MASTEC INC, 10-K, 2000-02-04

MASTEC INC
10-K, 2000-02-04
WATER, SEWER, PIPELINE, COMM & POWER LINE CONSTRUCTION

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

COMMISSION FILE NUMBER 0-3797

(MASTEC LOGO)

MASTEC, INC.
(Exact name of registrant as specified in its charter)

FLORIDA 65-0829355
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)

3155 N.W. 77TH AVENUE, MIAMI, FL 33122-1205 (305) 599-1800
(Address of principal executive offices) (Registrant's telephone number,
including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
COMMON STOCK, $.10 PAR VALUE NEW YORK STOCK EXCHANGE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

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

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

The number of shares of Common Stock outstanding as of February 1, 2000
was 28,306,087. The aggregate market value of the voting stock held by
non-affiliates of the registrant based on the $47.4375 closing price for the
registrant's Common Stock on the New York Stock Exchange on February 1, 2000 was
approximately $683,850,034. Directors, executive officers and 10% or greater
shareholders are considered affiliates for purposes of this calculation but
should not necessarily be deemed affiliates for any other purpose.

DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE REGISTRANT'S PROXY STATEMENT RELATING TO THE 2000
ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE.

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<PAGE>

THE FOLLOWING STATEMENT IS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS
FOR FORWARD-LOOKING STATEMENTS DESCRIBED IN THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. MASTEC, INC. AND SUBSIDIARIES ("MASTEC" OR THE "COMPANY")
MAY MAKE CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K THAT ARE
FORWARD-LOOKING, SUCH AS STATEMENTS REGARDING OUR FUTURE GROWTH AND
PROFITABILITY, OUR COMPETITIVE STRENGTHS AND BUSINESS STRATEGIES, AND
ANTICIPATED TRENDS IN THE INDUSTRIES AND ECONOMIES THAT WE SERVE. THESE
FORWARD-LOOKING STATEMENTS ARE BASED ON OUR CURRENT EXPECTATIONS AND ARE SUBJECT
TO A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS RELATING TO OUR OPERATIONS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, INCLUDING RAPID TECHNOLOGICAL AND
REGULATORY CHANGES IN THE INDUSTRIES WE SERVE, THE FINANCIAL RESOURCES OF OUR
CUSTOMERS, OUR NUMEROUS COMPETITORS AND THE FEW BARRIERS TO ENTRY FOR POTENTIAL
COMPETITORS, THE SHORT-TERM NATURE OF MANY OF OUR CONTRACTS, THE SEASONALITY AND
QUARTERLY VARIATIONS WE EXPERIENCE IN OUR REVENUE, OUR UNCERTAIN REVENUE GROWTH,
OUR ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL, OUR ABILITY TO EXPAND OUR
INFRASTRUCTURE AND MANAGE OUR GROWTH, OUR ABILITY TO IDENTIFY, FINANCE AND
INTEGRATE ACQUISITIONS, OUR FOREIGN OPERATIONS AND INVESTMENTS AND THE
RESTRICTIONS IMPOSED BY OUR CREDIT FACILITY, AMONG OTHERS. IF ANY OF THESE RISKS
OR UNCERTAINTIES MATERIALIZE, OR IF ANY OF THE UNDERLYING ASSUMPTIONS PROVE
INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM RESULTS EXPRESSED OR
IMPLIED IN ANY FORWARD-LOOKING STATEMENTS MADE BY US. THESE AND OTHER RISKS ARE
DETAILED IN THIS ANNUAL REPORT ON FORM 10-K AND IN OTHER DOCUMENTS FILED BY US
WITH THE SECURITIES AND EXCHANGE COMMISSION. WE DO NOT UNDERTAKE ANY OBLIGATION
TO REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR
CIRCUMSTANCES.

BUSINESS

GENERAL

We design, build, install and maintain internal and external networks
supporting the Internet, Internet-related applications, e-commerce and other
communications and energy facilities for leading telecommunications, cable
television, energy and other Fortune 500 companies. Based on revenue, we are the
largest end-to-end telecommunications and energy infrastructure service provider
in North America. We offer comprehensive network infrastructure solutions to a
diverse group of customers, enabling our customers to connect with their
customers.

Currently, we operate from approximately 200 locations throughout North
America, which accounted for 95% of our revenue for the year ended December 31,
1999. Our revenue and operating income have grown significantly in the past five
years through both acquisitions and internal growth. Over the past five years,
our consolidated revenue has grown at a compounded annual growth rate of 55% and
our consolidated operating income has grown at a compounded annual rate of 61%.
Our 1999 growth was achieved primarily through internal growth.

We are organized into eight service lines centered around our
customers, which include some of the largest and most prominent companies in the
telecommunications and energy fields. Our customers include:

o incumbent local exchange carriers,

o competitive local exchange carriers,

o cable television operators,

o long distance carriers,

o wireless phone companies,

o telecommunications equipment vendors,

o co-location facilities providers,

o public and private energy companies and

o financial institutions and other Fortune 500 companies.

Representative customers are:

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BellSouth Telecommunications, Inc. Global Crossing, Ltd.
SBC Communications, Inc. Williams Communications Group, Inc.
GTE Corporation AT&T Corp.
Sprint Corp. Charter Cable, Inc.
US West, Inc. Time Warner, Inc.
Qwest Communications, Inc. Winstar Communications Inc.
Telergy, Inc. NEC Corp.
Enron Corp. Carolina Power and Light Co.
Level 3 Communications First Union National Bank

BellSouth accounted for approximately 12% of our revenue for the year
ended December 31, 1999. Our top 10 customers combined accounted for
approximately 42% of our domestic revenue.

INDUSTRY OVERVIEW

Our industry is experiencing a number of trends that we believe will
lead to a significant increase in the demand for our services over the next
several years.

INCREASED DEMAND FOR BANDWIDTH. Recent increased growth in
telecommunications voice, video and data traffic, electronic commerce, and in
the transmission of high quality information, entertainment and other content
over the Internet, coupled with increased use of and reliance on personal
computers, has enhanced the need for greater bandwidth. Market research analysts
estimate that at the end of 1998, 25 million U.S. households were online,
implying a 24% household penetration. This number is expected to have reached 30
million by year-end 1999 and over 58 million by 2004 (55% of households). The
total number of U.S. Internet users (business and residential) is anticipated to
reach 126 million in 2004. We believe 50% of these users will access the network
by means of a broadband technology.

Because of the physical limitations of existing network facilities,
telecommunications providers and cable television system operators are upgrading
facilities with new and innovative technology, expanding and, in many cases,
replacing the existing telecommunications infrastructure to allow for increased
bandwidth. The "race for the last mile", increased upgrades and maintenance of
existing networks are expected to drive further capital spending growth by our
customers even after substantial completion of their backbone networks.

INCREASED OUTSOURCING OF INFRASTRUCTURE NEEDS. Telecommunication
service providers are entering new geographic and product markets and offering
bundled services that once were offered separately. Additionally, a growing
number of energy companies are exploring ventures in the telecommunications
industry to maximize the value of their rights of way. Consolidation and
deregulation in the telecommunications industry has created integrated,
geographically diverse companies who have combined assets to compete in the
changing marketplace. These providers are focusing on the increased range of
their core competencies of providing telecommunications and energy services and
are increasingly outsourcing infrastructure needs.

INCREASED DEMAND FOR COMPREHENSIVE SOLUTIONS. Increased competition and
the resulting increase in investment in infrastructure and content by
telecommunications and other service providers have led to greater concerns
about the quality and reliability of infrastructure providers. We believe that
our customers increasingly are seeking comprehensive end-to-end solutions to
their infrastructure needs by turning to fewer qualified infrastructure service
providers who have the size, financial capability and technical expertise to
deliver a quality and reliable network on time. These customers are seeking
service providers that can build out large and complex networks quickly, with a
high level of quality and who can rapidly mobilize their capital equipment,
financial assets and personnel to respond effectively to the increasing scale
and time constraints of customer demands.

COMPETITIVE STRENGTHS

We have positioned ourselves to take advantage of these trends by
emphasizing the following competitive strengths:

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NATIONAL FOOTPRINT AND NAME RECOGNITION. We have significantly
broadened our geographic presence in recent years and believe we are capable of
servicing customers across the United States and Canada. We are continuing to
develop the brand name "MasTec" across all of our operating units nationwide to
further position ourselves as an integrated, national company.

END-TO-END SOLUTIONS. We believe we are one of the few infrastructure
providers capable of providing all of the design, building, installation and
maintenance services necessary for a complete telecommunications network
starting from a transmission point, such as a telephone company central office
or cable television head-end, and running through aerial, underground and buried
cables or through wireless transmission to the ultimate end users' voice and
data ports, computer terminals, cable outlets or cellular stations.

TECHNICAL EXPERTISE AND RELIABLE CUSTOMER SERVICE. We believe that we
have established a reputation for quality and reliability, technical expertise
and operating and financial efficiency. We believe that our reputation among our
customers should give us an advantage in securing larger, more technically
complex infrastructure projects, a greater volume of business from our existing
customers and new customers.

DIVERSE AND LONG-STANDING CUSTOMER BASE. We have a diverse customer
base that allows us to capitalize on the wide range of technological advances
and other market developments that drive capital spending by our customers. We
have continually provided services to our top 10 customers for an average of
more than 15 years. We believe that our diverse and long-standing customer base
makes us less susceptible to downturns in any particular geographic region or
industry sector.

EXPERIENCED MANAGEMENT. We have a strong management team to continue
executing our growth strategy. Our management team has the operational, business
development and financial knowledge and experience to anticipate trends in our
industry and to consistently meet and exceed our clients' expectations for
comprehensive and reliable solutions.

GROWTH STRATEGY

The key elements of our growth strategy are as follows:

EXPAND EXISTING CUSTOMER RELATIONSHIPS AND PURSUE NEW CUSTOMERS. We
believe that our customers increasingly are seeking single national vendors to
provide all of their telecommunications and energy infrastructure services
needs. Consequently, we actively market our national footprint and comprehensive
service offerings to our existing and potential customers and focus on
increasing the range of services we provide. We also team with engineering
firms, equipment suppliers and other vendors to provide turnkey services to our
customers.

CONTINUE TO ACHIEVE OPERATING EFFICIENCIES. We intend to continue to
improve our profitability by focusing on ways to achieve cost savings, economies
of scale and improved asset and personnel utilization. We have realigned our
North American operations along service and customer lines to focus on our core
businesses and instituted a program to improve efficiency and productivity by
leveraging existing administrative personnel to support increased growth. We
also intend to further develop and expand the use of integrated management
information systems across our service lines to facilitate financial control,
project costing and asset allocation. The goal of the program is to realize
savings in overhead and other expenses and thereby improve operating margins and
profitability. An element of the program includes paying our service line
presidents and other managers incentive compensation based upon profitability,
return on assets and other financial criteria.

PURSUE STRATEGIC ALLIANCES AND SELECTED ACQUISITIONS. Through strategic
alliances and selected acquisitions, we continue to add customers and
capabilities as well as expand our geographic coverage. Most recently, we teamed
with Skanska USA, Inc. to provide project management for RCN Corporation's
announced construction of a $3 billion fiber optic network. We have also
announced an arrangements with Lucent to provide comprehensive broadband
infrastructure solutions to the cable television industry throughout the United
States and with IBM to provide their rapid network deployment solutions. We have
completed 33 domestic acquisitions in the last five years, targeting selected
companies to expand into customer and geographic markets we did not currently
serve and to expand the range and depth of services we provided. We will
continue to focus our acquisition efforts on profitable

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companies with good reputations and strong management. We are not currently
engaged in any negotiations to make any material acquisitions.

SERVICE LINES

Our North American operations consist of three segments:

o External Communication Services,

o External Energy Services and

o Internal Communication Services.

o designing conduit networks and fiber rings;

o placing and splicing fiber optic, coaxial and copper cable;

o excavating trenches in which to place the cable;

o fabricating and placing related structures such as poles,
anchors, conduits, manholes, cabinets and closures;

o placing drop lines from the main distribution terminals to the
customer's home or business; and

o maintaining, removing and replacing these facilities.

We also provide route development, right of way and other site
acquisition, permitting, materials procurement, acceptance testing and as-built
documentation.

We bundle our services and are organized to serve our customers' needs
as follows:

o INTER-EXCHANGE NETWORKS. We design, engineer and build fiber
optic and other cable networks between metropolitan areas
using specialty equipment such as trenchers, plows and
directional borers.

o LOCAL EXCHANGE NETWORKS. We design, install, build and
maintain telecommunications networks from the provider's
point-of-presence to their customers' locations within
metropolitan areas (local loop).

o BROADBAND NETWORKS. We design, engineer, build and install the
infrastructure for network rebuilds, upgrades and maintenance
for cable television multiple system operators.

o WIRELESS NETWORKS. We provide turnkey installation and
maintenance services to the wireless communications industry,
including site acquisition, design and building of
communication towers, placement of antennas and associated
wiring, and installation of transmission equipment and
shelters.

o INTELLIGENT TRAFFIC NETWORKS. We also provide similar services
to the traffic control and highway safety industry, including
the installation and maintenance of traffic signals,
controllers, connecting signals, variable message signs,
closed-circuit television and other monitoring devices and
controllers.

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Our external communication services customers include BellSouth
Telecommunications, Inc., GTE Corporation, Qwest Communications, Inc., Williams
Communication, Inc., Global Crossing, Ltd., Telergy, Inc., Tele-Communications,
Inc., Charter Cable, Inc., Sprint Corp. and Sprint Spectrum, L.P.

EXTERNAL ENERGY SERVICES. We provide external network and
infrastructure services to public and private utilities. These services consist
of overhead and underground installation and maintenance of electrical and other
utilities' transmission and distribution networks, substation construction and
maintenance, right-of-way maintenance and restoration of asphalt and concrete
surfaces. They are substantially similar to the services we provide to our
telecommunications customers, but the work often involves the installation and
splicing of high-voltage transmission and distribution lines. Our external
energy services customers include Carolina Power and Light Co., Florida Power
and Light Co., Texas Utilities Company and Virginia Power Co.

INTERNAL COMMUNICATION SERVICES. We provide services consisting of the
design, installation, testing and documentation of switching and transmission
equipment and supporting components at a provider's point-of-presence (central
office) locations. We also design, install and maintain integrated voice, data
and video networks inside customer premises as well as the infrastructure
required to support complex intranet and Internet solutions. We provide systems
integration services, which involve the selection, configuration, installation
and maintenance of software, hardware, other computing and communications
equipment and cabling to provide an integrated computing and communications
system. Internal communication services are less capital intensive than external
communication services but require a more technically proficient work force. Our
customers include equipment vendors such as Lucent Technologies, Inc. and NEC
Corp. and large corporate customers with multiple locations such as First Union
National Bank and Montgomery Ward and Co.

NON-CORE INTERNATIONAL INVESTMENTS

We currently have South American investments in Argentina, Ecuador and
Paraguay which are held for sale. Our investment in Argentina is a minority
interest in Supercanal Holding, S.A., a holding company of numerous cable
television operators in western Argentina. In Ecuador, we hold a minority
interest in Consorcio Ecuatoriano de Telecomunicaciones, S.A., one of the two
cellular phone operators in the Republic of Ecuador. We own, through our
subsidiary Comunicaciones Personales, S.A., a wireless personal communications
system in Paraguay.

