Clearnet Communications Inc. — Annual Report 1999

May 19, 2000

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CLEARNET COMMUNICATIONS INC.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 1999

MAY 19, 2000

CLEARNET COMMUNICATIONS INC. ANNUAL INFORMATION FORM

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS.............................................................................................2 CLEARNET .......................................................................................................................................2 CORPORATE HISTORY .........................................................................................................................3 GENERAL DEVELOPMENT OF THE BUSINESS ...........................................................................3 DESCRIPTION OF THE BUSINESS.................................................................................................7 OVERVIEW...........................................................................................................................................7 BUSINESS COMMUNICATIONS SERVICES - MIKE......................................................................................8 PERSONAL COMMUNICATIONS SERVICES - CLEARNET PCS..................................................................11 SMR BUSINESS.................................................................................................................................11 FUTURE CAPITAL REQUIREMENTS .......................................................................................................12 EMPLOYEES.......................................................................................................................................12 PROPERTIES .....................................................................................................................................12 COMPETITION.....................................................................................................................................13 LEGAL PROCEEDINGS ........................................................................................................................14 INTELLECTUAL PROPERTY ..................................................................................................................14 SELECTED CONSOLIDATED FINANCIAL INFORMATION .........................................................15 MANAGEMENT’S DISCUSSION AND ANALYSIS........................................................................16 MARKET FOR SECURITIES ..........................................................................................................16 TAKE-OVER BID PROTECTION....................................................................................................16 OWNERSHIP RESTRICTIONS.......................................................................................................17 DIRECTORS AND OFFICERS........................................................................................................18 ADDITIONAL INFORMATION ........................................................................................................20

FORWARD LOOKING STATEMENTS

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A number of the matters discussed in this Annual Information Form and in the Management’s Discussion and Analysis section of Clearnet’s Annual Report, which is incorporated by reference herein, that are not historical or current facts deal with potential future circumstances and developments. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from Clearnet’s actual future experience involving any one or more of such matters. Certain of the notable risks and uncertainties are discussed within the “- Operating Risks and Uncertainties” section of Management’s Discussion and Analysis and in various sections herein. The operation and results of Clearnet’s wireless communications business may also be subject to the effect of other risks and uncertainties including, but not limited to, the risks associated with: changing local and regional economic conditions; prospects for subscriber growth; prospects for wireless penetration rates; market acceptance of wireless telephony and data applications generally and Mike and Clearnet PCS specifically; new product and service launches; marketing cost of acquisition (COA); bad debt expenses; earnings before interest, taxes and amortization (EBITA); and other risk factors described herein or in Clearnet’s public disclosures filed with various securities commissions. Clearnet’s actual future experience may differ substantially from the expectations described in such forward-looking statements.

CLEARNET

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Clearnet Communications Inc. is a holding company that was continued under the Canada Business Corporations Act on October 20, 1994. Clearnet has two wholly owned subsidiaries, Clearnet Inc. and Clearnet PCS Inc., both of which are Canada Business Corporations Act corporations. The registered head office of each company is located at 200 Consilium Place, Scarborough, Ontario, M1H 3J3 and its telephone number is (416) 279-9000. There have been no amendments made to the articles of any of the companies in the past year.

Clearnet Inc. owns and operates an Enhanced Specialized Mobile Radio (“ESMR”) digital wireless business communications service under the Mike[TM][1 ] trademark (“Mike”), an analogue dispatch Specialized Mobile Radio (“SMR”) service and a multi-location mobile communications sales and service dealership division (“Clearnet Business Communications Centre” or “CBCC”).

Clearnet PCS Inc. owns and operates personal communications service (“PCS”) digital wireless communications service under the Clearnet PCS[TM2] trademark and numerous retail store outlets.

1 Mike is a trade-mark used under licence from Clearnet Communications Inc.

2 Trade-mark used under licence from Clearnet Communications Inc.

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Clearnet’s Class A Non-Voting Shares trade in Canadian currency on the Toronto Stock Exchange (stock symbol: NET.A) and in U.S. currency on the NASDAQ National Market System (stock symbol: CLNT).

In this Annual Information Form, unless the context otherwise requires, Clearnet Communications Inc. along with both its wholly owned subsidiaries are referred to as “Clearnet”.

Corporate History

Clearnet Communications Inc. was incorporated under the laws of Ontario on January 16, 1984 under the name Brooktel Inc. On August 24, 1988, Brooktel Inc. changed its name to Airnet Services Inc. Airnet Services Inc. amalgamated with PSB International Inc. on November 1, 1990 and with MOCO Canada Inc. on March 1, 1991. In late 1992 and early 1993, Airnet Services Inc. disposed of its residual interests in all businesses, other than its holdings in Clearnet Inc. On May 1, 1993, Airnet Services Inc. amalgamated with two wholly owned subsidiaries and, on March 24, 1994, Airnet Services Inc. changed its name to Clearnet Communications Inc. It continued under the Canada Business Corporations Act on October 20, 1994.

Clearnet Inc. was incorporated under the laws of Ontario on March 14, 1985. It succeeded to the business of Clearbrook Communications Inc., a predecessor of Clearnet Inc., which was incorporated on September 27, 1983 and was granted its first SMR licence and obtained its first subscriber in April 1984. The Clearnet trademark was first used in Canada in April 1985. Clearnet Inc. was continued under the Canada Business Corporations Act on October 20, 1994 and amalgamated with a wholly owned subsidiary under the Canada Business Corporations Act on January 1, 1996.

