EXHIBIT 99.1

Vesper Holding Companies

Index

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Vesper Holding S.A and Vesper Holding Sao Paulo S.A.:

We have audited the accompanying combined consolidated balance sheets of Vesper Holding S.A. (a Brazilian corporation) and Subsidiaries and Vesper Holding Sao Paulo S.A. (a Brazilian corporation) and Subsidiaries (together, the Vesper Holding Companies, see Note 1) as of December 31, 2000 and 1999, and the related combined consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the year ended December 31, 2000 and for the period from January 18, 1999 (inception) to December 31, 1999. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Vesper Holding Companies as of December 31, 2000 and 1999 and the results of their operations and their cash flows for the year ended December 31, 2000 and for the period from January 18, 1999 (inception) to December 31, 1999 in conformity with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

San Diego, California
January 15, 2001 (except with respect to the matters discussed in
   Notes 1, 2 and 4, as to which the date is November 13, 2001)

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VESPER HOLDING COMPANIES
COMBINED CONSOLIDATED BALANCE SHEETS
(In thousands)

See accompanying notes.

2

VESPER HOLDING COMPANIES
COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)

See accompanying notes.

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VESPER HOLDING COMPANIES
COMBINED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(In thousands)

See accompanying notes.

4

VESPER HOLDING COMPANIES
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

See accompanying notes.

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VESPER HOLDING COMPANIES
NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2001 (unaudited), December 31, 2000 and 1999

Note 1. Vesper Holding Companies Operations and Liquidity

         Vesper Holding S.A. (Vesper Northeast) and Vesper Holding Sao Paulo S.A. (Vesper Sao Paulo) were formed by Velocom Inc. (Velocom), Bell Canada International, Inc. (BCI) and QUALCOMM, Incorporated (QUALCOMM) to act as holding companies and to establish the operating companies Vesper S.A. (formerly Canbra Telefonica S.A.) and Vesper Sao Paulo S.A. (formerly Megatel S.A.), together referred to herein as the Vesper Holding Companies. Vesper Northeast and Vesper Sao Paulo were organized under the laws of Brazil as corporations in September 1998 and May 1999, respectively (Vesper Northeast having remained dormant from September 2, 1998 to January 18, 1999). The operating companies are subject to the laws and regulations governing telecommunication services in effect in Brazil.

         Vesper Northeast and Vesper Sao Paulo submitted bids for two competitive local exchange carrier licenses (the Licenses) for commercial operations of switched fixed telephone services, one in Rio de Janeiro and the North and Northeast regions of Brazil comprised of sixteen Brazilian states, and one for the State of Sao Paulo, Brazil, respectively. Vesper Northeast and Vesper Sao Paulo were awarded their respective Licenses in public auctions held on January 18, 1999 and May 5, 1999, respectively. Commercial switched fixed telephone operations started in January 2000 for Vesper Northeast and February 2000 for Vesper Sao Paulo.

         From inception to December 31, 2000, the Vesper Holding Companies generated an accumulated deficit of approximately $541 million and negative cash flows from operations totaling approximately $488 million. At December 31, 2000 current liabilities exceeded current assets by approximately $69 million. From inception to September 30, 2001, the unaudited accumulated deficit was approximately $1.25 billion and unaudited cumulative negative cash flows from operations totaled approximately $731 million. At September 30, 2001, unaudited current liabilities exceeded current assets by approximately $240 million and unaudited stockholders’ deficit totaled approximately $375 million. The Vesper Holding Companies expect to incur substantial future losses and negative cash flows from operations during the development, construction, and expansion of their business in an effort to generate a sufficient customer revenue basis to cover switched fixed telephone service operating expenses in initial markets under the Licenses. The Vesper Holding Companies expect further continuing operating losses and negative cash flows from operations upon expansion of operations into new markets, even if and after they achieve positive cash flows from operations in the Vesper Holding Companies’ initial markets.