We account for these investments at cost, totaling approximately $58.6
million at December 31, 1999. The companies in Argentina and Ecuador, in which
we have invested approximately $30.0 million, have defaulted on their third
party debt obligations. We do not guarantee any of that indebtedness. In the
fourth quarter of 1999, we recorded a $4.0 million write-down of our investment
in Conecel based upon a publicly announced proposed purchase of a controlling
interest in Conecel by an unaffiliated purchaser. As part of the proposed
transaction, Conecel's third party debt obligations will be restructured and
will no longer be in default. We continue to monitor these investments to
determine their impact, if any, on our results of operations, financial
positions and cash flows.

While we do not currently anticipate taking an additional impairment
charge on any of these assets, there can be no assurance that future
transactions or events will not result in any further impairment of these
assets. If we were to take a charge, however, it could adversely affect our
earnings for the period in which we incurred the charge.

BACKLOG

At December 31, 1999, we had a backlog for domestic operations of
approximately $670.1 million as compared to a backlog of $249.9 million at
December 31, 1998. Our backlog consists of the uncompleted portion of services
we are to perform under project-specific contracts. We do not include as backlog
the estimated amount of work under our 90 master service agreements because the
customers under these contracts are not committed to order a specific volume of
services from us. We expect to complete substantially all of our backlog at
December 31, 1999 during the next 24 calendar months.

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SALES AND MARKETING

We have developed a marketing plan emphasizing the "MasTec" brand name
nationwide and the role we play in building the e-world to position ourselves as
a seamless, end-to-end infrastructure service provider. Local marketing efforts
are principally carried out by the management of our service lines, with our
executive management supplementing their efforts at the corporate level. Our
service line presidents market to existing and potential telecommunications and
other utility customers to negotiate new contracts or to be placed on lists of
vendors invited to submit bids for master services agreements and individual
projects. They are responsible for developing and maintaining successful
long-term relationships with customers, which we believe helps facilitate our
repeat business. Our external and internal communication services are also
marketed through commissioned salespeople and our corporate marketing
department.

SAFETY AND INSURANCE

We are committed to ensuring that our employees perform their work
safely and strive to instill safe work habits in all of our employees. In this
regard we evaluate our employees not only on the basis of the efficiency and
quality of their work but also on their safety records and the safety records of
the employees they supervise. We also hold regular training sessions and
seminars with our employees devoted to safe work practices.

The primary claims we face in our operations are workers' compensation,
automobile liability and various general liabilities. We maintain insurance
policies with respect to these claims, but our insurance policies are generally
subject to high deductibles and we are effectively self-insured for worker's
compensation and automobile liability up to $250,000 and for general liability
up to $100,000. We have umbrella coverage up to a policy limit of $25.0 million.
We actuarially determine any liabilities for unpaid claims and associated
expenses, including incurred but not reported losses, and reflect those
liabilities in our balance sheet as an accrued liability. We continually review
the determination of these claims and expenses and the extent of the accrued
liability.

SUPPLIERS

Our customers supply the majority of the raw materials and supplies
necessary to carry out our contracted work, although we are increasingly
supplying materials and supplies on turnkey projects. We obtain materials and
supplies for our own account from independent third-party providers and do not
manufacture any significant amount of materials or supplies for resale. We are
not dependent on any one supplier for any materials or supplies that we obtain
for our own account. We have not experienced any difficulty in obtaining an
adequate supply of materials and supplies.

We also use independent contractors to perform portions of our services
and to manage work flow. These independent contractors typically are sole
proprietorships or small business entities. Independent contractors typically
provide their own employees, vehicles, tools and insurance coverage. We are not
dependent on any single independent contractor.

COMPETITION

The industries in which we operate are highly competitive and we
compete with other companies in most of the markets in which we operate ranging
from small independent firms servicing local markets to larger firms servicing
regional markets, as well as large national and international engineering firms
and equipment vendors on turnkey projects who subcontract work to contractors
other than us. Despite the current trend toward outsourcing, we may also face
competition from existing or prospective customers who employ in-house personnel
to perform some of the same types of services as we provide. There are
relatively few significant barriers to entry into the markets in which we
operate and, as a result, any organization that has adequate financial resources
and access to technical expertise may become one of our competitors. Although we
believe we are the largest provider of external network services for
telecommunications service providers and energy companies in the United States,
neither we nor any of our competitors can be considered dominant in the industry
on a national basis.

Because of the highly competitive bidding environment for
infrastructure services, the price of the contractor's bid historically has
often been the principal factor in determining whether the contractor is awarded
the work. Smaller competitors are sometimes able to win bids based on price
alone due to their lower overhead costs.

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We believe that as demand for our services increases, customers will
increasingly consider other factors in choosing a service provider, including
technical expertise and experience, financial and operational resources,
nationwide presence, industry reputation and dependability, which should benefit
contractors such as us.

EMPLOYEES

As of December 31, 1999, we had approximately 9,900 employees, 9,100 of
whom were employed in North American operations. Approximately 300 of our
employees are represented by a labor union, principally the Communication
Workers of America or the International Brotherhood of Electrical Workers under
agreements with wage rates established through dates ranging from the end of
January 2000 to May 2001. We believe that our employee relations are good.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following is a list of the names and ages of all of our executive
officers, indicating all positions and offices they hold with us. Our executive
officers hold office for one year or until their successors are elected by our
Board of Directors.

NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jorge Mas ................................36 Chairman of the Board of Directors
Joel-Tomas Citron ........................37 Vice Chairman of the Board of Directors, President
and Chief Executive Officer
Carmen M. Sabater ........................35 Senior Vice President and Chief Financial Officer
Jose Sariego .............................45 Senior Vice President and General Counsel
Arlene Vargas ............................33 Vice President and Controller

</TABLE>

JORGE MAS has been our Chairman of the Board of Directors since January
1998 and a director since March 1994. From March 1994 to October 1999, Mr. Mas
was our Chief Executive Officer. In addition, Mr. Mas is the Chairman of the
Board of Directors of Neff Corporation, a publicly-held construction equipment
sales and leasing company, is involved in several real estate holding companies
and has served on the Board of Directors of First Union National Bank since
April 1998. Mr. Mas has been Chairman of the Cuban American National Foundation,
a not-for-profit organization, since July 1999, and was Vice Chairman from July
1998 until July 1999.

JOEL-TOMAS CITRON has been our Chief Executive Officer since October
1999 and our President since May 1999. He has been a member of our Board of
Directors since January 1998 and has been Vice Chairman of the Board since
November 1998. Mr. Citron was the managing partner of Triscope Capital LLC, a
private investment partnership from January 1998 until December 1998 and
Chairman of the Board of Directors of the United States subsidiary of Proventus
AB, a privately held investment company based in Stockholm, Sweden from January
1992 to December 1997. Mr. Citron is also a member of the Board of Directors of
Neff Corporation; past Chairman of the Board of Directors of American
Information Systems, Inc. (now owned by Exodus Communications, Inc.), a provider
of Internet and Internet systems solutions; and a member of the Board of
Directors of Telergy, Inc., a facilities-based provider of integrated
communications services and-high bandwidth fiber optic capacity in New York
State.

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CARMEN M. SABATER has been our Senior Vice President since December
1998 and was elected Chief Financial Officer in May 1999. From 1994 until
December 1998 Ms. Sabater was our Corporate Controller. Prior to joining us, Ms.
Sabater was a Senior Manager with Deloitte & Touche, a public accounting firm.

JOSE SARIEGO, has been our Senior Vice President and General Counsel
since September 1995. Prior to joining us, Mr. Sariego was Senior Corporate
Counsel and Secretary of Telemundo Group, Inc., a Spanish language television
network, from August 1994 to August 1995. From January 1990 to August 1994, Mr.
Sariego was a partner in the Miami office of Kelley Drye & Warren, an
international law firm.

ARLENE VARGAS has been our Vice President and Corporate Controller
since September 1998. Prior to joining us, Ms. Vargas was a Senior Manager from
June 1997 to September 1998 and a Manager from June 1994 to June 1997 with
PricewaterhouseCoopers LLP, a public accounting firm.

PROPERTIES

Our corporate headquarters are located in a 60,000 square foot building
owned by us in Miami, Florida. Our principal operations are conducted from
regional and field offices, equipment yards and temporary storage locations,
none of which we believe is material to our operations because most of our
services are performed on the

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customers' premises or on public rights of way. In addition, we believe that
equally suitable alternative locations are available in all areas where it
currently does business.

We also own a substantial amount of construction equipment, which at
December 31, 1999 had a gross book value of $223.4 million. This equipment
includes trucks, tractors, trailers, bucket trucks, backhoes, bulldozers,
directional boring machines, digger derricks and cranes. We obtain substantially
all of our equipment from various third-party vendors, none of which we depend
upon, and have not experienced any difficulties in obtaining desired equipment.

LEGAL PROCEEDINGS

In the fourth quarter of 1999, we entered into a stipulation of
settlement regarding two shareholder class action and derivative lawsuits first
filed in 1990. The two Delaware state court lawsuits alleged, among other
things, that various former fiduciaries of ours breached their duties in
approving certain transactions including the acquisition of control of MasTec in
1994, and that these former fiduciaries engaged in mismanagement, waste and
breach of fiduciary duties in managing our affairs prior to the acquisition of
control. The settlement, which must be approved by the court, calls for the
payment of certain amounts by another defendant, a dismissal of the actions with
prejudice and full release of all parties. We are not required to make any
payments or to contribute to any amounts paid by other parties.

In November 1997, Church & Tower, Inc., one of our wholly-owned
subsidiaries, filed a lawsuit against Miami-Dade County in Florida state court
alleging breach of contract and seeking damages exceeding $3.0 million in
connection with the county's refusal to pay amounts due to Church & Tower under
a multi-year agreement to perform road restoration work for the Miami-Dade Water
and Sewer Department ("MWSD"), a department of the county, and the county's
wrongful termination of the agreement. The county has refused to pay amounts due
to Church & Tower under the agreement until alleged overpayments under the
agreement have been resolved, and has counterclaimed against Church & Tower
seeking unspecified damages. The county also has refused to award a new road
restoration agreement for MWSD to Church & Tower, which was the low bidder for
the new agreement. MasTec is vigorously pursuing this lawsuit.

We are a party to other pending legal proceedings arising in the normal
course of business, none of which we believe is material to our financial
position or results of operations.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION. Our common stock currently is listed on the New
York Stock Exchange under the symbol "MTZ". The following table sets forth, for
the quarters indicated, the high and low sale prices of the common stock, as
reported by the New York Stock Exchange.

FISCAL YEAR ENDED DECEMBER 31,
-----------------------------------------
1998 1999
HIGH LOW HIGH LOW
--------------------- -----------------
First Quarter $ 34 3/16 $ 22 3/8 30 3/8 19 5/8
Second Quarter $ 34 $ 19 13/16 30 21
Third Quarter $ 26 3/8 $ 14 1/2 37 1/4 26 11/16
Fourth Quarter $ 28 3/4 $ 12 3/8 44 1/2 28 1/2

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HOLDERS. As of December 31, 1999, there were 4,582 shareholders of
record of the common stock.

DIVIDENDS. We have not declared cash dividends since our inception and
we do not anticipate paying any cash dividends in the foreseeable future, but
intend instead to retain any future earnings for reinvestment in our business.

Any future determination as to the payment of dividends will be made at
the discretion of our Board of Directors and will depend upon our operating
results, financial condition, capital requirements, general business conditions
and such other factors as the Board of Directors deem relevant. In addition,
certain credit agreements to which we are a party prohibit us from paying
dividends or making other distributions on the Common Stock without the prior
written consent of the lenders under such credit agreements. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

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<PAGE>

SELECTED FINANCIAL DATA

The following table states our selected financial data. The summary
consolidated data as of December 31, 1995, 1996, 1997, 1998 and 1999 and for
each of the years in the five-year period ended December 31, 1999 are derived
from our audited consolidated financial statements.

The summary consolidated financial data for 1996, 1997 and 1998 includes
the results of our Spanish operations, 87% of which we sold effective December
31, 1998. You should read the following selected financial data together with
our consolidated financial statements and their notes as well as "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1995 1996(1) 1997(2) 1998(1) 1999
----------- ------------- ----------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
North American revenue .................................. $ 174,583 $ 284,645 $377,046 $ 669,628 $1,003,802
Brazilian revenue ....................................... -- -- 74,900 141,954 55,220
Spanish revenue ......................................... -- 188,155 207,493 237,340 --
--------- --------- -------- ---------- ----------
Total revenue .......................................... 174,583 472,800 659,439 1,048,922 1,059,022
Costs of revenue ......................................... 130,762 352,329 495,840 803,112 803,799
Depreciation and amortization ............................ 6,913 12,000 23,855 43,313 56,148
General and administrative expenses(3).................... 19,081 58,529 82,261 174,237 91,898
--------- --------- -------- ---------- ----------
Operating income:
North American operating income ......................... 17,827 30,209 36,033 13,093 106,681
Brazilian operating income .............................. -- -- 9,629 15,301 496
Spanish operating income ................................ -- 19,733 11,821 (134) --
--------- --------- -------- ---------- ----------
Total operating income ................................. 17,827 49,942 57,483 28,260 107,177
Interest expense ......................................... 4,954 11,434 11,541 29,580 26,673
Interest income .......................................... 3,349 3,246 1,783 9,093 9,398
Other income (expense), net(1)(4)(5)(6) .................. (18,662) 769 8,332 (5,155) (10,092)
--------- --------- -------- ---------- ----------
Income (loss) before provision (benefit) for income taxes,
equity in earnings (losses) of unconsolidated companies
and minority interest .................................. (2,440) 42,523 56,057 2,618 79,810
Provision (benefit) for income taxes(1) .................. (1,970) 15,591 20,944 12,550 33,266
Equity in earnings (losses) of unconsolidated companies
and minority interest .................................. (139) 3,133 (449) (3,983) (1,818)
Net income (loss) ........................................ $ (609) $ 30,065 $ 34,664 $ (13,915) $ 44,726
========= ========= ======== ========== ==========
Basic weighted average common shares
outstanding(7) ......................................... 23,892 24,703 26,460 27,489 27,809
Basic earnings (loss) per share .......................... $ (0.03) $ 1.22 $ 1.31 $ (0.51) $ 1.61
Diluted weighted average common shares
outstanding(7) ......................................... 23,892 25,128 27,019 27,489 28,416
Diluted earnings (loss) per share ........................ $ (0.03) $ 1.20 $ 1.28 $ (0.51) $ 1.57
</TABLE>

11
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------
BALANCE SHEET DATA: 1995 1996 1997 1998(1) 1999(8)
---------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Working capital $ 44,567 $ 151,780 $ 124,088 $ 254,825 $ 169,619
Property and equipment, net 44,571 59,602 86,109 137,382 153,527
Total assets 170,163 483,018 630,224 732,221 728,409
Total debt 72,089 155,192 149,057 321,832 279,658
Total shareholders' equity 50,504 103,504 223,697 204,273 256,833

</TABLE>

(1) Includes the results of operations of our Spanish subsidiary from May
1, 1996, 87% of which we sold effective December 31, 1998. Included in
1998 are severance charges relating to our Spanish operations of $13.4
million, of which $1.9 million is reflected in costs of revenue and
$11.5 million in general and administrative expenses, and a loss of
$9.2 million related to the sale of our Spanish subsidiary. Our
effective tax rate for the year ended December 31, 1998 was mainly
affected by a tax liability of approximately $7.8 million resulting
from the sale of 87% of our Spanish subsidiary, the non-deductibility
of the amortization of intangibles and the non-deductibility of other
expenses. Because of the sale, the balance sheet data as of December
31, 1998 does not include the financial condition of our Spanish
operations.
(2) Our Brazilian operations began August 1, 1997. Information for the year
ended December 31, 1997 includes the results of operations of our
Brazilian operations from August 1, 1997.
(3) Includes a non-recurring charge for payments to operational management
at our external and internal communication services segments. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."
(4) As a result of the disposal of non-core real estate assets and other
investments, we recorded $23.1 million in charges in the year ended
December 31, 1995.
(5) Included in 1997 results of operations is a gain of $7.1 million from
the partial sale of our interest in an Ecuadorian cellular company.
(6) Includes, for 1999, a write-down of $6.0 million related to
international assets held for sale, a $2.0 million transaction loss on
a note receivable resulting from the sale of our Spanish operations and
$2.2 million of expenses relating to our Paraguay PCS system.
(7) Amounts have been adjusted to reflect the three-for-two stock split
effected on February 28, 1997.
(8) Working capital excludes $65.8 million of assets held for sale.

