (1,801)
Decrease/(increase) in inventory.................. 145 (727) (255)
Decrease/(increase) in prepaid expenses and other
current assets.................................. 85 (462) 1,071
Decrease in prepaid income taxes.................. -- -- 300
Increase in accrued interest...................... -- -- 316
(Decrease)/increase in accounts payable and
accrued liabilities............................. (258) (1,427) 957
(Decrease)/increase in due to/due from related
parties, net.................................... (1,293) 664 958
Increase in customer deposits and advances........ 1,174 1,275 1,034
(Decrease)/increase in income taxes payable....... (58) (107) 165
------- ------ ------
Net cash provided by operating activities......... 12,883 8,799 9,778
------- ------ ------
Cash flows from investing activities:
Prepaid equipment purchases............................... -- -- --
Purchases of property and equipment....................... (10,535) (4,238) (8,175)
------- ------ ------
Net cash used in investing activities............. (10,535) (4,238) (8,175)
------- ------ ------
Cash flows from financing activities:
Dividends paid............................................ (6,000) (2,000) --
------- ------ ------
Net cash used in financing activities............. (6,000) (2,000) --
------- ------ ------
(Decrease)/increase in cash and cash
equivalents..................................... (3,652) 2,561 1,603
Cash and cash equivalents at beginning of year.............. 5,294 2,733 1,130
------- ------ ------
Cash and cash equivalents at end of year.................... $ 1,642 5,294 2,733
======= ====== ======
Supplementary disclosures:
Interest paid............................................... $ -- -- --
======= ====== ======
Income taxes paid........................................... $ 6,249 3,755 1,082
======= ====== ======
</TABLE>

See accompanying notes to consolidated financial statements.
F-6
<PAGE> 36

WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(TABULAR AMOUNTS IN THOUSANDS OF UNITED STATES DOLLARS)

(1) BUSINESS, OPERATIONS AND FUTURE ACTIVITIES

Wireless Technology Corporations Limited (the "Company") was incorporated
in the British Virgin Islands as an international business company on October
27, 1993. The Company is a wholly-owned indirect subsidiary of PLD Telekom Inc.
("PLD" or the "Parent"), a company incorporated in the United States. The
Company's only significant asset is a 50% controlling interest in CJSC ALTEL
("ALTEL") which was formed on January 14, 1994 as a joint stock company under
the laws of Kazakhstan. This subsidiary was formerly named CJSC BECET
International. In April 1998 its name was changed to CJSC ALTEL.

ALTEL was formed for the purpose of planning, developing, operating and
servicing a cellular telecommunications system throughout Kazakhstan, and for
the sale of related equipment to subscribers. ALTEL commenced operations in
September 1994 and continues to develop its service network throughout
Kazakhstan.

The ALTEL joint venture agreement required the Company to subscribe for
1,000 Class B shares in exchange for the contribution of working capital and
tangible equipment with a cost of $20,000,000. The Class B shares were fully
subscribed and paid as of December 31, 1995. Funding for the contribution was
provided by PLD. The Company is entitled to a priority return of its $20,000,000
contribution upon dissolution, liquidation or wind-up of ALTEL before the other
shareholder receives any proceeds.

Kazakhtelecom ("KT"), the other shareholder of ALTEL, subscribed for 1,000
Class A shares in exchange for the contribution to ALTEL of a fifteen year
license for the use of certain cellular frequencies and the procurement of
access to the public telephone network. For accounting purposes, no value was
assigned to KT's contribution.

The Company's results are dependent upon ALTEL's ability to retain existing
subscribers, to attract new subscribers, and to control operating expenses. The
ability to retain and attract subscribers is dependent upon the general economic
conditions of the marketplace, the demographic characteristics of its
subscribers, the activities of competitors, if any, and other factors which may
be outside the control of the Company.

The Company's operations are also subject to the economic, political, and
social risks inherent in doing business in Kazakhstan. These include the
policies of the Kazakh government, economic conditions, imposition of or changes
to taxes or other similar changes by regulatory bodies, foreign exchange
fluctuations and controls, controlling of prices by the Anti-Monopoly
Commission, the potential for civil disturbance and the deprivation or
unenforceability of contractual rights.