Clearnet PCS Inc. was incorporated under the Canada Business Corporations Act on March 28, 1995.

GENERAL DEVELOPMENT OF THE BUSINESS

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Prior to October 1994, Clearnet was a private company providing SMR and other dispatch radio services to industrial and commercial clients in Canada. Major events since then that have influenced or constituted part of Clearnet’s development include:

• the October 1994 $112.8 million gross proceeds initial public offering in Canada and the United States of Class A Non-Voting Shares by Clearnet Communications Inc. At that time, such shares traded in Canadian currency (stock symbol: NET.A) on both

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the Toronto Stock Exchange and the Montréal Exchange and in U.S. currency on NASDAQ’s National Market Systems (stock symbol: CLNTF);

• the October 1994 acquisition of Motorola Canada Limited’s Canadian SMR business in a share for assets transaction which had a fair market value of approximately $161 million;

• the November 1994 commencement of the build-out of the first phase of the Mike network covering the 1200 km. Windsor, Ontario to Québec City, Québec corridor;

• the December 1995 public issue by Clearnet Communications Inc. in the United States of 14 3/4% Senior Discount Notes due 2005 and warrants to purchase Class A NonVoting Shares for gross proceeds of U.S. $180 million;

• the December 1995 announcement of the award to Clearnet of one of two 30 MHz national PCS licences;

• the April 1996 publication by Industry Canada of the licence conditions under which the PCS licences were awarded;

• the May 1996 public issue in Canada and the U.S. by Clearnet Communications Inc. of 9.2 million Class A Non-Voting Shares for total gross proceeds of $239 million;

• the July 1996 selection by Clearnet of CDMA technology for its national PCS network and of Lucent Technologies Canada Inc. as its supplier of such CDMA infrastructure and the announcement of vendor financing from Lucent of up to $475 million;

• the October 1996 launch of the Mike network from Windsor to Québec City;

• the December 1996 execution of the comprehensive PCS equipment and services supply agreement with Lucent;

• the December 1996 decision by the Canadian Radio-television and Telecommunications Commission (“CRTC”) to forbear from regulating Clearnet’s services thus placing Clearnet on the same regulatory footing (including no rate regulation) as the cellular service incumbents;

• the January 1997 announcement of Clearnet’s head office move in late 1997 to 218,000 square feet of space in 200 Consilium Place, in Scarborough in Metropolitan Toronto;

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• the May 1997 completion of a national analogue cellular roaming agreement with Rogers Cantel Inc. for Clearnet’s PCS clients using dual mode/dual band handsets for implementation with Clearnet’s launch of its PCS Network;

• the May 1997 completion of a Mike roaming agreement (Mike’s Green Card service) with Nextel Communications, Inc. for reciprocal roaming arrangements throughout Clearnet’s Mike coverage area for Nextel’s customers and throughout Nextel’s coverage area for Clearnet’s Mike clients for implementation on July 18, 1997;

• the May 1997 announcement by Lucent Technologies Canada and Clearnet of Lucent’s creation of the Wireless Innovation Lab in Canada as a design, development and interoperability testing facility, managed by Lucent’s Bell Laboratories for the wireless industry;

• the August 1997 public issue in Canada and the United States by Clearnet Communications Inc. of 2.9 million Class A Non-Voting Shares and the issue of 566,000 Canadian dollar 11 3/4% Senior Discount Notes due 2007 for total gross proceeds of $373 million;

• the September 1997 completion of a PCS roaming agreement with Sprint PCS for extensive digital PCS coverage for Clearnet’s PCS clients across the United States (implemented in July 1998);

• the October 1997 commercial launch of Clearnet PCS in Toronto, Montreal and Vancouver followed in November in Edmonton and December in Ottawa-Hull; with full Canada-wide national roaming ability using dual mode/dual band Sony handsets;

• the December 1997 completion of a reciprocal PCS roaming agreement with PrimeCo Personal Communications L.P. that provides Clearnet PCS clients with extensive digital PCS roaming in the United States. Clearnet also receives roaming revenues from PrimeCo as PrimeCo subscribers travel to Canada and access service on Clearnet’s digital PCS network (implemented in July 1998);

• the March 1998 launch of Clearnet PCS in Calgary, Alberta;

• the May 1998 public issue in Canada and the United States by Clearnet Communications Inc. of 10.925 million Class A Non-Voting Shares and the issue of 500,000 Canadian dollar 10.4% Senior Discount Notes due 2008 for a total gross proceeds of $497.2 million;

• the June 1998 launch of direct internet sales of PCS products through the Clearnet Web Store;

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• the July 1998 introduction of straightforward, fixed-rate US roaming service for PCS clients;

• the August 1998 launch of Clearnet PCS in Kitchener-Waterloo, Guelph and Cambridge;

• the September 1998 introduction of the Motorola i1000, Canada’s smallest most powerful integrated digital phone for use on the Mike network. Built by Motorola, the Mike i1000 offers advanced features such as built-in speakerphone, lightweight (under 150 grams), VibraCall vibration alert for incoming phone calls, Mike’s Direct Connect alerts and messages and a see-through clam shell window that allows viewing of a four-line, full graphic display;

• the September 1998 launch of the Mike network in Vancouver;

• the October 1998 launch of Clearnet PCS in Québec City followed in November in London, Ontario and in December in Victoria, British Columbia;

• the February 1999 issue of Canadian denominated 10.75% Senior Discount Notes due 2009 raising gross proceeds of $100 million;

• the February 1999 launch of Clearnet PCS in Barrie, Ontario;

• the March 1999 announcement of a new client care call centre in the Montréal suburb of St-Laurent.