Note 2. Subsequent Recapitalization and Debt Restructuring of the Vesper Holding Companies

         On October 11, 2001, Vesper Holding, Ltd. (the Parent) was incorporated in the Cayman Islands. On November 13, 2001, QUALCOMM, VeloCom, and BCI (collectively, the Shareholders), entered into agreements to exchange all of their equity interests in Vesper Northeast and Vesper Sao Paulo for 2,523,674 ordinary shares and 1,155,152 special voting shares of the Parent. As part of the same transaction, QUALCOMM and VeloCom converted other previously existing advances to Vesper Northeast and Vesper Sao Paulo into 12,177,290 ordinary shares of the Parent for an aggregate value of $60 million. QUALCOMM and VeloCom also agreed to purchase 57,720,404 ordinary shares of the Parent for an aggregate purchase price of $286 million. As a result, QUALCOMM, VeloCom, and BCI became 74%, 24%, and 2% shareholders in the Parent, respectively, and Vesper Holding and Vesper Holding Sao Paulo became wholly-owned subsidiaries of the Parent. Also in November 2001, QUALCOMM converted a previously existing promissory note receivable into equity securities of VeloCom, thereby increasing its ownership interest in VeloCom to 49.9% and, as a consequence, increasing QUALCOMM’s direct and indirect ownership of the Parent to approximately 86%. At November 13, 2001, cash proceeds totaling $135 million out of the total due of $286 million were received by the Parent from QUALCOMM and VeloCom. The remaining $151 million is due and payable by QUALCOMM on an as needed basis.

         Effective November 13, 2001, the Parent entered into a restructuring agreement (the Restructuring Agreement) between itself and its Shareholders and Nortel, Ericsson, Lucent, Harris Corporation and QUALCOMM (collectively, the Vendors). The Restructuring Agreement resulted in a reduction of over $1 billion in debt on the Vesper Holding Companies’ balance sheet. Using proceeds from the recapitalization transactions described in the

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preceding paragraph, the Vendors, excluding QUALCOMM, were paid approximately $135 million in exchange for a release in full of any claims against the Parent and its shareholders, including Vendor financing approximating $ 1.08 billion at November 13, 2001 (see also Note 4). In addition to the cash payment, the Vendors, excluding QUALCOMM, received 5,687,717 warrants for ordinary shares of the Parent, which expire on November 9, 2006 and have an exercise price of $4.96 per share. The warrants were assigned a fair value of $5 million.

         As a condition precedent to the closing of the Restructuring Agreement, vendor supply agreements were terminated. Thus, the Parent and the Vesper Holding Companies are no longer committed to acquire the remaining balances of equipment and services, as would have been required under the original vendor supply agreements (see Note 4).

         When all transactions contemplated in the restructuring agreements are completed, the liquidity and financial position of the Vesper Holding Companies will significantly improve. However, management and the shareholders of the Parent believe that successive increases in funding, in the form of equity capital, shareholder loans, debt financing or other instruments, beyond amounts received and committed through November 13, 2001, will be needed. In particular, additional financing will be necessary to purchase telecommunications capital equipment, fund principal and interest payments under debt and lease structures and to support operations until such time, if ever, that the Vesper Holding Companies are able to generate positive cash flows from operations. Management of the Vesper Holding Companies remains confident, given the current economic and financing conditions in Brazil, that the Vesper Holding Companies will be able to secure additional financing to bridge any funding gaps through December 2002. There is no assurance that the Parent or the Vesper Holding Companies will be able to obtain such financial resources on acceptable terms, if at all, and the Parent may be dependent upon its shareholders to provide such capital resources. Without additional capital resources, the conditions existing at November 13, 2001 raise substantial doubt about the Vesper Holding Companies’ ability to continue as a going concern. In this regard, QUALCOMM delivered to the Parent’s board of directors a written assurance that QUALCOMM intends to continue its support of the Parent sufficient to allow the Vesper Holding Companies to continue operating at least through December 31, 2002. This assurance is in addition to the $151 million receivable by the Parent for the sale of ordinary shares to QUALCOMM discussed above.