The Kazakh government has exercised and continues to exercise substantial
influence over many aspects of the private sector. The government has been
attempting to implement economic reform policies and encourage substantial
private economic activity. These reforms have been partially successful to date.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Consolidation

The accompanying consolidated financial statements are prepared in
accordance with generally accepted accounting principles in the United States
("U.S. GAAP") and are presented in United States' dollars ("U.S. dollars"). The
consolidated financial statements include the accounts of the Company and its
subsidiary, ALTEL, which the Company effectively controls. Significant
intercompany transactions and balances have been eliminated.

The accompanying consolidated financial statements present the financial
position and results of operations of the Company and subsidiary (the "Company")
on a stand-alone basis. The Company incurs and pays its own expenses. Management
assistance is provided by the Parent under the terms of negotiated management

F-7
<PAGE> 37
WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

agreements and specific costs incurred by the Parent on behalf of the Company
are charged thereto. All intercompany transactions and charges are disclosed in
note 6, "Related Party Transactions".

Income tax expense is based upon a calculation of current tax expense and
deferred tax expense in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", on a stand-alone basis. Refer
to note 8, "Income Taxes".

Intercompany interest charges incurred are the result of, and are made
pursuant to, intercompany loan and/or lease agreements and are not a result of
allocations of interest by the Parent or its subsidiaries.

The Parent's investment in the Company has been pushed down into the
Company's consolidated financial statements and allocated to the cost of the
telecommunication license. The cost of the telecommunication license is
amortized on a straight-line basis over the term of the license.

There are no common costs allocated to the Company by the Parent. Direct
costs incurred by the Parent on behalf of the Company are reimbursed by the
Company. Services provided by the Parent are furnished under the terms of the
negotiated management agreements. Refer to note 6, "Related Party Transactions".
Management of the Company believes that the accompanying consolidated financial
statements include all the costs incurred by the Company in its operations.

(b) Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. As of December 31,
1998 and 1997, the Company's cash equivalents consist of cash on deposit and
term deposits. As of December 31, 1998 and 1997, the Company had $1,362,000 and
$4,625,000, respectively, in cash equivalents.

Telecommunications revenues include airtime revenues, terminal sales,
subscription fees, connection fees and other revenues. The Company records
airtime revenues, subscription fees, connection fees and other revenues as
earned, at the time the services are provided. Terminal sales are recognized
when the equipment is delivered and the supporting contract is signed.

(d) Inventory

Inventory includes cellular telephones and accessories held for sale and is
stated at the lower of average cost or net realizable value.

(e) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets as follows:

<TABLE>
<S> <C>
Base station equipment................................. 10
Leasehold improvements and renovations................. 15
Office equipment, computers, and software.............. 3-5
Other telecommunication equipment...................... 3
Vehicles............................................... 3-5
Residential apartments................................. 5
</TABLE>

(f) Telecommunications License

The telecommunications license is amortized on a straight-line basis over
15 years, the term of the license.

F-8
<PAGE> 38
WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(g) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

Long-lived assets and certain identifiable intangibles are reviewed by the
Company for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount to
undiscounted future net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognised is
measured by the amount by which the carrying amount of the assets exceed the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.

(h) Reporting Currency and Foreign Currency Translation

The statutory accounts of ALTEL are maintained in accordance with Kazakh
accounting rules and regulations and are stated in Kazakh tenge. The Kazakh
statements are translated into U.S. dollars and then adjusted to U.S. GAAP in
accordance with Statement of Financial Accounting Standards No. 52, "Accounting
for Foreign Currency Translation" ("SFAS 52"). ALTEL's functional currency is
the U.S. dollar as virtually all equipment expenditures are made in U.S. dollars
and revenues are collected in U.S. dollar equivalents.

In accordance with SFAS 52, ALTEL has re-measured its financial statements
since the functional currency is also the reporting currency. Accordingly, U.S.
dollar transactions are re-measured at their historical value. Monetary assets
and liabilities denominated in local currencies are translated into U.S. dollars
at the prevailing period-end exchange rate. All other assets and liabilities are
translated at historical exchange rates. Results of operations have been
translated using the monthly average exchange rates. Translation differences
resulting from the use of these different rates are included in the accompanying
statements of operations. The tenge to U.S. dollar exchange rates used as of
December 31, 1998 and 1997 were 83.8 tenge to 1 U.S. dollar and 76.2 tenge to 1
U.S. dollar, respectively.