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

GENERAL

Currently, we operate from approximately 200 locations throughout North
America, which accounted for 95% of our revenue for the year ended December 31,
1999. Our revenue and operating income have grown significantly in the past five
years through both acquisitions and internal growth. Our 1999 growth was
achieved primarily through internal growth. We intend to continue to emphasize
internal growth, although we also intend to grow through selected acquisitions
following a disciplined model to take advantage of consolidation opportunities
in the fragmented infrastructure services industry in the United States. We
regularly evaluate potential acquisition opportunities, but we are not currently
engaged in any negotiations to make any material acquisitions.

For the year ended December 31, 1999, approximately 12% of our domestic
revenue was derived from services performed for BellSouth. Our top 10 customers
combined account for approximately 42% of our domestic revenue.

We report our operations in four segments:

o External Communication Services,

o External Energy Services,

o Internal Communication Services and

o International.

12
<PAGE>

External Communication Services represents our core business and is
divided into five service lines:

o Inter-exchange networks,

o Local exchange networks,

o Broadband networks,

o Wireless networks, and

o Intelligent transportation networks.

Internal Communication Services includes:

o switching and transmission services, and

o structured cabling services.

International operations are currently confined to Brazil where we
operate a 51% joint venture which we consolidate net of a 49% minority interest
after tax.

Our primary types of contracts with our customers include:

o design and installation contracts for specific projects,

o master service agreements for all specified design,
installation and maintenance services within a defined
geographic territory, and

o turnkey agreements for comprehensive design, engineering,
installation, procurement and maintenance services.

The majority of our contracts, whether master service agreements or
contracts for specific projects, provide that we will furnish a specified unit
of service for a specified unit of price. For example, we contract to install
cable for a specified rate per foot. We recognize revenue as the related work is
performed. Turnkey agreements are invoiced on a unit basis. A portion of our
work is performed under percentage-of-completion contracts. Under this method,
revenue is recognized on a cost-to-cost method based on the percentage of total
cost incurred to date in proportion to total estimated cost to complete the
contract. Customers are billed with varying frequency-weekly, monthly or upon
milestones,

We perform the majority of our services under master service
agreements, which typically are exclusive service agreements to provide all of
the customer's network requirements up to a specified dollar amount per job
within defined geographic areas. These contracts are generally for two to three
years but are typically subject to termination at any time upon 90 to 180 days
prior notice. Each master service agreement contemplates hundreds of individual
projects generally valued at less than $100,000 each. These master service
agreements are typically awarded on a competitive bid basis, although customers
are sometimes willing to negotiate contract extensions beyond their original
terms without opening them up to bid. Master service agreements are invoiced on
a unit basis where invoices are submitted as work is completed. We currently
have 90 master service agreements across all segments.

13
<PAGE>

Direct costs include:

o operations payroll and benefits,

o subcontractor costs,

o materials not provided by our customers,

o fuel,

o equipment rental, and

o insurance.

Our customers generally supply materials such as cable, conduit and
telephone equipment, although on some turnkey projects, we supply these
materials. General and administrative costs include all costs of our management
personnel, rent, utilities, travel and business development efforts and back
office administration such as financial services, insurance administration,
professional costs and clerical and administrative overhead.

Many of our contracts require performance and payment bonds. Contracts
generally include payment provisions under which 5% to 10% is withheld from
payment until the contract work has been completed. We typically agree to
indemnify our customers against adverse claims and warrant the quality of our
services for specified time periods, usually one year.

14
<PAGE>

RESULTS OF OPERATIONS

NORTH AMERICA

The following tables state for the periods indicated our North American
operations in dollar and percentage of revenue terms (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1998 1999
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenue $ 377,047 $ 669,628 $ 1,003,802
Costs of revenue 279,394 506,721 759,850
Depreciation and amortization 20,452 37,284 52,132
General and administrative expenses (1) 41,168 112,530(1) 85,139
----------------- ----------------- -----------------
Operating income $ 36,033 $ 13,093 $ 106,681
================= ================= =================

<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1998 1999
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenue 100.0% 100.0% 100.0%
Costs of revenue 74.1 75.7 75.7
Depreciation and amortization 5.4 5.6 5.2
General and administrative expenses 10.9 16.8 8.5
----------------- ----------------- -----------------
Operating income 9.6% 1.9% 10.6%
================= ================= =================
</TABLE>
(1) General and administrative expenses for 1998 include a non-recurring
$33.8 million charge for payments to operational managers at our
internal and external communication services segments.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

The following table states revenue and change in revenue by North
American operating segments, in dollar and percentage terms (in thousands):
<TABLE>
<CAPTION>
CHANGE
1998 1999 $ %
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
External Communication Services $ 455,798 $ 743,955 288,157 63.2
External Energy Services 120,218 153,179 32,961 27.4
Internal Communication Services 89,687 105,246 15,559 17.3
Other 3,925 1,422 (2,503) (63.8)
-------------- -------------- -------------- -------------
$ 669,628 $ 1,003,802 334,174 49.9
============== ============== ==============
</TABLE>

Our North American revenue was $1,004 million for the year ended
December 31, 1999, compared to $669.6 million for the same period in 1998,
representing an increase of $334.2 million or 49.9%. The fastest growing
operating segment is our external communication services segment primarily due
to the increased demand for bandwidth by end-users which has spurred increased
network construction and upgrades by our customers. The growth we are
experiencing in our internal communication services is primarily due to growth
in services provided at central office facilities resulting from regulatory
co-location requirements to open central office facilities to new competitors.
During the year ended December 31, 1999, we completed a total of four
acquisitions, all in our external communication services segment. This compares
to a total of 12 acquisitions for the year ended December 31, 1998 of which
eight were in the external communication services segment, two in our external
energy services segment and two in our internal communication services segment.
Our external energy services segment grew primarily through two acquisitions
made in March and April 1998. Internal growth in revenue from our North American
operations, as adjusted to exclude acquisitions, approximated 47% for the year
ended December 31, 1999, and was primarily driven by growth in external
communication services.

Our North American costs of revenue were $759.9 million or 75.7% of
revenue for the year ended December 31, 1999, compared to $506.7 million or
75.7% of revenue for the same period in 1998. In 1999, margins were impacted by
increased revenue derived from the sale of materials on turnkey projects, which
carry a lower mark-up. Additionally, our external energy services segment
experienced reduced productivity due to unusually poor weather conditions in the
mid-Atlantic states during the third quarter of 1999. Adverse weather conditions
impacted productivity during the first quarter of 1998.

15
<PAGE>

Depreciation and amortization expense was $52.1 million or 5.2% of
revenue for the year ended December 31, 1999, compared to $37.3 million or 5.6%
of revenue for the same period in 1998. The increased depreciation and
amortization expense of $14.8 million resulted from our investment in our fleet
to support revenue growth and from intangibles related to acquisitions completed
in 1998 and 1999. The decline as a percentage of revenue was due to increased
revenue.

General and administrative expenses were $85.1 million or 8.5% of
revenue for the year ended December 31, 1999, compared to $112.5 million (which
included a $4.5 million provision for bad debts related to receivables at our
internal communication services segment and a $33.8 million non-recurring
charge, both as described in the year ended December 31, 1998 to 1997 comparison
below) or 16.8% of revenue (11.2% of revenue, excluding the bad debt provision
and the non-recurring charge) for the same period in 1998. The decline in
general and administrative expenses as a percent of revenue for the year ended
December 31, 1999 was due primarily to our ability to support higher revenue
with a reduced administrative base.

Operating income was $106.7 million or 10.6% of revenue for the year ended
December 31, 1999, compared to $13.1 million or 1.9% of revenue for the same
period in 1998. The following table states operating income and change in
operating income by North American operating segments, in dollar and percentage
terms (in thousands):

<TABLE>
<CAPTION>
CHANGE
------------------------------
1998 1999 $ %
-------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
External Communication Services $ 33,258 $ 107,048 73,790 221.9
External Energy Services 10,910 12,069 1,159 10.6
Internal Communication Services (11,460) 5,769 17,229 150.3
Other (19,615) (18,205) 1,410 7.2
-------------- --------------- -------------- ------------
$ 13,093 $ 106,681 93,588 714.8
============== =============== ==============
</TABLE>

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

The following table states revenue and change in revenue by North American
operating segments, in dollar and percentage terms (in thousands):

<TABLE>
<CAPTION>
CHANGE
------------------------------
1997 1998 $ %
-------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
External Communication Services $ 286,814 $ 455,798 168,984 58.9
External Energy Services 19,693 120,218 100,525 510.5
Internal Communication Services 47,285 89,687 42,402 89.7
Other 23,254 3,925 (19,329) (83.1)
-------------- --------------- -------------- ------------
$ 377,046 $ 669,628 292,582 77.6
============== =============== ==============
</TABLE>

Our North American revenue was $669.6 million for the year ended
December 31, 1998, compared to $377.0 million for the same period in 1997,
representing an increase of $292.6 million or 77.6%. The increase in North
American revenue was due primarily to revenue generated from acquired companies,
as well as internally generated growth. Each operating segment experienced
significant growth, excluding our other operating segment, which decreased as a
result of a corporate decision to exit the non-network construction services
business. During 1998, we completed a total of 12 acquisitions in North America
of which eight were in our external communications services segment, two in the
external energy services segment, and two in the internal communication services
segment. These acquisitions generated revenue of approximately $255.1 million,
representing 87.2% of the total increase in revenue. In comparison, during 1997
we acquired 11 companies in North America (seven in external communication
services, two in external energy services and two in internal communication
services).

Our North American costs of revenue were $506.7 million or 75.7% of
revenue for the year ended December 31, 1998, compared to $279.4 million or
74.1% of revenue in 1997. The increase in costs of revenue as a

16
<PAGE>

percentage of revenue was due primarily to numerous inefficiencies caused by
severe weather conditions in various regions as a result of the climatic
condition known as "El Nino," poor performance in internal communication
services due to improperly managed growth and losses from a non-core external
communication services contract.

Depreciation and amortization expense was $37.3 million or 5.6% of
revenue for the year ended December 31, 1998, compared to $20.5 million or 5.4%
of revenue in 1997. The increased depreciation and amortization expense resulted
from our investment in our fleet to support revenue growth.

General and administrative expenses were $112.5 million or 16.8% of
revenue for the year ended December 31, 1998, compared to $41.2 million or 10.9%
of revenue in 1997.

The increase in general and administrative expenses was due primarily
to three items: a non-recurring $33.8 million charge for payments made pursuant
to employment and non-competition agreements entered into with management of our
internal and external communication services segments, $1.4 million for start-up
costs and a $4.5 million provision for bad debts related to our internal
communication services following a quarterly analysis of significantly past-due
receivables.

The $33.8 million charge relates to up-front amounts in the form of
signing bonuses and extended non-competition payments made under the agreements
that could not be attributed to future services. Base salary and bonuses for
future performance paid pursuant to these agreements are being recognized over
the related service periods. The up-front payments were paid to these managers
to resolve issues arising from the original price paid for the acquisition of
their businesses and issues relating to these managers' roles within our
company, as well as to preserve the goodwill of the acquired businesses. These
issues arose primarily from a significant decline in the value of the MasTec
shares these managers received between the time when we bought their businesses
and the expiration of the period when they were restricted from sale of the
shares. Because neither these payments nor the agreements were contemplated,
included or required under the original terms of the business acquisitions and
could not be attributed to future services, these payments were recorded as
operating expenses in 1998, rather than deferred or amortized. The provision for
bad debts was made in 1998 following a quarterly review and analysis of an
increase during the first quarter of 1998 in significantly past due receivables
at our internal communication services segment. Excluding the previously
mentioned expenses, general and administrative expenses were $72.8 million or
10.9% of revenue in 1998.

Operating income was $13.1 million or 1.9% of revenue for 1998,
compared to $36.0 million or 9.6% of revenue in 1997. The following table states
operating income and change in operating income by North American segments, in
dollar and percentage terms (in thousands):

<TABLE>
<CAPTION>
CHANGE
------------------------------
1997 1998 $ %
-------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
External Communication Services $ 44,794 $ 33,258 (11,536) (25.8)%
External Energy Services 607 10,910 10,303 1,697.4
Internal Communication Services 4,865 (11,460) (16,325) (335.6)
Other (14,233) (19,615) (5,382) (37.8)
-------------- --------------- -------------- ------------
$ 36,033 $ 13,093 (22,940) (63.7)%
============== =============== ==============
</TABLE>

17
<PAGE>

BRAZIL

The following table states for the periods indicated our Brazilian
operations in dollar and percentage of revenue terms (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1998 1999
--------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 74,900 100 % $ 141,954 100 % $ 55,220 100 %
Costs of revenue 63,266 84.5 112,667 79.4 43,949 79.6
Depreciation and amortization 390 0.5 3,349 2.4 4,016 7.3
General and administrative expenses 1,615 2.2 10,636 7.5 6,759 12.2
--------------------- --------------------- ---------------------
Operating income $ 9,629 12.8% $ 15,302 10.8% $ 496 0.9%
===================== ===================== =====================
</TABLE>

(1) Brazilian operations began on August 1, 1997.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Brazilian revenue was $55.2 million for the year ended December 31,
1999, compared to $142.0 million for the same period in 1998, representing a
decrease of $86.8 million or 61.1%. Brazilian revenue decreased primarily due to
the devaluation of the Brazilian reais and to a reduction in work performed.
Revenue in local currency was R$96.0 million reais during the year ended
December 31, 1999, compared to R$160.4 million reais for the same period in
1998, representing a decrease of 40.1%. Due to the economic conditions in
Brazil, it is uncertain when, if at all, previous levels of telephony
infrastructure spending will re-commence.

Brazilian costs of revenue were $43.9 million or 79.6% of revenue for
the year ended December 31, 1999, compared to $112.7 million or 79.4% of revenue
for the same period in 1998. In 1999, margins were positively impacted as a
result of amounts paid by a customer during the second quarter for additional
costs incurred during prior periods for which no revenue had been recorded due
to the uncertainty of its collection. This improved costs of revenue during the
year ended December 31, 1999 by 3.0%. Most of the costs associated with this
project were previously recorded in earlier periods. During the fourth quarter
of 1998, we completed certain wireless projects that carry higher than
traditional margins.

Depreciation and amortization expense was $4.0 million or 7.3% of
revenue for the year ended December 31, 1999 compared to $3.3 million or 2.4% of
revenue for the same period in 1998. Depreciation and amortization relates
primarily to an intangible asset resulting from one acquisition completed in
early 1998 that is being amortized over a five year period relative to the
volume of work under specified contracts.

