##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2009

OR



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

Commission File Number: 001-16201





GLOBAL CROSSING LIMITED

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|BERMUDA                                                        |  | 98-0407042                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

WESSEX HOUSE

45 REID STREET

HAMILTON HM 12, BERMUDA

(Address Of Principal Executive Offices)

(441) 296-8600

(Registrants telephone number, including area code)





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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |   |  |                   |  |   |  |                       |  |   |  |                           |  |  
|----------------------- |  | - |  | ----------------- |  | - |  | --------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer |  | x |  | Non-accelerated filer |  |  ̈ |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

The number of shares of the Registrants common stock, par value $0.01 per share, outstanding as of August 3, 2009 was 60,134,317.









---

##### Table of Contents

GLOBAL CROSSING LIMITED AND SUBSIDIARIES

INDEX



|                             |  |                                                                                       |  |     
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|                             |  |                                                                                       |  | Page
|                             | 
|PART I FINANCIAL INFORMATION |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Financial Statements                                                                  |  | 3   
|                             |  |                                                                                      
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 20  
|                             |  |                                                                                      
|Item 3.                      |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 35  
|                             |  |                                                                                      
|Item 4.                      |  | Controls and Procedures                                                               |  | 35  
|                             | 
|PART II OTHER INFORMATION    |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Legal Proceedings                                                                     |  | 37  
|                             |  |                                                                                      
|Item 1A.                     |  | Risk Factors                                                                          |  | 37  
|                             |  |                                                                                      
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                   |  | 37  
|                             |  |                                                                                      
|Item 5.                      |  | Other Information                                                                     |  | 38  
|                             |  |                                                                                      
|Item 6.                      |  | Exhibits                                                                              |  | 38  



2



---

##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

GLOBAL CROSSING LIMITED
AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share information)



|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | -
|                                                                                                                                                                             |  | June 30,2009 |        |   | December 31,2008 |  
|                                                                                                                                                                             |  | (unaudited)  |        |   | (as adjusted)    |  
|                                                                                                                                                                             |  |             
|ASSETS:                                                                                                                                                                      |  |              |        |   |                  |   |        |  
|Current assets:                                                                                                                                                              |  |              |        |   |                  |   |        |  
|Cash and cash equivalents                                                                                                                                                    |  | $            | 268    |   |                  | $ | 360    |  
|Restricted cash and cash equivalents - current portion                                                                                                                       |  |              | 9      |   |                  |   | 7      |  
|Accounts receivable, net of allowances of $53 and $58                                                                                                                        |  |              | 365    |   |                  |   | 336    |  
|Prepaid costs and other current assets                                                                                                                                       |  |              | 107    |   |                  |   | 103    |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Total current assets                                                                                                                                                         |  |              | 749    |   |                  |   | 806    |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Restricted cash and cash equivalents - long term                                                                                                                             |  |              | 12     |   |                  |   | 11     |  
|Property and equipment, net of accumulated depreciation of $1,043 and $851                                                                                                   |  |              | 1,319  |   |                  |   | 1,300  |  
|Intangible assets, net (including goodwill of $164 and $147)                                                                                                                 |  |              | 189    |   |                  |   | 172    |  
|Other assets                                                                                                                                                                 |  |              | 59     |   |                  |   | 60     |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Total assets                                                                                                                                                                 |  | $            | 2,328  |   |                  | $ | 2,349  |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|                                                                                                                                                                             |  |             
|LIABILITIES:                                                                                                                                                                 |  |              |        |   |                  |   |        |  
|Current liabilities:                                                                                                                                                         |  |              |        |   |                  |   |        |  
|Accounts payable                                                                                                                                                             |  | $            | 282    |   |                  | $ | 329    |  
|Accrued cost of access                                                                                                                                                       |  |              | 86     |   |                  |   | 92     |  
|Short term debt and current portion of long term debt                                                                                                                        |  |              | 19     |   |                  |   | 26     |  
|Accrued restructuring costs - current portion                                                                                                                                |  |              | 13     |   |                  |   | 13     |  
|Deferred revenue - current portion                                                                                                                                           |  |              | 146    |   |                  |   | 138    |  
|Other current liabilities                                                                                                                                                    |  |              | 399    |   |                  |   | 361    |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Total current liabilities                                                                                                                                                    |  |              | 945    |   |                  |   | 959    |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Long term debt                                                                                                                                                               |  |              | 1,157  |   |                  |   | 1,127  |  
|Obligations under capital leases                                                                                                                                             |  |              | 88     |   |                  |   | 93     |  
|Deferred revenue                                                                                                                                                             |  |              | 337    |   |                  |   | 308    |  
|Accrued restructuring costs                                                                                                                                                  |  |              | 13     |   |                  |   | 14     |  
|Other deferred liabilities                                                                                                                                                   |  |              | 73     |   |                  |   | 94     |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Total liabilities                                                                                                                                                            |  |              | 2,613  |   |                  |   | 2,595  |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|                                                                                                                                                                             |  |             
|SHAREHOLDERS DEFICIT:                                                                                                                                                       |  |              |        |   |                  |   |        |  
|Common stock, 110,000,000 shares authorized, $.01 par value, 60,134,317 and 56,696,312 shares issued and outstanding as of June 30, 2009
and December 31, 2008, respectively |  |              | 1      |   |                  |   | 1      |  
|Preferred stock with controlling shareholder, 45,000,000 shares authorized, $.10 par value, 18,000,000 shares issued and
outstanding                                         |  |              | 2      |   |                  |   | 2      |  
|Additional paid-in capital                                                                                                                                                   |  |              | 1,422  |   |                  |   | 1,399  |  
|Accumulated other comprehensive loss                                                                                                                                         |  |              | (54    | ) |                  |   | (23    | )
|Accumulated deficit                                                                                                                                                          |  |              | (1,656 | ) |                  |   | (1,625 | )
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Total shareholders deficit                                                                                                                                                  |  |              | (285   | ) |                  |   | (246   | )
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  
|Total liabilities and shareholders deficit                                                                                                                                  |  | $            | 2,328  |   |                  | $ | 2,349  |  
|                                                                                                                                                                             |  |              |        |   |                  |   |        |  