(i) Income Tax

Deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income or expense in the period it occurs.

(j) Use of Estimates

The preparation of consolidated financial statements in conformity with
U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the year. Actual results could
differ from those estimates.

(k) Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash, trade and
other receivables, amounts due to related parties and accounts payable
approximate fair value due to their short maturity.

(l) Comprehensive Income

SFAS 130 "Reporting Comprehensive Income" was issued in June 1997. SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. SFAS 130
requires that all items that are required to be recognised under accounting
standards as
F-9
<PAGE> 39
WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

components of comprehensive income be reported in an annual financial statement
that is displayed with the same prominence as other financial statements. The
Company adopted SFAS 130 as of January 1, 1998. For the years ended December 31,
1998 and 1997, comprehensive income was equal to net income reported in the
statement of operations. As SFAS 130 only requires additional disclosures in the
Company's financial statements, its adoption did not have any impact on the
Company's financial position or results of operation.

(m) Reclassifications

Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the current year's presentation.

(3) PROPERTY AND EQUIPMENT

Property and equipment, at cost, as of December 31, 1998 and 1997 consists
of the following:

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Base station equipment...................................... $ 21,164 $16,998
Leasehold improvements and renovations...................... 5,929 5,277
Office equipment, computers, and software................... 4,537 3,193
Other telecommunications equipment.......................... 1,310 1,092
Vehicles.................................................... 500 456
Residential apartments...................................... 335 335
-------- -------
Total property and equipment...................... 33,775 27,351
Less: accumulated depreciation.............................. (10,430) (6,423)
-------- -------
Net book value of assets subject to depreciation............ 23,345 20,928
Uninstalled equipment....................................... 6,401 2,434
-------- -------
Property and equipment, net....................... $ 29,746 $23,362
======== =======
</TABLE>

(4) TELECOMMUNICATIONS LICENSE

The telecommunications license as of December 31, 1998 and 1997 consists of
the following:

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Costs....................................................... $ 31,595 $31,595
Less: accumulated amortization.............................. (10,014) (7,902)
-------- -------
Telecommunications license, net........................... $ 21,581 $23,693
======== =======
</TABLE>

In March 1994, PLD acquired all of the outstanding shares of the Company
for consideration of $30,000,000 plus costs of acquisition of $800,000 and
$800,000 of ALTEL's organization costs. The acquisition was accounted for by the
purchase method of accounting. As of the date of acquisition, ALTEL had not
commenced operations and did not have any tangible assets or liabilities.
Therefore, the entire purchase price was allocated to ALTEL's cellular license
and has been "pushed down" into the Company's financial statements.

(5) SHARE CAPITAL

The authorized share capital of the Company as of December 31, 1998 and
1997 was 20,001,000 ordinary shares of $1 par value each. The shares may be
divided into such number of classes and series as determined by the directors.
The issued and outstanding share capital of the Company as of December 31, 1998
and 1997 consisted of 20,000,002 shares with aggregate par value of $20,000,002.
Two shares were issued on incorporation

F-10
<PAGE> 40
WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

on October 27, 1993 and an additional 20,000,000 shares were issued on December
20, 1995 to PLD for the contribution to purchase the Class B shares of ALTEL
(see note 1). Total dividends declared and paid were $3,000,000, $1,000,000 and
$0 for the years ended December 31, 1998, 1997 and 1996, respectively.

The balance of reserve capital was created in the current year by transfer
from current year profits of the subsidiary. Under the legislation of Kazakhstan
and charter documents of the subsidiary, the subsidiary is required to create
reserve capital equivalent to 25% of its share capital over an undetermined
period. The current reserve capital is equivalent to 0.5% of share capital and
the balance of the required reserve of 24.5% is to be created in future periods.

(6) RELATED PARTY TRANSACTIONS

(a) Management fees of $1,649,000, $1,155,000 and $885,000 for the years
ended December 31, 1998, 1997 and 1996, respectively, were charged to ALTEL by
PLD. In 1998 these amounts were paid direct to PLD; in 1997 and 1996 PLD
received the fees via the Company (see note 9). Balances outstanding of $140,000
and $129,000 as of December 31, 1998 and 1997, respectively, in relation to
these charges, are included in due to related parties.