General and administrative expenses were $6.8 million or 12.2% of
revenue for the year ended December 31, 1999, compared to $10.6 million or 7.5%
of revenue for the same period in 1998. General and administrative expenses were
R$7.1 million reais or 7.4% of reais revenue during the year ended December 31,
1999, compared to R$9.9 million reais or 6.2% of reais revenue for the same
period in 1998.

YEAR ENDED DECEMBER 31, 1998 OPERATING INCOME COMPARED TO FIVE MONTHS
ENDED DECEMBER 31, 1997 OPERATING INCOME

Brazilian operations commenced on August 1, 1997. Our Brazilian revenue
was $142.0 million for the year ended December 31, 1998, compared to $74.9
million in 1997, representing an increase of $67.1 million or 89.5%. The
increase in revenue was due primarily to a full year of operations in 1998,
compared to five months in 1997.

Brazilian costs of revenue were $112.7 million for the year ended
December 31, 1998, compared to $63.3 million in 1997. Costs of revenue were
79.4% of revenue in 1998, compared to 84.5% in 1997. The decrease in costs of
revenue as a percentage of revenue was due primarily to the completion of
certain wireless projects in the fourth quarter of 1998.

Depreciation and amortization expense was $3.3 million for the year
ended December 31, 1998, compared to $0.4 million for the year ended December
31, 1997. Depreciation and amortization relates primarily to an

18
<PAGE>

intangible asset resulting from one acquisition which is being amortized over a
five year period. Depreciation and amortization expense was 2.4% of revenue for
the year ended December 31, 1998, compared to 0.5% of revenue for the year ended
December 31, 1997.

General and administrative expenses were $10.6 million or 7.5% of
revenue for the year ended December 31, 1998, compared to $1.6 million or 2.2%
in 1997. The increase in general and administrative expenses was due primarily
to costs of establishing an infrastructure to support anticipated additional
work following the privatization of Telebras, which did not take place until
July 1998.

COMBINED RESULTS-NORTH AMERICA AND BRAZIL ONLY

The following table states for the periods indicated certain combined
income statement data for North America and Brazil only and the related
percentage of combined revenue.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1998(2) 1999
--------------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Operating income $ 45,661 10.1% $ 28,394 3.5% $ 107,177 10.1%
Interest expense (6,595) (1.5) (23,753) (2.9) (26,673) (2.5)
Interest income 775 0.2 8,488 1.0 9,398 1.0
Other income (expense), net 7,857 1.7 1,183 0.2 (10,092) (0.9)
Income before provision for income taxes,
equity in earnings (losses) of
unconsolidated companies and minority
interest 47,698 10.5 14,312 1.8 79,810 7.7
Provision for income taxes (18,633) (4.1) (4,563) (0.6) (33,266) (3.3)
Equity in earnings (losses) of unconsolidated
companies and minority interest(l) (3,184) (0.7) (4,787) (0.6) (1,818) (0.2)
--------------------- --------------------- --------------------
Net income $ 25,881 5.7% $ 4,962 0.6% $ 44,726 4.2%
===================== ===================== ====================
</TABLE>

(1) Consists of the minority interest of our Brazilian joint venture
partner.
(2) Adjusted to exclude our Spanish operations which were sold effective
December 31, 1998.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

For a discussion of revenue, costs of revenue, depreciation and
amortization and general and administrative expenses, see "North America" and
"Brazil" above.

Interest expense was $26.7 million or 2.5% of revenue for the year
ended December 31, 1999, compared to $23.8 million or 2.9% of revenue for the
same period in 1998. The increase in interest expense of $2.9 million was due
primarily to increased indebtedness resulting from the issuance of our 7 3/4%
Senior Subordinated Notes in early 1998.

Interest income includes interest of $4.8 million earned and collected
from a customer to which we extended financing for our services.

Reflected in other expense, net for the year ended December 31, 1999,
are the following transactions. At various dates predominantly during the second
quarter of 1999, we sold approximately 20 parcels of non-core real estate assets
with a book value of approximately $6.9 million and a non-core business with a
book value of approximately $4.3 million. We recognized a loss on sale of
approximately $3.6 million from these sales. These losses resulted from our
selling a portion of those assets in a manner that we knew would accelerate the
timing of the disposition and the receipt of cash proceeds from the sale. We
also reserved $1.0 million for a 1994 lawsuit from a predecessor company
following a $1.1 million judgment awarded in October 1999. We have appealed this
judgment and may incur other costs related to this lawsuit, such as interest and
attorneys' fees. We wrote-down certain international assets held for sale by
$6.0 million based on a proposed transaction and market information.
Additionally, we incurred expenses totaling $2.2 million relating to our
Paraguay PCS system and a $2.0 million foreign currency transaction loss related
to a note receivable resulting from the sale of our Spanish operations.
Offsetting these amounts was a fee of $4.8 million collected from a
telecommunications customer related to extensions to the maturity date of a
vendor financing arrangement.

19
<PAGE>

For the year ended December 31, 1999, our effective tax rate was
approximately 41.5% for North American operations and 33% for Brazilian
operations.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

For a discussion of revenue, costs of revenue, depreciation and
amortization and general and administrative expenses, see "North America" and
"Brazil" above.

Interest expense was $23.8 million or 2.9% of revenue for the year
ended December 31, 1998, compared to $6.6 million or 1.5% of revenue in 1997.
The increase in interest expense was due primarily to increased indebtedness
resulting from the issuance of our Senior Subordinated Notes in early 1998, the
proceeds of which were used primarily for acquisitions and to fund international
operations investments. Minority interest primarily relates to our Brazilian
joint venture partner with a 49% interest.

Interest income includes interest income from temporary investments and
interest received from a customer.

SPAIN

The following table states for the periods indicated our Spanish
operations, which were sold effective December 31, 1998, in dollar and
percentage of revenue terms (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 (1) 1998 (2)
------------------------- -------------------------
<S> <C> <C> <C> <C>
Revenue $ 207,493 100.0 $ 237,340 100.0%
Costs of revenue 153,180 73.8 183,724 77.4
Depreciation and amortization 3,013 1.5 2,680 1.1
General and administrative expenses 39,478 19.0 51,070 21.5
Operating income (loss) 11,822 5.7 (134) (0.0)
Interest expense (4,946) (2.4) (5,827) (2.5)
Interest income 1,008 0.1 605 -
Other income (loss) 475 - (6,338) (2.7)
Income (loss) before benefit from income taxes, equity
in earnings of unconsolidated companies and minority
interest 8,359 4.0 (11,694) (4.9)
(Provision) benefit from income taxes (2,311) (1.2) (7,987) (3.2)
Equity in earnings of unconsolidated companies 2,897 1.4 1,291 0.1
Minority interest (162) - (487) -
------------------------- -------------------------
Net income (loss) $ 8,783 4.2% $ (18,877) (8.0)%
========================= =========================
</TABLE>

(1) We sold 87% of our Spanish operations effective December 31, 1998.
(2) Includes a total of $13.4 million of severance charges of which $1.9
million is reflected in costs of revenue and $11.5 million in general
and administrative expenses.

20
<PAGE>

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

We sold 87% of our Spanish operations effective December 31, 1998.
Revenue from Spanish operations was $237.3 million for the year ended December
31, 1998, compared to $207.5 million in 1997, representing an increase of $29.8
million or 14.4%. The increase was due to acquisitions made in 1998.

Costs of revenue were $183.7 million or 77.4% of revenue for the year
ended December 31, 1998, compared to $153.2 million or 73.8% of revenue in 1997.
The increase in costs of revenue as a percentage of revenue was due primarily to
increased labor costs associated with a new labor agreement and to $1.9 million
in direct labor severance costs.

Depreciation and amortization expense was $2.7 million for the year
ended December 31, 1998, compared to $3.0 million in 1997. Depreciation and
amortization expense was 1.1% of revenue for the year ended December 31, 1998,
compared to 1.5% of revenue in 1997.

General and administrative expenses were $51.1 million or 21.5% of
revenue for the year ended December 31, 1998, compared to $39.5 million or 19.0%
of revenue in 1997. The increase in general and administrative expenses as a
percentage of revenue was due to severance charges of $11.5 million resulting
from reductions in administrative personnel.

Included in other expense for 1998 is a $9.2 million loss on sale of
the Spanish operation. The effective income tax rate on a consolidated basis for
the year ended December 31, 1998 increased to 479% from 37% in 1997. This
increase was mainly attributable to the recognition of approximately $9.2
million of a loss on sale of our Spanish operations, however for tax purposes
the Company recorded a tax provision of $7.8 million. Excluding the effect of
the book loss on sale and the taxable gain, the effective tax rate would have
been 40.1%, which is attributed to the non-deductibility of the amortization of
intangibles and other expenses.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs are for working capital, capital
expenditures, acquisitions and investments, and debt service. Our primary
sources of liquidity are cash flows from operations, borrowings under revolving
lines of credit and the proceeds from the sale of assets held for sale.

Net cash provided by operating activities was $120.1 million for the
year ended December 31, 1999, compared to cash used by operations of $13.9
million for the same period in 1998 and cash provided of $15.2 million in 1997.
Net cash provided by operating activities in 1999 was due principally to
profitability and working capital management.

Our working capital at December 31, 1999, excluding assets held for
sale of $65.8 million, was $169.6 million compared to $197.6 million (excluding
assets held for sale of $57.2 million at December 31, 1998). Our North American
working capital as of December 31, 1999 was $124.7 million, comprised primarily
of $233.2 million in accounts receivable, $25.4 million in inventories and other
current assets and $7.2 million in cash, net of $141.1 million in current
liabilities.

We have a revolving line of credit with a group of banks that provides
for borrowings up to an aggregate amount of $165.0 million. Amounts outstanding
under the credit facility mature on June 9, 2001. We are required to pay an
unused facility fee ranging from .25% to .50% annually on the facility,
depending upon certain financial covenants. The credit facility contains
customary events of default and covenants which prohibit, among other things,
making investments in excess of a specified amount, incurring additional
indebtedness in excess of a specified amount, paying dividends in excess of a
specified amount, making capital expenditures in excess of a specified amount,
creating liens, prepaying other indebtedness, including our 7 3/4% Senior
Subordinated Notes, and engaging in mergers or combinations without the prior
written consent of the lenders. The credit facility also provides that we must
maintain financial ratio coverages at the end of each fiscal quarter such as
debt to earnings and earnings to interest expense.

During 1999, we acquired four external communication services providers
for $11.6 million in cash and $2.4 million in notes and invested $69.5 million
primarily in our fleet to support revenue growth which we financed from cash
provided by operations and from financing activities. We have also sold assets
and investments for which we have received approximately $27.8 million in cash,

21
<PAGE>

$15.9 million of which was attributable to the sale of our Spanish operations.
In 1998 and 1997, we invested cash in acquisitions and investments in
unconsolidated companies totaling $89.1 million and $49.0 million, respectively.
During 1998, we made capital expenditures of $76.4 million, primarily for
machinery and equipment used in the production of revenue, compared to $21.5
million in 1997.

We anticipate that available cash, cash flows from operations and
proceeds from the sale of assets and investments and borrowing availability
under the credit facility will be sufficient to satisfy our working capital
requirements for the foreseeable future. However, to the extent that we should
desire to increase our financial flexibility and capital resources or choose or
be required to fund future capital commitments from sources other than operating
cash or from borrowings under our existing credit facility, we may consider
raising additional capital by increasing the credit facility or through the
offering of additional equity and/or debt securities in the public or private
markets. There can be no assurance, however, that additional capital will be
available to us on acceptable terms, if at all.

We currently have South American investments in Argentina, Ecuador and
Paraguay which are held for sale. Our investment in Argentina is a minority
interest in Supercanal Holding, S.A., a holding company of numerous cable
television operators in western Argentina. In Ecuador, we hold a minority
interest in Consorcio Ecuatoriano de Telecomunicaciones, S.A. ("Conecel"), one
of the two cellular phone operators in the Republic of Ecuador. We own, through
our subsidiary Comunicaciones Personales, S.A., a wireless personal
communications system in Paraguay.

On December 31, 1998, we sold 87% of our Spanish operations to a group
of investors and during 1999 we advanced $3.0 million for working capital needs.
The sale included the assumption of our remaining indebtedness to Telefonica
from the original purchase of our Spanish operations of $25.0 million (3.6
billion pesetas), for which we are not contingently liable. At December 31,
1999, we had $14.6 million reflected in other current assets, $11.6 million of
which subsequently has been received.

YEAR 2000

To date, we have not experienced any material Year 2000 issues and have
been informed by our material suppliers and vendors that they have also not
experienced material Year 2000 issues. We have not spent a material amount on
Year 2000 compliance issues. Most of our expenses have related to the operating
costs associated with time spent by employees and consultants in the evaluation
and implementation process and Year 2000 compliance matters generally.

During January 2000, additional Year 2000 patches were applied to all
required systems related to the end of February 2000 issues. Testing has been
completed for these patches and we will continue to monitor any on-going issues
prior to and after March 31, 2000.

SEASONALITY

Our North America operations have historically been seasonally weaker
in the first and fourth quarters of the year and have produced stronger results
in the second and third quarters. This seasonality is primarily the result

22
<PAGE>

of customer budgetary constraints and preferences and the effect of winter
weather on external network activities. Some of our U.S. customers, particularly
the incumbent local exchange carriers, tend to complete budgeted capital
expenditures before the end of the year and defer additional expenditures until
the following budget year. Revenue in a local currency from MasTec Inepar is not
expected to fluctuate seasonally.

IMPACT OF INFLATION

The primary inflationary factor affecting our operations is increased
labor costs. We have not experienced significant increases in labor costs to
date. Competition for qualified personnel could increase labor costs for us in
the future. Our international operations may, at times in the future, expose it
to high inflation in certain foreign countries. During 1999, we generated
approximately 5% of our total revenue from international operations that are
susceptible to currency devaluation. We anticipate that revenue from our
international operations will be less significant to our operations in the
foreseeable future due to our current intention to dispose of them, however, the
likelihood and extent of further devaluation and deteriorating economic
conditions in Brazil and other Latin American countries and the resulting impact
on our results of operations, financial position and cash flows cannot now be
determined.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Notes 1 and 5 of Notes to Consolidated Financial Statements for
disclosures about market risk.

23
<PAGE>

MASTEC, INC.

INDEX TO FINANCIAL STATEMENTS

PAGE
NUMBER
-------
Reports of Independent Certified Public Accountants .................. 25

Consolidated Statements of Operations
for the Years Ended December 31, 1997, 1998 and 1999 ............... 27

Consolidated Balance Sheets as of December 31, 1998 and 1999 ......... 28

Consolidated Statement of Changes in Shareholders' Equity
for the Years Ended December 31, 1997, 1998 and 1999 ............... 29

Consolidated Statements of Cash Flows
for the Years Ended December 31, 1997, 1998 and 1999 ............... 30

Notes to Consolidated Financial Statements ........................... 33

24
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and
Shareholders of MasTec, Inc.:

In our opinion, based upon our audits and the report of other auditors, the
accompanying consolidated balance sheets and the related consolidated
statements of operations, changes in shareholders' equity and cash flows
present fairly, in all material respects, the financial position of MasTec,
Inc. and its subsidiaries ("MasTec") at December 31, 1998 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with generally accepted
accounting principles. These consolidated financial statements are the
responsibility of MasTec's management; our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We did
not audit the financial statements of Sintel, S.A., a wholly-owned subsidiary
until December 31, 1998 which statements reflect total revenues of $207.2
million and $207.6 million for the years ended December 31, 1997 and 1998,
respectively. Those statements, prior to adjustment, were audited by other
auditors whose report dated March 31, 1999 expressed a qualified opinion
thereon. The other auditor's report has been furnished to us, and our opinion
expressed herein, insofar as it relates to amounts included for Sintel, S.A.,
except for the adjustment, which results from the matter noted in the
qualification of the other auditor's report and is described in the following
paragraph, is based solely on the report of the other auditors. We conducted
our audits of the consolidated financial statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
consolidated financial statement presentation. We believe that our audits and
the report of other auditors provide a reasonable basis for the opinion
expressed above.