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



3



---

##### Table of Contents

GLOBAL CROSSING LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except share
and per share information)

(unaudited)



|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|---------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ------------- | - |  | - | ---------- | -
|                                                                                   |  | Three Months EndedJune 30, |            |   | Six Months EndedJune 30, |  
|                                                                                   |  | 2009                       |            |   | 2008                     |   |            | 2009 |  |   | 2008          |  
|                                                                                   |  |                            |            |   | (as adjusted)            |   |            |      |  |   | (as adjusted) |  
|                                                                                   |  |                            |            |  
|Revenue                                                                            |  | $                          | 633        |   |                          | $ | 654        |      |  | $ | 1,242         |   |  | $ | 1,286      |  
|Cost of revenue (excluding depreciation and amortization, shown separately below): |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Cost of access                                                                     |  |                            | (285       | ) |                          |   | (306       | )    |  |   | (571          | ) |  |   | (605       | )
|Real estate, network and operations                                                |  |                            | (98        | ) |                          |   | (112       | )    |  |   | (195          | ) |  |   | (220       | )
|Third party maintenance                                                            |  |                            | (27        | ) |                          |   | (28        | )    |  |   | (51           | ) |  |   | (55        | )
|Cost of equipment and other sales                                                  |  |                            | (22        | ) |                          |   | (23        | )    |  |   | (45           | ) |  |   | (46        | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Total cost of revenue                                                              |  |                            | (432       | ) |                          |   | (469       | )    |  |   | (862          | ) |  |   | (926       | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Gross margin                                                                       |  |                            | 201        |   |                          |   | 185        |      |  |   | 380           |   |  |   | 360        |  
|Selling, general and administrative                                                |  |                            | (108       | ) |                          |   | (129       | )    |  |   | (212          | ) |  |   | (259       | )
|Depreciation and amortization                                                      |  |                            | (82        | ) |                          |   | (84        | )    |  |   | (161          | ) |  |   | (160       | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Total operating expenses                                                           |  |                            | (622       | ) |                          |   | (682       | )    |  |   | (1,235        | ) |  |   | (1,345     | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Operating income (loss)                                                            |  |                            | 11         |   |                          |   | (28        | )    |  |   | 7             |   |  |   | (59        | )
|Other income (expense):                                                            |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Interest income                                                                    |  |                            | 4          |   |                          |   | 2          |      |  |   | 5             |   |  |   | 6          |  
|Interest expense                                                                   |  |                            | (38        | ) |                          |   | (46        | )    |  |   | (74           | ) |  |   | (92        | )
|Other income, net                                                                  |  |                            | 58         |   |                          |   | 8          |      |  |   | 43            |   |  |   | 28         |  
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Income (loss) before preconfirmation contingencies and provision for income taxes  |  |                            | 35         |   |                          |   | (64        | )    |  |   | (19           | ) |  |   | (117       | )
|Net gain on preconfirmation contingencies                                          |  |                            |           |   |                          |   | 4          |      |  |   |              |   |  |   | 4          |  
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Income (loss) before provision for income taxes                                    |  |                            | 35         |   |                          |   | (60        | )    |  |   | (19           | ) |  |   | (113       | )
|Provision for income taxes                                                         |  |                            | (8         | ) |                          |   | (29        | )    |  |   | (12           | ) |  |   | (47        | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Net income (loss)                                                                  |  |                            | 27         |   |                          |   | (89        | )    |  |   | (31           | ) |  |   | (160       | )
|Preferred stock dividends                                                          |  |                            | (1         | ) |                          |   | (1         | )    |  |   | (2            | ) |  |   | (2         | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Income (loss) applicable to common shareholders                                    |  | $                          | 26         |   |                          | $ | (90        | )    |  | $ | (33           | ) |  | $ | (162       | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|                                                                                   |  |                            |            |  
|Income (loss) per common share, basic:                                             |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Income (loss) applicable to common shareholders                                    |  | $                          | 0.43       |   |                          | $ | (1.62      | )    |  | $ | (0.56         | ) |  | $ | (2.93      | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Weighted average number of common shares                                           |  |                            | 59,904,503 |   |                          |   | 55,675,011 |      |  |   | 58,422,070    |   |  |   | 55,196,799 |  
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|                                                                                   |  |                            |            |  
|Income (loss) per common share, diluted:                                           |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Income (loss) applicable to common shareholders                                    |  | $                          | 0.34       |   |                          | $ | (1.62      | )    |  | $ | (0.56         | ) |  | $ | (2.93      | )
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  
|Weighted average number of common shares                                           |  |                            | 78,540,571 |   |                          |   | 55,675,011 |      |  |   | 58,422,070    |   |  |   | 55,196,799 |  
|                                                                                   |  |                            |            |   |                          |   |            |      |  |   |               |   |  |   |            |  