(b) Additional charges, related to management services, of $94,000,
$191,000, and $26,000 for the years ended December 31, 1998, 1997 and 1996,
respectively, were charged by PLD and another PLD subsidiary. These amounts are
included in general and administrative expenses. A prepayment of $20,000 as of
December 31, 1998 and a balance outstanding of $929,000 as of December 31, 1997,
respectively, in relation to these charges, are included in due from and due to
related parties, respectively.

(c) Direct costs of $4,355,000, $4,163,000, and $3,291,000 for the years
ended December 31, 1998, 1997 and 1996, respectively, were charged by KT to
ALTEL. Balances outstanding of $462,000 and $817,000 as of December 31, 1998 and
1997, respectively, in relation to these charges, are included in due to related
parties.

(d) Consulting fees of $443,000, $88,000 and $81,000 for the years ended
December 31, 1998, 1997 and 1996, respectively, were paid by ALTEL to KT (see
note 9). These amounts are included in general and administrative expenses.
There was no balance outstanding as of December 31, 1998 and 1997 in relation to
these charges.

(e) Lease payments for the office premises in Almaty and other premises of
$263,000, $91,000 and $91,000 for each of the years ended December 31, 1998,
1997 and 1996 were paid by ALTEL to KT. There was no balance outstanding in
relation to these leases as of December 31, 1998 and 1997.

(7) CUSTOMER DEPOSITS AND ADVANCES

(a) Deposits of $3,867,000 and $2,725,000 in the years ended December 31,
1998 and 1997, respectively, were received by ALTEL from customers as guarantee
deposits which should be paid back if contracts are annuled and if there are no
amounts payable to ALTEL. The size of deposits depends on the type of
subscription and access level.

(b) Advances of $377,000 and $345,000 in the years ended December 31, 1998
and 1997, respectively, were received from customers as prepayments for future
services.

(8) INCOME TAXES

The provision for income tax expense for the years ended December 31, 1998,
1997, and 1996 consists solely of current tax due to the government of
Kazakhstan. The statutory Kazakh income tax rate for the years ended December
31, 1998, 1997, and 1996 was 30%. The effective tax rates on income as
calculated under U.S. GAAP differ from the statutory rates due to differences
between taxable income under the tax laws of Kazakhstan

F-11
<PAGE> 41
WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and net income before income tax and minority interest for U.S. GAAP purposes.
These differences are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------ ----- -----
<S> <C> <C> <C>
Provision for income tax at statutory rate................. $4,582 3,075 1,400
Add/(deduct) the tax effect of:
Difference in rates...................................... (655) (439) (200)
Non-deductible amortization of license................... 634 633 626
Foreign currency loss.................................... 98 73 102
Change in valuation allowance............................ 556 55 0
Other.................................................... 701 251 (381)
------ ----- -----
Provision for income tax......................... $5,916 3,648 1,547
====== ===== =====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities as of December 31, 1998 and
1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
------ ----
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................... $ 343 342
Accumulated depreciation and amortization................. 1,083 267
Accounts payable and accrued liabilities.................. 59 45
Due to related parties.................................... -- 278
Other..................................................... 11 8
------ ----
1,496 940
Less: valuation allowance................................... (791) (235)
------ ----
Net deferred tax asset.................................... 705 705
Deferred tax liabilities:
Other..................................................... (705) (705)
------ ----
$ -- --
====== ====
</TABLE>

As a result of the rapid change in regulatory environment and uncertainty
surrounding the Kazakh tax regime, the Company has provided a valuation
allowance against deferred tax assets.

The net change in the valuation allowance was an increase of $556,000 for
the year ended December 31, 1998, and a decrease of $51,000 for the year ended
December 31, 1997.

F-12
<PAGE> 42
WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(9) COMMITMENTS AND CONTINGENCIES

(a) Leases

As of December 31, 1998, the Company had long-term operating leases
primarily involving business facilities and equipment. The leases have varying
terms and contain renewal options. Future minimum lease payments under
non-cancelable operating leases consist of the following as of December 31,
1998:

<TABLE>
<S> <C>
1999........................................................ $ 630
2000........................................................ 608
2001........................................................ 265
2002........................................................ 95
2003........................................................ 65
Thereafter.................................................. 47
------
Total future minimum lease payments............... $1,710
======
</TABLE>

Rent expense for the years ending December 31, 1998, 1997 and 1996 was
$565,000, $541,000, and $422,000 respectively.

