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UNITED STATES

FORM 10-K

(Mark One)

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2003

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to

Commission File Number 0-19603

CENTENNIAL COMMUNICATIONS CORP.

Registrant’s telephone number, including area code:     (732) 556-2200

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

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

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

      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.     o

      Indicate by check mark if the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes     o     No     þ

      As of August 4, 2003, there were 95,857,352 shares of common stock outstanding. The aggregate market value of the common stock held by non-affiliates of the Company, based upon the last reported sale price on the Nasdaq National Market on November 29, 2002, of $2.99 per share, was $33,522,651.

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DOCUMENTS INCORPORATED BY REFERENCE

      Certain portions of the Company’s Proxy Statement to be filed with the U.S. Securities and Exchange Commission, or SEC, pursuant to Rule 14a-6 under the Securities Exchange Act of 1934, as amended, in connection with the Company’s 2003 Annual Meeting of Stockholders are incorporated by reference in Part III, Items 10-14 of this Annual Report on Form 10-K.

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CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR”

      This report contains or incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements in this report that are not historical facts are hereby identified as “forward-looking statements.” Where, in any forward-looking statement, we or our management expresses an expectation or belief as to future results or actions, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Our actual results may differ materially from our expectations, plans or projections. Forward-looking statements can be identified by the use of the words “believe,” “expect,” “estimate,” “anticipate,” “project,” “intend,” “may,” “will” and similar expressions, or by discussion of competitive strengths or strategy that involve risks and uncertainties. We warn the reader that these forward-looking statements are only predictions and estimates, which are inherently subject to risks and uncertainties.

      Important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, us include, but are not limited to:

	•	our substantial debt obligations;
	•	the availability and cost of additional capital to fund our operations, including the need to refinance and/or amend existing indebtedness;
	•	restrictive covenants and consequences of default contained in our financing arrangements, which place limitations on how we conduct business;
	•	the competitive nature of the telecommunications industry in the areas in which we operate, including, without limitation, the effect of existing and new competitors, including competitors that may have a lower cost basis or greater resources than we do, competitors that may offer less expensive products than we do and competitors that may offer more technologically advanced products than we do;
	•	market prices for the products and services we offer may continue to decline in the future;
	•	general economic, business, political and social conditions in the areas in which we operate, including the Caribbean region, including the effects of world events and weather conditions on tourism in the Caribbean;
	•	continued overbuilding by personal communications service providers in our U.S. wireless markets and the effects of increased competition in our markets, which may cause a reduction in roaming revenue, increased subscriber cancellations, a continued reduction of prices charged and lower average revenue per subscriber;
	•	fluctuations in currency values;
	•	our dependence on roaming agreements for a material portion of our U.S. wireless revenue and the continued price declines in roaming rates and potential reduction of roaming minutes of use;
	•	our ability to attract and retain qualified personnel;
	•	the fact that our coverage areas are not as extensive as those of other wireless operators which may limit our ability to attract and retain customers;
	•	the effects of consolidation in the wireless communications industry;
	•	the effects of governmental regulation of the telecommunications industry;
	•	the capital intensity of the telecommunications industry, including our plans to make significant capital expenditures during the coming years to continue to build out and upgrade our networks and the availability of additional capital to fund these capital expenditures;
	•	declining rates for international long distance traffic;

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	•	opportunities for growth through acquisitions and investments and our ability to manage this growth;
	•	changes and developments in technology, including our ability to upgrade our networks to remain competitive and our ability to anticipate and react to frequent and significant technological changes;
	•	our ability to effectively manage subscriber cancellations, particularly in light of regulations scheduled to take effect November 2003 requiring wireless companies to permit the phone numbers that they allocate to their customers to be portable when the customer switches to another carrier, which may increase movement of customers between competitors and consequently the cancellation by our subscribers of our services, which we refer to as “churn,” and present technological difficulties;
	•	local operating hazards and risks in the areas in which we operate, including without limitation, hurricanes, tornadoes, windstorms and other natural disasters;
	•	our ability to manage, implement and monitor billing and operational support systems;
	•	potential litigation relating to using wireless telephones while operating an automobile and the potential reduction of wireless usage due to legislation restricting usage while driving;
	•	potential litigation relating to possible health effects of radio frequency transmission;
	•	the relative illiquidity and corresponding volatility of our common stock and our ability to raise future equity capital;
	•	the control of us retained by some of our stockholders and anti-takeover provisions; and
	•	other factors described in this report.

      We undertake no obligation, other than as may be required under the federal securities laws, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We do not assume responsibility for the accuracy and completeness of the forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, any or all of the forward-looking statements contained in this report and in any other public statements that are made may prove to be incorrect. This may occur as a result of inaccurate assumptions as a consequence of known or unknown risks and uncertainties. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the caption “Risk Factors” under Item 1 of this report. We caution that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict these new risk factors, nor can we assess the impact, if any, of the new risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied by any forward-looking statement. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur. Any investor or potential investor in our securities should carefully read this report and the documents incorporated by reference in their entirety.

CERTAIN DEFINITIONS

      The terms “Centennial,” the “Company,” “our” and “we” as used in this report refer to Centennial Communications Corp. and its subsidiaries on a consolidated basis. The term “Centennial Cellular” refers to Centennial Cellular Operating Co. LLC, a direct, wholly owned subsidiary of Centennial. The term “Centennial Puerto Rico” refers to Centennial Puerto Rico Operations Corp., one of our subsidiaries.

      When we say “fiscal 2001,” we mean our fiscal year which began June 1, 2000, and ended May 31, 2001. When we say “fiscal 2002,” we mean our fiscal year which began June 1, 2001, and ended May 31, 2002. When we say “fiscal 2003,” we mean our fiscal year which began June 1, 2002, and ended May 31, 2003. When we say “fiscal 2004,” we mean our fiscal year which began June 1, 2003, and will end May 31, 2004. When we say “fiscal 2005,” we mean our fiscal year which will begin June 1, 2004, and will end May 31, 2005. When we say “fiscal 2006,” we mean our fiscal year which will begin June 1, 2005, and will end May 31, 2006.

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      The term “Pops” refers to the population of a market derived from the 2002 Kagan’s Wireless Telecom Atlas and Database, for our U.S. and Puerto Rico service areas, or the Banco Central De La Republica Dominicana, Departmento de Cuentas Nacionales, for our Dominican Republic service area. The term “Net Pops” refers to a market’s Pops multiplied by the percentage interest as of May 31, 2003, that we own in an entity licensed to construct or operate a wireless telephone system in that market.

      In this report, we present certain financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. To improve the clarity of our disclosure, we will no longer use the terms “adjusted EBITDA” and “adjusted EBITDA margin,” which we have used in prior public statements and SEC filings, and instead will now use the terms “adjusted operating income” and “adjusted operating income margin.” This is a change in name only, and we have not changed the way we calculate current or prior results for this financial measure. For a detailed discussion of these non-GAAP terms, including management’s belief why these measures provide meaningful information to investors, limitations on the use of these measures and a reconciliation to comparable GAAP measures, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Non-GAAP Financial Measures.”

INDUSTRY AND MARKET DATA

      Industry and market data throughout this report were obtained through company research, surveys and studies conducted by third parties and industry and general publications. We have not independently verified market and industry data from third-party sources. While we believe internal company surveys are reliable and market definitions are appropriate, neither these surveys nor these definitions have been verified by any independent sources. We have not sought the consent of any of these sources to refer to their data in this report.

      “En Confianza,” “Centennial Te Escucha,” “Centennial Wireless,” “Centennial de Puerto Rico” and “Centennial Dominicana” are some of our primary trademarks. All other trademarks, service marks or other trade names referred to in this report are the property of their respective owners.

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PART I

Item 1.  Business

Overview

      We are a leading regional wireless and broadband (wireline and cable television) telecommunications service provider serving over one million customers in markets covering over 17.3 million Net Pops in the United States and the neighboring Caribbean. In the United States, we are a regional wireless service provider in small cities and rural areas in two geographic clusters covering parts of six states. In our Puerto Rico-based Caribbean service area, which also includes operations in the Dominican Republic and the U.S. Virgin Islands, we are a facilities-based, fully integrated communications service provider offering both wireless and, in Puerto Rico and the Dominican Republic, broadband services to business and residential customers. Below are some key statistics regarding our business:

	•	approximately 939,500 wireless subscribers, 222,356 access line equivalents and 78,200 cable subscribers at the end of fiscal 2003;
	•	revenue of $745.7 million for fiscal 2003, an increase of 4.2% from fiscal 2002;
	•	net loss of $111.9 million for fiscal 2003, as compared to a net loss of $77.5 million for fiscal 2002;
	•	adjusted operating income of $295.7 million for fiscal 2003, an increase of 17.1% from fiscal 2002, representing adjusted operating income margins of 39.7% and 35.3% for fiscal 2003 and 2002, respectively;
	•	capital expenditures in fiscal 2003 of $133.1 million, a decrease of 38.0% from fiscal 2002; and
	•	roaming revenue constituted 10.8% of total revenue in fiscal 2003, down from 13.1% in fiscal 2002.

      On June 20, 2003, we sold $500.0 million aggregate principal amount of our 10 1/8% senior unsecured notes due 2013, or Senior Notes, in a private placement transaction. Net proceeds were used to permanently repay $300.0 million of term loans under our senior credit facility, $170.0 million of our revolving credit facility under our senior credit facility and the balance to pay fees and expenses related to the transaction. In connection with the sale of our Senior Notes, we amended our senior credit facility to provide us with additional flexibility under the financial and other covenants in the senior credit facility. See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

      We were organized in 1988. Our principal corporate office is located at 3349 Route 138, Wall, New Jersey 07719. Our phone number is (732) 556-2200 and our websites are www.centennialwireless.com, wwwcentennialpr.com and www.centennialrd.com.

Our Operations

      Our consolidated financial statements include three distinct business segments: U.S. wireless, Caribbean wireless and Caribbean broadband. See Note 14 to the consolidated financial statements.

      In the United States, we provide digital wireless service in two geographic clusters, covering approximately 6.1 million Net Pops. Our Midwest cluster includes parts of Indiana, Michigan and Ohio, and our Southeast cluster includes parts of Louisiana, Mississippi and Texas. Our clusters are comprised of small cities and rural areas that generally have lower penetration levels and fewer competitors than major metropolitan areas. Through clustering, we believe we are able to achieve critical mass and operating efficiencies while developing a respected brand image within our service areas. Further, these clusters are near major metropolitan markets, and we benefit from the traffic generated by subscribers of other wireless service

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	•	approximately 540,900 wireless subscribers at the end of fiscal 2003, of which 96% were postpaid;
	•	revenue of $353.2 million for fiscal 2003, an increase of 0.6% from fiscal 2002;
	•	operating income of $125.9 million for fiscal 2003, as compared to $103.1 million for fiscal 2002;
	•	adjusted operating income of $160.4 million for fiscal 2003, an increase of 7.7% from fiscal 2002, representing adjusted operating income margins of 45.4% and 42.4% in fiscal 2003 and 2002, respectively;
	•	capital expenditures of $44.2 million in fiscal 2003, an increase of 43.8% from fiscal 2002;
	•	total monthly revenue (including roaming revenue) per wireless subscriber, or ARPU, of $55 for fiscal 2003 and $56 for fiscal 2002; and
	•	postpaid churn of 2.0% and 2.2% for fiscal 2003 and 2002, respectively, and 1.7% for the three months ended May 31, 2003, down from 1.8% for the same period in 2002.

      We have long-term roaming agreements with AT&T Wireless Services, Inc. and Cingular Wireless LLC. These roaming agreements enable us to offer nationwide plans at attractive rates and provide predictable roaming revenue for us.