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



4



---

##### Table of Contents

GLOBAL CROSSING LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)



|                                                                                |  |                          |     |   |               |   |      |  
|------------------------------------------------------------------------------- |  | ------------------------ | --- | - | ------------- | - | ---- | -
|                                                                                |  | Six Months EndedJune 30, |    
|                                                                                |  | 2009                     |     |   | 2008          |  
|                                                                                |  |                          |     |   | (as adjusted) |  
|Cash flows provided by (used in) operating activities:                          |  |                          |     |   |               |   |      |  
|Net loss                                                                        |  | $                        | (31 | ) |               | $ | (160 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                          |     |   |               |   |      |  
|Loss on sale of marketable securities                                           |  |                          |    |   |               |   | 3    |  
|Non-cash income tax provision                                                   |  |                          |    |   |               |   | 27   |  
|Non-cash stock compensation expense                                             |  |                          | 10  |   |               |   | 43   |  
|Depreciation and amortization                                                   |  |                          | 161 |   |               |   | 160  |  
|Provision for doubtful accounts                                                 |  |                          | 4   |   |               |   | 5    |  
|Amortization of prior period IRUs                                               |  |                          | (11 | ) |               |   | (7   | )
|Gain on preconfirmation contingencies                                           |  |                          |    |   |               |   | (4   | )
|Change in long term deferred revenue                                            |  |                          | 32  |   |               |   | 32   |  
|Other                                                                           |  |                          | (46 | ) |               |   | (34  | )
|Change in operating working capital:                                            |  |                          |     |   |               |   |      |  
|- Changes in accounts receivable                                                |  |                          | (17 | ) |               |   | (21  | )
|- Changes in accounts payable                                                   |  |                          | (59 | ) |               |   | 5    |  
|- Changes in other current assets                                               |  |                          | (12 | ) |               |   | (41  | )
|- Changes in other current liabilities                                          |  |                          | 19  |   |               |   | 32   |  
|                                                                                |  |                          |     |   |               |   |      |  
|Net cash provided by operating activities                                       |  |                          | 50  |   |               |   | 40   |  
|                                                                                |  |                          |     |   |               |   |      |  
|                                                                                |  |                         
|Cash flows provided by (used in) investing activities:                          |  |                          |     |   |               |   |      |  
|Purchases of property and equipment                                             |  |                          | (92 | ) |               |   | (92  | )
|Purchases of marketable securities                                              |  |                          |    |   |               |   | (11  | )
|Proceeds from sale of property and equipment                                    |  |                          |    |   |               |   | 4    |  
|Proceeds from sale of marketable securities                                     |  |                          | 4   |   |               |   | 12   |  
|Change in restricted cash and cash equivalents                                  |  |                          | (2  | ) |               |   | (6   | )
|                                                                                |  |                          |     |   |               |   |      |  
|Net cash used in investing activities                                           |  |                          | (90 | ) |               |   | (93  | )
|                                                                                |  |                          |     |   |               |   |      |  
|                                                                                |  |                         
|Cash flows provided by (used in) financing activities:                          |  |                          |     |   |               |   |      |  
|Proceeds from short and long term debt                                          |  |                          | 6   |   |               |   | 7    |  
|Repayment of capital lease obligations                                          |  |                          | (30 | ) |               |   | (29  | )
|Repayment of long term debt (including current portion)                         |  |                          | (20 | ) |               |   | (9   | )
|Proceeds from exercise of stock options                                         |  |                          |    |   |               |   | 1    |  
|Payment of employee taxes on share-based compensation                           |  |                          | (12 | ) |               |   |     |  
|                                                                                |  |                          |     |   |               |   |      |  
|Net cash used in financing activities                                           |  |                          | (56 | ) |               |   | (30  | )
|                                                                                |  |                          |     |   |               |   |      |  
|                                                                                |  |                         
|Effect of exchange rate changes on cash and cash equivalents                    |  |                          | 4   |   |               |   | 4    |  
|                                                                                |  |                          |     |   |               |   |      |  
|                                                                                |  |                         
|Net decrease in cash and cash equivalents                                       |  |                          | (92 | ) |               |   | (79  | )
|Cash and cash equivalents, beginning of period                                  |  |                          | 360 |   |               |   | 397  |  
|                                                                                |  |                          |     |   |               |   |      |  
|Cash and cash equivalents, end of period                                        |  | $                        | 268 |   |               | $ | 318  |  
|                                                                                |  |                          |     |   |               |   |      |  
|                                                                                |  |                         
|Non-cash investing and financing activities:                                    |  |                          |     |   |               |   |      |  
|Capital lease and debt obligations incurred                                     |  | $                        | 25  |   |               | $ | 27   |  
|                                                                                |  |                          |     |   |               |   |      |  