(b) PLD

On January 1, 1995, ALTEL entered into a 2 year agreement with the Company,
acting on behalf of PLD, under which PLD would provide certain consulting,
informational services, management support services, and personnel expertise to
ALTEL. Payments under this agreement were $25,000 per month plus 3% of monthly
gross revenues. This agreement was renewed for a further year on January 1, 1997
and was terminated as of December 31, 1997. On January 1, 1998, ALTEL entered
into an agreement directly with PLD covering the same range of services, with
payments of $25,000 per month plus 3.4% of monthly gross revenues. This
agreement was for a one year term, automatically renewable for successive one
year periods unless terminated by either party.

On January 1, 1995, ALTEL entered into a 2 year agreement with KT, under
which KT would provide certain consulting services, management support services,
and personnel expertise. Payments under this agreement were 300,000 tenge per
month ($3,580 at the December 31, 1998 exchange rate) plus 0.15% of monthly
gross revenues. This agreement was renewed for a further year on January 1, 1997
and was terminated as of December 31, 1997. On January 1, 1998, ALTEL entered
into a new agreement with KT, under which KT would provide certain consulting
services, management support services, and personnel expertise. Payments under
this agreement are 300,000 tenge per month ($3,580 at the December 31, 1998
exchange rate) plus 1% of monthly gross revenues. This agreement was for a one
year term, automatically renewable for successive one year periods unless
terminated by either party.

(d) Guarantee

In June 1996, PLD issued senior discount notes and convertible subordinated
notes with an aggregate principal amount of $149.5 million. The Company, along
with other PLD subsidiaries, is a guarantor of the debt under the terms of the
related indentures.

As noted in its annual report on Form 10-K, PLD does not presently have
sufficient funds on hand to meet its current debt obligations. The Company is a
guarantor of such obligations. While management of PLD believe that, as long as
progress towards settlement of such obligations is being made, the holders of
such debt will agree to payment deferrals beyond the present due date of April
30, 1999, there can be no assurance that the holders will grant such deferrals
or that they will not demand payment in full of the obligations. PLD's failure
to make

F-13
<PAGE> 43
WIRELESS TECHNOLOGY CORPORATIONS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

payment in full could result in a claim being made against the Company under its
guaranty and a cross-default under and acceleration of senior discount notes and
convertible subordinated notes with an aggregate principal amount in excess of
$150 million for which the Company also serves as a guarantor. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.

(e) Motorola, USA

Motorola, USA is the major supplier of ALTEL's network equipment. Under the
supply contract, ALTEL files preliminary purchase orders for the delivery of
equipment with a prepayment of 5% of the cost of the purchase order. Once a
purchase order is presented, ALTEL may be exposed to potential liabilities to
Motorola, USA in the amount of $1,159,000 as at December 31, 1998.

F-14

<PAGE> 1
EXHIBIT 99.1

Independent Auditors' Consent

The Board of Directors
Wireless Technology Corporations Limited:

We consent to incorporation by reference in the registration statement (no.
333-5396) on Form S-3 of PLD Telekom Inc. of our report dated March 30, 1999,
relating to the consolidated balance sheets of Wireless Technology Corporations
Limited and subsidiary as of December 31, 1998 and 1997, and the related
consolidated statements of operations, shareholder's equity, and cash flows for
each of the years in the three year period ended December 31, 1998, which report
appears in the Annual Report on Form 20-F for the year ended December 31, 1998
of Wireless Technology Corporations Limited.

Our report dated February 17, 1999 contains an explanatory paragraph that states
that the Company's parent, PLD Telekom Inc. (PLD) does not presently have
sufficient funds on hand to meet its current debt obligations. The Company is a
guarantor of such obligations. PLD's failure to make payment in full when
required could result in a claim being made against the Company under its
guaranty and a cross-default under and acceleration of other debt obligations
for which the Company is also a guarantor. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

KPMG

Almaty, Kazakhstan
June 25, 1999