      We believe that the quality and coverage of our network provide us with a strategic advantage over our competitors. We own 25 MHz of spectrum in the 800 MHz frequency band in each of our U.S. wireless markets. Our network currently employs both analog and TDMA (time division multiple access) digital technology. We have begun to overlay our Midwest cluster network with GSM (global system for mobile communications) technology that will support GPRS (general packet radio service) advanced data technology and will align our technology with our largest roaming partners. We expect to launch GSM service in the Midwest cluster by the end of 2003. We intend to begin the overlay of our Southeast cluster network with GSM technology after we complete the overlay of our Midwest cluster, and we expect to launch GSM service in the Southeast cluster in 2004.

      In connection with the AT&T Wireless roaming agreement, AT&T Wireless granted us two separate options to purchase 10 MHz of spectrum covering an aggregate of approximately 4.2 million Pops in Michigan and Indiana that is contiguous to our Midwest cluster for an aggregate price of $20 million. This option provides us with the opportunity to expand our U.S. wireless operations. We are still evaluating this business opportunity, which would require us to incur additional capital expenditures if we elected to build out our network in these areas. The options expire in late 2004 and early 2005.

     Caribbean Region

      In the Caribbean region, we have an established business with attractive adjusted operating income margins, substantial adjusted operating income and significant growth potential. We offer wireless, wireline and cable television services in Puerto Rico, wireless and wireline services in the Dominican Republic and wireless services in the U.S. Virgin Islands. We derived approximately 90% of our Caribbean revenue for fiscal 2003 from our Puerto Rico operations. Puerto Rico is a U.S. dollar-denominated and Federal Communications Commission, or FCC, regulated commonwealth of the United States. We believe wireless telecommunications services are experiencing significant growth in this region due to lower wireless penetration and lower wireline teledensity as compared to other parts of the United States. We also believe that lower wireline teledensity has resulted in significant substitution of wireline services for wireless services. This is evidenced by a 29% increase in postpaid minutes of usage per month from 760 for fiscal 2002 to 981 for fiscal 2003. This compares to approximately 434 minutes, according to the Cellular Telecommunications and Internet Association, for wireless subscribers in the United States for the twelve months ended December 31, 2002. For this reason, we focus on intensive postpaid users of service generating higher ARPUs.

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      Caribbean Wireless. Our Caribbean wireless operations cover a population of approximately 13.0 million and serve Puerto Rico, the Dominican Republic and the U.S. Virgin Islands using the same digital technology, called CDMA (code division multiple access). We launched wireless services in Puerto Rico in December 1996, in the Dominican Republic in October 2000 and in the U.S. Virgin Islands in June 2001. Below are some key statistics regarding our Caribbean wireless business:

	•	approximately 398,600 wireless subscribers at the end of fiscal 2003, of which 75.4% were postpaid;
	•	revenue of $261.3 million for fiscal 2003, an increase of 11.4% from fiscal 2002;
	•	operating income of $36.8 million for fiscal 2003, as compared to an operating loss of $4.8 million for fiscal 2002;
	•	adjusted operating income of $96.6 million for fiscal 2003, an increase of 23.1% from fiscal 2002, representing adjusted operating income margins of 37.0% and 33.5% for fiscal 2003 and 2002, respectively;
	•	capital expenditures of $50.4 million for fiscal 2003, a decrease of 54.3% from fiscal 2002;
	•	wireless ARPU of $58 for fiscal 2003 and $61 for fiscal 2002; and
	•	postpaid churn of 2.7% and 2.6% for fiscal 2003 and 2002, respectively, and of 2.1% for the three months ended May 31, 2003, down from 3.0% for the same period in 2002.

      We provide wireless services in Puerto Rico pursuant to a 30 MHz license in the 1900 MHz frequency band which also covers the U.S. Virgin Islands. Our wireless network is supported by our high-capacity terrestrial and undersea fiber-optic network, which decreases our marginal network costs. In fiscal 2003, for example, our Puerto Rico wireless operating expenses per minute were 53% lower than our U.S. wireless operations, and our Puerto Rico wireless network capital expenditures for each incremental minute of use were 74% lower than those of our U.S. wireless operations.

      In the Dominican Republic, we own 80% of All America Cables and Radio, Inc., our Dominican Republic subsidiary which operates under the name “Centennial Dominicana” and holds a 30 MHz license at the 1900 MHz frequency band. Our Dominican Republic operations are experiencing significant growth, and, while adjusted operating income for fiscal 2003 was negative, it was positive in the fourth quarter of fiscal 2003.

      Caribbean Broadband. Our Caribbean broadband business includes wireline operations in Puerto Rico and the Dominican Republic and cable television operations in Puerto Rico. We launched broadband services in Puerto Rico in August 1997 and in the Dominican Republic in April 2000, and we acquired cable television operations in Puerto Rico in September 2000. Below are some key statistics and other information regarding our Caribbean broadband business:

	•	switched and dedicated access line equivalents of 222,356 at the end of fiscal 2003;
	•	approximately 78,200 cable subscribers at end of fiscal 2003;
	•	revenue of $141.3 million for fiscal 2003, an increase of 2.5% from fiscal 2002;
	•	operating loss of $199.0 million for fiscal 2003, as compared to an operating loss of $39.2 million for fiscal 2002;
	•	adjusted operating income of $38.6 million for fiscal 2003, an increase of 53.2% from fiscal 2002, representing adjusted operating income margins of 27.4% and 18.3% for fiscal 2003 and 2002, respectively;
	•	capital expenditures of $38.5 million for fiscal 2003, a decrease of 47.7% from fiscal 2002; and
	•	a client base of multinational corporations, including Cisco Systems, Inc., IBM Corporation, Lucent Technologies Inc., Microsoft Corporation, The Procter & Gamble Company and most of Puerto Rico’s wireless carriers.

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      In Puerto Rico, we have built a fully integrated communications company since our launch in 1997 and are the only significant fiber-based competitive local exchange carrier, or CLEC, on the island. We provide a full range of services, including switched voice, private line services, international long distance, data, cable television, toll-free and Internet-related services, to business and residential customers over our own fiber-optic, coaxial and microwave network. Our digital cable television system serves southern and western Puerto Rico. This digital cable system allows us to bring last mile broadband services to these less densely populated areas of Puerto Rico and enables us to bundle high speed data services with video, which we believe is an important factor in attracting and retaining customers.

      In the Dominican Republic, we have constructed a terrestrial fiber-optic network in Santo Domingo, the country’s capital, and offer broadband services there. Currently, the majority of our broadband revenue in the Dominican Republic is derived from terminating the long-distance traffic of other carriers originating in the United States.

      To complement our terrestrial fiber networks, we own significant undersea fiber-optic capacity connecting key markets in the Caribbean with our international gateway switch in Miami, Florida. This extensive fiber network allows us to offer customers with operations in our Caribbean service area low-cost, high quality, end-to-end broadband solutions. For example, we provide America Online, Inc. with telecommunications services to enable it to bring its Internet services to Puerto Rico.

Competitive Strengths

      Significant and Improving Cash Flow. Our U.S. wireless networks have been upgraded for digital TDMA technology and our GSM network build out is in progress and expected to be substantially completed by the end of 2004. The build-out of our Caribbean wireless, fiber-optic and cable television networks is substantially complete. A 38.0% decline in capital expenditures and a 17.1% increase in adjusted operating income from fiscal 2002 to 2003 have resulted in improved cash flow.

      Competitive Advantage Through Our Owned Fiber-Optic Network in the Caribbean. Our extensive terrestrial fiber-optic network supports all of our services in the Caribbean and, along with the purchased capacity we have on undersea fiber-optic cables, allows us to offer our customers a single-vendor solution for broadband connectivity to the United States. Our broadband and wireless businesses share other infrastructure, including switching equipment, and back-office functions, which we believe enables us to transmit traffic more cheaply than our competitors. We maximize this advantage by serving intensive users of telecommunication services.

      Extensive Direct Distribution. Over 84% of our wireless sales in the United States and Caribbean and substantially all of our broadband and cable television sales are made through our employees. We believe this extensive company-owned distribution network, consisting of 82 stores and 161 kiosks and 1,284 sales associates as of May 31, 2003, enables us to provide a superior sales and customer service experience to our customers. We believe our competitors rely more heavily on higher cost, indirect distribution channels.

      High Quality Network. We believe that the quality and coverage of our network contributes to our high customer retention. Our monthly postpaid customer retention rate was 98% for our U.S. wireless operations for fiscal 2003, which we believe is among the highest in the industry. Further, we are overlaying our network with GSM technology, which is the most commonly used global standard and is employed by our largest roaming partners. The primary benefits of GSM/ GPRS technology are better network capabilities and a superior selection of handsets in terms of price, functions and style.

      Market Opportunity in the Caribbean. We believe that Puerto Rico and the Dominican Republic are large, politically stable markets with lower penetration rates and lower teledensity rates than the United States for both wireless and broadband telecommunications services and present an attractive market opportunity for us.

      Geographic Focus. We believe that we are able to give our geographic markets more focused attention than the national and multinational telecommunications operators with whom we compete. Generally, our markets are not large enough to be of critical importance to national and global competitors, which we believe

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      Strong Management Team and Equity Investors. We have assembled our management team from several of the world’s leading telecommunications operators, including ALLTEL Corporation/360 Communications Co., Bell Atlantic Corporation (now Verizon Communications Inc.), SBC Communications Inc., BellSouth Corporation and Millicom International Cellular S.A. Welsh, Carson, Anderson & Stowe, or Welsh Carson, and The Blackstone Group, leading private equity investors, are controlling stockholders of Centennial.

Business Strategy

      Target High Quality Wireless Customers. We target high usage wireless customers in our Caribbean service area by offering service plans with a significant number of minutes in exchange for a higher monthly fee. We grew our postpaid customer base in our Caribbean service area by 26% in fiscal 2003. The ARPU for our Caribbean postpaid wireless customers was $76 for fiscal 2003, and bad debt expense for our Caribbean operations was 2.1% of service revenue for fiscal 2003. We believe we are able to generate high customer revenue because we provide superior customer service and we are able to offer rate plans with a large number of minutes.

      Increase Penetration of Our Broadband Business. We are the only significant facilities-based competitor to the Puerto Rico Telephone Company, or PRTC, the incumbent wireline carrier in Puerto Rico. We have laid approximately 1,500 miles of fiber-optic cable in Puerto Rico that reaches approximately 1,000 buildings. We believe that our ability to extend this extensive owned fiber-optic network directly to the customer premises enables us to quickly meet customer demands for high-bandwidth services. We believe this network, coupled with our competitive prices, allows us to capture a large share of new, high-capacity landline services in Puerto Rico. We intend to continue to leverage this network to increase our market share. We currently serve some of the largest enterprises, carriers and governmental institutions in Puerto Rico, including Cisco, IBM, Lucent, Microsoft, Proctor & Gamble and the University of Puerto Rico.

      Deploy GSM/ GPRS in Our U.S. Wireless Network. We have begun to overlay our Midwest cluster network with GSM technology that will support GPRS advanced data technology and expect to launch GSM service in our Midwest cluster by the end of 2003. We intend to begin the overlay of our Southeast cluster network with GSM technology after we complete our overlay in our Midwest cluster, and we expect to launch GSM service in the Southeast cluster in 2004. GSM/ GPRS provides faster data services and makes available lower-cost, more attractive, multi-functional handsets, such as camera phones. Further, it aligns us technologically with our principal roaming partners. We expect this deployment will improve our service offerings and will be important in attracting and retaining customers for our U.S. wireless operations.

      Continue to Build Brand. Brand development is essential in the increasingly competitive telecommunications environments. Our brand emphasizes a superior customer experience by providing a quality network and effective customer service. As a regional telecommunications provider, we tailor our brand to the three markets we serve: “Trusted Advisor” in the United States, “En Confianza” in Puerto Rico and “Centennial Te Escucha” in the Dominican Republic. We believe the success of our brand-building efforts during fiscal 2003 was demonstrated by our lowest-ever level of postpaid churn, 1.8%, in the fourth quarter.