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



5



---

##### Table of Contents

GLOBAL CROSSING LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except
countries, cities, employees, share and per share information)

(unaudited)



|1. | BACKGROUND AND ORGANIZATION
|-- | ---------------------------

Global Crossing
Limited (GCL) and its subsidiaries (collectively, the Company) are a global communications service provider, serving many of the worlds largest corporations, government entities and many other telecommunications
carriers, providing a full range of Internet Protocol (IP) and managed data and voice products and services. The Companys network delivers services to nearly 700 cities in more than 60 countries and six continents around the world.
The Company operates as an integrated global services provider with operations in North America, Europe, Latin America and a portion of the Asia/Pacific region, providing services that support a migration path to a fully converged IP environment.
The vast majority of the Companys revenue is generated from monthly services. The Company reports its financial results based on three separate operating segments: (i) Global Crossing (UK) Telecommunications Ltd (GCUK) and its
subsidiaries (collectively, the GCUK Segment); (ii) GC Impsat Holdings I Plc (GC Impsat) and its subsidiaries (collectively, the GC Impsat Segment); and (iii) GCL and its other subsidiaries
(collectively, the Rest of World Segment or ROW Segment) (see Note 10).



|2. | BASIS OF PRESENTATION
|-- | ---------------------

Basis of Presentation and Use of
Estimates

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and disclosures normally included in financial
statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated
financial statements and related notes thereto included in the Companys Annual Report for the year ended December 31, 2008 filed with the SEC on Form 10-K as amended by the Companys Form 8-K filed on May 7, 2009 which adjusted
the historical financial statements to reflect the retrospective adoption of the Financial Accounting Standards Board Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement). These condensed consolidated financial statements include the accounts of the Company over which it exercises control. In the opinion of management, the accompanying condensed consolidated financial
statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim results for the Company. The results of operations for any interim period are not necessarily indicative of
results to be expected for the full year.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, the disclosure of contingent assets and liabilities in the condensed
consolidated financial statements and the accompanying notes, and the reported amounts of revenue and expenses and cash flows during the periods presented. Actual amounts and results could differ from those estimates. The estimates the Company makes
are based on historical factors, current circumstances and the experience and judgment of the Companys management. The Company evaluates its assumptions and estimates on an ongoing basis and may employ third party experts to assist in the
Companys evaluations.

Reclassifications

Certain amounts in the prior period condensed consolidated financial statements and accompanying footnotes have been reclassified to conform to the current year presentation.

In the condensed consolidated statements of operations for the three and six months ended June 30, 2008, $1 and $3, respectively, of sales taxes
previously netted against revenue were reclassified to selling, general and administrative expenses to be consistent with the presentation of other similar taxes. Additionally for the three and six months ended June 30,
2008, $5 and $9, respectively, of costs incurred to operate the GC Impsat Segment data center business, primarily employee-related expenses, were reclassified from selling, general and administrative to real estate, network and
operations as they represent service delivery costs and therefore are more appropriately reported as cost of revenue.