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

         The accompanying financial statements reflect the historical combined consolidated financial position, results of operations and cash flows of the Vesper Holding Companies, for all periods since the inception of Vesper Northeast and Vesper Sao Paulo, in January 1999 and May 1999, respectively, prior to giving effect the purchase transaction described in Note 2.

         The consolidated financial statements of Vesper Northeast include the accounts of its wholly owned subsidiaries Vesper S.A. and Vesper Cayman S.A. The consolidated financial statements of Vesper Sao Paulo include the accounts of its wholly owned subsidiaries Vesper Sao Paulo S.A. and Vesper Sao Paulo Cayman S.A. All significant intercompany accounts and transactions have been eliminated in consolidation and combination.

         All amounts as of and for the nine months ending September 30, 2000 and 2001 included in the notes to the combined consolidated financial statements are unaudited. The accompanying unaudited combined consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with the instructions to Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. All significant intercompany accounts and transactions have been eliminated in consolidation and combination. Operating results for the nine months ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001.

Use of Estimates

         The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and

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liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Revenues

         Revenues for usage charges, network usage charges and other customer services are recognized when the services are provided.

         Customer activation fee revenues and related costs are deferred and amortized over the period of the customer relationship, which is estimated to be two years.

Cash and Cash Equivalents

         The Vesper Holding Companies consider all highly liquid investments with original maturities of three months or less to be cash equivalents.

Property, Plant and Equipment

         Property, plant and equipment are recorded at cost and are depreciated or amortized using the straight-line method over their estimated useful lives. Buildings and improvements are depreciated for up to twenty-five years, equipment and vehicles are depreciated over three to twenty years, furniture and office equipment are depreciated over five to ten years and computer software and hardware are depreciated over five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining term of the related lease. Maintenance, repairs, and minor renewals and betterments are charged to expense as incurred.

         Upon the retirement or disposition of property, plant and equipment, the related cost and accumulated depreciation and amortization are removed and any resulting gain or loss is recorded in operations.

         Capital leases and sale leaseback transactions are recorded as vendor financing and loans payable. The purchase price is recorded as property and equipment, and lease payable amounts as financing liabilities. Interest is expensed as incurred.

         Construction in progress includes labor, material, transmission and related equipment, engineering, site development, capitalized interest and other costs relating to the construction and development of switched fixed telephone networks. The Company reclassifies construction in progress and begins depreciating related equipment upon commencement of commercial operations of the equipment.

Intangible Assets

         Intangible assets consist primarily of acquisition cost for Licenses for spectrum and are recorded at cost. The Licenses were allocated conditionally through January 2019 and May 2019 and are each renewable for an additional twenty-year period. The Licenses are renewable provided that the licensee has complied with applicable rules and policies of Agencia Nacional de Telecommunicacoes (ANATEL), the Brazilian Government regulatory body, and upon payment of an additional fee based on a specific formula. The cost of such licenses is being amortized on a straight-line basis over the initial twenty-year terms of the Licenses.

Long-Lived Assets

         The Vesper Holding Companies assess potential impairments to their long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. An impairment loss is recognized when the undiscounted cash flows expected to be generated by an asset (or group of assets) is less than its carrying amount. Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value, and is recorded as a reduction in the carrying value of the related asset and a charge to operating results.

Start-up Activities and Organization Costs

         Costs of start-up activities and organization costs are expensed as incurred.

Foreign Currency

         The functional currency of Vesper Holding Companies is the Brazilian real, which is the currency of the country in which they operate. Assets and liabilities are translated to United States dollars at year-end or historical exchange rates; capital stock and accumulated deficit are translated at historical exchange rates; and revenues, expenses, gains and losses are translated at rates of exchange that approximate the rates in effect at the transaction date. Resulting translation adjustments are recognized as a component of other comprehensive

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income. Transactions denominated in currencies other than the Brazilian real are recorded based on the exchange rate at the time such transactions occur. Subsequent changes in exchange rates result in transaction gains and losses. The resulting transaction gains or losses are recognized as a component of net loss.