Wireless Telephone Markets and Interests

      The chart below sets forth information regarding our wireless operations as of May 31, 2003, as reported in the 2002 Kagan’s Wireless Telecom Atlas & Database, with respect to our U.S. and Puerto Rico service areas, and by Banco Central de la Republica Dominicana, Departmento de Cuentas Nacionales, for our Dominican Republic service area. Those U.S. wireless telephone systems and the investment interests which are in Metropolitan Statistical Areas, or MSAs, are asterisked; the remainder are in Rural Service Areas, or

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Products and Services

      Wireless. The nature of the products and services we offer varies depending on the market. Our principal source of revenue is derived from providing network access and airtime minutes of use to wireless telephone subscribers. We offer primarily postpaid and, to a lesser extent, prepaid wireless services. Other value-added services available to wireless telephone subscribers are similar to those provided by conventional landline telephone systems, including custom calling features such as voice mail, caller ID, call forwarding, call waiting and conference calling. In the United States, we also offer our customers short messaging services and access to information from the Internet through their wireless phones. In Puerto Rico, our recently upgraded next generation networks give our customers access to the wireless web directly from their handsets through our mobile web offering.

      We offer our wireless customers a variety of handsets employing TDMA technology in the United States and CDMA technology in the Caribbean. We offer for sale a variety of handsets and accessories incorporating the latest in digital technology that is supportable on our network and a variety of rate plans designed to meet the varied needs of our customers. Most rate plans consist of a fixed monthly charge (with varying allotments of included minutes), plus variable charges for additional minutes of use. These handsets allow, among other things, our customers to roam onto other carriers’ digital or analog networks. We offer handsets primarily from Nokia, Kyocera, Motorola, Panasonic and Samsung.

      Broadband. In our Puerto Rico and Dominican Republic service areas, we offer a broad range of communications services including ATM (asynchronous transfer mode), frame relay, dedicated access, dedicated Internet ports, international long distance, switched access, high-speed Internet access, dial-up Internet access and private line services. We also offer cable television services in our Puerto Rico service area. All services are provided over our own fiber-optic, coaxial and microwave network. We also offer customers web page design, development, hosting and web casting, integration services and a variety of e-commerce design and related services.

Roaming

      In the United States, a significant portion of our revenue is generated from roaming. We have negotiated agreements with our roaming partners that allow both companies’ customers to make and receive calls outside of their home calling areas. During the last several years, we significantly lowered the prices for our roaming partners to discourage them from building networks in our service areas and moving roaming minutes off our network. As part of these agreements, we significantly reduced our incollect costs (the costs we pay other carriers when our subscribers are roaming on their networks). Our roaming revenue in fiscal 2003 was $77.6 million, or approximately 10.8% of our total consolidated revenue.

      We expect roaming revenue in fiscal 2004 to be significantly less than in fiscal 2003 due to fewer minutes from roaming partners with CDMA networks and reduced rates for partners with TDMA/ GSM networks. We

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Sales and Marketing

      In the United States we market our services and products under the name “Centennial Wireless.” In Puerto Rico, we market our wireless services and products under the name “Centennial de Puerto Rico,” and in the Dominican Republic, we market our services and products under the name “Centennial Dominicana.” Nearly two years ago, we introduced a branding campaign named “Trusted Advisor” in the United States, and in the past year we introduced branding campaigns named “En Confianza” in Puerto Rico and “Centennial Te Escucha” in the Dominican Republic which are designed to convey our strategy based on delivering superior service.

      Our marketing objective is to increase our customer base, increase usage and reduce subscriber cancellations. Our current marketing strategy emphasizes continued net subscriber growth and targets customers who are likely to generate higher monthly revenue and low churn rates. In marketing our services, we stress our superior sales and customer service, our quality wireless service, competitive prices, technologically advanced features and the local presence of our sales and customer service representatives and technical staff. In the Caribbean, we focus on marketing our services to postpaid customers. In the United States, we focus on customers who live and work in our licensed serving areas, which keeps a significant portion of the minutes of use on our own network. We also offer nationwide calling plans for customers who are attracted to one flat wireless rate. The nationwide calling area offered in the United States includes our licensed area plus the roaming areas of AT&T Wireless, Cingular, Verizon and Alltel. The long-term roaming contracts we entered into with AT&T Wireless and Cingular enable our U.S. wireless operation to offer nationwide rate plans at competitive rates.

      As of May 31, 2003, we operated 66 stores and 53 kiosks in the United States, including a kiosk program in shopping malls and larger retail centers, and 16 stores and 108 kiosks in the Caribbean, including company-owned stores and kiosks in retail centers. In Puerto Rico and the U.S. Virgin Islands, we have a store or kiosk presence in most major shopping centers. We use a variety of television, billboard, radio and newspaper advertising to stimulate interest in our services, increase our customer base, increase usage and reduce subscriber cancellations.

      In both our U.S. and Caribbean wireless operations, we use both our own internal sales force and, to a lesser extent, independent agents and dealers to obtain customers for our services. We believe we rely less on outside agents and dealers than larger, nationwide or global carriers. As of May 31, 2003, we had an internal sales force of 1,284. These employees are generally paid a base pay plus commissions. Sales commissions are structured to take into account the rate plan selected and the length of the subscriber’s contract and the type of wireless telephone sold. We also maintain an ongoing training program to improve the effectiveness of our internal sales force. Our dealers are independent contractors paid solely on a commission basis.

Customer Service

      We are committed to assuring consistently high quality customer service. Both our U.S. and Caribbean wireless operations have a local staff, including a manager, customer service representatives and technical engineering staff. We have established local customer support facilities for all of the U.S. wireless telephone systems and the Caribbean integrated communication system. We believe that by having local offices and customer support facilities, we are better able to service customers and monitor the technical quality of our

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System Construction, Operation and Development

      Wireless telephone technology is based upon the radio coverage of a given geographic area by a number of overlapping “cells.” Each cell contains a transmitter-receiver at a “base station” or “cell site” that communicates by radio signal with wireless telephones located in the cell and is connected to a mobile telephone switching office, or the “switch,” which is connected to the local landline telephone network. Because wireless telephone systems are fully interconnected with the landline telephone network and long distance networks, subscribers can receive and originate both local and long distance calls from their wireless telephones. If a wireless telephone user leaves the service area of the wireless telephone system during a call, the call is generally continued and carried through a technical interface established with an adjacent system through intersystem networking arrangements. Such an arrangement is referred to as roaming.

      Construction of wireless telephone systems is capital intensive, requiring a substantial investment for land and improvements, buildings, towers, switches, cell site equipment, microwave equipment, engineering and installation. Until technological limitations on maximum capacity are approached, additional wireless telephone system capacity can normally be added in increments that closely match demand after the initial construction phase is complete. We use CDMA technology in our Caribbean wireless markets. During fiscal 2003, we constructed 31 cell sites in our U.S. wireless operations, and, as of May 31, 2003, our U.S. wireless operations had 722 cell sites. During fiscal 2003, we added 60 cell sites in our Caribbean wireless operations, and, as of May 31, 2003, our Caribbean wireless operations had 350 cell sites. We expect continued network investment to support customer growth, increased usage per customer and new services.

      In accordance with our strategy of developing market clusters, we have selected wireless switching systems that are capable of serving multiple markets with a single switch. Where we have deemed it appropriate, we have implemented microwave links and fiber connections in our U.S. wireless telephone systems and Caribbean integrated communication system, which provide ongoing cost efficiency and generally improve system reliability.

      Our U.S. wireless systems are served by five technologically advanced Nortel Networks supernode switches in Fort Wayne, Indiana; Alexandria, Louisiana; Vidor, Texas; and Lafayette, Louisiana. For our U.S. wireless operations, we intend to deploy a GSM network over our existing TDMA network and to offer GPRS advanced data technology. This technology will maintain technological compatibility with our largest roaming partners and provide the speed and capacity to support a variety of innovative mobile data applications, including e-mail, e-commerce and web-browsing. In May 2003, we entered into a multi-year contract with Ericsson, Inc., to overlay our U.S. wireless networks with GSM/ GPRS technology. GSM/ GPRS technology provides faster data services and makes available lower-cost, more attractive multi-functional handsets, such as camera phones. The new GSM/ GPRS technology will provide us with the foundation for continued evolution of products and services through the future development of next generation products.

      Our Puerto Rico network uses CDMA technology. The latest generation of this technology is capable of carrying voice and data traffic at speeds significantly higher than the previous wireless technology and faster than dial-up landline Internet connections. The construction of our Caribbean integrated communication system is capital intensive. In addition, the plans of our CLEC business to extend our fiber-optic network and to enter into large commercial and residential buildings and industrial parks will necessitate further capital expenditures. We have three switches in Puerto Rico. In our Caribbean service area, we use network equipment manufactured by Lucent Technologies. In June 2003, we entered into an agreement with Nortel pursuant to which Nortel will supply our Dominican Republic wireless operations with a CDMA third generation network.

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      In 2002, our cable network in Puerto Rico underwent digitization of its primary headend and transport equipment and offers its customers digital service. High speed data service is being deployed and is currently available.

Billing and Operational Support Systems

      We operate management information systems to handle customer care, billing, network management, financial and administrative services. We have outsourced with ALLTEL Information Systems, a network management and operations support systems provider, to provide billing services to facilitate network fault detection, correction and management, performance and usage monitoring and security for our wireless operations throughout our company. We maintain stringent controls for both voluntary and involuntary deactivations. We attempt to minimize subscriber disconnects by identifying needed activation and termination policy adjustments through pre-activation screening, credit review and call pattern profiling in order to detect any prior fraudulent or bad debt activity.

      In our Caribbean service area, we completed the implementation of our broadband billing and customer service systems in February 2003. We are continuing to invest in operations support systems, further enhancing our provisioning and billing of broadband services. Our cable television systems in Puerto Rico use CSG Systems for billing and customer service needs. We are currently in the process of improving our cable television operational support systems to facilitate the rollout of new products and services.

Competition

      Wireless. In the United States and Puerto Rico, the FCC can grant commercial mobile radio service, or CMRS, licenses to up to eight companies to provide different types of wireless telephone services in each of our service areas. The FCC licenses cellular systems in 734 geographically defined market areas, which comprised 306 MSAs and 428 RSAs. In each market, cellular frequencies are divided into two equal 25 MHz blocks, which are designated as non-wireline (Block A) and wireline (Block B). The FCC also grants two 30 MHz licenses to operate broadband personal communication systems, or PCS, in each of 51 defined Major Trading Areas, or MTAs, and one 30 MHz and three 10 MHz licenses in each of 493 Basic Trading Areas, or BTAs, which are component parts of MTAs. However, the FCC also allows CMRS carriers to subdivide and assign their spectrum allocations and/or their geographic market areas to other carriers. This creates the possibility of more than eight CMRS carriers having the ability to serve a single market.

      We currently control 25 MHz cellular licenses in 30 MSAs and RSAs in the United States, one 30 MHz broadband PCS license in the Puerto Rico MTA (which includes the U.S. Virgin Islands) and a 30 MHz PCS license in the Dominican Republic, which is not subject to FCC regulation. Our wireless systems compete directly with both cellular and broadband PCS licensees in each market on the basis of, among others, quality, price, area served, network coverage, services offered and responsiveness of customer service. The telecommunications industry is experiencing rapid technological change. With the development of new technologies, products and services, competition for wireless subscribers has intensified.

      In general, in each of our U.S. wireless markets we have between four and five competitors. PCS operators have continued to build out their networks in our service areas and we expect this trend to continue. Our primary competitors in our U.S. wireless markets are ALLTEL, AT&T Wireless, U.S. Cellular, Cingular, Nextel, Sprint PCS (and Sprint affiliates), T-Mobile and Verizon Wireless. We also compete to a lesser extent with paging, dispatch services and resellers. As wireless service is becoming a viable alternative to traditional landline phone service, we are increasingly competing directly with the traditional landline telephone companies for customers.