6



---

##### Table of Contents

Recently Issued and Recently Adopted Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 168, The FASB Accounting Standards CodificationTMand the Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162 (SFAS No. 168). SFAS No. 168 essentially reduces the U.S. GAAP Hierarchy to two levels (one that is
authoritative and one that is not) and introduces the FASB Accounting Standards Codification (the FASB ASC) as the single source of accounting and reporting standards for nongovernmental entities. Without changing the application of U.S.
GAAP, the FASB ASC is a topical reorganization of authoritative U.S. GAAP, which includes accounting guidance previously categorized in Levels A  D pursuant to SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles, and certain guidance issued by the SEC. SFAS No. 168 is effective for interim and annual periods ending after September 15, 2009.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (SFAS No. 165). SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur
after the balance sheet date but before the financial statements are issued or available to be issued. SFAS No. 165 sets forth: (i) the period after the balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in the financial statements; (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its
financial statements; and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. SFAS No. 165 is effective prospectively for interim and annual periods ending after
June 15, 2009. In accordance with SFAS No. 165, the Company has evaluated subsequent events through August 4, 2009, the issuance date of these condensed consolidated financial statements.

In April 2009, the FASB issued FASB Staff Position (FSP) No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments (FSP No. FAS 107-1 and APB 28-1). FSP No. FAS 107-1 and APB 28-1 amends SFAS No. 107,Disclosures about Fair Value of Financial Instruments,to require disclosures about fair value of
financial instruments in interim as well as in annual financial statements. This FSP also amends Accounting Principles Board (APB) Opinion No. 28, Interim Financial Reporting, to require those disclosures in all interim
financial statements. FSP No. FAS 107-1 and APB 28-1 is effective for interim reporting periods ending after June 15, 2009. The adoption of FSP No. FAS 107-1 and APB 28-1 did not have a material effect on the Companys condensed
consolidated financial statements.

In May 2008, the FASB issued FSP No. APB 14-1, Accounting for Convertible Debt Instruments That
May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB No. 14-1). This FSP clarifies the accounting for convertible debt instruments that may be settled in cash upon either mandatory or optional
conversion (including partial cash settlement) and specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entitys nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods. FSP APB No. 14-1 must be applied on a retrospective basis and is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. On May 30, 2006, the Company completed a public offering of $144 aggregate principal amount of 5% convertible senior notes due 2011 (the 5% Convertible Notes) which are within the scope of FSP APB No. 14-1.
Accordingly, the Companys consolidated financial statements as of December 31, 2008 and condensed consolidated financial statements for the three and six months ended June 30, 2008 have been adjusted to reflect the retrospective
application of FSP APB No. 14-1.

Upon adoption of FSP APB No. 14-1 on January 1, 2009, the Company reclassified $38 of the
carrying value of the 5% Convertible Notes to additional paid-in capital. In addition, upon adoption the cumulative effect of the retrospective application of FSP APB No. 14-1 on the Companys accumulated deficit was an increase of $17
related to prior period amortization of the debt discount and associated deferred financing fees.

As of June 30, 2009 the principal
amount of the liability component, its unamortized discount and its net carrying value were $144, $18 and $126, respectively, while as of December 31, 2008 the principal amount of the liability component, its unamortized discount and its net
carrying value were $144, $22 and $122, respectively. The remaining unamortized discount of $18 as of June 30, 2009 will be amortized, using the effective interest rate method, through the maturity of the 5% Convertible Notes on May 15,
2011. As of both June 30, 2009 and December 31, 2008, the carrying amount of the equity component was $38. At June 30, 2009 and December 31, 2008, if the 5% Convertible Notes were converted into shares of the Companys
common stock at a conversion price of $22.98 per share, approximately 6.3 million shares of the Companys common stock would be issued.

For each of the three and six months ended June 30, 2009 and 2008, the effective interest rate for the 5% Convertible Notes was 12.75%. For the three months ended June 30, 2009 and 2008, interest expense for the 5% Convertible
Notes related to the coupon and the amortization of the debt discount was $4 ($4 after-tax) and $3 ($3 after-tax), respectively, while for the six months ended June 30, 2009 and 2008, interest expense for the 5% Convertible Notes related to the
coupon and the amortization of the debt discount was $8 ($8 after-tax) and $7 ($7 after-tax), respectively.