As discussed in Note 2, for purposes of inclusion in the consolidated financial
statements, MasTec adjusted the financial statements of Sintel, S.A., a
wholly-owned subsidiary until December 31, 1998, to correct for the effect of
the improper reversal of a reserve for employee severance. We have audited the
adjustment to the Sintel, S.A. financial statements. In our opinion, such
adjustment is and has been properly applied to the financial statements of
Sintel, S.A. for the year ended December 31, 1998 for purposes of inclusion in
the 1998 MasTec consolidated financial statements.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP
Miami, Florida

January 26, 2000

25
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel)

1. We have audited the consolidated balance sheet of SINTEL, S.A. and
subsidiaries ("Sintel") as of December 31, 1998 and 1997 and the related
consolidated statements of income and the accompanying notes, all expressed in
Spanish pesetas which are not included herein. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

3. The framework agreement entered into with Telefonica de Espana, S.A.,
whereby the latter guaranteed a minimum level of purchases from the Controlling
Company, expired on December 31, 1998. In view of this situation, the
Controlling Company is implementing a strategy consisting of the internal
rationalization of its operating structure and the expansion and
diversification of its production activities in Spain and Latin America, as
discussed in Note 1.

4. In relation to what is described in the previous paragraph, in 1998 the
Controlling Company restructured its operations which gave rise to an
extraordinary expense of Ptas. 1,810 million for indemnities to terminated
employees. In view of the extraordinary nature of this restructuring, the
Controlling Company's directors considered it appropriate to offset a portion
of this cost and reversed Ptas. 1,001 million of voluntary reserves with a
credit to income for the year. The recording of this transaction is detailed in
Notes 10 and 18. Although the use of voluntary reserves is unrestricted for the
Shareholder's Meeting, Spanish accounting regulations do not provide for the
reversal of this reserve and consequent recording as extraordinary revenues for
1998. Therefore, under generally accepted accounting principles, net income for
the year should be reduced, and voluntary reserves should be increased, by
Ptas. 1,001 million. However, this matter does not change the total balance of
consolidated shareholder's equity as of December 31, 1998.

5. In our opinion, except as described in paragraphs 3 and 4 above, the
consolidated financial statements referred to above present fairly, in all
materials respects the consolidated financial position of SINTEL, S.A. and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations for the years then ended, in conformity with generally accepted
accounting principles in Spain.

6. Further, in our opinion, the reconciliation of consolidated net income
for each of the two years in the period ended December 31, 1998 and
shareholders' equity as of December 31, 1998 and 1997 presented in Note 21 and
Note 22 to the 1998 and 1997 consolidated financial statements, respectively,
which reconciles net income and shareholders' equity , as shown in the
consolidated financial statements, to net income, as determined in accordance
with generally accepted accounting principles in the United States, presents
fairly the information shown therein on a consistent basis.

/s/ ARTHUR ANDERSEN

Arthur Andersen
Madrid, Spain

March 31, 1999

26
<PAGE>

MASTEC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1997 1998 1999
----------- ------------- -------------
<S> <C> <C> <C>
Revenue ....................................................... $659,439 $1,048,922 $1,059,022
Costs of revenue .............................................. 495,840 803,112 803,799
Depreciation and amortization ................................. 23,855 43,313 56,148
Non-recurring charge .......................................... -- 33,765 --
General and administrative expenses ........................... 82,261 140,472 91,898
-------- ---------- ----------
Operating income ............................................. 57,483 28,260 107,177
Interest expense .............................................. 11,541 29,580 26,673
Interest income ............................................... 1,783 9,093 9,398
Other income (expense), net ................................... 8,332 (5,155) (10,092)
-------- ---------- ----------
Income before provision for income taxes, equity in earnings of
unconsolidated companies and minority interest .............. 56,057 2,618 79,810
Provision for income taxes .................................... 20,944 12,550 33,266
Equity in earnings of unconsolidated companies ................ 2,897 1,906 ---
Minority interest ............................................. (3,346) (5,889) (1,818)
-------- ---------- ----------
Net income (loss) ............................................. $ 34,664 $ (13,915) $ 44,726
======== ========== ==========
Basic weighted average common shares outstanding .............. 26,460 27,489 27,809
Basic earnings (loss) per share ............................... $ 1.31 $ (0.51) $ 1.61
Diluted weighted average common shares outstanding ............ 27,019 27,489 28,416
Diluted earnings (loss) per share ............................. $ 1.28 $ (0.51) $ 1.57
</TABLE>

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

27
<PAGE>

MASTEC, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 19,864 $ 27,635
Accounts receivable, unbilled revenue and retainage, net ......... 279,015 251,576
Inventories ...................................................... 9,393 14,264
Assets held for sale ............................................. 57,238 65,752
Other current assets ............................................. 59,601 34,634
-------- ---------
Total current assets ........................................... 425,111 393,861
Property and equipment, net ....................................... 137,382 153,527
Investments in unconsolidated companies ........................... 5,886 5,893
Intangibles, net .................................................. 140,461 151,556
Other assets ...................................................... 23,381 23,572
-------- ---------
Total assets ................................................... $732,221 $ 728,409
======== =========

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of debt ....................................... $ 11,143 $ 12,200
Accounts payable and accrued expenses ............................ 84,372 74,408
Other current liabilities ........................................ 74,771 71,882
-------- ---------
Total current liabilities ...................................... 170,286 158,490
-------- ---------
Other liabilities ................................................. 46,973 45,628
-------- ---------
Long-term debt .................................................... 310,689 267,458
-------- ---------
Commitments and contingencies (Note 11)
Shareholder's equity:
Common stock ..................................................... 2,738 2,823
Capital surplus .................................................. 149,479 168,799
Retained earnings ................................................ 56,477 101,203
Foreign currency translation adjustments ......................... (4,421) (15,992)
-------- ---------
Total shareholders' equity ..................................... 204,273 256,833
-------- ---------
Total liabilities and shareholders' equity ..................... $732,221 $ 728,409
======== =========
</TABLE>

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

28
<PAGE>

MASTEC, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK
--------------------- CAPITAL RETAINED
SHARES AMOUNT SURPLUS EARNINGS
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Balance December 31, 1996 .............. 26,435 $2,643 $ 149,083 $ 35,728
Net income ............................. 34,664
Foreign currency translation
adjustment ............................
Stock issued from treasury for stock
options exercised ..................... 206
Tax benefit resulting from stock
option plan ........................... 1,538
Stock issued for acquisitions .......... 1,621 162 76,219
Stock issued from treasury for an
acquisition ........................... 4,479
Stock issued for stock dividend
from treasury ......................... (75,802)
Stock issued from treasury ............. 3,007
------ ------ --------- ---------
Balance December 31, 1997 .............. 28,056 2,805 158,730 70,392
Retirement of treasury stock ........... (476) (47) (4,717)
------ ------ --------- ---------
Balance December 31, 1997 .............. 27,580 2,758 154,013 70,392
Net loss ............................... (13,915)
Foreign currency translation
adjustment ............................
Stock issued, primarily for
acquisitions and stock options
exercised ............................. 469 47 8,721
Tax benefit resulting from stock
option plan ........................... 403
Repurchase of common stock ............. (667) (67) (13,658)
------ ------ --------- ---------
Balance December 31, 1998 .............. 27,382 2,738 149,479 56,477
Net income ............................. 44,726
Foreign currency translation
adjustment ............................
Stock issued, primarily for
acquisitions and stock options
exercised ............................. 851 85 17,387
Tax benefit resulting from stock
option plan ........................... 1,933
------ ------ --------- ---------
Balance December 31, 1999 .............. 28,233 $2,823 $ 168,799 $ 101,203
====== ====== ========= =========

<CAPTION>
FOREIGN ACCUMULATED
CURRENCY OTHER
TRANSLATION TREASURY COMPREHENSIVE
ADJUSTMENTS STOCK TOTAL INCOME
------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Balance December 31, 1996 .............. $ (802) $ (83,148) $ 103,504 $ 34,926
Net income ............................. 34,664 34,664
Foreign currency translation
adjustment ............................ (2,664) (2,664) (2,664)
Stock issued from treasury for stock
options exercised ..................... 979 1,185 --
Tax benefit resulting from stock
option plan ........................... 1,538 --
Stock issued for acquisitions .......... 76,381 --
Stock issued from treasury for an
acquisition ........................... 1,603 6,082 --
Stock issued for stock dividend
from treasury ......................... 75,802 --
Stock issued from treasury ............. 3,007 --
--------- --------- --------- ----------
Balance December 31, 1997 .............. (3,466) (4,764) 223,697 66,926
Retirement of treasury stock ........... 4,764 -- --
--------- --------- --------- ----------
Balance December 31, 1997 .............. (3,466) -- 223,697 66,926
Net loss ............................... (13,915) (13,915)
Foreign currency translation
adjustment ............................ (955) (955) (955)
Stock issued, primarily for
acquisitions and stock options
exercised ............................. 8,768 --
Tax benefit resulting from stock
option plan ........................... 403 --
Repurchase of common stock ............. (13,725) --
--------- --------- --------- ----------
Balance December 31, 1998 .............. (4,421) -- 204,273 52,056
Net income ............................. 44,726 44,726
Foreign currency translation
adjustment ............................ (11,571) (11,571) (11,571)
Stock issued, primarily for
acquisitions and stock options
exercised ............................. 17,472 --
Tax benefit resulting from stock
option plan ........................... 1,933 --
--------- --------- --------- ----------
Balance December 31, 1999 .............. $ (15,992) $ -- $ 256,833 $ 85,211
========= ========= ========= ==========
</TABLE>

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

29
<PAGE>

MASTEC, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1997 1998 1999
------------ ------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ..................................................... $ 34,664 $ (13,915) $ 44,726
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization ........................................ 23,855 43,313 56,148
Minority interest .................................................... 3,346 5,889 1,818
Equity in earnings of unconsolidated companies ....................... (2,897) (1,906) --
Deferred tax (benefit) expense ....................................... (4,991) 6,974 (1,961)
(Gain) loss on sale or write-down of assets .......................... (6,848) 8,918 9,798
Changes in assets and liabilities net of effect of acquisitions and
divestitures:
Accounts receivable, unbilled revenue and retainage, net ............ (28,809) (34,942) 5,707
Inventories and other current assets ................................ 64 (16,759) 564
Other assets ........................................................ (10,889) (27,341) (1,946)
Accounts payable and accrued expenses ............................... 5,348 (2,017) (2,858)
Other current liabilities ........................................... 7,326 13,385 5,653
Other liabilities ................................................... (4,988) 4,548 2,486
--------- ---------- ---------
Net cash provided by (used in) operating activities .................... 15,181 (13,853) 120,135
--------- ---------- ---------
Cash flows from investing activities:
Capital expenditures .................................................. (21,534) (76,445) (69,507)
Cash paid for acquisitions and contingent consideration, net of
cash acquired ....................................................... (45,606) (75,745) (18,706)
Investments in unconsolidated companies, net of distributions ......... (1,234) (13,384) (25,528)
Repayment (advances) of notes receivable, net ......................... 1,345 (18,667) 15,667
Net proceeds from sale of assets ...................................... 29,628 5,600 27,791
--------- ---------- ---------
Net cash used in investing activities .................................. (37,401) (178,641) (70,283)
--------- ---------- ---------
Cash flows from financing activities:
Proceeds (repayments) from revolving credit facilities, net ........... 57,328 5,032 (45,384)
Proceeds from senior notes ............................................ -- 199,724 --
Other borrowings ...................................................... 19,936 35,106 --
Debt repayments ....................................................... (59,059) (17,946) --
Proceeds from issuance of common stock ................................ 6,264 3,779 6,593
Stock repurchased ..................................................... -- (13,725) --
Financing costs ....................................................... (587) (4,993) --
--------- ---------- ---------
Net cash provided by (used in) financing activities .................... 23,882 206,977 (38,791)
--------- ---------- ---------
Net increase in cash and cash equivalents .............................. 1,662 14,483 11,061
Net effect of translation on cash ...................................... (353) (682) (3,290)
Cash and cash equivalents--beginning of period ......................... 4,754 6,063 19,864
--------- ---------- ---------
Cash and cash equivalents--end of period ............................... $ 6,063 $ 19,864 $ 27,635
========= ========== =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest .............................................................. $ 8,727 $ 21,795 $ 25,510
========= ========== =========
Income taxes .......................................................... $ 10,377 $ 6,593 $ 9,726
========= ========== =========
</TABLE>

(CONTINUED)

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

30
<PAGE>

MASTEC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
(IN THOUSANDS)

Supplemental disclosure of non-cash investing and financing activities:

YEAR ENDED
DECEMBER 31,
1998
-------------
Disposal of Sintel:
Accounts receivable .................. $137,214
Inventories .......................... 2,774
Other current assets ................. 37,722
Property and equipment ............... 17,251
Other assets ......................... 2,825
--------
Total non-cash assets ............... 197,786
--------
Liabilities ........................... 109,448
Long-term debt ........................ 25,013
--------
Total disabilities .................. 134,461
--------
Net non-cash assets sold .............. 63,325
Cash .................................. 2,234
Investment retained ................... (4,072)
--------
Fair value of net assets sold ......... 61,487
Net loss on sale ...................... (9,222)
--------
Sales price ........................... $ 52,265
========
Assumption of debt .................... 25,013
Seller financing ...................... 27,252
--------
Sales price ........................... $ 52,265
========

(CONTINUED)

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

31
<PAGE>

MASTEC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)

In 1997, we issued 1.6 million shares of common stock for domestic
acquisitions, of which 0.25 million shares were issued from treasury stock at a
cost of approximately $1.6 million.

In 1997, we converted a note receivable and accrued interest thereon
totaling $29.0 million into stock of Conecel.

In 1998, we issued approximately 0.16 million shares of common stock
primarily as payment for contingent consideration related to 1997 acquisitions.
In addition, we issued approximately 0.1 million shares as bonuses to certain
employees and fees to directors.

In 1997, we completed certain acquisitions which have been accounted for
as purchases. The fair value of the net assets acquired totaled $139.8 million
and was comprised primarily of $44.0 million of accounts receivable, $27.5
million of property and equipment, $7.8 million of other assets and $3.3
million in cash, offset by $40.8 million of assumed liabilities. The excess of
the purchase price over the net assets acquired was $98.1 million and was
allocated to goodwill. The acquisitions were made in the form of cash and
stock.

In 1998, we completed certain acquisitions which have been accounted for
as purchases. The fair value of the net assets acquired totaled $91.4 million
and was comprised primarily of $35.2 million of accounts receivable $27.2
million of property and equipment, $8.0 million of other assets and $5.0
million in cash, offset by $39.2 million of assumed liabilities. The excess of
the purchase price over the net assets acquired was $55.3 million and was
allocated to goodwill.