• the March 1999 launch of the Mike Network in Victoria, British Columbia;

• the April 1999 closing of a $350 million Senior Secured Credit Facility by Clearnet Inc. for Clearnet’s Mike business to refinance existing bank debt and to finance or refinance vendor financing amongst other purposes;

• the April 1999 issue of US denominated 10.125% Senior Discount Notes due 2009 raising gross proceeds of US $256 million (approximately $379 million);

• the June 1999 introduction of the new Nokia 6188 dual-mode digital PCS handset;

• the July 1999 introduction for use on the Mike Network of the Motorola i1000plus and i500plus that integrate digital phone, Mike’s Direct Connect two-way radio and alphanumeric paging with an Internet microbrowser, e-mail, fax and remote dial-up capabilities;

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• the October 1999 launch of the Motorola i700 plus that has similar features to the i1000plus and the i500plus however is heavy duty for the toughest working environments;

• the October 1999 introduction of the new SANYO SCP-4000 dual-mode digital PCS handset;

• the November 1999 launch of the Mike Network in Alberta with coverage in Calgary, Edmonton and Red Deer, as well as surrounding areas and highway corridors with the plan to expand to many other urban centres in 1999 and 2000;

• the November 1999 launch of digital Clearnet PCS service in Halifax and other areas in Nova Scotia;

• the November 1999 issue of 3,000,000 Class A Non-Voting Shares raising gross proceeds of $120 million;

• the December 1999 closing of an additional $200 million in availability under the Lucent Credit Facility bringing the total credit facility to $675 million.

DESCRIPTION OF THE BUSINESS

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Overview

Clearnet is a Canadian wireless communications company.

Clearnet's operations are primarily directed toward the provision of service on and expansion of its Clearnet PCS and Mike digital wireless networks. 1999 represented the second and third full year, respectively, of commercial operation of Clearnet's PCS and Mike networks. As at December 31, 1999, Clearnet had 1,363 PCS and Mike cell sites and 10 switches in service. By offering both PCS and Mike services, Clearnet has not only differentiated product offerings, but also achieves synergies by using common infrastructure and systems wherever possible (e.g. shared cell sites and billing systems), as well as by having its two networks supported by one organization, avoiding duplication of costs.

As at December 31, 1999, Clearnet had invested approximately $1.5 billion in capital expenditures, including $373 million in 1999, for Mike and Clearnet PCS since the commencement of the Mike and PCS build-outs. As at December 31, 1999, Clearnet covered approximately 20.4 million Mike POPs and 16.5 million PCS POPs for an aggregate cost per POP of approximately $40 (US$27). Clearnet has shifted its focus from its earlier phase of

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primarily building its infrastructure and organization to its current primary focus on significantly expanding its subscriber base and network revenues.

Clearnet generates revenue from airtime billings from wireless services of the Mike, PCS and SMR networks and from equipment sales, rental and service of wireless subscriber units and accessories. The airtime and equipment sales, rental and service revenue is summarized in the Selected Consolidated Financial Information section of this Annual Information Form.

Clearnet expended approximately $3.4 million and $4.5 million in research and development activities in fiscal 1999 and 1998, respectively.

Business Communications Services - Mike

In October 1996, Clearnet commercially launched its ESMR digital business communications service under the Mike brand in the highly populated southern region of the provinces of Ontario and Quebec. Since 1996, Clearnet has significantly expanded its digital Mike coverage in existing markets in Ontario and Quebec as well as launching service in new regions. As at December 31, 1999, Clearnet had successfully launched commercial service on its Mike network in the following metropolitan areas (Statistics Canada census metropolitan areas (CMAs) and census agglomerations (CAs) with a population of at least 100,000 people) which, combined with non-metropolitan areas, cover approximately 20.4 million POPs (1998 - 16.4 million), representing 98% of the total population of these areas:

CMA/CA Covered POPs (thousands)	CMA/CA Covered POPs (thousands)	Date Launched
Toronto	4,580	October 1996
Montreal	3,475	October 1996
Vancouver	1,980	September 1998
Ottawa-Hull	1,055	September 1997
Calgary	900	November 1999
Edmonton	890	November 1999
Quebec City	695	October 1996
Hamilton	655	October 1996
London	420	October 1996
Kitchener	410	October 1996
St. Catharines-Niagara	385	October 1996
Victoria	315	May 1999
Windsor	295	October 1996
Oshawa	295	October 1996
Sherbrooke	150	March 1997
Abbotsford	150	October 1998
Trois-Rivieres	145	December 1997

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Kingston	140	October	1996
Barrie	130	December	1996
Guelph	115	October	1996
Brantford	105	October	1996
Peterborough	90	December	1996

Clearnet has implemented The Mike Network using Motorola's iDEN technology. Motorola has been the sole supplier to Clearnet of both iDEN network infrastructure and handsets. Clearnet's Mike network utilizes 800 MHz frequencies that are adjacent to the 800 MHz spectrum allocated for cellular use. 800 MHz frequencies have propagation advantages over higher frequencies, such as Clearnet's 1900 MHz PCS spectrum, which allow more costeffective geographic coverage. While the amount of 800 MHz spectrum licensed to Clearnet varies by regional area, Clearnet has in excess of 10 MHz of spectrum available for its Mike network in each of Canada's largest metropolitan areas: Montreal, Toronto and Vancouver.