For the three months ended June 30, 2009, the effect of applying FSP APB No. 14-1 was a decrease in the Companys income applicable to common shareholders of $2 (or $.03 per
basic and diluted share) while for the six months ended June 30, 2009, the effect of applying FSP APB No. 14-1 was an increase in the Companys loss applicable to common shareholders of $4 (or $.07 per basic share). For the three and
six months ended June 30, 2008, the effect of the application of FSP APB No. 14-1 was an increase in the Companys loss applicable to common shareholders of $1 (or $.02 per basic share) and $3 (or $.05 per basic share), respectively.



7



---

##### Table of Contents

On January 1, 2009, the Company adopted the provisions of SFAS No. 157, Fair Value
Measurements (SFAS No. 157), related to nonfinancial assets and nonfinancial liabilities on a prospective basis which did not have a material impact on the Companys consolidated position or results of operations. SFAS
No. 157, as amended establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and expands the required disclosures about fair value measurement. On January 1, 2008, the Company adopted the
effective provisions of SFAS No. 157 as related to financial assets and financial liabilities as well as other assets and liabilities carried at fair value on a recurring basis which did not have a material impact on the Companys
consolidated position or results of operations.

In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or the Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP No. 157-4). This FSP amends SFAS No. 157 to provide additional guidance for
(i) estimating fair value when the volume and level of activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability and (ii) identifying circumstances that may indicate
that a transaction is not orderly. FSP No. 157-4 also requires additional disclosures about fair value measurements in interim and annual reporting periods. FSP No. 157-4 is effective for interim and annual periods ending after
June 15, 2009. The adoption of this FSP did not have a material impact on the Companys condensed consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141R). SFAS No. 141R changes how business acquisitions are accounted for and impacts financial statements both in
periods before the acquisition date and in subsequent periods. SFAS No. 141R applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquiree), including those sometimes
referred to as true mergers or mergers of equals and combinations achieved without the transfer of consideration, for example, by contract alone or through the lapse of minority veto rights. SFAS No. 141R became
effective for the Company on January 1, 2009 and its provisions will be applied prospectively to any potential future transactions.

SFAS No. 141R amends AICPA Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (SOP No. 90-7). Prior to adoption, reversal of pre-emergence tax valuation
allowances are recorded as a reduction of intangibles to zero and thereafter as additional paid-in-capital. Upon adoption, the reversal of pre-emergence valuation allowances will be recorded as a reduction of tax expense. During the three and six
months ended June 30, 2008 the Company recorded a provision for income taxes and additional paid-in-capital of $9 and $22, respectively, as a result of accounting in accordance with SOP No. 90-7. SFAS No. 141R also amends SFAS
No. 109, Accounting for Income Taxes. Prior to adoption, the reversal of valuation allowances recorded in purchase accounting would first reduce goodwill to zero, and then reduce the other acquired non-current intangible assets to
zero, and then be reflected in income tax expense. Upon adoption, the reversals of pre-acquisition valuation allowances that do not qualify as a measurement period adjustment are reflected in income tax expense. During the three and six months ended
June 30, 2008, the Company recorded $3 and $5, respectively, of valuation allowance reversals for deferred tax assets acquired as part of the Impsat acquisition as a reduction in goodwill. SFAS No. 141R also nullifies AICPA Practice
Bulletin No. 11, Accounting for Preconfirmation Contingencies in Fresh Start Reporting, which required adjustments of preconfirmation contingencies to be separately disclosed in income or loss from continuing operations. Subsequent
to adoption, adjustments in income tax contingencies will be recognized in provision for income taxes and non-income tax contingencies in operating income or loss.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133 (SFAS No. 161). SFAS
No. 161 requires enhanced disclosures related to derivatives and hedging activities. Under SFAS No. 161, entities must describe: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related
hedge items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133), and its related interpretations; and (c) how derivative instruments and related
hedged items affect an entitys financial position, financial performance, and cash flows. The requirements of SFAS No. 161 are effective for both interim and annual reporting periods beginning after November 15, 2008, with early
application encouraged. The adoption of SFAS No. 161 on January 1, 2009 did not have a material impact on the Companys condensed consolidated financial statements.



|3. | FINANCING ACTIVITIES
|-- | --------------------

Financing Activities

During the six months ended June 30, 2009, the Company entered into various capital leasing arrangements that aggregated $25
in total leased amount. These agreements have terms that range from 36 to 48 months and implicit interest rates that range from 3.4% to 20.2%, with a weighted average effective interest rate of 10.4%.



8



---

##### Table of Contents

During the six months ended June 30, 2009, the Company also entered into debt agreements having
aggregate principal amount of $6. These agreements have terms that range from 6 to 12 months, $4 of which have variable interest rate based on a spread over the Colombian Fixed Term Deposit Rate and $2 based on a spread over the Brazilian Inter-bank
Lending Rate.