Income Taxes

         The Company recognizes deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets, liabilities and carryovers. The Company recognizes deferred tax assets for the expected future effects of all deductible temporary differences, loss carryovers and tax credit carryovers. Net deferred tax assets are then reduced, if deemed necessary, by a valuation allowance if management believes it is more likely than not that some or all of the net deferred tax assets will not be realized.

Comprehensive Income (Loss)

         Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments. The Vesper Holdings Companies present other comprehensive loss in the combined consolidated statements of shareholders’ equity.

Concentration of Operations

         Vesper Holding Companies’ operations are located in Brazil. The Vesper Holding Companies are exposed to credit and currency risks resulting from adverse general economic conditions, which may affect Brazil and Latin America in general. The Vesper Holding Companies have not entered into any foreign currency forward contracts, hedges or other instruments to mitigate currency risks.

Fair Value of Financial Instruments

         Fair values of cash equivalents and other current amounts receivable and payable approximate the carrying amount due to their short-term nature. Carrying amounts under vendor financing and loans payable approximate fair value based on borrowing arrangements available to the Company (see Notes 2 and 4).

         The Vesper Holding Companies have certain agreements with suppliers of network interface unit for the supply of network equipment manufactured locally, under which acquisition cost of related products are denominated in U.S. dollars. The Companies do not enter into currency hedging arrangements, thus exposing the Companies to currency rate risk on amounts payables in denominations other than the functional currency. Gains and losses arises from this exposure are recorded in the determination of net income.

Recent Accounting Pronouncements

         In December 1999, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, “Views on Selected Revenue Recognition Issues” (SAB 101), which provides the staff’s views in applying generally accepted accounting principles to revenue recognition issues. The Vesper Holding Companies adopted SAB 101 effective as of January 1, 2000. The Company did not report any revenue during the period from inception to December 31, 1999.

         In July 2001, the Financial Accounting Standards Board (FASB) issued FASB Statements Nos. 141 and 142 (FAS 141 and FAS 142), “Business Combinations” and “Goodwill and Other Intangible Assets,’’ respectively. FAS 141 replaces APB 16 and eliminates pooling-of-interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and accounting for negative goodwill. FAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Under FAS 142, goodwill will be tested annually and whenever events or circumstances occur indicating that goodwill might be impaired. FAS 141 and FAS 142 are effective for all business combinations completed after June 30, 2001. Upon adoption of FAS 142, amortization of goodwill recorded for business combinations consummated prior to July 1, 2001 will cease, and intangible assets acquired prior to July 1, 2001 that do not meet the criteria for recognition under FAS 141 will be reclassified to goodwill. Companies are required to adopt FAS 142 for fiscal years beginning after December 15, 2001, but early adoption is permitted. The Vesper Holding Companies will adopt FAS 142 as of the beginning of fiscal 2002 and do not expect the adoption of FAS 142 to have a material effect on their

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consolidated financial position and results of operations, given that no goodwill has been recorded in the accompanying balance sheets.

         In August 2001, the FASB issued FAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” FAS 144 replaces FAS 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” The FASB issued FAS 144 to establish a single accounting model, based on the framework established in FAS 121, as FAS 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under APB 30, “Reporting The Results of Operations – Reporting The Effects of Disposal of a Segment of a Business, and Extraordinary Unusual and Infrequently Occuring Events and Transactions.” FAS 144 also resolves significant implementation issues related to FAS 121. Companies are required to adopt FAS 144 for fiscal years beginning after December 15, 2001, but early adoption is permitted. The Vesper Holding Companies will adopt FAS 144 as of the beginning of fiscal 2002 and do not expect the adoption of FAS 144 to have a material effect on their consolidated financial position or results of operations.