      The Puerto Rico wireless market is highly competitive. In Puerto Rico, we compete with five other wireless carriers: AT&T Wireless, Cingular, Movistar (partially owned by Telefónica de Espana), Sprint PCS and Verizon Wireless.

      The telecommunications market in the Dominican Republic is also highly competitive. We compete with three other wireless carriers: Compania Dominicana de Telefonos C. por A., a subsidiary of Verizon Wireless

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      Most of our competitors have greater financial resources than we do. We expect competition for wireless subscribers in our markets to continue to remain intense.

      In the future, we may also compete against emerging wireless technologies, including satellite-based mobile voice and data services and 3G wireless technologies.

      Broadband. Our Caribbean operations hold an authorization to provide broadband services in Puerto Rico, a concession to provide a variety of telecommunications services in the Dominican Republic and authorization to provide facilities-based international long distance service in the United States. Our main competitor for our broadband services in Puerto Rico is the PRTC, the incumbent telephone company and a subsidiary of Verizon. There are no other facilities-based CLECs with significant operations at this time, but we cannot be sure that other CLECs will not emerge in Puerto Rico in the future.

      In the Dominican Republic, we compete primarily against the incumbent provider Codetel, which has a substantial market share, and Tricom, which provides both wireline and fixed-wireless service.

      Cable. We are the only cable television operator in our franchise areas. Liberty Media and Adelphia Communications also operate cable television companies in Puerto Rico, but not in our franchise areas. Our cable television company in Puerto Rico competes primarily against the direct broadcast satellite companies, namely DirecTV and EchoStar.

Regulation

     U.S. Federal Regulation

      Our operations in the United States, Puerto Rico, and the U.S. Virgin Islands are governed by, among other regulations, the Communications Act of 1934, or the Communications Act, which was substantially amended by the Telecommunications Act of 1996, or the 1996 Act. The Communications Act has provisions dealing specifically with our wireless services and our cable television services, as well as provisions applicable to both our wireless and landline services.

      Matters Specific to Wireless Carriers. The cellular and PCS systems we operate, known as CMRS systems, are licensed and regulated by the FCC under the Communications Act. The FCC regulates the licensing, construction, operation, acquisition and sale of CMRS systems.

      Prior FCC rules prohibited licensees from controlling more than 55 MHz of licensed CMRS spectrum in any CMRS market. Under these rules, acquisitions of spectrum below this limitation were essentially always permitted and acquisitions of spectrum above this limitation were essentially always prohibited. In early 2003, this “bright line” spectrum limitation was replaced with a rule under which CMRS spectrum acquisitions are assessed on a case-by-case basis, without regard to whether they would have been permissible or impermissible under the old limitation. This rule change potentially allows us to acquire additional spectrum in some areas, but also adds uncertainty to our ability to acquire spectrum in areas where, under the old rule, approval would have been essentially automatic. We do not currently expect to need additional spectrum in any of our service areas.

      The FCC generally issues CMRS licenses for a term of ten years, after which they must be renewed. CMRS licenses may be revoked and license renewal applications denied by the FCC for cause. Under present rules, there may be competition for a CMRS license upon the expiration of its initial license term. While there can be no assurance that any license will be renewed, the FCC’s rules provide for a significant renewal preference to cellular and PCS licensees that have used their spectrum for its intended purpose, have built a network and have complied with FCC regulations and federal communication statutes. If a CMRS licensee is awarded a renewal expectancy, its renewal will be granted without further consideration of any competing applications. While our cellular licenses have been renewed regularly by the FCC in the past, and we believe

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      The FCC also regulates other aspects of the operation and ownership of CMRS systems. Operational regulations include the cellular rules requiring coordination of proposed frequency usage with adjacent cellular licensees to avoid electrical interference between adjacent systems. In addition, the height and power of base station transmitting facilities and the type of signals they emit must fall within specified parameters. In November 2002, an FCC rule expired that had expressly prohibited CMRS carriers from placing restrictions on the resale of their services by parties who would buy blocks of numbers and services and resell them to end users. However, we remain subject to provisions of the Communications Act requiring us to apply only just, reasonable and nondiscriminatory terms to our services, so it is unclear what effect, if any, the expiration of the FCC’s rule will have on our operations. The FCC also imposes radio frequency radiation limitation requirements on CMRS licensees. There can be no assurance that any FCC requirements currently applicable to our CMRS system will not be changed in the future.

      Ownership regulations include the requirement to obtain prior FCC approval before completing most types of acquisitions and assignments of FCC licenses. Acquisitions of minority interests generally do not require FCC approval. Whenever FCC approval is required, any interested party may file a petition to dismiss or deny the application for approval of the proposed transfer or assignment.

      In addition to regulation by the FCC, wireless systems are also subject to Federal Aviation Administration, or FAA, regulations regarding the siting and construction of wireless transmitter towers and antennas, as well as local zoning requirements. The FCC also requires that all licensees register and obtain FCC registration numbers for all of their antennas and/or towers that require prior FAA clearance. All new towers must be registered at the time of construction. Failure to properly register a tower could lead to enforcement action, such as the imposition of a penalty. We believe that we are in compliance with the tower registration requirements.

      Matters Relevant to Both Wireless and Landline Telephone Operations. Amendments to the Communications Act made by the 1996 Act were aimed at opening local telecommunications markets to competition. The provisions of the Communications Act added by the 1996 Act govern, among other things, the removal of barriers to market entry and impose on incumbent local exchange carriers, or ILECs, duties to negotiate reasonable and nondiscriminatory interconnection agreements and access to unbundled elements of the ILEC’s network at any technically feasible point. The law encourages competition through these provisions and others governing resale, number portability, dialing parity, access to rights-of-way and numbering administration.

      The overall effect of the amendments made by the 1996 Act on our business continues to be unclear. The FCC has issued numerous rules and regulations to implement the 1996 Act and all significant FCC rulings have been appealed to the courts. Generally speaking, the FCC has prevailed in the courts, but in some cases it has not, and even when it eventually prevails, the ongoing litigation (which has reached the United States Supreme Court in two cases) creates uncertainty for companies such as us trying to comply with the legislation and associated FCC regulations. We have, however, benefited from reduced costs in acquiring required communication services, such as ILEC interconnection, and we have benefited from the right to receive compensation for the termination of traffic as discussed below. However, provisions relating to interconnection, telephone number portability, equal access and resale could subject us to increased competition and additional economic and regulatory burdens.

      Reciprocal compensation refers to payments that one carrier makes when it sends traffic to another carrier for completion. Reciprocal compensation applies to calls between landline networks and between a landline and a CMRS network. We both send and receive traffic to and from landline networks and so both pay and receive reciprocal compensation. The treatment of compensation for calls to internet service providers, or ISPs, which affects us in Puerto Rico, has been particularly controversial. The FCC has established rules generally intended to reduce and, possibly, eventually eliminate the compensation paid by one carrier to another for jointly handling ISP-bound calls. This lower compensation, however, only applies where the incumbent telephone company also agrees to receive lower compensation for calls it receives (whether bound

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      In July 2002, we concluded arbitration of a new interconnection agreement with the PRTC that generally reflects these new FCC rules. See “— Matters Specific to Our Puerto Rico Operations.” Centennial both sends traffic to, and receives traffic from, PRTC, so the FCC’s compensation rules apply to both Centennial and PRTC. We continue to disagree with PRTC about whether compensation is due under the FCC rules for certain types of ISP-bound calls and we expect this issue will remain in dispute for the foreseeable future. As a result, it is unclear how and to what extent the implementation of the FCC rules will affect us.

      State and Local Regulation. Under the Communications Act, no state may regulate the entry of CMRS providers or the rates charged for CMRS service. However, states can regulate other terms and conditions of service. The siting and construction of CMRS facilities, including transmission towers, antennas and equipment shelters, may be subject to state or local zoning, land use and other local regulations. Before a system can be put into commercial operation, the holder of a CMRS license must obtain all necessary zoning and building permit approvals for the transmitter sites and switching locations. Local jurisdictions control access to the rights-of-way and state governments (often public utility commissions) have the right to set rules relating to customer service. For example, some states and several local communities have enacted ordinances restricting the use of wireless phones while driving a motor vehicle. Several other state and local legislative bodies have proposed legislation to adopt similar laws. These laws could reduce subscriber usage and lead to potential litigation against wireless carriers.

      911 Service Requirements. The FCC has adopted requirements for CMRS providers to implement basic and enhanced 911 services, or E911. E911 is being rolled out in phases. E911 capabilities will enable CMRS systems to determine the location of persons making emergency calls. The FCC’s rules require CMRS carriers to work with local public safety officials to process the 911 calls, including those made from analog mobile telephones that are not registered with the carrier’s cellular system. Since April 1998, CMRS carriers have been required to be able to identify the cell from which the call has been made as well as the identification of the calling party number. The rules also require CMRS systems to continue to improve their ability to locate wireless 911 callers within a cell. FCC rules generally required that by October 1, 2001, nationwide CMRS carriers be able to provide location information with a greater degree of accuracy in accordance with standards set by the FCC. For regional CMRS providers such as ourselves, the FCC extended the compliance deadline to March 1, 2003, or to a mutually acceptable date agreed to by the wireless provider and local governmental authorities responsible for 911 services. In some cases the local governmental authorities in our service areas have not yet asked us to meet these requirements, in other cases, we have negotiated or are in the process of negotiating mutually acceptable compliance dates. We believe that we are materially in compliance with our E911 obligations. The FCC has ruled that the costs associated with the various phases of E911 compliance are not reimbursable. Thus, these E911 rules require us to spend additional capital to implement the E911 requirements.

      Electronic Surveillance Standards. The Communications Assistance for Law Enforcement Act requires all telecommunications carriers, including us and other CMRS licensees, to implement equipment changes necessary to assist law enforcement authorities in achieving enhanced ability to conduct electronic surveillance of those suspected of criminal activity. The FCC has established varying deadlines for different aspects of this legislation. In August 1999, the FCC added additional surveillance capability requirements, which carriers were required to meet by September 30, 2001. However, on August 15, 2000, a federal circuit court of appeals vacated and remanded some of these requirements. The FCC then reexamined and reissued these requirements, which are commonly referred to as the “punchlist” items, and extended the September 30, 2001 punchlist compliance deadline to June 30, 2002. Due to Centennial’s network upgrade schedule, Centennial did not meet some of the compliance deadlines. However, Centennial currently has waivers on file with the FCC requesting an extension of the applicable compliance deadlines. Issues relating to when and how carriers may obtain reimbursement from the federal government for equipment upgrades associated with such requirements are still unresolved.

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      Universal Service. Our U.S. wireless and Puerto Rico wireless and wireline operations are required to contribute to the Federal Universal Service Fund and to any equivalent state fund. In general, these funds are created to subsidize telecommunications services in rural and high cost areas of the United States. Centennial is currently receiving Federal Universal Service non-rural high-cost support for its operations in Puerto Rico. In addition, we have recently filed applications in Louisiana, Mississippi, Indiana and Michigan to receive support in these states as well. Under the FCC’s current regulations and nationwide benchmark costing model, Puerto Rico was found to be below the national benchmark for receiving high cost support. As a consequence, the federal funds available to Puerto Rico will be reduced gradually over the next several years. Under the current scheme, support for Puerto Rico would be completely phased out by 2011. However, support is distributed by wire center and thus support for lower cost wire centers in Puerto Rico could be phased out prior to 2011. The FCC proceeding to review these issues is currently pending after remand from the courts. Thus, Centennial’s future ability to receive universal service support is unclear. In addition, the FCC is conducting a review of its rules applicable to the amount of funding available to competitive carriers providing services supported by the high-cost funding system. It is impossible to predict the outcome of this FCC review, which may result in Centennial receiving materially less universal service support than it does today.