In 1999, we completed certain acquisitions which have been accounted for
as purchases. The fair value of the net assets acquired totaled $3.5 million
and was comprised primarily of $7.0 million of accounts receivable, $2.4
million of property and equipment, $0.68 million of other assets and $0.27
million in cash, offset by $6.6 million of assumed liabilities. The excess of
the purchase price over the fair value of net assets acquired was $7.4 million
and was allocated to goodwill. We also issued 0.53 million shares of common
stock with a value of $11.3 million related to the payment of contingent
consideration from earlier acquisitions. Of the $11.3 million, $2.3 million was
recorded as a reduction of other current liabilities and $9.0 million as
additional goodwill.

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

32
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997, 1998 AND 1999

NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We design, build, install and maintain internal and external networks
supporting the Internet, Internet-related applications, e-commerce and other
communications and energy facilities for leading telecommunications, cable
television, energy and other Fortune 500 companies. Based on revenue, we are
the largest end-to-end telecommunications and energy infrastructure service
provider in North America. We offer comprehensive network infrastructure
solutions to a diverse group of customers, enabling our customers to connect
with their customers. Our North American operations consist of three segments:
external communication services, external energy services and internal
communication services.

Revenue generated by North American operations, as a percentage of total
revenue, was 57.2%, 63.8% and 94.8% in 1997, 1998 and 1999, respectively. For
the years ended, December 31, 1997, 1998 and 1999, revenue expressed as a
percentage of North American revenue generated by external communication
services was 76.1%, 68.1% and 74.1%, respectively, by external energy services
was 5.2%, 18.0% and 15.3%, respectively, and by internal communication services
was 12.5%, 13.4% and 10.5%, respectively. See Note 10. In 1997 and 1998,
international operations consisted primarily of our operations in Spain and
Brazil. Effective December 31, 1998, we sold 87% of our Spanish operations.

A summary of the significant accounting policies followed in the
preparation of the accompanying consolidated financial statements is presented
below:

MANAGEMENT'S ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The more significant estimates relate to our for
allowance for doubtful accounts, accrued insurance, and the realization of
certain intangibles and assets held for sale. Actual results could differ from
those estimates.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
MasTec, Inc. and its subsidiaries including our 51% interest in our Brazilian
operations. All material intercompany accounts and transaction have been
eliminated. Certain prior year amounts have been reclassified to conform to the
current presentation.

COMPREHENSIVE INCOME (LOSS). As reflected in the consolidated statement of
changes in shareholders' equity, comprehensive income is a measure of net
income and all other changes in equity that result from transactions other than
with shareholders. Comprehensive income (loss) consists of net income (loss)
and foreign currency translation adjustments.

FOREIGN CURRENCY. We operate in Brazil, which is subject to greater
political, monetary, economic and regulatory risks than our domestic
operations. During January 1999, the Brazilian government allowed its currency
to trade freely against other currencies resulting in an immediate devaluation
of the Brazilian REAIS. Assets and liabilities of foreign subsidiaries and
equity with a functional currency other than U.S. dollars are translated into
U.S. dollars at exchange rates in effect at the end of the reporting period.
Foreign entity revenue and expenses are translated into U.S. dollars at the
average rates that prevailed during the period. The resulting net translation
gains and losses are reported as foreign

33
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)

currency translation adjustments in shareholders' equity as a component of
other accumulated comprehensive income. Exchange gains and losses on
transactions and equity investments denominated in a currency other than their
functional currency are included in results of operations as incurred.

REVENUE RECOGNITION. Revenue and related costs for short-term construction
projects (i.e., generally projects with a duration of less than one month) are
recognized as the projects are completed. Upon completion of the projects
customers provide written acceptance. Revenue generated by certain long-term
construction contracts are accounted for by the percentage of completion method
under which income is recognized based on the ratio of estimated cost incurred
to total estimated contract cost.

Losses, if any, on such contracts are provided for in full when they
become known. Billings in excess of costs and estimated earnings on uncompleted
contracts are classified as current liabilities. Any costs in excess of
billings are classified as current assets. Work in process on contracts is
based on work performed but not billed to customers as per individual contract
terms.

We also provide management, coordination, consulting and administration
services for construction projects. Compensation for such services is
recognized ratably over the term of the service agreement.

EARNINGS PER SHARE. Basic earnings per common share is computed by
dividing income available to common shareholders by the weighted average number
of common shares outstanding. Diluted earnings per common share include the
dilutive effect of stock options using the treasury stock method. The
difference between the weighted average common shares outstanding used to
calculate basic and diluted earnings per share relates to stock options assumed
exercised under the treasury method of accounting of approximately 559,000 and
607,000 at December 31, 1997 and 1999, respectively. Potentially dilutive
shares as of December 31, 1998 were not included in the diluted per share
calculation include 336,000 shares because their effects would be anti-dilutive
due to the loss incurred by us. Accordingly, for 1998, diluted net loss per
common share is the same as basic net loss per common share.

CASH AND CASH EQUIVALENT. We consider all short-term investments with
maturities of three months or less when purchased to be cash equivalents. At
December 31, 1998 and 1999, we had cash and cash equivalents denominated in
Brazilian REAIS that translate to approximately $9.1 million and $20.5 million,
respectively.

INVENTORIES. Inventories (consisting principally of material and supplies)
are carried at the lower of first-in, first-out cost or market.

PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost.
Depreciation and amortization are computed using the straight-line method over
the estimated useful lives of the respective assets. Leasehold improvements are
amortized over the shorter of the term of the lease or the estimated useful
lives of the improvements. Expenditures for repairs and maintenance are charged
to expense as incurred. Expenditures for betterments and major improvements are
capitalized. The carrying amounts of assets sold or retired and related
accumulated depreciation are eliminated in the year of disposal and the
resulting gains and losses are included in income.

34
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)

INTANGIBLES AND OTHER LONG LIVED ASSETS. Assets and liabilities acquired
in connection with business combinations accounted for under the purchase
method are recorded at their respective estimated fair values. Goodwill
represents the excess of the purchase price over the estimated fair value of
net assets acquired, including the recognition of applicable deferred taxes,
and is amortized on a straight-line basis over a period ranging from 5 to 40
years, with a weighted average amortization period of 23 years. At December 31,
1998 and 1999, we had recorded intangibles primarily consisting of goodwill of
$140.5 million and $151.6 million, respectively (net of accumulated
amortization of $14.9 million in 1998 and $24.5 million in 1999).

We review long-lived assets, identifiable intangibles and goodwill and
record an impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be fully recoverable. Recoverability
of assets to be held and used is measured by a comparison of the carrying
amount of the assets to future undiscounted net cash flows expected to be
generated by the assets. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets or expected future
cash flows on an undiscounted basis. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.

ACCRUED INSURANCE. We are self-insured for certain property and casualty
and worker's compensation exposure and, accordingly, accrue the estimated
losses not otherwise covered by insurance.

INCOME TAXES. We record income taxes using the liability method of
accounting for deferred income taxes. Under this method, deferred tax assets
and liabilities are recognized for the expected future tax consequence of
temporary differences between the financial statement and income tax bases of
our assets and liabilities. A valuation allowance is established when it is
more likely than not that any or all of the deferred tax assets will not be
realized.

STOCK BASED COMPENSATION. We adopted the disclosure provision of Statement
of Financial Accounting Standard No. 123, Accounting for Stock Based
Compensation ("SFAS 123") and retained the intrinsic value method of accounting
for such stock based compensation (see Note 7).

FAIR VALUE OF FINANCIAL INSTRUMENTS. We estimate the fair market value of
financial instruments through the use of public market prices, quotes from
financial institutions and other available information. Judgment is required in
interpreting data to develop estimates of market value and, accordingly,
amounts are not necessarily indicative of the amounts that we could realize in
a current market exchange. Our short-term financial instruments, including cash
and cash equivalents, accounts and notes receivable, accounts payable and other
liabilities, consist primarily of instruments without extended maturities, the
fair value of which, based on management's estimates, equaled their carrying
values. Long-term debt is carried at face value less unamortized discount. The
fair value of our senior notes was approximately $188.0 million at December 31,
1999. We use letters of credit to back certain insurance policies. The letters
of credit reflect fair value as a condition of their underlying purpose and are
subject to fees competitively determined in the market place.

35
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 2--INVESTING ACTIVITIES

During 1998 and 1999, we completed 12 and four North American
acquisitions, respectively, which have been accounted for under the purchase
method of accounting. Accordingly, the results of operations of acquired
companies have been included in our consolidated results of operations from
their respective acquisition dates. Contingent consideration, to the extent
earned, will be recorded as additional goodwill. If the acquisitions had been
made at the beginning of 1998 or 1999, pro forma results of operations would
not have differed materially from actual results based on historical
performance prior to their acquisition by us. During 1999, we acquired
Directional Advantage Boring, Inc., Central Trenching, Inc., Queens Network
Cable Corp. and Trench Masters, Inc. all of which are external communication
services providers.

Common stock issued in acquisitions is valued based upon the market price
of the common stock around the date of purchase or the date the purchase price
is determined.

During the fourth quarter of 1999, we recorded in other current assets a
$2.5 million preferred stock investment in a co-location facilities provider.
In connection with the investment, we have entered into an agreement to build
their neutral central offices throughout the United States.

We also have 171,250 warrants to purchase common stock at $60.00 per share
of a competitive local exchange carrier in the northeastern United States with
whom we have a preferred services provider agreement.

On December 31, 1998, we sold 87% of our Spanish operations to a group of
investors and during 1999 we advanced $3.0 million for working capital needs.
The sale included the assumption of our remaining indebtedness to Telefonica
from the original purchase of our Spanish operations of $25.0 million, for
which we are not contingently liable. At December 31, 1999, we had $14.6
million reflected in other current assets, $11.6 million of which subsequently
has been received.

The following information presents the unaudited pro forma condensed
results of operations for the years ended December 31, 1998 as if our
disposition of our Spanish operations had occurred in January 1998.

Revenue ............................ $811,582
Net income ......................... 4,962
Basic earnings per share ........... 0.18
Diluted earnings per share ......... 0.18

We corrected in consolidation the matter described in paragraph 4 of
Sintel's auditors' report, included herein, on our Spanish operations.

NOTE 3--ACCOUNTS RECEIVABLE

Accounts receivable are presented net of an allowance for doubtful
accounts of $3.1 million, $7.3 million, and $9.7 million at December 31, 1997,
1998 and 1999, respectively. We recorded a provision for doubtful accounts of
$5.3 million, $4.5 million and $4.7 million during 1997, 1998 and 1999,
respectively. In addition, we recorded write-offs of $5.3 million, $0.3 million
and $2.3 million during 1997, 1998 and 1999, respectively.

36
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 3--ACCOUNTS RECEIVABLE--(CONTINUED)

Accounts receivable includes retainage which has been billed but is not
due until completion of performance and acceptance by customers, and claims for
additional work performed outside original contract terms. Retainage aggregated
$18.9 million and $16.5 million at December 31, 1998 and 1999, respectively.
Retainage is expected to be collected within one year. Any retainage expected
to be collected beyond a year is recorded in long-term other assets.

Included in accounts receivable is unbilled revenue of $83.3 million and
$69.6 million at December 31, 1998 and 1999, respectively. Such unbilled
amounts represent work performed but not billable to customers as per
individual contract terms, of which $45.2 million and $18.6 million at December
31, 1998 and 1999, respectively, are related to our Brazilian operations.
Unbilled revenue is typically billed within one to two months.

NOTE 4--PROPERTY AND EQUIPMENT

Property and equipment is comprised of the following as of December 31,
1998 and 1999 (in thousands):

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
1998 1999 (IN YEARS)
------------ ------------- -------------
<S> <C> <C> <C>
Land ................................... $ 7,950 $ 6,905
Buildings and improvements ............. 9,961 11,852 5 - 20
Machinery and equipment ................ 168,484 223,378 3 - 7
Office furniture and equipment ......... 9,299 13,760 3 - 5
--------- ----------
195,694 255,895
Less-accumulated depreciation .......... (58,312) (102,368)
--------- ----------
$ 137,382 $ 153,527
========= ==========
</TABLE>

37
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 5--DEBT

Debt is comprised of the following at December 31, (in thousands):

<TABLE>
<CAPTION>
1998 1999
----------- ------------
<S> <C> <C>
Revolving credit facility, at LIBOR plus 1.25% (7.06% at
December 31, 1998 and 6.98% at December 31, 1999) ............. $ 106,300 $ 64,000
Other bank facilities at LIBOR plus 1.50% (6.31% at December 31,
1998 and 7.32% at December 31, 1999) .......................... 6,206 7,707
Notes payable for equipment, at interest rates from 7.5% to 8.5%
due in installments through the year 2000 ..................... 6,145 3,920
Notes payable for acquisitions, at interest rates from 7% to 8%
due in installments through February 2000 ..................... 3,431 4,254
Senior notes, 7.75% due February 2008 .......................... 199,750 199,777
--------- ---------
Total debt ..................................................... 321,832 279,658
Less current maturities ........................................ (11,143) (12,200)
--------- ---------
Long-term debt ................................................. $ 310,689 $ 267,458
========= =========
</TABLE>

We have a credit facility that provides for borrowings up to an aggregate
amount of $165.0 million. Amounts outstanding under the revolving credit
facility mature on June 9, 2001. Upon written request by us and at the bank's
sole discretion, the maturity date of the credit facility may be extended to
June 9, 2002. We are required to pay an unused facility fee ranging from .25%
to .50% per annum on the facility, depending upon certain financial covenants.
The credit facility is secured by a pledge of shares of certain of our
subsidiaries. Interest under the credit facility accrues at rates based, at our
option, on the agent bank's base rate plus a margin of up to .50% depending on
certain financial covenants or 1% above the overnight federal funds effective
rate, whichever is higher, or its LIBOR Rate (as defined in the credit
facility) plus a margin of 1.00% to 2.25%, depending on certain financial
covenants.

We had outstanding $8.3 million in standby letters of credit as of
December 31, 1999.

On January 30, 1998, we issued $200.0 million, 7.75% senior subordinated
notes due in February 2008 with interest due semi-annually. The net proceeds
were used primarily for acquisitions and other corporate purposes.

The credit facility and the senior notes contain customary events of
default and covenants which prohibit, among other things, making investments in
excess of a specified amount, incurring additional indebtedness in excess of a
specified amount, paying dividends in excess of a specified amount, making
capital expenditures in excess of a specified amount, creating liens, prepaying
other indebtedness, including the senior notes, and engaging in certain mergers
or combinations without the prior written consent of the lenders. The credit
facility also provides that we must maintain certain financial ratio coverages,
requiring, among other things minimum ratios at the end of each fiscal quarter
of debt to earnings and earnings to interest expense.

38
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 5--DEBT--(CONTINUED)

At December 31, 1999, debt matures as follows:

2000 .......................... $ 12,200
2001 .......................... 67,308
2002 .......................... 345
2003 .......................... 28
Thereafter (due 2008) ......... 199,777
--------
$279,658
========

NOTE 6--LEASE COMMITMENTS

We have operating lease agreements for our premises and equipment that
expire on various dates through 2005. The operating lease agreements are
subject to escalation. Rent expense for the year ended December 31, 1999, was
approximately $14.8 million.

Minimum future lease commitments under non-cancelable operating leases in
effect at December 31, 1999 were as follows:

2000 ................................... $11,263
2001 ................................... 9,747
2002 ................................... 7,776
2003 ................................... 5,805
2004 ................................... 1,766
Thereafter ............................. 3,832
-------
Total minimum lease payments ......... $40,189
=======

NOTE 7--STOCK OPTION PLANS

We have three stock option plans currently in effect: the 1994 Stock
Incentive Plan (the "1994 Plan"), the 1994 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan") and the 1999 Non-Qualified Employee Stock
Option Plan (the "Non-Qualified Plan"). Typically, options under these plans
are granted at fair market value at the date of grant, vest between three to
five years and terminate no later than 10 years from the date of grant.