Note 4. Vendor Financing and Loans Payable

         The Vesper Holding Companies have vendor financing and loans payable as follows (in thousands):

         In December 1999, Vesper Northeast entered into a series of agreements with Nortel, Ericsson, Harris Corporation and QUALCOMM to issue up to $997 million in aggregate principal of long-term vendor financing, of which $549 million (unaudited), $386 million and $270 million in principal was outstanding as of September 30, 2001, and December 31, 2000 and 1999, respectively. Interest on these notes was payable quarterly in arrears commencing March 2000 at LIBOR plus 6% per annum. In December 1999 Vesper Sao Paulo entered into agreements with Lucent to issue up to $782 million of long-term vendor financing (available in three separate tranches), of which $338 million (unaudited), $252 million and $145 million in principal was outstanding as of September 30, 2001 and December 31, 2000 and 1999, respectively. Interest on these notes was payable quarterly, at the option of the Vesper Companies, at LIBOR plus 6% for tranche A and 8% for tranche C or a compounded rate of 5.5% plus the higher of prime rate and the Federal Funds effective rate. All long-term vendor financing, other than financing provided under an agreement with QUALCOMM, was restructured and retired in November 2001 as part of the Restructuring Agreement (see Note 2).

         The terms of bank loans and notes were amended as part of the restructuring in November 2001 (see Note 2). After restructuring, the bank loans bear interest at the Certificate of Deposit Inter Bank (CDI) rate (the LIBOR rate equivalent in Brazil) plus 1.5% (approximately 20.5% at September 30, 2001) and are payable in lump-sum payments approximating $20 million in 2004 and $60 million in 2005. The bank loans are subject to certain restrictive financial covenants.

         Equipment leases are subject to interest from 11% to 14.5% or LIBOR plus additional interest varying from 1.5% to 8%. As of the date of the restructuring in November 2001, equipment leases are payable as follows: $17.7 million in 2002; $18.5 million in 2003; $3.5 million in 2004; $1.0 million in 2005; and $0.4 million thereafter.

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         Substantially all of the Companies’ assets are collateralized under the various financing agreements discussed above.

         The Vesper Holding Companies have not historically hedged foreign currency denominated debt. Substantially all vendor financing is denominated in US dollars. Accordingly, the Company has experienced significant economic loss and a negative impact on earnings and equity with respect to its holdings solely as a result of foreign currency exchange rate fluctuations, reflecting local currency devaluations against the US dollar. If the Vesper Holding Companies were to enter into hedging transactions, there can be no assurance that any such hedging transactions would be successful and that the exchange rate fluctuations would not have a material adverse effect on the Vesper Holding Companies.

         The Vesper Holding Companies hired specialized companies to supply infrastructure and telecommunication equipment, which will be delivered ready for use at the sites indicated by the Vesper Holding Companies. When the equipment is delivered to the respective sites, the property and equipment balance is recorded and the related liability is recorded in trade accounts payable, as a long-term liability, the balance of which, after the definitive acceptance of the site by the Vesper Holding Companies, is converted into financing, according to the conditions noted above.

         Cash paid for interest was $43 million (unaudited), $63 million and none for the nine months ended September 30, 2001, the year ended December 31, 2000 and the period from inception to December 31, 1999.

         Note 5. Composition of Certain Financial Statement Captions

Accounts Receivable, Net

         Unbilled accounts receivable relate to services rendered that had not been invoiced as of the balance sheet date.

Recoverable Taxes

         Recoverable taxes are mainly comprised of Value Added Taxes (VAT) incurred on the acquisition of property and equipment, which is recoverable against VAT payable on operating revenues. Beginning January 1, 2001, new VAT legislation requires that VAT tax credit generated after January 2, 2001 will be recovered in forty-eight monthly installments, if VAT tax payment is applicable.

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Property, Plant and Equipment

         The Vesper Holding Companies recorded a provision for losses related to installed equipment held by customers, which upon discontinuation of the services is considered unlikely to be recovered, as a component of depreciation and amortization totaling approximately $4 million (unaudited), $23 million, and $0 for the nine months ended September 30, 2001, for the year ended December 31, 2000, and for the period from inception to December 31, 1999, respectively.

Intangible Assets

         Amortization of intangible assets commenced in 2000 upon activation of the network.

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Note 6. Transactions with Related Parties