Clearnet markets its Mike service primarily through independent and corporate-owned dealer channels to businesses and organizations as a PCS-like service with the added benefit of Mike's unique Direct Connect functionality, which provides low-cost instant connectivity for work groups. Mike also appeals to users desiring a full suite of integrated wireless services including digital telephone, dispatch and text messaging. Clearnet believes that its Mike service is unique in Canada because it provides fully integrated services, which include these features as well as Internet e-mail and circuit data (with packet data expected to be available in 2000), all on one network, with all services accessible to users through one multifunctional handset. We believe that The Mike Network is different from SMR services, conventional two-way radio network services and cellular services because of its wide-area coverage, high capacity, digital voice quality, multifunctional handset, superior privacy and anti-fraud features, range of enhanced services and easy-to-use, menu-driven subscriber equipment.

Through a reciprocal roaming arrangement with Nextel Communications, Inc. (Nextel[TM] ), Clearnet's Mike clients have digital service in most major urban areas throughout the United States. Clearnet has an exclusive arrangement with Nextel, which enables Clearnet to charge its Mike clients local rates for the use of Nextel wireless telephone services in the United States. As of February 22, 2000, Nextel's digital mobile network or the compatible digital network of Nextel Partners, Inc. served 94 of the top 100 U.S. markets. Through recent market launches, Nextel and Nextel Partners service is available today in areas of the United States where approximately 190 million people live or work. Because Clearnet and Nextel are strategic partners, the roaming agreement between the two organizations is such that in Canada only Mike clients benefit from "home-rate U.S. roaming" on all service plans.

In connection with its Mike business, Clearnet enjoys strategic relationships with Motorola, a leading global wireless telecommunications company, and Nextel, the largest ESMR network operator in the United States and many other countries. Nextel ended 1999 with more than 4.9 million global digital subscribers. As at March 17, 2000, the economic interests of

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Motorola and Nextel in Clearnet were 12.3% and 14.4%, respectively. Clearnet believes these alliances provide it with competitive advantages in the areas of handset and infrastructure costs, U.S. roaming, product and service development, sales and marketing, and network operations and technology.

Clearnet also operates a separate division, Clearnet Business Communications Centre (“CBCC”). The CBCC dealership division sells, leases, rents, installs and services Mike, SMR and, to a lesser extent, Clearnet PCS subscriber units and accessories.

Personal Communications Services - Clearnet PCS

The Clearnet PCS network was commercially launched in certain major metropolitan areas in October 1997. Clearnet has since successfully launched commercial service on its PCS network in the following metropolitan areas (Statistics Canada census metropolitan areas (CMAs) and census agglomerations (CAs) with a population of at least 100,000 people) which, combined with non-metropolitan areas, cover a total population of 16.5 million at December 31, 1999 (1998 - 13.7 million) with digital PCS service, representing 90% of the total population of such areas.

CMA/CA	Covered POPs (thousands)	Date Launched
Toronto	4,420	October 1997
Montreal	3,325	October 1997
Vancouver	1,900	October 1997
Ottawa-Hull	890	December 1997
Calgary	840	March 1998
Edmonton	740	November 1997
Quebec City	610	October 1998
Hamilton	570	October 1997
Kitchener	390	August 1998
London	330	November 1998
Victoria	260	December 1998
St. Catharines-Niagara	255	October 1997
Oshawa	245	October 1997
Windsor	245	September 1999
Halifax	215	November 1999
Sherbrooke	135	October 1999
Barrie	105	February 1999
Guelph	105	August 1998
Abbotsford	95	September 1999
Brantford	90	December 1999
Peterborough	75	December 1999

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Kelowna

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The Clearnet PCS network utilizes 30 MHz of spectrum in the 1850 MHz to 1990 MHz range (often referred to as the 1.9 GHz range). Clearnet has implemented its PCS network using Code Division Multiple Access (CDMA) equipment supplied primarily by Lucent Technologies Canada Corp. (formerly, Lucent Technologies Canada Inc.) (together with Lucent Technologies Inc., Lucent[TM] ). From the commencement of service, Clearnet has offered substantially all of its PCS subscribers effective national coverage on an identical basis to analogue cellular. This extended service, to areas covering more than 28 million POPs representing approximately 93% of Canada's population, is offered through roaming arrangements on the analogue cellular network of a national Canadian cellular operator by means of dual-mode, dual-band 1900 MHz CDMA PCS/800 MHz analogue cellular handsets. Through roaming agreements with various U.S. PCS operators, Clearnet PCS clients have digital service in most major urban areas throughout the United States.