GCUK Notes Tender Offer

As required by the indenture governing the senior secured notes due 2014 (the GCUK Notes), within 120 days after the end of each twelve month period ending December 31, GCUK must offer (the Excess Cash Offer) to
purchase a portion of the GCUK Notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, to the purchase date, using 50% of Designated GCUK Cash Flow from that period. Designated
GCUK Cash Flow means GCUKs consolidated net income plus non-cash charges minus capital expenditures, calculated in accordance with the terms of the indenture governing the GCUK Notes. With respect to the 2008 Excess Cash Offer, GCUK has
made an offer for and purchased approximately $11 in principal amount of the GCUK Notes, plus accrued interest through the purchase date.



|4. | RESTRUCTURING ACTIVITIES
|-- | ------------------------

2007 Restructuring Plans

During 2007, the Company adopted a restructuring plan as a result of the Impsat Fiber Networks, Inc. (Impsat) acquisition under
which redundant Impsat employees were terminated. As a result, the Company incurred cash restructuring costs of approximately $8 for severance and related benefits. The liabilities associated with this restructuring plan have been accounted for as
part of the purchase price of Impsat. As of June 30, 2009 and December 31, 2008, the remaining liability of the restructuring reserve was $8 as of each date, all related to the GC Impsat Segment.

2006 Restructuring Plan

The Company adopted a
restructuring plan as a result of the Fibernet Group Plc (Fibernet) acquisition under which redundant Fibernet employees were terminated and certain Fibernet facility lease agreements were terminated or restructured. As a result of these
efforts the Company incurred cash restructuring costs of approximately $3 for severance and related benefits in connection with workforce reductions and $4 for real estate consolidation. The liabilities associated with the restructuring plan have
been accounted for as part of the purchase price of Fibernet. All amounts incurred for employee separations have been paid and it is anticipated that payment in respect of the restructuring activities for real estate consolidation will continue
through 2017. As of June 30, 2009 and December 31, 2008, the remaining liability related to these initiatives was $1 as of each date, all related to the GCUK Segment.

2003 and Prior Restructuring Plans

Prior to the Companys emergence from bankruptcy on
December 9, 2003, the Company adopted certain restructuring plans as a result of the slowdown of the economy and telecommunications industry, as well as its efforts to restructure while under Chapter 11 bankruptcy protection. As a result of
these activities, the Company eliminated employees and vacated facilities. All amounts incurred for employee separations were paid as of December 31, 2004 and it is anticipated that the remainder of the restructuring liability, all of which
relates to facility closings, will be paid through 2025.

The undiscounted facilities closing reserve, which represents estimated future
cash flows, is composed of continuing building lease obligations and broker commissions for the restructured sites (aggregating $104 as of June 30, 2009), offset by anticipated receipts from existing and future third-party subleases. As of
June 30, 2009, anticipated third-party sublease receipts were $91, representing $42 from subleases already entered into and $49 from subleases projected to be entered into in the future.

The table below reflects the activity associated with the restructuring reserve relating to the restructuring plans initiated during and prior to 2003
for the six months ended June 30, 2009:



|                              |  |                  |    |  
|----------------------------- |  | ---------------- | -- | -
|                              |  | FacilityClosings |   
|Balance at December 31, 2008  |  | $                | 18 |  
|Change in estimated liability |  |                  | 2  |  
|Deductions                    |  |                  | (4 | )
|Foreign currency impact       |  |                  | 1  |  
|                              |  |                  |    |  
|Balance at June 30, 2009      |  | $                | 17 |  
|                              |  |                  |    |  



9



---

##### Table of Contents

|5. | OTHER CURRENT LIABILITIES
|-- | -------------------------



|                                                                    |  |              |     |                  |   |    
|------------------------------------------------------------------- |  | ------------ | --- | ---------------- | - | ---
|                                                                    |  | June 30,2009 |     | December 31,2008
|                                                                    |  | (unaudited)  |     |                 
|                                                                    |  |             
|Accrued taxes, including value added taxes in foreign jurisdictions |  | $            | 104 |                  | $ | 94 
|Accrued payroll, bonus, commissions, and related benefits           |  |              | 58  |                  |   | 45 
|Accrued professional fees                                           |  |              | 12  |                  |   | 12 
|Accrued interest                                                    |  |              | 16  |                  |   | 16 
|Accrued real estate and related costs                               |  |              | 15  |                  |   | 15 
|Accrued capital expenditures                                        |  |              | 7   |                  |   | 10 
|Current portion of capital lease obligations                        |  |              | 59  |                  |   | 52 
|Income taxes payable                                                |  |              | 12  |                  |   | 8  
|Accrued third party maintenance costs                               |  |              | 10  |                  |   | 7  
|Customer deposits                                                   |  |              | 34  |                  |   | 33 
|Other                                                               |  |              | 72  |                  |   | 69 
|                                                                    |  |              |     |                  |   |    
|Total other current liabilities                                     |  | $            | 399 |                  | $ | 361
|                                                                    |  |              |     |                  |   |    