      Rate Integration. Rate integration is the averaging of interstate long distance rates throughout a provider’s customer base. The FCC is currently examining the applicability of current rate integration requirements on CMRS offerings, particularly to wide area calling plans. Until this process is concluded it will be uncertain what obligations, if any, CMRS providers will have in this regard. However, implementation of rate integration requirements could have an effect on our current service offerings and rate plans and hinder our pricing flexibility, making it harder for us to compete in our markets.

      Number Pooling. The telecommunications industry has been faced with an apparent shortage of available telephone numbers, arising from many different factors within the industry. As a consequence, the FCC and state regulators have become concerned with promoting the efficient use of the available numbers. The FCC has imposed what is referred to as “thousand block pooling.” Beginning November 24, 2002, carriers may only request and will only be assigned numbers in blocks of one thousand numbers rather than the previous blocks of ten-thousand numbers. To request additional blocks, carriers must meet utilization thresholds set by the FCC. This more restrictive pooling requirement will force carriers to more closely track their number utilization, imposing greater administrative burdens and increased pressure to implement number portability, which may require possible equipment upgrades.

      Number Portability. Number portability allows a CMRS carrier’s customer who moves to another carrier to take along, or “port,” his or her phone number. The original CMRS carrier must be able to transmit calls to the ported number. Until July 16, 2002, CMRS carriers were required to provide number portability by November 24, 2002. On July 16, 2002, the FCC voted to extend this deadline to November 24, 2003. A legal challenge seeking to extend that deadline further was rejected by the courts in June 2003. As a result, wireless carriers who provide services in any of 100 markets specifically designated by the FCC must provide for wireless number portability in these markets by November 24, 2003 and in all other markets by May 2004. Puerto Rico and Fort Wayne, Indiana are included in these designated markets and constitute 26% of our Net Pops. The implementation of number portability will increase competition and require equipment and network upgrades. These upgrades will require expenditures of additional capital with no immediate new sources of revenue. We cannot predict the impact of these anticipated capital expenditures on our operations.

      Hearing Aid Compatibility. In July 2003, the FCC modified its rules that exempt wireless phones from the requirements of the Hearing Aid Compatibility Act and created new rules that impose obligations on wireless carriers and handset manufacturers to make available handsets that meet certain requirements that allow hearing aid users to have access to digital wireless services. The new rules require that within two years handset manufacturers and wireless carriers make available two wireless phone models that have the required air interface standard for radio frequency interference. Within three years, two wireless phone models must be available that meet the T-Coil compatibility standard, and by 2008 all phones must meet the radio frequency interference standard. All of these requirements impose obligations that will require wireless providers like us to invest in handsets that meet the required criteria and as such may increase the cost of the wireless phones we offer our customers.

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      Matters Specific to Our Puerto Rico Operations. Comprehensive telecommunications reform legislation was enacted in 1996 by the Commonwealth of Puerto Rico. This legislation, titled the Puerto Rico Telecommunications Act of 1996, or the Puerto Rico Act, is intended to open the Puerto Rico telecommunications market to competition. Among other things, it established the Telecommunications Regulatory Board of Puerto Rico, or TRB, which was given primary regulatory jurisdiction in Puerto Rico over all telecommunications services, all service providers, and all persons with a direct or indirect interest in said services or providers.

      Increased competition in Puerto Rico has put pressure on our operation to become more aggressive in pricing plans and product offerings, which in turn has added to our interconnection requirements. In July 2002, we concluded the arbitration of a new interconnection agreement with PRTC. The agreement was formally affirmed by the TRB, in December 2002. The new agreement reflects our view that our local calling areas should determine whether a landline call between us and PRTC is rated as local or toll for purposes of intercarrier compensation. As our local calling areas are larger, fewer calls will cross local calling area boundaries, thereby lowering our costs by reducing the amount of access charges we might owe to PRTC. In addition, the agreement affirms our right to use our extensive physical interconnections with PRTC’s network to provide direct connections to business customers seeking to shift some or all of their business to us. However, the agreement contains PRTC-proposed traffic classifications that PRTC will argue relieve it of its obligation to compensate us for some ISP-bound calls, and which may result in an obligation on our part to pay PRTC relatively high access charges on some calls on which we believe we should pay lower reciprocal compensation rates.

      In January 2003, PRTC filed an appeal of the TRB’s ruling in federal court in Puerto Rico, challenging the TRB’s decision to use our calling areas to classify traffic. In our response, we challenged the TRB’s decision to use PRTC’s traffic classifications in the way just noted above. The matter is now pending before the court. There can be no assurance that we will prevail on our challenge to the TRB’s decision, nor that PRTC’s challenge to the TRB’s decision to rely on our calling areas will be rejected.

      In addition, several long distance providers in Puerto Rico have requested that we provide equal access for our wireline customers. Equal access would allow customers to reach their long distance providers by dialing one plus the number. We implemented equal access in Puerto Rico during fiscal 2002. The implementation of equal access could have an impact on our long distance business by increasing competition.

      The telecommunications regulatory framework in the Dominican Republic consists of General Telecommunications Law No. 153-98, enacted on May 27, 1998, resolutions promulgated under that law, the Dominican Republic’s reference document filed with the World Trade Organization and concession agreements entered into by the Dominican government with individual service providers. None of the outstanding concession agreements contains an exclusive arrangement with any wireless carrier and the Dominican government has announced a policy of encouraging growth through competition in the telecommunications industry.

      In addition, the law created a governing body to regulate telecommunication activities. This body is referred to as the Dominican Institute of Telecommunications, or Indotel. Indotel is headed by a five-member council, which includes a representative from the telecommunications industry. Indotel has control over all frequency bands and channels of radio transmission and communications within the country and over its jurisdictional water. We believe that this modern legislation, combined with technological advances and the sustained growth of private investment, will significantly contribute to the development of the telecommunications sector in the Dominican Republic.

      To substantially broaden the number of its citizens with access to a telephone and to allow for the establishment and growth of other modern telecommunications services, the Dominican government adopted a policy of liberalization of the telecommunications sector beginning in the late 1980’s. In 1994, the Dominican government enacted a series of interconnection resolutions that required all service providers in the Dominican Republic to contractually interconnect with all other service providers, under guidelines articulated

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      As a result of the new interconnection rate structure, the rate for the termination of international inbound calls to the Dominican Republic has increased. This increase required the renegotiation of termination agreements with several international exchange carriers. Centennial is currently in the process of negotiating these agreements. Centennial has renegotiated the majority of these interconnection agreements to reflect the new rate structure; however, certain agreements are still under negotiation because some companies are refusing to accept the new interconnection rates. It is difficult to assess at this time the ultimate impact of the increase in these rates; however, the increased rates for the termination of international traffic in the Dominican Republic could have an adverse effect on the volume of traffic terminated by Centennial which may or may not be offset by the increased revenue.

      On April 11, 2003, we negotiated new interconnection agreements with all Dominican carriers, in compliance with the interconnection regulation enacted by Indotel in June 2002. These agreements were approved and ratified by Indotel’s Executive Council. We believe the new interconnection agreements establish a fair and non-discriminatory set of terms and will lower the average cost of terminating a domestic call within the Dominican Republic.

      The Dominican government made changes to the tax regime governing telecommunications carriers. Effective on January 1, 2003, telecommunication providers adopted the system established by the Dominican Republic’s Tax Code. Since 1995, all telecommunications companies have been operating under the Canon Tax, which imposes a 10% tax on the difference between our revenue and our interconnection costs. Now telecommunications providers will be relieved of the obligation to pay this tax and pay 25% on taxable profits with a minimum tax of 1.5% on gross revenue to expire on December 31, 2003.

      Notwithstanding the above, a new fiscal package was introduced in late 2002 to the National Congress that calls for an extension in the application of the minimum tax of 1.5% until December 31, 2005. In exchange, the minimum percentage will be lowered from 1.5% to 0.5%. The Senate preliminarily approved the bill on May 2003, pending a second vote. Later on, the bill is to be discussed and voted by the Chamber of Deputies.

      We operate in the Dominican Republic under a concession that previously belonged to International Telephone & Telegraph, or ITT, and dating back over 100 years. After several modifications, the Concession’s latest version dates to 1996, when a new twenty-year term was awarded to our subsidiary, Centennial Dominicana. The concession contract also provides that Centennial Dominicana may construct, operate and exploit all types of telecommunications services in the Dominican Republic.

      In August 2003, the Dominican government, by presidential decree, introduced a 5% tax on all exports of goods and services, which includes the services that we provide to international telecommunications providers. The constitutionality of the tax is currently being challenged in the Dominican Supreme Court, in part, on the basis that the tax was enacted solely by presidential declaration, rather than by the legislature. In addition, we believe that the services that we provide to international telecommunications providers should not be considered taxable as an export under this new law.

      Our FCC license for Puerto Rico covers the U.S. Virgin Islands. As stated above, the U.S. Virgin Islands are part of the United States, so our operations there are subject to the Communications Act and the 1996 Act, and, for purposes of regulating our operations, the government of the U.S. Virgin Islands is the equivalent of a state.

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      Our cable television operation in Puerto Rico is subject to both federal and local regulation. We are subject to federal statutory provisions governing cable television contained in the Communications Act of 1934, as amended, and associated FCC regulations. Those regulations cover our obligations with regard to signal carriage requirements, leased access to channels, political advertising, signal leakage and a number of other matters that affect our operations including access to poles, conduits and rights of way controlled by municipalities and utilities. Locally, we are regulated by the TRB.

      In order to provide cable services, an operator must obtain a franchise that gives the operator access to the rights-of-way. A franchise is an agreement whereby the franchising authority (the TRB) allows the cable provider (Centennial) access to the right of ways for the installation of its cable network. In exchange, we agree to conditions that vary from franchise to franchise given that franchise agreements are subject to negotiation. In Puerto Rico, the TRB is responsible for franchising cable television operators. We hold six franchises in Puerto Rico covering the southern and western parts of the island.

      Franchises are effective for a defined term, which vary among franchises. Our six franchises expire between 2007 and 2012. Upon expiration, franchises may be renewed. Franchise renewals are subject to negotiation between the franchising authority and the provider. Whether a renewal is granted depends on various factors including, among other things, our financial standing, the quality of the service provided and whether we complied with our obligations under the franchise agreement. The TRB may also seek to impose additional terms and conditions, such as build out and upgrade requirements.

      The local franchising authority in Puerto Rico, the TRB, may also have the right to regulate rates when a provider is not subject to effective competition. A provider is assumed not to be subject to effective competition unless there has been a finding by the FCC to the contrary. Our markets have been found by the FCC to be subject to effective competition. As such, our rates are not subject to rate regulation.

Employees

      We had approximately 3,000 employees as of May 31, 2003. Our employees are not represented by a labor organization. We consider our relationship with our employees to be good.

Risk Factors

      Investors in our securities should carefully consider the risks described below and other information included in this report. Our business, financial condition, or results of operations could be materially adversely affected by any of these risks, and the trading price of our securities could decline due to any of these risks. Investors in our securities could lose all or part of their investment as a result of any such decline. This report also contains forward-looking statements that involve risks and uncertainties; please see “Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below.

      Our principal business, wireless telephone service, is highly competitive. In the United States, we compete against an average of four or five other wireless carriers in the markets we serve. In Puerto Rico, we compete against five other wireless carriers and in the Dominican Republic we compete against three other wireless carriers. Many of our existing competitors are larger than we are, have greater financial resources than we do and are less leveraged than we are. Competition for customers is based principally upon services and features offered, system coverage, technical quality of the wireless system, price, customer service and network capacity. Some competitors may market services we do not offer, which may make their services more attractive to customers. We expect competition to intensify as a result of the development of new technologies,

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      Market prices for wireless voice and data services have declined over the last several years and may continue to decline in the future due to increased competition. We cannot make assurances that we will be able to maintain or improve ARPU. We expect significant competition among wireless providers to continue to drive service and equipment prices lower. This may lead to increasing movement of customers between competitors and consequently to churn. Additionally, over the last several years, rates for terminating traffic to the Dominican Republic have decreased. If market prices continue to decline it could adversely affect our ability to grow revenue, which would have a material adverse effect on our financial condition and results of operations and our ability to service our indebtedness.