Clearnet markets its PCS services under the Clearnet PCS brand to the Canadian consumer and small office/home office wireless markets, primarily through retail distribution channels. Clearnet PCS handsets can now be purchased at over 1,300 outlets of national retailers, specialty independent dealers, university book and computer stores and Clearnetoperated retail locations and mall kiosks across Canada, which provide service and warranty support to Clearnet's independent channels. Since June 1998, Clearnet has operated the Clearnet Web Store, allowing Canadians to purchase Clearnet PCS phones and accessories online easily and securely for direct home delivery. Clearnet believes it was the first wireless communications company in North America to achieve direct, secure electronic commerce capability on the Internet.

From the launching of service in October 1997 until June 1999, Clearnet offered one model of dual-mode, dual-band 1900 MHz PCS/800 MHz cellular handset manufactured by Sony. The availability of a range of attractive dual-mode, dual-band CDMA 1900 MHz PCS/800 MHz cellular handset models has been limited and the cost of such handsets has been high relative to the competitive offerings of other technologies. Clearnet believes that during the fourth quarter of 1998 and the first six months of 1999, the cost and limited model availability of CDMA handsets were significant limiting factors in marketing Clearnet PCS service. However, in June 1999 Clearnet introduced new and lower-cost Nokia, Qualcomm and Sanyo PCS handsets. Clearnet currently offers three models of PCS handsets and expects significantly increased availability of new handsets in 2000.

In January 1999, Clearnet launched new "flat-rate" pricing plans, which provide unlimited evening and weekend local calling for monthly access fees currently starting as low as $50. Clearnet believes that in some situations these plans make PCS service a viable alternative to wireline telephone service, and market reaction to these new pricing plans has been encouraging.

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Clearnet also operates numerous retail locations throughout Canada. The stores sell Clearnet PCS and Mike subscriber units and accessories.

SMR Business

Prior to 1994, Clearnet's activities were directed primarily at the development, expansion and management of its SMR business. Clearnet's first license was granted and the first subscriber unit utilizing Clearnet's network was activated in April 1984. As of December 31, 1999, Clearnet provided primarily dispatch services over analogue networks to 25,250 commercial/industrial subscribers. In areas where Clearnet's Mike network provides coverage, Clearnet is encouraging its analogue SMR users to convert to Mike service. Accordingly, excluding SMR business acquisitions, Clearnet's analogue SMR subscriber base has decreased and is expected to continue to do so throughout the foreseeable future.

Future Capital Requirements

Clearnet’s Management’s Discussion and Analysis, which includes the discussion on future capital requirements, is incorporated herein by reference and appears in Clearnet’s 1999 Annual Report.

Employees

As at December 31, 1999, Clearnet had 2,327 full-time equivalent employees. Clearnet believes that its future success will depend upon its continued ability to attract and retain highly skilled and qualified employees. Clearnet is not party to any labour agreements and a union represents none of its employees. Clearnet believes that it enjoys good relations with its employees.

Properties

The properties Clearnet owns or leases are described below as of December 31, 1999(unless otherwise specified). Clearnet occupies a total of approximately 645,000 square feet of office space, mobile switching and operations offices, and approximately 120,000 square feet of commercial space for its retail locations (including both PCS Flagship, Kiosk and CBCC stores). Approximate square footage of the largest locations are as follows:

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Office, Mobile Switch and Operations Summary

Location3 Scarborough, Ontario St. Laurent, Quebec Burnaby, BC Markham, Ontario(owned) Etobicoke, Ontario(owned) Calgary, Alberta(owned) St. Laurent, Quebec(owned)	Approximate Square Footage 418,000 55,000 52,000 34,000 34,000 29,000 23,000

Retail Location Summary

ary
Location4 Montréal (8 locations) Toronto (7 locations) Calgary (3 locations) Vancouver (3 locations) Edmonton (3 locations) Ottawa-Hull (4 locations) Kitchener – Waterloo (2 locations) Chicoutimi (owned) Amos (owned) Québec City (2 locations) Rimouski	Approximate Square Footage
	31,000 22,000 11,000 9,000 9,000 8,000 7,000 7,000 6,000 5,000 5,000

In addition, Clearnet leases or licences antenna sites that are primarily used, or are intended to be used, in conjunction with its SMR, Mike and PCS operations. The antenna sites include equipment shelters and typically comprise relatively little square footage. The antennas may be installed on either a tower or rooftop. As of December 31, 1999, Clearnet leased or licensed approximately 1,363 antenna sites.

Clearnet has granted security interests in its assets including its real property interests and its network equipment to its secured lenders.

Competition

The success of Clearnet’s digital wireless services will depend upon Clearnet’s ability to compete with other wireless communication providers in Canada. Clearnet expects competition to be intense with respect to: obtaining and retaining distributors; services and features offered,

3 All leased except as indicated.

4 All leased except as indicated.

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such as voice quality, speed and reliability of data transmission, call waiting, call forwarding, paging and short messaging capability, as well as other features; ease of use; pricing; extent of geographic and in-building coverage; image and brand recognition; client care service and general level of client satisfaction; and the capacity, availability and general reliability of its service. Clearnet’s operations face strong competition from entities utilizing other communications technologies, and may face competition from other technologies currently being developed or to be developed in the future. It is the policy of the Government of Canada to encourage enhanced, sustained competition in the field of telecommunications.

Further information on competitive conditions is described in Management’s Discussion and Analysis.