Under these plans there were a total of 1,654,151, 1,291,962 and 286,703
options available for grant at December 31, 1997, 1998 and 1999, respectively.
We also have a non-qualified stock purchase plan whereby eligible employees may
purchase common stock through payroll deductions at a 15% discount from fair
market value.

In addition, there are 149,000 options outstanding under individual option
agreements with varying vesting schedules at exercise prices ranging from $3.83
to $21.09 with terms up to 10 years.

39
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 7--STOCK OPTION PLANS--(CONTINUED)

The following is a summary of all stock option transactions:

<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE FAIR
STOCK AVERAGE VALUE OF
OPTIONS EXERCISE PRICE OPTIONS GRANTED
------------- ---------------- ----------------
<S> <C> <C> <C>
Outstanding December 31, 1996 ......... 897,900 $ 9.98
Granted ............................... 1,254,950 24.96 $19.97
Exercised ............................. (201,950) 5.58
Canceled .............................. (343,475) 23.62
--------- ------
Outstanding December 31, 1997 ......... 1,607,425 17.06
Granted ............................... 1,234,250 19.17 $13.29
Exercised ............................. (101,990) 11.38
Canceled .............................. (110,580) 19.47
--------- ------
Outstanding December 31, 1998 ......... 2,629,105 18.32
Granted ............................... 1,849,955 32.65 $16.04
Exercised ............................. (407,069) 16.21
Canceled .............................. (168,030) 22.26
--------- ------
Outstanding December 31, 1999 ......... 3,903,961 $25.21
========= ======
</TABLE>

The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
STOCK OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- ---------------------------
WEIGHTED WEIGHTED WEIGHTED
RANGE OF AVERAGE AVERAGE AVERAGE
EXERCISE NUMBER OF REMAINING EXERCISE NUMBER OF EXERCISE
PRICES STOCK OPTIONS CONTRACTUAL LIFE PRICE STOCK OPTIONS PRICE
- ----------------- --------------- ------------------ ---------- --------------- ---------
<S> <C> <C> <C> <C> <C>
$ 3.83-5.29 54,300 4.19 $ 4.49 54,300 $ 4.49
6.83-8.68 121,250 5.59 7.56 75,553 7.66
8.92-14.63 136,350 3.20 9.60 82,800 9.51
15.59-20.19 630,300 8.99 17.96 451,634 18.18
20.56-29.69 2,281,706 8.49 25.31 601,129 21.08
31.19-40.19 680,055 9.89 39.50 2,600 31.63
--------- ---- ------ ------- ------
3.83-40.19 3,903,961 8.48 25.21 1,268,016 17.80
========= ==== ====== ========= ======
</TABLE>

We have elected to follow Accounting Principles Board Option No. 25,
"Accounting for Stock Issued to Employees", and related interpretations in
accounting for its employees stock options. Therefore, no compensation cost has
been recognized.

40
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 7--STOCK OPTION PLANS--(CONTINUED)

We have reflected below the 1997, 1998 and 1999 earnings as if
compensation expense relative to the fair value of the options granted had been
recorded under the provisions of SFAS No. 123 "Accounting for Stock- Based
Compensation." The fair value of each option grant was estimated using the
BlackScholes option-pricing model with the following assumptions used for
grants in 1997, 1998 and 1999, respectively: a five, six and five year expected
life for 1997, 1998 and 1999, respectively; volatility factors of 82%, 72% and
41% respectively; risk-free interest rates of 5.5%, 4.3% and 5.9%,
respectively; and no dividend payments.

1997 1998 1999
---------- ------------- ----------
Net income (loss):
As reported ...................... $34,664 $ (13,915) $44,726
======= ========= =======
Pro forma ........................ $28,797 $ (28,472) $32,980
======= ========= =======
Basic earnings (loss) per share:
As reported ...................... $ 1.31 $ (0.51) $ 1.61
Pro forma ........................ $ 1.09 $ (1.04) $ 1.19
Diluted earnings (loss) per share:
As reported ...................... $ 1.28 $ (0.51) $ 1.57
Pro forma ........................ $ 1.07 $ (1.04) $ 1.16

NOTE 8--INCOME TAXES

The provision (benefit) for income taxes consists of the following (in
thousands):

1997 1998 1999
--------- ------------ ----------
Current:
Federal ........................... $ 9,583 $ (3,876) $ 32,069
Foreign ........................... 4,465 1,376 214
State and local ................... 1,670 536 3,770
------- -------- --------
15,718 (1,964) 36,053
------- -------- --------
Deferred:
Federal ........................... 2,730 9,193 (5,889)
Foreign ........................... 2,040 5,430 1,740
State and local ................... 456 (109) 1,362
------- -------- --------
5,226 14,514 (2,787)
------- -------- --------
Provision for income taxes ......... $20,944 $ 12,550 $ 33,266
======= ======== ========

41
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 8--INCOME TAXES--(CONTINUED)

The tax effects of significant items comprising our net deferred tax
liability as of December 31, 1998 and 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
1998 1999
------------- -------------
<S> <C> <C>
Deferred tax assets:
Non-compete ......................................... $ 6,068 $ 5,919
Bad debts ........................................... 2,694 4,279
Accrued self insurance .............................. 4,655 5,468
Operating loss and tax credit carry forward ......... 1,186 1,960
All other ........................................... 4,762 2,105
--------- ---------
Total deferred tax assets ............................ 19,365 19,731
--------- ---------
Deferred tax liabilities:
Installment sale .................................... $ 7,452 $ 3,902
Accounts receivable retainage ....................... 6,891 5,665
Property and equipment .............................. 12,737 15,709
Asset re-evaluations ................................ 5,901 5,526
All other ........................................... 3,328 2,080
--------- ---------
Total deferred tax liabilities ....................... 36,309 32,882
Valuation allowance ................................. 211 --
--------- ---------
Net deferred tax liability ........................... $ (17,155) $ (13,151)
========= =========
</TABLE>

The net deferred tax liability includes deferred items resulting from
acquisitions made during the period which are not reflected as part of the
deferred tax provision. During 1999, the net change in the valuation allowance
for the deferred tax asset was a decrease of $0.2 million. Such change is
attributed to amounts expected to be realized through future earnings.

A reconciliation of U.S. statutory federal income tax expense on the
earnings from continuing operations is as follows:

<TABLE>
<CAPTION>
L997 1998 1999
------ -------- -------
<S> <C> <C> <C>
U.S. statutory federal rate applied to pretax income .......... 35% 35% 35%
State and local income taxes .................................. 2 10 4
Effect of non-U.S. tax rates .................................. (1) (23) --
Amortization of intangibles ................................... -- 58 2
Gain on sale of Spanish operations ............................ -- 329 --
Non-deductible expenses ....................................... -- 37 2
Other ......................................................... 1 33 (1)
-- --- ---
Provision for income taxes .................................... 37% 479% 42%
== === ==
</TABLE>

No provision has been made for the years ended December 31, 1998 and 1999
for U.S. income taxes on the undistributed earnings of the foreign subsidiaries
since it is our intention to utilize those earnings in the foreign operations
for an indefinite period of time. During 1998, MasTec sold its interest in its
Spanish operations which resulted in a tax liability of $7.8 million. At
December 31, 1999,

42
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 8--INCOME TAXES--(CONTINUED)

undistributed earnings of the remaining foreign subsidiaries amounted to $13.2
million. If the earnings of such foreign subsidiaries were not indefinitely
reinvested, a deferred tax liability of $0.2 million would be required.

The Internal Revenue Service is currently reviewing the tax returns filed
by MasTec for the years ended December 31, 1995 and 1996. No adjustments have
been proposed to date related to this review.

NOTE 9--CAPITAL STOCK

MasTec has authorized 100,000,000 shares of common stock, $0.10 par value.
At December 31, 1998 and 1999, approximately 27,382,000 and 28,233,000 shares
of common stock were issued and outstanding. At December 31, 1998 and 1999,
MasTec had 5,000,000 shares of authorized but unissued preferred stock,
respectively.

NOTE 10--OPERATIONS BY GEOGRAPHIC AREAS AND SEGMENTS

We currently derive a substantial portion of our revenue from providing
external communication services to BellSouth. For the year ended December 31,
1997, approximately 27%, 13% and 11% of our revenue was derived from services
performed for Telefonica, BellSouth and Telebras, respectively. For the year
ended December 31, 1998, approximately 19% of our revenue was derived from
services performed for Telefonica. For the year ended December 31, 1999,
approximately 12.0% of our revenue was derived from services performed for
BellSouth. Accounts receivable from our BellSouth approximated $17.1 million at
December 31, 1999.

Our North American operations consist of three segments: External
Communication Services, External Energy Services and Internal Communication
Services. We also operate in Brazil.

EXTERNAL COMMUNICATION SERVICES. We design, build, install and maintain
the physical facilities used to provide end-to-end telecommunications service
from the provider's central office, switching center or cable head-end to the
ultimate consumer's home or business. These services include: designing conduit
networks and fiber rings; placing and splicing fiber optic, coaxial and copper
cable; excavating trenches in which to place the cable; fabricating and placing
related structures such as poles, anchors, conduits, manholes, cabinets and
closures; placing drop lines from the main distribution terminals to the
customer's home or business; and maintaining, removing and replacing these
facilities.

We also provide route development, right of way and other site
acquisition, permitting, materials procurement, acceptance testing and as-built
documentation.

EXTERNAL ENERGY SERVICES. We provide external network and infrastructure
services to public and private utilities. These services consist of overhead
and underground installation and maintenance of electrical and other utilities'
transmission and distribution networks, substation construction and
maintenance, right-of-way maintenance and restoration of asphalt and concrete
surfaces. They are substantially similar to the services we provide to our
telecommunications customers, but the work often involves the installation and
splicing of high-voltage transmission and distribution lines.

43
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 10--OPERATIONS BY GEOGRAPHIC AREAS AND SEGMENTS--(CONTINUED)

INTERNAL COMMUNICATION SERVICES. We provide services consisting of the
design, installation, testing and documentation of switching and transmission
equipment and supporting components at a provider's point-of-presence (central
office) locations. We also design, install and maintain integrated voice, data
and video networks inside customer premises as well as the infrastructure
required to support complex intranet and Internet solutions. We provide systems
integration services, which involve the selection, configuration, installation
and maintenance of software, hardware, other computing and communications
equipment and cabling to provide an integrated computing and communications
system. Internal communication services are less capital intensive than
external communication services but require a more technically proficient work
force. We provide switching and transmission services to equipment vendors, and
premise wiring and structured cabling services to large corporate customers
with multiple locations.

44
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 10--OPERATIONS BY GEOGRAPHIC AREAS AND SEGMENTS--(CONTINUED)

The following table set forth, for each of 1997, 1998 and 1999, certain
information about segment results of operations and segment assets (in
thousands).

<TABLE>
<CAPTION>
EXTERNAL INTERNAL EXTERNAL
COMMUNICATION COMMUNICATION ENERGY
1997 SERVICES SERVICES SERVICES INTERNATIONAL(1) OTHER(2) CONSOLIDATED
- --------------------------------- --------------- --------------- ---------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ......................... $286,814 $ 47,285 $ 19,693 $282,393 $ 23,254 $ 659,439
======== ======== ======== ======== ========= ==========
Operating income (loss) ......... 44,794 4,865 607 21,450 (14,233) 57,483
Depreciation and
amortization .................. 16,210 1,022 2,888 3,403 332 23,855
Total assets .................... 194,245 51,606 33,250 325,458 25,665 630,224
Capital expenditures ............ 16,387 1,113 1,223 1,879 932 21,534

<CAPTION>
EXTERNAL INTERNAL EXTERNAL
COMMUNICATION COMMUNICATION ENERGY
1998 SERVICES SERVICES SERVICES INTERNATIONAL(1) OTHER(2) CONSOLIDATED
- --------------------------------- --------------- --------------- ---------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ......................... $455,798 $ 89,687 $120,218 $379,294 $ 3,925 $1,048,922
======== ========= ======== ======== ========= ==========
Operating income (loss) ......... 33,258 (11,460) 10,910 15,167 (19,615) 28,260
Depreciation and
amortization .................. 24,600 1,617 10,095 6,029 972 43,313
Total assets .................... 299,952 61,185 87,181 186,023 97,880 732,221
Capital expenditures ............ 41,946 2,361 25,872 5,003 1,263 76,445

<CAPTION>
EXTERNAL INTERNAL EXTERNAL
COMMUNICATION COMMUNICATION ENERGY
1999 SERVICES SERVICES SERVICES INTERNATIONAL(1) OTHER(2) CONSOLIDATED
- --------------------------------- --------------- --------------- ---------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ......................... $743,955 $105,246 $153,179 $ 55,220 $ 1,422 $1,059,022
======== ======== ======== ======== ========= ==========
Operating income (loss) ......... 107,048 5,769 12,069 496 (18,205) 107,177
Depreciation and
amortization .................. 35,683 2,468 12,560 4,016 1,421 56,148
Total assets .................... 394,662 63,083 84,472 142,672 43,520 728,409
Capital expenditures ............ 57,786 1,815 8,845 86 975 69,507

<FN>
- ----------------
(1) For the year ended December 31, 1997, revenue, depreciation and
amortization and operating profit was $74.9 million, $390,000 and $9.6
million, respectively, for Brazil and $207.5 million, $3.0 million and
$11.8 million, respectively, for Spain. As of December 31, 1997, assets
and capital expenditures consisted of $93.4 million and $0, respectively
for Brazil, $195.2 million and $1.9 million, respectively for Spain and
$36.9 million related to other international entities. For the year ended
December 31, 1998 revenue, depreciation and amortization and operating
profit (loss) was $142.0 million, $3.3 million and $15.3 million,
respectively for Brazil and $237.3 million, $2.7 million and $(134,000)
respectively for Spain. As of December 31, 1998 total assets consisted of
$117.2 million for Brazil, capital expenditures consisted of $3.5 million
for Brazil and $1.5 million for Spain, and total assets of $68.8 million
related to our other international entities, which includes a note
receivable of $25.8 million in connection with the sale of our Spanish
operations. For the year ended December 31, 1999, international includes
only our Brazilian operations.

(2) Consists of non-core construction and corporate operations.
</FN>
</TABLE>

45
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 10--OPERATIONS BY GEOGRAPHIC AREAS AND SEGMENTS--(CONTINUED)

There are no significant transfers between geographic areas and segments.
Operating income consists of revenue less operating expenses, and does not
include interest expense, interest and other income, equity in earnings of
unconsolidated companies, minority interest and income taxes. Operating income
is net of corporate general and administrative expenses. Total assets are those
assets used in our operations in each segment. Corporate assets include cash
and cash equivalents, real estate assets held for sale and notes receivable.

NOTE 11--COMMITMENTS AND CONTINGENCIES

In the fourth quarter of 1999, we entered into a stipulation of settlement
regarding two shareholder class action and derivative lawsuits first filed in
1990. The two Delaware state court lawsuits alleged, among other things, that
various former fiduciaries of MasTec breached their duties in approving certain
transactions, including, the acquisition of control of the Company in 1994 in
these former fiduciaries engaged in mismanagement, waste and breach of
fiduciary duties in managing our affairs prior to the acquisition of control.
The settlement, which must be approved by the court, calls for the payment of
certain amounts by another defendant, a dismissal of the actions with prejudice
and full release of all parties. We are not required to make any payments or to
contribute to any amounts paid by other parties.