      We earn a portion of our revenue from customers of other wireless communications providers who enter our service areas and use their wireless phones, commonly referred to as roaming. Roaming rates per minute have declined over the last several years and we expect that such declines will continue for the foreseeable future. For fiscal 2003, we recorded $77.6 million of roaming revenue. For fiscal 2002, we recorded $92.6 million of roaming revenue, which represented 26% of U.S. wireless revenue. We expect roaming revenue in fiscal 2004 to be significantly less than in fiscal 2003 due to fewer minutes from roaming partners with CDMA networks and reduced rates for partners with TDMA/ GSM networks. We expect roaming revenue to continue to decline in the future.

      Two of our major roaming partners are performing a GSM overlay of their existing TDMA networks and, in connection with roaming arrangements we have entered into with them, have required that we overlay our existing network in our Midwest cluster with GSM technology. We are contractually obligated to complete a portion of the overlay in our Midwest cluster by the end of 2003. We intend to begin the overlay in our Southeast cluster as soon as we complete the overlay in our Midwest cluster, and we expect to launch GSM service in the Southeast cluster during 2004. If we fail to complete the build-out in a manner and timeframe consistent with our contractual arrangements with our roaming partners, we may experience a significant loss of roaming revenue from those partners. In addition, if we fail to meet certain contractual build-out requirements, the options from AT&T Wireless to purchase additional spectrum in our Midwest cluster could terminate.

      In addition, we believe that customers are increasingly demanding the most technologically advanced wireless devices. The TDMA supported phones that we currently offer lack many of the innovative features currently offered by our CDMA and GSM/ GPRS competitors, such as color screens and cameras. Therefore, if we fail to launch GSM service in our U.S. wireless operations in the near future, we believe we may lose subscribers and our retail business may be adversely affected.

      The wireless industry is extremely competitive. Among other things, the wireless industry is characterized by a high rate of churn. Churn can be the result of several competitive factors, including price, service offerings, network coverage, reliability issues and customer care concerns. Efforts to reduce churn increase costs as we offer incentives to customers to remain users of our wireless services, and efforts to replace lost

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      The FCC has mandated that wireless carriers provide for wireless number portability in 100 designated markets by November 24, 2003 and in all other markets by May 2004. Our Puerto Rico and Fort Wayne, Indiana, markets, which encompass 26% of our Net Pops, are included in the FCC’s 100 designated markets. Wireless number portability will allow customers to keep their wireless phone number when switching between service providers. Number portability will make it more convenient for customers to change wireless service providers and therefore could cause churn to increase significantly. We anticipate wireless number portability will increase price competition. We may be required to grant promotional credits, subsidize product upgrades, and/or reduce pricing to match competitors’ initiatives in an effort to retain customers, which could adversely affect our operating results. In addition, the implementation of number portability will require equipment and network upgrades which may cause service disruptions. These upgrades will require expenditures of additional capital. We cannot predict the effect of these anticipated capital expenditures on our operations.

      The U.S. telecommunications industry is subject to federal, state and other regulations that are continually evolving. In addition, the telecommunications industry in the Dominican Republic is similarly subject to change. As new telecommunication laws and regulations are issued, we may be required to modify our business plans or operations. We cannot make assurances that we can do so in a cost-effective manner. In addition, the failure by us to comply with applicable governmental regulations could result in the loss of our licenses or the assessment of penalties or fines or otherwise have a material adverse effect on the results of our operations. For a more detailed description of the regulatory framework we operate in, see “Regulation” in this Item 1.

      The FCC, which has jurisdiction over our operations in the United States, Puerto Rico and the U.S. Virgin Islands, and state regulatory agencies continue to issue rules implementing the requirements of the Telecommunications Act of 1996, or the 1996 Act. These rules include the obligation of incumbent telephone companies to allow other carriers to connect to their network by reasonable means at rates based on cost. The interpretation and implementation of these and other provisions of the 1996 Act and the FCC rules implementing the 1996 Act continue to be heavily debated and may have a material adverse effect on our business.

      Centennial Puerto Rico is also subject to the jurisdiction of the TRB. The TRB could determine that the rates for our wireline services are unreasonably high or otherwise not in the public interest. The TRB could also revoke our Local Exchange Certification if we fail to comply with applicable regulations. This determination could have a material adverse effect on our business. See “Regulation — U.S. Federal Regulation — Matters Specific to Our Puerto Rico Operations” in this Item 1.

      We are subject to siting and zoning regulations that could materially affect our ability to build new cell sites and expand our coverage. All telecommunication providers are obligated to contribute to the federal universal service fund in accordance with a formula presently based upon a percentage of interstate and intrastate revenue. The contribution formula may change in ways that would materially adversely affect us. Universal service funds are used, among other things, to provide local telephone service to individuals or families qualifying for federal assistance or households in remote areas. Many states, including those we operate in, are implementing local universal service programs that would require carriers to contribute additional funds.

      Further, federal or state governments, the government of the Commonwealth of Puerto Rico or the government of the Dominican Republic could adopt regulations or take other actions that might have a

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      In the United States, cellular, personal communications services and microwave licenses are valid for ten years from the effective date of the license. Licensees may renew their licenses for additional ten-year periods by filing renewal applications with the FCC. The renewal applications are subject to FCC review and are put out for public comment to ensure that the licensees meet their licensing requirements and comply with other applicable FCC mandates. Failure to file for renewal of these licenses or failure to meet any licensing requirements could lead to a denial of the renewal application and thus adversely affect our ability to continue to provide service in that license area. Our cable franchises in Puerto Rico are subject to similar restrictions. Furthermore, our compliance with regulatory requirements such as enhanced 911 and wireless local number portability may depend on the availability of necessary equipment and/or software. Failure to comply with these regulatory requirements may have an adverse effect on our licenses and/or operations and could result in sanctions, fines or other penalties.

      A substantial portion of our assets consists of intangible assets, principally our interests in wireless licenses held by our subsidiaries. If the market value of our wireless licenses decreases significantly, we may realize a material loss upon the sale of any of our licenses and our ability to sell assets to repay debt would be significantly affected. The market for the purchase and sale of wireless licenses may not exist in the future or the values of our licenses in that market may fall. The future value of our interests in our wireless licenses will depend significantly upon the success of our business. Moreover, the transfer of interests in these licenses is prohibited without FCC approval. We cannot make assurances that we would be able to obtain FCC approval to transfer interests in our licenses if such a transfer became necessary.

      We face rapid and significant changes in technology. In particular, the wireless telecommunications industry is experiencing significant technological change, including:

	•	evolving industry standards,
	•	the allocation of new radio frequency spectrum in which to license and operate advanced wireless services,
	•	ongoing improvements in the capacity and quality of digital technology and shorter development cycles for new products and enhancements,
	•	changes in end-user requirements and preferences,
	•	development of data and broadband capabilities, and
	•	migration to next-generation services.

      In order for us to keep up with these technological changes to remain competitive, we will be required to continue to make significant capital expenditures to build our integrated communication system. In addition, the plans of our CLEC business to extend our fiber-optic network and to enter into large commercial and residential buildings and industrial parks will necessitate further capital expenditures.

      Customer acceptance of the services that we offer will continually be affected by technology-based differences in our product and service offerings. For example, two-way radio dispatch, or “push-to-talk” technology, which allows subscribers to talk to each other instantly with a single push of a button, is becoming increasingly popular as it allows subscribers to save time on dialing or making a connection to a network. The most popular push-to-talk feature is offered by Nextel, which competes with us in many of our U.S. wireless

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      We cannot predict the effect of technological changes on our business, as technological changes may result in increases in our capital expenditures. New technologies may be protected by patents or other intellectual property laws and therefore may not be available to us. It is possible that technological developments will have a material adverse effect on us. Like others in the industry, we are uncertain about the extent of customer demand despite improvements in technology as well as the extent to which airtime and monthly access rates may continue to decline. Also, alternative technologies may be developed that provide wireless communications service or alternative service superior to that available from us. Rapid changes in technology in our market may adversely affect our business.

      We depend on a limited number of suppliers and vendors for equipment and services relating to our network infrastructure. If these suppliers experience interruptions or other problems delivering these network components on a timely basis, our subscriber growth and operating results could suffer significantly. Our initial choice of a network infrastructure supplier can, where proprietary technology of the supplier is an integral component of the network, cause us to be effectively locked into one or a few suppliers for key network components. As a result, we have become reliant upon a limited number of network equipment manufacturers, including Nortel Networks Corporation, Lucent Technologies, Inc. and Ericsson, Inc. If it becomes necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory replacement suppliers or vendors on economically attractive terms, on a timely basis, or at all.

      The success of our business is largely dependent on our executive officers, as well as on our ability to attract and retain other highly qualified technical and management personnel. We believe that there is, and will continue to be, intense competition for qualified personnel in the wireless services industry, and we cannot make assurances that we will be able to attract and retain the personnel necessary for the development of our business. The loss of key personnel or the failure to attract additional personnel as required could have a material adverse effect on our business, financial condition and results of operations. We do not currently maintain “key person” life insurance on any of our key employees.

      Our business is dependent on the business and economic conditions as well as consumer spending in the areas in which we operate, particularly in the Caribbean. If existing economic conditions in the Caribbean were to deteriorate, the market for wireless or other communications services in the Caribbean may be disproportionately and adversely affected due to the generally lower per capita income in the Caribbean as compared to the United States. This deterioration would also have an adverse effect on our business in the Caribbean and, because our Puerto Rico operations contribute significantly to our financial performance, on our overall financial condition and results of operations.

      Our business may be materially adversely affected by events such as hurricanes, labor strikes, terrorism and other factors that may generally affect the regions in which we operate. For instance, hurricanes and labor

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      Any change in Puerto Rico’s political status with the United States, or the ongoing debate about such status, could affect the economy of Puerto Rico. The ultimate effect of possible changes in Puerto Rico’s governmental and political status is uncertain and, accordingly, we cannot make assurances that such changes will not materially adversely affect our business and results of operations. In addition, the economy of the Caribbean area is highly dependant on tourism. If the tourism industry continues to decline, in particular as a result of the threat of terrorism, it could have a material adverse effect on our business.

      The Dominican Republic’s currency is the DR peso. The DR peso has experienced approximately 47% devaluation against the U.S. dollar during fiscal 2003. We transact the majority of our business in the Dominican Republic in DR pesos; however, we purchase wireless phones and network infrastructure in U.S. dollars, thereby exposing us to foreign currency exchange risk. Further devaluation of the DR peso could have a material adverse effect on our Dominican Republic operations’ profitability.

      The demand for our services in Puerto Rico is significantly affected by the level of business activity on the island. Puerto Rico provides tax incentives for U.S. companies to operate in Puerto Rico and to reinvest the earnings from their Puerto Rico operations in Puerto Rico. As a result of a 1996 amendment to the U.S. Internal Revenue Code, the tax benefits available to corporations doing business in Puerto Rico phase out in annual increments through 2005. Consequently, these corporations may reduce or close their Puerto Rico operations and may reduce or eliminate their re-investments in Puerto Rico. The changes may also reduce the incentives for new investments in Puerto Rico. As a result, such changes in the tax law could reduce demand for our services.

      We currently receive approximately $12 million per year in payments from the federal Universal Service Fund in connection with our Puerto Rico operations, based on FCC rules that make such funding available to competitive carriers, including wireless carriers, operating in areas where the established landline carrier also receives such funding. However, Universal Service Fund support for our Puerto Rico operations is scheduled to be eliminated by 2011 or sooner. We have applied to receive additional funding pursuant to these rules in four states. However, these FCC rules are currently under review and may be changed in a way that materially reduces or eliminates our right to obtain such funding, including the amounts we currently receive in Puerto Rico.