Legal Proceedings

There are no material legal proceedings pending against Clearnet. Clearnet participates in a variety of regulatory proceedings before the CRTC. Material ongoing proceedings are described briefly under “Regulation” in Management’s Discussion and Analysis.

Intellectual Property

Clearnet owns or has the right to use such intellectual property as necessary or convenient for the carrying on of its business. As an airtime service provider, the intellectual property inherent in its networks and the handsets that operate on such networks is typically held by the manufacturers. However, except for minor trademarks which it displays on handsets with the permission of handset suppliers, all of the trademarks including brands used in marketing Clearnet’s services are, Clearnet believes, owned by Clearnet. Clearnet attempts to register important marks under the Canadian Trade Marks Act and, occasionally, under similar legislation in the U.S. This registration process in the ordinary course takes a long time and, consequently, Clearnet cannot yet be certain of all its rights to certain marks of which it has sought registration. A summary of the most significant trademarks is as follows:

Clearnet Future Friendly Mike Mobilair Mobilayre

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SELECTED CONSOLIDATED FINANCIAL INFORMATION

(in $000’s of Canadian dollars, except for per share data)

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The following selected five year consolidated financial data (except for the supplementary quarterly data) has been derived from and should be read in conjunction with Clearnet’s audited consolidated financial statements for fiscal 1999 which are included in the 1999 Annual Report of Clearnet (the “Annual Statements”) and its annual consolidated financial statements for previous years, which are prepared in accordance with accounting principles generally accepted in Canada.

		Fiscal Year	Fiscal Year		Eight month
		Ended December 31,			period
	1999	1998	1997	1996	ended Dec 31/95
Income Statement Data:
Network revenue	281,427	143,399	35,904	15,639	9,590
Equipment sales, rental
and service revenue	72,066	84,830	62,046	23,123	12,418
Total revenue	353,493	228,229	97,950	38,762	22,008
Net loss	581,800	544,000	289,804	74,812	13,120
Net loss per share	10.65	10.88	7.03	2.07	0.43
Balance Sheet Data:
Cash, cash equivalents and
short-term investments	213,505	16,075	112,411	347,506	272,349
Net operating assets(1)	(49,314)	(36,964)	(16,478)	(46,862)	(56,306)
Capital assets	1,137,722	932,154	770,865	252,313	134,300
Total assets	1,691,513	1,295,244	1,209,882	807,192	599,327
Total debt(2)	2,109,866	1,286,587	869,534	283,214	239,422
Shareholders’ equity (deficiency)	(609,093)	(152,718)	200,001	437,117	284,980
Supplementary Quarterly Data:
		Fiscal Quarter Ended 1999
	Dec. 31	Sept. 30	June 30	Mar. 31
Total revenue	109,819	94,945	79,892	68,837
Net loss	167,638	133,610	153,954	126,598
Net loss per share	3.03	2.46	2.83	2.33
		Fiscal Quarter Ended 1998
	Dec. 31	Sept. 30	June 30	Mar. 31
Total revenue	72,341	59,414	56,309	40,165
Net loss	148,411	138,060	126,301	131,228
Net loss per share	2.74	2.55	2.60	3.04

(1) Net operating assets consists of the sum of trade accounts receivable, commodity tax and other receivables, inventory, prepaid expenses, less current portion of deferred revenue and accounts payable and accrued liabilities, excluding current portion of obligations under capital lease.

(2) Total debt consists of bank indebtedness, current and long-term portion of long-term debt and current and long-term portion of obligations under capital leases.

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Dividend Policy

Clearnet has not paid any dividends since the completion of its initial public offering in October 1994 and does not anticipate declaring or paying cash dividends in the foreseeable future, as it intends to retain future earnings, if any, for reinvestment in its business and for repayment of indebtedness. Any future determination to declare or pay cash dividends will be at the discretion of the board of directors of Clearnet, will be subject to compliance with Clearnet’s debt financing arrangements, and will depend upon Clearnet’s financial condition, results of operations, capital requirements and such other factors as the board of directors of Clearnet considers relevant. Certain covenants under the terms of its Credit Facility, Vendor Financing and Senior Discount Notes (as described in Management’s Discussion and Analysis) prohibit or limit the ability of Clearnet and its subsidiaries to declare or pay cash dividends.

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Clearnet’s Management’s Discussion and Analysis is incorporated herein by reference and appears in Clearnet’s 1999 Annual Report.

MARKET FOR SECURITIES

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Clearnet completed its initial public offering in October 1994 with the issuance of Class A Non-Voting Shares. Clearnet’s Class A Non-Voting Shares have been quoted on the Nasdaq National Market since October 13, 1994, and currently trade under the symbol “CLNT” and have traded on The Toronto Stock Exchange under the symbol “NET.A” since October 20, 1994.

TAKE-OVER BID PROTECTION

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Under applicable Canadian law, an offer to purchase shares of any class of shares of Clearnet would not necessarily require that an offer be made to purchase shares of the other classes of shares. An agreement has been entered into among the principal holders of the Clearnet Voting Shares, Clearnet and a trustee on behalf of all shareholders, in order to ensure that the holders of any one class of shares, will not sell their shares in certain takeover bid transactions unless a substantially similar offer is made to holders of the Class A Non-Voting Shares.