In November 1997, Church & Tower filed a lawsuit against Miami-Dade County
(the "County") in Florida state court alleging breach of contract and seeking
damages exceeding $3.0 million in connection with the County's refusal to pay
amounts due to Church & Tower under a multi-year agreement to perform road
restoration work for the Miami-Dade Water and Sewer Department ("MWSD"), a
department of the County, and the County's wrongful termination of the
agreement. The County has refused to pay amounts due to Church & Tower under
the agreement until alleged overpayments under the agreement have been
resolved, and has counterclaimed against us and is seeking unspecified damages.
The County also has refused to award a new road restoration agreement for MWSD
to Church & Tower, which was the low bidder for the new agreement. We are
vigorously pursuing this lawsuit and believe that we will not incur any
material liability from this lawsuit.

We are a party to other pending legal proceedings arising in the normal
course of business, none of which MasTec believes is material to our financial
position or results of operations.

In connection with certain contracts, we have signed certain agreements of
indemnity in the aggregate amount of approximately $500.0 million, of which
approximately $361.6 million relate to the uncompleted portion of contracts in
process. These agreements are to secure the fulfillment of obligations and
performance of the related contracts.

Our current and future operations and investments in certain foreign
countries are generally subject to the risks of political, economic or social
instability, including the possibility of expropriation, confiscatory taxation,
hyper-inflation or other adverse regulatory or legislative developments, or
limitations on the repatriation of investment income, capital and other assets.
We cannot predict whether any of such factors will occur in the future or the
extent to which such factors would have a material adverse effect on our
international operations.

46
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 12--ASSETS HELD FOR SALE

Included in assets held for sale at December 31, 1999 is our minority
interest in Supercanal Holding S.A. ("Supercanal") a cable television operator
in western Argentina with a carrying value at December 31, 1999 of
approximately $17.9 million, and our minority interest in Consorcio Ecuatoriano
de Telecomunicaciones, S.A. ("Conecel"), one of two cellular operators in
Ecuador with a carrying value of $12.1 million. Both Supercanal and Conecel
defaulted, during the second quarter of 1999, on their third-party obligations.
We do not guarantee any of their indebtedness.

We are monitoring our investments in Argentina and Ecuador and have
determined that the carrying values of these assets as of December 31, 1999
have not been further impaired. We periodically review the carrying value of
our South American assets through our independent sources including information
provided by the companies, actual or proposed transactions, valuation from
investment bankers, discussions with other stakeholders and comparable
transactions. We have engaged investment bankers to dispose of our interest in
Conecel and Supercanal. There can be no assurance that future transactions or
events will not result in a further impairment of these assets. In the case of
Supercanal, we executed an agreement in September 1997 to sell less than half
of our interest in Supercanal in excess of its carrying value. In early 1999,
we received a valuation from an investment banking firm that valued our
interest at more than its carrying value, and later in 1999 received an offer
to purchase the interest for a combination of cash and other securities valued
at more than the carrying value.

We do not exercise significant influence over the management of Supercanal
because the other two shareholders holding 72% of the outstanding stock are
entitled to make most significant decisions regarding the operations of
Supercanal under a stockholders' agreement. Additionally, we are not
represented on the board of directors.

On January 25, 2000, the majority shareholders of Supercanal approved a
capital increase which would require MasTec to contribute approximately $5.9
million to Supercanal within the next six months to maintain our interest. We
are considering whether to make the capital contribution.

In December 1997, we sold our investment in the holding company for
Conecel for $20.0 million in cash and 7.5 million shares of Conecel common
stock valued at $25.0 million. Accordingly, we recognized a gain of $4.4
million net of tax based on the percent of cash received to the total
transaction value. In the fourth quarter of 1999, we recorded a $4.0 million
write-down of our investment in Conecel based upon a publicly announced
purchase of a controlling interest in Conecel by an unaffiliated purchaser. As
part of the transaction, Conecel's third party debt obligations would be
restructured and would no longer be in default.

We have a $28.6 million investment in a PCS wireless system in Paraguay
which is held for sale. The system became operational in January 2000 in
accordance with its license requirements. We are actively marketing the system
for sale. Our Paraguayan subsidiary is under a preliminary investigation for
alleged improper conduct by certain of its employees in connection with a prior
extension of the completion deadline. We believe that the allegations are
baseless.

We also have other international investments with a carrying value of $2.6
million recorded as assets held for sale as of December 31, 1999. We estimate
that the carrying value of such assets held for sale will be realized upon
their ultimate disposition.

47
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 12--ASSETS HELD FOR SALE--(CONTINUED)

During the year ended December 31, 1999 we sold non-core real estate
reflected at $6.9 million at a loss of $1.1 million. Currently, approximately
$4.6 million remains unsold. Of the original $10.5 million reflected at
December 31, 1998, an additional $950,000 was recorded as an asset held for
sale and subsequently disposed.

NOTE 13--QUARTERLY INFORMATION (UNAUDITED)

The following table presents unaudited quarterly operating results for the
two years ended December 31, 1999. MasTec believes that all necessary
adjustments have been included in the amounts stated below to present fairly
the quarterly results when read in conjunction with the Consolidated Financial
Statements and Notes thereto for the years ended December 31, 1998 and 1999.

<TABLE>
<CAPTION>
1998 1999
QUARTER ENDED QUARTER ENDED
----------------------------------------------- -----------------------------------------------
MAR 31 JUN 30 SEP 30 DEC 31 MAR 31 JUN 30 SEP 30 DEC 31
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Revenue ..................... $ 186,095 $246,106 $288,606 $ 328,115 $206,796 $238,688 $301,092 $312,446
Gross profit, excluding
depreciation and
amortization ............... 33,129 59,878 70,093 82,710 44,699 60,419 73,332 76,773
Operating income (loss) ..... (13,599) 20,011 26,289 (4,441) 12,661 26,010 34,735 33,771
Net income (loss) ........... (12,099) 9,395 13,413 (24,624) 4,352 12,177 17,146 11,051
Basic earnings (loss)
per share .................. $ (0.44) $ 0.34 $ 0.49 $ (0.90) $ 0.16 $ 0.44 $ 0.61 $ 0.39
Diluted earnings (loss)
per share .................. $ (0.44) $ 0.33 $ 0.48 $ (0.90) $ 0.16 $ 0.43 $ 0.60 $ 0.38
</TABLE>

We believe that the effects of inflation have not had a significant impact
on our results of operations or financial condition. However, the results of
operations have been impacted due to the devaluation in Brazil (see Note 1).
MasTec's results of operations have historically been seasonally weaker in the
first and fourth quarters of the year and have produced stronger results in the
second and third quarters.

The first quarter of 1998 was negatively affected by severe weather, $4.0
million related to bad debts incurred in North American operations and $13.4
million of severance expenses related to our Spanish operations.

The fourth quarter of 1998 includes a non-recurring $33.8 million charge
for payments made pursuant to employment and non-competition agreements entered
into with management of our internal and external communication services
segment and $1.4 million expense for start-up costs.

48
<PAGE>

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1998 AND 1999

NOTE 13--QUARTERLY INFORMATION (UNAUDITED)--(CONTINUED)

resolve issues arising from the original price paid for the acquisition of
their businesses and issues relating to these managers' roles within our
company, as well as to preserve the goodwill of the acquired businesses. These
issues arose primarily from a significant decline in the value of the MasTec
shares these managers received between the time when we bought their businesses
and the expiration of the period when they were restricted from sale of the
shares. Because neither these payments nor the agreements were contemplated,
included or required under the original terms of the business acquisitions and
could not be attributed to future services, these payments were recorded as
operating expenses in 1998, rather than deferred or amortized.

During the fourth quarter of 1998, we sold at a loss of $9.2 million
($17.0 million net of taxes) 87% of our Spanish operations.

In the fourth quarter of 1999, we recorded a $4.0 million write-down of
our investment in Conecel based upon a publicly announced purchase of a
controlling interest in Conecel by an unaffiliated purchaser. Additionally, we
recorded a $2.0 million write-down related to an ancillary international asset,
start-up expenses of $2.2 million related to our Paraguayan PCS system and a
$2.0 million foreign currency transaction loss related to a note receivable
resulting from the sale of the Spanish operation.

* * * * * * * * * * * *

49
<PAGE>

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding our executive officers is included in this Annual
Report under the caption "Executive Officers of the Registrant." Information
regarding our directors and nominees for directors will be contained in our
Proxy Statement relating to the 2000 Annual Meeting of Shareholders to be filed
with the Securities and Exchange Commission on or before April 30, 2000 (the
"Proxy Statement"), and is incorporated in this Annual Report by reference.

EXECUTIVE COMPENSATION

Information regarding compensation of our executive officers will be
contained in the Proxy Statement and is incorporated in this Annual Report by
reference, except the Compensation Committee Report and Performance Graph
contained in the Proxy Statement, which are not incorporated in this Annual
Report by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding the ownership of our common stock will be
contained in the Proxy Statement and is incorporated in this Annual Report by
reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions
will be contained in the Proxy Statement and is incorporated in this Annual
Report by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements - The financial statements and the
reports of our Certified Public Accountants are listed on page
24 and included on pages 25 through 49.

2. Financial Statements Schedules - The financial statement
schedule information required by Item 14(a)(2) is included as
part of "Note 3 - Accounts Receivable" of the Notes to
Consolidated Financial Statements.

3. Exhibits including those incorporated by reference:

EXHIBIT
NO.* DESCRIPTION
- ------- -----------

3.1 Articles of Incorporation, filed as Appendix B to our definitive Proxy
Statement for our 1998 Annual Meeting of Stockholders dated April
14, 1998 and filed with the Securities and Exchange Commission on April
14, 1998, and incorporated by reference herein.

3.2 By-laws, filed as Exhibit 3.2 to MasTec's Form 8-K dated May 29, 1998
and filed with the Commission on June 26, 1998, and incorporated by
reference herein.

50
<PAGE>

4.1 7 3/4% Senior Subordinated Notes Due 2008 Indenture dated as of
February 4, 1998, filed as Exhibit 4.2 to MasTec's Registration
Statement on Form S-4 (file No. 333-46361) and incorporated by
reference herein.

10.1 Stock Option Agreement dated March 11, 1994 between MasTec and Arthur
B. Laffer, filed as Exhibit 10.6 to MasTec's Form 10-K for the year
ended December 31, 1995 and incorporated by reference herein.

10.2 Stock Option Agreement dated December 29, 1997 between MasTec and Henry
N. Adorno, filed as Exhibit 10.2 to MasTec's Form 10-K for the year
ended December 31, 1997 and incorporated by reference herein.

10.3 Stock Option Agreement dated December 29, 1997 between MasTec and
Joel-Tomas Citron, filed as Exhibit 10.3 to MasTec's Form 10-K for the
year ended December 31, 1997 and incorporated by reference herein.

10.4 Revolving Credit Agreement dated as of June 9, 1997 between MasTec,
certain of its subsidiaries, and Bank Boston, N.A. as agent, filed as
Exhibit 10.4 to MasTec's Form 10-K for the year ended December 31, 1998
(the "1998 10-K") and incorporated by reference herein.

10.5 Agreement dated July 21, 1997 between MasTec and Inepar S/A Industrias
e Construcoes, filed as Exhibit 10.5 to MasTec's Form 10-K for the year
ended December 31, 1997 and incorporated by reference herein.

10.6 First Amendment to Revolving Credit Agreement, filed as Exhibit 10.1 to
MasTec's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998 and incorporated by reference herein.

10.7 Second, Third, Fourth and Fifth Amendments to Revolving Credit
Agreement filed as Exhibit 10.7 to our 1998 10-K and incorporated by
reference herein.

10.8 Agreement between Joel-Tomas Citron and MasTec dated as of November 18,
1998 filed as Exhibit 10.8 to our 1998 10-K and incorporated by
reference herein.

10.9 Stock purchase and sale agreement dated as of December 31, 1998 between
MasTec and a group of investors regarding the sale of MasTec's Spanish
operations 1998 filed as Exhibit 10.9 to our 1998 10-K and incorporated
by reference herein.

10.10 1994 Stock Option Plan for Non-Employee Directors filed as an Appendix
to our definitive Proxy Statement for our 1993 Annual and Special
Meeting of Stockholders, dated February 10, 1994 and filed with the
Securities and Exchange Commission on February 11, 1994 and
incorporated by reference herein.

21.1 Subsidiaries of MasTec.

27.1 Financial Data Schedule

- --------------------------------
* Exhibits filed with the Securities and Exchange Commission. The registrant
agrees to provide these exhibits supplementally upon request.

(b) Reports on Form 8-K:

None.

51
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on February 3, 2000.

MASTEC, INC.

/s/ CARMEN M. SABATER
---------------------
Carmen M. Sabater
Senior Vice President - Chief
Financial Officer
(Principal Financial Officer)

/s/ ARLENE VARGAS
------------------------------
Arlene Vargas
Vice President and Controller
(Principal Accounting Officer)

POWER OF ATTORNEY

The undersigned directors and officers of MasTec, Inc. hereby
constitute and appoint Carmen M. Sabater and Jose Sariego and each of them with
full power to act without the other and with full power of substitution and
resubstitution, our true and lawful attorneys-in-fact with full power to execute
in our name and behalf in the capacities indicated below this Annual Report on
Form 10-K and any and all amendments thereto and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and hereby ratify and confirm all that such
attorneys-in-fact, or any of them, or their substitutes shall lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on February 3, 2000.

/S/ JORGE MAS
- -------------------------------- -------------------------------
Jorge Mas, Chairman of the Board Joseph P. Kennedy, II, Director

/S/ JOEL-TOMAS CITRON
- -------------------------------- -----------------------------
Joel-Tomas Citron, Vice Chairman, William N. Shiebler, Director
President and Chief Executive
Officer (Principal Executive
Officer)

/S/ ELIOT C. ABBOTT
- -------------------------------- -----------------------
Eliot C. Abbott, Director Olaf Olafsson, Director

/S/ ARTHUR B. LAFFER /S/ JOSE S. SORZANO
- -------------------------------- -------------------------
Arthur B. Laffer, Director Jose S. Sorzano, Director

52
<PAGE>

EXHIBIT INDEX

EXHIBIT DESCRIPTION
- ------- -----------
21.1 Subsidiaries of MasTec.

27.1 Financial Data Schedule

Exhibit 21.1

Set forth below is a list of the significant subsidiaries of MasTec.

MasTec North America, Inc.
MasTec Latin America, Inc.
MasTec Inepar S/A Sistemas de Telecomunicacoes
LatLink Corporation

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 27,635
<SECURITIES> 0
<RECEIVABLES> 261,310
<ALLOWANCES> 9,734
<INVENTORY> 14,264
<CURRENT-ASSETS> 393,861
<PP&E> 255,895
<DEPRECIATION> 102,368
<TOTAL-ASSETS> 728,409
<CURRENT-LIABILITIES> 158,490
<BONDS> 199,777
0
0
<COMMON> 2,833
<OTHER-SE> 254,000
<TOTAL-LIABILITY-AND-EQUITY> 728,409
<SALES> 1,059,022
<TOTAL-REVENUES> 1,059,022
<CGS> 803,799
<TOTAL-COSTS> 148,046
<OTHER-EXPENSES> 10,092
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,673
<INCOME-PRETAX> 79,810
<INCOME-TAX> 33,266
<INCOME-CONTINUING> 44,726
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,726
<EPS-BASIC> 1.61
<EPS-DILUTED> 1.57

</TABLE>