      Media reports have suggested that, and studies have been undertaken to determine whether, certain radio frequency emissions from wireless handsets and cell sites may be linked to various health concerns, including cancer, and may interfere with various electronic medical devices, including hearing aids and pacemakers. In addition, lawsuits have been filed against other participants in the wireless industry alleging various adverse health consequences as a result of wireless phone usage.

      If consumers’ health concerns over radio frequency emissions increase, they may be discouraged from using wireless handsets and regulators may impose restrictions on the location and operation of cell sites. These concerns could have an adverse effect on the wireless communications industry and expose wireless providers to litigation, which, even if not successful, can be costly to defend.

      Government authorities might increase regulation of wireless handsets and cell sites as a result of these health concerns and wireless companies might be held liable for costs or damages associated with these concerns. The actual or perceived risk of radio frequency emissions could also adversely affect us through a

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      In addition, the perceived safety risk associated with the use of a wireless device while driving may also adversely affect our results of operations. Studies have indicated that using wireless devices while driving may impair a driver’s attention. The U.S. Congress has proposed legislation that would seek to withhold a portion of federal funds from any state that does not enact legislation prohibiting an individual from using a wireless telephone while driving motor vehicles. In addition, many state and local legislative bodies have passed and proposed legislation to restrict the use of wireless telephones while driving motor vehicles. Concerns over safety risks and the effect of future legislation, if adopted and enforced in the areas we serve, could limit our ability to market and sell our wireless services. In addition, these concerns and this legislation may discourage use of our wireless devices and decrease our revenue from customers who now use their wireless telephones while driving. Further, litigation relating to accidents, deaths or serious bodily injuries allegedly incurred as a result of wireless telephone use while driving could result in damage awards against telecommunications providers, adverse publicity and further governmental regulation. Any or all of these results, if they occur, could have a material adverse effect on our results of operations and financial condition.

      Our financial and operational success depends on assuring that we have adequate capacity and a sufficient customer support system to accommodate anticipated new customers and the related increase in usage of our network. The network capacity plan relies on:

	•	the availability of wireless telephones of the appropriate model and type to meet the demands and preferences of our customers;
	•	the ability to obtain and construct additional cell sites and other infrastructure equipment; and
	•	the ability to obtain additional spectrum if required;

In addition, we must develop effective procedures for customer activation, customer service, billing and other support services.

      Reliance on our customer service functions will increase as we add new customers. Our failure to timely and efficiently meet the demands for these services could decrease or slow subscriber growth or delay or otherwise impede billing and collection of amounts owed, which would adversely affect our revenue. We cannot make assurances that our customer service systems and network capacity will expand quickly enough to keep up with our anticipated customer growth, and failure to do so would impair our ability to compete, which would adversely affect our results and financial operations.

      We are a highly leveraged company. At May 31, 2003, on a pro forma basis after giving effect to our offering of Senior Notes in June 2003, we would have had approximately $1.8 billion of consolidated long-term debt. Our ability to make payments on our debt and to fund planned capital expenditures will depend on our ability to generate cash in the future. Our fiscal 2004, 2005 and 2006 scheduled amortization payments on all our debt will be approximately $13.5 million, $92.5 million and $105.7 million, respectively. Our capital expenditures were approximately $133.1 million for fiscal 2003. Net cash provided by operations for fiscal 2003 was $205.1 million.

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      Our substantial debt service obligation could have important consequences to investors in our securities, including the following:

	•	limit our ability to borrow money or sell stock to fund our working capital, capital expenditures, debt service requirements or other purposes;
	•	increase our vulnerability to compete effectively or operate successfully under adverse economic and industry conditions;
	•	limit our ability to obtain additional financing and our flexibility in planning for, or reacting to, changes in our business or the industry;
	•	the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, our debt and would not be available for other purposes;
	•	increase our vulnerability to interest rate increases as the borrowings under our senior credit facility are at variable interest rates;
	•	place us at a competitive disadvantage to many of our competitors who are less leveraged than we are; and
	•	suffer a material adverse effect on our business and financial condition if we were unable to service our indebtedness or obtain additional financing, as needed.

      While all term loan tranches under the senior credit facility require quarterly amortization payments, the B and C tranches of the senior credit facility require substantial payments upon final maturity in May and November 2007, respectively, and all amounts outstanding under the revolver of the senior credit facility will become due in November 2006. Additionally, the $15.0 million credit facility which Banco Popular de Puerto Rico provides to our subsidiary, Centennial Puerto Rico Cable TV Corp., pursuant to which $11.7 million is outstanding as of May 31, 2003, matures in installments through fiscal 2005. That credit facility is guaranteed by Centennial Puerto Rico. We expect, based on our indebtedness as of May 31, 2003, after giving effect to our Senior Notes offering and the application of the proceeds received, that we will have long-term indebtedness of $105.7 million and $269.8 million that will become due in 2006 and 2007, respectively. We do not expect our business to generate cash flow from operations in an amount sufficient to enable us to repay this indebtedness when it comes due. As a result, we believe we will need to refinance all or a portion of our indebtedness prior to May 2006. However, we may not be able to refinance any or all of our indebtedness on favorable terms or at all. See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.” The Senior Notes mature in June 2013, the 10 3/4% senior subordinated notes due 2008, or Senior Subordinated Notes, mature in December 2008, and the unsecured subordinated notes due 2009, or Mezzanine Debt, matures in July 2009. We cannot make assurances that we will be able to refinance any of our debt on commercially reasonable terms or at all.

      Despite our substantial indebtedness, we may still be able to incur significantly more debt, which would further reduce the cash we have available to invest in our operations or to service our debt obligations. The terms of the indentures governing our Senior Notes and Senior Subordinated Notes, as well as the credit agreement governing the senior credit facility and the agreements governing our other indebtedness, limit, but do not prohibit, the incurrence of significant additional indebtedness by us and our subsidiaries in the future. As of May 31, 2003, on a pro forma basis after giving effect to our offering of the Senior Notes in June 2003, we would have had approximately $220 million available for additional borrowings, as permitted, under the senior credit facility. The more we become leveraged, the more we, and in turn the holders of our common stock and our indebtedness, become exposed to the risks described above. If we do not generate sufficient cash flow to meet our debt service and to fund our working capital requirements, we may need to seek additional financing or sell certain of our assets.

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      Our senior credit facility and the indentures governing our Senior Notes and our Senior Subordinated Notes contain covenants that, among other things, require us to maintain certain financial ratios and restrict our ability to take specific actions, even if we believe such actions are in our best interest. These include restrictions on our ability to:

	•	incur additional debt;
	•	incur additional debt that ranks senior to or equally with the Senior Notes;
	•	create liens or negative pledges with respect to our assets;
	•	pay dividends or distributions on, or redeem or repurchase, our capital stock;
	•	make investments, loans or advances or other forms of payments;
	•	make capital expenditures;
	•	issue, sell or allow distributions on capital stock of specified subsidiaries;
	•	prepay or defease specified indebtedness;
	•	enter into transactions with affiliates; or
	•	merge, consolidate or sell our assets.

These restrictions are subject to important qualifications.

      As of May 31, 2003, on a pro forma basis after giving effect to the offering of the Senior Notes, we had approximately $676.9 million outstanding under the senior credit facility. We currently anticipate that we will not be able to satisfy one of our financial covenants in the senior credit facility, beginning in May 2006. As a result, management currently expects that the senior credit facility will have to be refinanced at or before that time. We might not be able to successfully access the capital markets to refinance this debt, in which case this debt and our other debt could be accelerated.

      In connection with the incurrence of the indebtedness under the senior credit facility, the lenders have received a pledge of all of the capital stock of Centennial Cellular, our wholly owned subsidiary through which we hold the assets of all of our subsidiaries, and that of its existing and future direct and indirect subsidiaries (but not to exceed 65% of the voting stock of the foreign subsidiaries). Additionally, our lenders generally have a lien on all of the personal property assets (tangible and intangible) and certain of the real property assets of Centennial Cellular and these subsidiaries. As a result of these pledges and liens, if we fail to meet our payment or other obligations under the senior credit facility, the lenders would be entitled to foreclose on and liquidate substantially all of our assets, to the extent required to pay obligations under the senior credit facility. Under those circumstances, we may not have sufficient funds to service our other indebtedness. As a result, the holders of our securities may lose a portion of or the entire value of their investment in our securities.

      We have not paid any cash dividends on our common stock and currently do not anticipate paying any cash dividends on our common stock in the foreseeable future. The terms of our senior credit facility and our indentures governing our Senior Notes and our Senior Subordinated Notes restrict our ability to declare or pay dividends on our common stock. We intend to retain any future earnings to fund our operations, debt service requirements and other corporate needs. No dividends can be paid on our common stock without the approval

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      If our stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall. These sales also might make it more difficult for us to sell equity securities in the future at times and prices that we deem appropriate.

      We have entered into a registration rights agreement with the Welsh Carson investors, The Blackstone Group investors and certain other stockholders. The registration rights agreement provides, among other things, that holders of a majority of the outstanding shares of common stock held by either of the Welsh Carson investors or The Blackstone Group investors may request that we register all or any portion of the shares they then hold. If the Welsh Carson investors or The Blackstone Group investors exercise their registration rights under this agreement to sell substantial amounts of our common stock in the public market, or if it is perceived that such exercise and sale could occur, the market price of our common stock could fall.

      The market price of our common stock has historically experienced and may continue to experience significant volatility. During the twelve months ended May 31, 2003, the market price of our common stock ranged from $1.50 to $3.95 per share. The market price of our common stock may continue to fluctuate significantly due to a number of factors, some of which are beyond our control. These factors include, but are not limited to, our historical and anticipated operating results, technological or regulatory changes in our industry, announcements or actions by our competitors, low trading volume in our common stock and general market and economic conditions. These factors could cause our common stock to trade at prices below the price which holders of our common stock paid for their shares, which could prevent investors in our common stock from selling their common stock at or above the price at which they purchased their shares. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices of securities. These fluctuations often have been unrelated or disproportionate to the operating performance of publicly traded companies. In the past, following periods of volatility in the market price of a particular company’s securities, securities class-action litigation has often been brought against that company. If similar litigation were instituted against us, it could result in substantial costs and divert management’s attention and resources from our operations.

      Welsh Carson, certain of its affiliates and certain other equity investors, including affiliates of The Blackstone Group and some of our executive officers and directors, collectively hold approximately 88% of Centennial’s outstanding shares of common stock. Accordingly, these equity investors, directly or indirectly, control our company and have the power to elect all of our directors, appoint new management and approve or reject any action requiring the approval of stockholders, including adopting amendments to our charter and approving mergers and sales of all or substantially all of our assets. These equity investors may make decisions that are adverse to the interests of other stockholders. In addition, as of May 31, 2003, affiliates of Welsh Carson currently hold approximately $189 million principal amount of our existing Senior Subordinated Notes and all of the Mezzanine Debt. The existence of a controlling stockholder group may have the effect of making it difficult for a third party to acquire, or of discouraging or delaying a third party from seeking to

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      Our board of directors’ ability to designate and issue up to 10,000,000 shares of preferred stock and issue up to approximately 144,000,000 additional shares of common stock, giving effect to the increase in authorized shares pursuant to the amendment to our certificate of incorporation which will take effect on September 11, 2003, could materially and adversely affect the voting power of the holders of common stock, and could have the effect of making it more difficult for a person to acquire, or could discourage a person from seeking to acquire, control of our company. If this occurred, investors in our common stock could lose the opportunity to receive a premium on the sale of their shares in a change of control transaction.

      In addition, the Delaware General Corporation Law contains provisions that would have the effect of restricting, delaying and/or preventing altogether certain business combinations with an interested stockholder. Interested stockholders include, among others, any person who, together with affiliates and associates, becomes the owner, or within three years became the owner, of 15% or more of a corporation’s voting stock. These provisions could also limit an investor’s ability to receive a premium in a change of control transaction.