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OWNERSHIP RESTRICTIONS

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Each of Clearnet Inc. and Clearnet PCS Inc. is required by the Telecommunications Act and the regulations thereunder and by the regulations under the Radiocommunication Act (collectively, the “Acts”) to be a Canadian-owned and controlled corporation incorporated or continued under the laws of Canada or a province of Canada. Each of Clearnet Inc. and Clearnet PCS Inc. is considered, under the Acts, to be Canadian-owned and controlled as long as: (a) not less than 80% of the members of its board of directors are individual Canadians; (b) Canadians beneficially own not less than 80% of its issued and outstanding voting shares; and (c) it is not otherwise controlled in fact by persons that are not Canadians. Clearnet intends that each will remain controlled by, and be a wholly-owned subsidiary of, Clearnet Communications Inc. and that it will ensure that it remains "Canadian" for the purposes of these ownership requirements. Accordingly, all of their outstanding voting shares are now, and it is intended that in the future will be, owned by a company controlled by Canadians. Each of Clearnet Inc.'s and Clearnet PCS Inc.'s Articles provide that not less than 80% of the members of its board of directors must be individual Canadians. Also, the Acts provide that, in order for a company which holds shares in a carrier to be considered Canadian, not less than 66[2/3] % of the issued and outstanding voting shares of that company must be owned by Canadians and Clearnet must not otherwise be controlled in fact by non-Canadians. Accordingly, not less than 66[2/3] % of the issued and outstanding voting shares of Clearnet must be owned by Canadians and Clearnet must not otherwise be controlled in fact by non-Canadians.

Clearnet has designed its capital structure to accommodate compliance with these requirements. The shares held by the public are the Class A Non-Voting Shares which are not included as "voting shares" for these purposes. Although the Class B Shares, Class C Subordinated Voting Shares and Class D Subordinated Voting Shares are voting shares, the Class B Shares constitute approximately 96.5% by number of all of such voting shares. To the best of Clearnet's knowledge, Canadians beneficially own and control in the aggregate and otherwise than by way of security not less than 66[2/3] % of the issued and outstanding voting shares and Clearnet is not otherwise controlled in fact by non-Canadians.

The regulations under the Telecommunications Act provide Clearnet with the time and ability to rectify ineligibility resulting from insufficient Canadian ownership of voting shares. Under such regulations, Clearnet may restrict the issue, transfer and ownership of shares, if necessary, to ensure that it and its subsidiaries remain qualified under such legislation. For such purposes, in particular but without limitation, Clearnet may, in accordance with the provisions, if any, contained in such regulations:

• (i) refuse to accept any subscription for any voting shares;

• (ii) refuse to allow any transfer of voting shares to be recorded in Clearnet's share register;

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• (iii) suspend the rights of a holder of voting shares to vote at a meeting of the shareholders of Clearnet; and

• (iv) sell, repurchase or redeem any voting shares.

Also, Clearnet's Articles provide that Clearnet may, in connection with the issue, transfer or ownership of voting shares in its capital, take any action, or refuse to take any action, as the case may be, to the extent necessary to ensure that any subsidiary of Clearnet is and continues to be eligible to operate as a telecommunications common carrier under the Telecommunications Act or to be issued radio authorizations or radio licences as a radiocommunications carrier under the Radiocommunication Act , if and only to the extent that the business activities of such subsidiary require such eligibility.

Clearnet's Articles also provide that the board of directors of Clearnet may make such by-laws and pass such resolutions as the board may consider necessary or desirable in order to ensure that Clearnet maintains its status as a Canadian company for purposes of the Acts.

DIRECTORS AND OFFICERS

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All of Clearnet’s directors and officers as a group beneficially own, directly or indirectly, or exercise control or direction over 63% of Clearnet’s Class B Voting Shares.

The section entitled ‘Election of Directors’ in Clearnet’s management proxy circular dated March 17, 2000 prepared for its annual meetings of shareholders scheduled for May 18, 2000 sets out the name, municipality of residence, the principal occupations within the five preceding years, the periods of service and the expiry of the current term of each director of Clearnet. Such section is incorporated herein by reference. Clearnet’s board does not have an executive committee. The members of its audit committee are identified in such section entitled ‘Election of Directors’.

Set out below are the names, municipalities of residence and principal occupations within the five preceding years of Clearnet’s officers:

Name	Residence	Position
George A. Cope	Ajax, Ontario	President and Chief Executive Officer
Robert G. McFarlane	Unionville, Ontario	Executive Vice President, Chief Financial Officer and Secretary-
		Treasurer
Wade Oosterman	Toronto, Ontario	Executive Vice President, Sales and Marketing
John H. Phillips	Toronto, Ontario	Executive Vice President, Carrier Relations and General Counsel
Kevin A. Salvadori	Toronto, Ontario	Executive Vice President, Chief Information Officer
Robert C. Simmonds	Ajax, Ontario	Chairman and Executive Vice President, Regulatory
Eros L. Spadotto	Mississauga, Ontario	Executive Vice President and Chief Technology Officer
John Watson	Aurora, Ontario	Executive Vice President, Client Operations

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David D. Wells Toronto, Ontario

Executive Vice President, Employee Services and Administration

George A. Cope has served as Clearnet’s President since 1987 and as a director since 1988. He has been a director of Clearnet Inc. since 1992 and its Chief Executive Officer since 1994. He served as its Chief Operating Officer from 1992 to 1994. He was Vice President, Corporate Development of Lenbrook Inc. from 1990 to 1994 and was on its board of directors from 1992 to 1994. Mr. Cope was a board member and President of Bell Cellular Distribution Services Inc. Mr. Cope is currently a member of the PCS Alliance of the Canadian Wireless Telecommunications Association. In the past, he has served on the board and on the executive of the CWTA.

Robert G. McFarlane was appointed Executive Vice President and Chief Financial Officer, Secretary and Treasurer of Clearnet in 1994. Prior to joining Clearnet, Mr. McFarlane was a Vice President of Orenda Corporate Finance Ltd., a private investment banking firm in Toronto.

Wade Oosterman has served as a director of Clearnet since 1992 and as its Executive Vice President, Sales and Marketing since 1994. He was a director of Clearnet Inc. from 1992 until late 1994 and Vice President, Marketing since 1994. From 1991 to 1994, he was President of the MOCO Canada Division, now CBCC, of Clearnet Inc. and prior to 1991 he was the President and a director of MOCO Canada Inc., a predecessor corporation of Clearnet.

John H. Phillips was elected a director in May 1, 1998. He has served as Clearnet's Executive Vice President and General Counsel since joining Clearnet on December 1, 1994. In late 1998, he was appointed Vice President, Carrier Relations in addition to his other responsibilities. Before joining Clearnet, from 1974, he practiced business law at Blake, Cassels & Graydon, becoming a partner in 1982. He served on the board of directors of Clearnet Inc. from 1985 to 1992. Mr. Phillips now serves the Canadian wireless telecommunications industry as Chairman of the Board of Directors of the Canadian Wireless Telecommunications Association.

Kevin A. Salvadori was appointed Executive Vice President, Chief Information Officer in May 2000. Prior to this appointment, he was Executive Vice President, Client Operations since November 1997. Before then, he served as Director, Client Care from 1995 to 1997 and as Director, PCS Launch during 1997. Prior to joining Clearnet, Mr. Salvadori was a Senior Associate with Braxton Associates, The Strategy Consulting Division of Deloitte & Touche from 1992 to 1995.

Robert C. Simmonds , P.Eng., has served as a director of Clearnet since 1992 and as its Chairman and Executive Vice President, Regulatory since 1994. He has also served as a director of Clearnet Inc. since 1985, its Chairman since 1992 and its Vice President, Regulatory

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since 1994. He served as President of Clearnet Inc. from 1985 to 1992 and its Chief Executive Officer from 1992 to 1994. He was Vice President, Technology of Lenbrook Inc. until 1994 and has been since 1977 and continues to be a member of the board of directors of Lenbrook Inc. He is a past director of the Canadian Wireless Telecommunications Association and currently chairs its Technical Committee. He is a member of the Executive Committee of the Radio Advisory Board of Canada and has, since 1992, served as the Chairman of its Mobile & Personal Communications Committee. He is also a member of the Dean’s Advisory Board of the Faculty of Applied Science and Engineering of the University of Toronto.

Eros L. Spadotto has been Executive Vice President, Chief Technology Officer since January 2000 and primarily responsible for the continuing evolution of wireless technologies. Before then he served as Executive Vice President,Networks and Information Systems since November 1997. Before then, he served as Clearnet’s Vice President, Engineering and Network Services since 1995. Mr. Spadotto was Director, Services Planning & Development at Bell Mobility from 1993 to 1995 and was Bell Mobility Cellular's Director, Technology Development from 1989 to 1993.

John Watson was appointed Executive Vice President, Client Operations in May 2000. Before then he served as Vice President, Channel Marketing since May 1998. Prior to joining Clearnet in May 1996 as Director, Channel Marketing, Mr. Watson was a Senior Consultant with Tandem Management Consultants.

David D. Wells was appointed Executive Vice President, Employee Services and Administration in April 1996. Prior to joining Clearnet, Mr. Wells was President and Chief Executive Officer of Mobility Canada, a corporation whose shareholders are the wireless affiliates of the provincial telephone companies in Canada. Mr. Wells has previously held a number of senior positions with Bell Mobility (formerly Bell Cellular), including finance, information systems, human resources and administration since joining in 1987 as Vice President of Corporate Services.

ADDITIONAL INFORMATION

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Additional information, including directors’ and certain executive officers’ remuneration, principal holders of Clearnet’s voting shares and options to purchase securities, is contained in the management proxy circular referred to above. Additional financial information is provided in Clearnet’s comparative financial statements for its year ended December 31, 1999 a copy of which appears in Clearnet’s 1999 Annual Report.

Any person may obtain copies of the following documents upon request to Clearnet Communications Inc., c/o Shareholder Services, 200 Consilium Place, Scarborough, Ontario, M1H 3J3 or Internet: investorrelations@clearnet.com:

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• (i) one copy of this Annual Information Form;

• (ii) one copy of the 1999 Annual Report of Clearnet, which contains “Management’s Discussion and Analysis” and Clearnet’s comparative financial statements for its year ended December 31, 1999 with the accompanying report of the auditors thereon;

• (iii) one copy of any Clearnet interim financial statements for periods after 1999; and

• (iv) one copy of the management proxy circular referred to above.

THE END

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