      Our corporate headquarters is located at 3349 Route 138, Wall Township, New Jersey 07719, where we lease approximately 31,000 square feet of office space. In addition, our U.S. wireless headquarters is based in Ft. Wayne, Indiana where we lease approximately 15,000 square feet of office space. Our Puerto Rico operations are headquartered in the greater San Juan, Puerto Rico area, where we lease an office building with approximately 95,000 square feet of office space. In the Dominican Republic we lease approximately 11,000 square feet of office space. In addition, we lease and own locations for customer call centers, switching offices, retail stores, local administrative offices, microwave sites and cell sites. We consider our owned and leased properties to be suitable and adequate for our business operations.

      We are party to several lawsuits in which plaintiffs have alleged, depending on the case, breach of contract, misrepresentation or unfair practice claims relating to our billing practices, including rounding up of partial minutes of use to full-minute increments, billing send to end, and billing for unanswered and dropped calls. The plaintiffs in these cases have not alleged any specific monetary damages and are seeking certification as a class action. A hearing on class certification in one of these cases is to be held on September 2, 2003 in state court in Louisiana. Damages payable by us could be significant, although we do not believe any damage payments would have a material adverse effect on our results of operations.

      In April 2002, WHTV Broadcasting Corp. and Sala Foundation Inc., operators of a wireless cable system in Puerto Rico, filed an action against us in the United States District Court for the District of Puerto Rico. The complaint alleges that we breached the terms of a November 2000 letter of intent to purchase the wireless cable system for $30 million. The complaint seeks specific performance of the letter of intent or not less than $15 million in damages.

      The ultimate outcome of these matters cannot be predicted with certainty, and accordingly, the aggregate ultimate liability of Centennial, if any, with respect to these matters is not determinable at this time.

      To our knowledge, there are no other material pending legal proceedings to which we or our subsidiaries are a party or of which any of our property is subject that is likely to have a material adverse effect on our business or results of operations.

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      There were no matters submitted to a vote of our shareholders during fiscal 2003.

Directors and Executive Officers of Centennial

      Executive officers of Centennial are elected annually by the board of directors and serve until their successors are duly elected and qualified. Centennial has nine directors. Each director is elected annually and serves until his or her successor is duly elected and qualified. Our directors are elected under a stockholders agreement that is described in detail under “Certain Relationships and Related Transactions” in our Proxy Statement relating to the 2003 Annual Meeting of Stockholders, or Proxy Statement, to be filed with the SEC pursuant to Rule 14a-6 under the Exchange Act.

      There are no arrangements or understandings between any officer and any other person pursuant to which the officer was selected, and there are no family relationships between any executive officers or any directors of Centennial. The names, ages and positions of the executive officers and directors of Centennial are listed below along with their business experience during at least the past five years.

      Michael J. Small has served as Chief Executive Officer and a director of Centennial since January 1999. He joined Centennial upon the consummation of the merger in January 1999. Prior to joining Centennial, Mr. Small served as Executive Vice President and Chief Financial Officer of 360° Communications Co. (now a subsidiary of ALLTEL Corporation) from 1995 to 1998. Prior to 1995, he served as President of Lynch Corporation, a diversified acquisition-oriented company with operations in telecommunications, manufacturing and transportation services.

      Thomas J. Fitzpatrick has served as Executive Vice President, Chief Financial Officer since August 2002. Prior to joining Centennial, from October 2001 to August 2002, Mr. Fitzpatrick was Senior Vice President and Chief Financial Officer of ICG Commerce, a privately held Internet procurement services provider. From September 2000 until May 2001, he was Chief Financial Officer of Digital Access Inc., a broadband services provider. From November 1999 to September 2000, Mr. Fitzpatrick was Chief Financial Officer of Inacom Corporation, a publicly-traded computer hardware distributor and information technology service provider. From August 1996 to September 1999, Mr. Fitzpatrick was Chief Operating Officer and Chief Financial Officer at DecisionOne Corporation, a large computer services firm. Prior to August 1996, Mr. Fitzpatrick worked for Bell Atlantic Corporation (now part of Verizon).

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      Phillip H. Mayberry has served as President, U.S. Wireless Operations of Centennial since January 1999 and was Senior Vice President — Operations since December 1994. He served as Vice President, Operations of Centennial from April 1990 to December 1994. From March 1989 to April 1990, Mr. Mayberry was a Vice President and General Manager of Metro Mobile CTS, Inc., a cellular telephone company.

      John A. de Armas has served as President, Caribbean Operations of Centennial since June 2003 and served as Executive Vice President, Caribbean Operations and President, Centennial Dominicana since February 2002. From 2000 to 2002, Mr. de Armas was President of Home Shopping Espanol, a division of Home Shopping Network. From 1998 to 2000, Mr. de Armas was Senior Vice President of System One Technologies, Inc. and from 1994 to 1998 he was Vice President of International Strategy/ Marketing of Phelps Dodge International Corporation.

      Thomas R. Cogar, Jr. has been Executive Vice President, Chief Technology Officer — Caribbean Operations since April 2002. Prior to that, he served as Senior Vice President, Chief Technology Officer — U.S. Wireless Operations of Centennial since March 1999. He joined Centennial in September 1990 as Director of Engineering and was appointed Vice President, Engineering in August 1991. From May 1987 to September 1990, Mr. Cogar was employed by Metro Mobile CTS, Inc., a cellular telephone company, in various technical capacities.

      Thomas E. Bucks has served as Senior Vice President, Controller of Centennial since March 1995. Prior to joining Centennial, Mr. Bucks was employed by Southwestern Bell Corporation in various financial capacities, most recently as District Manager — Financial Analysis and Planning.

      Tony L. Wolk has served as Senior Vice President, General Counsel of Centennial since September 1999. Prior to joining Centennial, Mr. Wolk was an attorney in private practice with the law firms of Gibson, Dunn & Crutcher LLP and Weil, Gotshal & Manges.

      Nassry G. Zamora has served as Senior Vice President, Human Resources for Centennial since May 2000. Prior to joining Centennial, Mr. Zamora served as Vice President, Human Resources of Phelps Dodge International Corporation from 1994 to 2000. From 1991 to 1994, Mr. Zamora was Manager, Diversity at Exxon Research & Engineering Company.

      Thomas E. McInerney has served as a director and Chairman of the board of directors of Centennial since January 1999. He joined Welsh Carson in 1986 and is a managing member or general partner of the respective sole general partners of Welsh Carson and other associated investment partnerships. He is a director of The BISYS Group, Inc., Savvis Communications Corporation and several private companies.

      Anthony J. de Nicola has served as a director of Centennial since January 1999. He joined Welsh Carson in 1994 and is a managing member or general partner of the respective sole general partners of Welsh Carson and other associated investment partnerships. Previously, he worked for William Blair & Co. for four years in the merchant banking area. He is a director of Valor Telecommunications, LLC, Alliance Data Systems Corporation and several private companies.

      James R. Matthews has served as a director of Centennial since July 2001. He joined Welsh Carson in 2000 and is a managing member or general partner of the respective sole general partners of Welsh Carson and other associated investment partnerships. Previously, he was a General Partner at J. H. Whitney & Co., a private equity firm where he worked for six years. He is a director of several private companies.

      Lawrence H. Guffey has served as a director of Centennial since October 2002. He also served as a director of Centennial from January 1999 to March 2001. He is a senior managing director of The Blackstone Group, L.P. and has been with The Blackstone Group since 1991. Mr. Guffey is a director of several private companies.

      David M. Tolley has been a director of Centennial since July 2001. He is a principal of The Blackstone Group L.P. and has been with The Blackstone Group since May 2000. From 1995 to 2000, he was with Morgan Stanley, most recently as Vice President, where he worked with a variety of clients in the telecommunications industry.

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      J.     Stephen Vanderwoude is a director of Centennial. Since 1996 he has been Chairman and Chief Executive Officer of Madison River Telephone Company LLC, a company that acquires and operates rural communications networks. Previously he was President, Chief Executive Officer and a director of Powerhouse Technologies, Inc., and a director of V-Band Corporation. He is currently a director of First Midwest Bancorp. He formerly was President and Chief Operating Officer and a director of Centel Corporation, and president of the local telecommunications division of Sprint Corporation.

      Carmen Ana Culpeper has been a director of Centennial since July 2000. Since 1999, Ms. Culpeper has served as President of C. Culpeper & Associates, a financial advisory and management consulting firm. She was President of the Puerto Rico Chamber of Commerce from June 1999 to June 2000 and continues to serve on its Council of Past Presidents. She was President of the Puerto Rico Telephone Company from April 1997 to March 1999, and from October 1995 to March 1997 she was President of Finapri, Inc., an insurance finance company. From October 1995 to March 1997, Ms. Culpeper was an independent broker at Clark Melvin Securities and prior to that held various positions in corporate finance at, among others, Donaldson, Lufkin & Jenrette and Citibank. Ms. Culpeper is a director of Levitt Homes of Puerto Rico Corporation.

      Ellen C. Wolf has been a director of Centennial since January 2003. Ms. Wolf has been chief financial officer of American Water, Inc. since 1999. Prior to joining American Water, Ms. Wolf spent twelve years with Bell Atlantic, most recently as the vice president-treasurer of Bell Atlantic Corporation. Prior to joining Bell Atlantic, Ms. Wolf spent eight years with the accounting firm of Deloitte Haskins & Sells.

Audit Committee

      The current members of our Audit Committee are J. Stephen Vanderwoude (chairman), Carmen Ana Culpeper and Ellen C. Wolf.

Compensation Committee

      The current members of the compensation committee are Thomas E. McInerney, Anthony J. de Nicola and Lawrence H. Guffey.

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PART II

Item 5.  Market for Registrant’s Common Equity and Related Stockholder Matters

Market Information and Holders

      Our common stock has been traded on the Nasdaq National Market under the symbol “CYCL” since December 3, 1991. The following table sets forth the daily high and low sales prices for our common stock as reported by the Nasdaq National Market during each quarter for the periods indicated.

      As of August 4, 2003, there were 95,857,352 shares issued and outstanding and 117 registered holders of our common shares. Such number does not include persons whose shares are held of record by a bank, brokerage house or clearing agency, but does include such banks, brokerage houses and clearing agencies.

      On August 21, 2003, we filed an amended and restated certificate of incorporation which, among other things, increased the number of authorized shares of our common stock from 140,000,000 to 240,000,000. The increase in the authorized number of shares will become effective on September 11, 2003, by the terms of the amended and restated certificate of incorporation.

Dividend Policy

      We have not paid any cash dividends on our common stock and currently do not anticipate paying any cash dividends on our common stock in the foreseeable future. The terms of our senior credit facility and the indentures governing our Senior Notes and our Senior Subordinated Notes restrict our ability to declare or pay dividends on our common stock. We intend to retain any future earnings to fund our operations, debt service requirements and other corporate needs. No dividends can be paid on our common stock without the approval of our controlling stockholders. Because Centennial Communications Corp. is a holding company, our ability to declare dividends is effectively limited to the amount of dividends, if any, our subsidiaries and other equity holdings may distribute to us.

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Item 6.  Selected Consolidated Financial Data

      The selected consolidated financial data set forth below for each of the five years in the period ended May 31, 2003 was derived from our audited Consolidated Financial Statements. The following information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included elsewhere herein. See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Non-GAAP Financial Measures” for a description of “adjusted operating income” and “adjusted operating income margin,” the non-GAAP financial measures we use below, a discussion of the reasons why management believes these non-GAAP financial measures provide meaningful information to investors, the limitations of the use of these non-GAAP financial measures and a reconciliation of each of these measures to the most comparable GAAP measure. See Note 1 of the consolidated financial statements contained in this report regarding a change in accounting principle for the adoption of SAB No. 101 during the year ended May 31, 2001. See Note 4 of the consolidated financial statements contained in this report regarding acquisitions and dispositions and the effect of such acquisitions and dispositions on the comparability of our historical financial statements.

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