|6. | COMPREHENSIVE LOSS
|-- | ------------------

The components of comprehensive
loss for the periods indicated are as follows:



|                                                      |  |                            |     |   |                          |   |     |      |  |   |                    |   |  |   |      |  
|----------------------------------------------------- |  | -------------------------- | --- | - | ------------------------ | - | --- | ---- |  | - | ------------------ | - |  | - | ---- | -
|                                                      |  | Three Months EndedJune 30, |     |   | Six Months EndedJune 30, |  
|                                                      |  | 2009                       |     |   | 2008 (as adjusted)       |   |     | 2009 |  |   | 2008 (as adjusted) |  
|                                                      |  | (unaudited)                |     |   | (unaudited)              |  
|                                                      |  |                            |     |  
|Net income (loss)                                     |  | $                          | 27  |   |                          | $ | (89 | )    |  | $ | (31                | ) |  | $ | (160 | )
|Foreign currency translation adjustment               |  |                            | (46 | ) |                          |   | 21  |      |  |   | (28                | ) |  |   | 5    |  
|Unrealized derivative gain (loss) on cash flow hedges |  |                            | (2  | ) |                          |   | 3   |      |  |   | (3                 | ) |  |   | 3    |  
|                                                      |  |                            |     |   |                          |   |     |      |  |   |                    |   |  |   |      |  
|Comprehensive loss                                    |  | $                          | (21 | ) |                          | $ | (65 | )    |  | $ | (62                | ) |  | $ | (152 | )
|                                                      |  |                            |     |   |                          |   |     |      |  |   |                    |   |  |   |      |  



10



---

##### Table of Contents

|7. | INCOME (LOSS) PER COMMON SHARE
|-- | ------------------------------

Basic income (loss)
per common share is computed as income (loss) applicable to common shareholders divided by the weighted-average number of common shares outstanding for the period. Income (loss) applicable to common shareholders includes preferred stock dividends of
$1 and $2, respectively, for the three months ended June 30, 2009 and 2008, and each of the six months ended June 30, 2009 and 2008.

Diluted income (loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. However, since the Company had net losses for the
three months ended June 30, 2008 and each of the six months ended June 30, 2009 and 2008, diluted loss per common share is the same as basic loss per common share.



|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------ |  | -------------------------- | ---------- | ---- | ------------------------ | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                 |  | Three Months EndedJune 30, |            |      | Six Months EndedJune 30, |           
|(in millions, except share and per share data)   |  | 2009                       |            | 2008 |                          |            | 2009 |  |   | 2008       |  
|                                                 |  |                            |            |     
|Basic income (loss) per share calculation        |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|                                                 |  |                            |            |     
|Numerator:                                       |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|Income (loss) applicable to common shareholders  |  | $                          | 26         |      | $                        | (90        | )    |  | $ | (33        | ) |  | $ | (162       | )
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|                                                 |  |                            |            |     
|Denominator:                                     |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|Weighted average number of common shares         |  |                            | 59,904,503 |      |                          | 55,675,011 |      |  |   | 58,422,070 |   |  |   | 55,196,799 |  
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|                                                 |  |                            |            |     
|Basic income (loss) per share                    |  | $                          | 0.43       |      | $                        | (1.62      | )    |  | $ | (0.56      | ) |  | $ | (2.93      | )
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|                                                 |  |                            |            |     
|Diluted income (loss) per share calculation      |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|                                                 |  |                            |            |     
|Numerator:                                       |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|Income (loss) applicable to common shareholders  |  | $                          | 26         |      | $                        | (90        | )    |  | $ | (33        | ) |  | $ | (162       | )
|Preferred stock dividends1                       |  |                            | 1          |      |                          |           |      |  |   |           |   |  |   |           |  
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|Income (loss) applicable to common shareholders  |  | $                          | 27         |      | $                        | (90        | )    |  | $ | (33        | ) |  | $ | (162       | )
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|                                                 |  |                            |            |     
|Denominator:                                     |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|Weighted average number of common shares         |  |                            | 59,904,503 |      |                          | 55,675,011 |      |  |   | 58,422,070 |   |  |   | 55,196,799 |  
|Preferred stock                                  |  |                            | 18,000,000 |      |                          |           |      |  |   |           |   |  |   |           |  
|Share based awards                               |  |                            | 636,068    |      |                          |           |      |  |   |           |   |  |   |           |  
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|Diluted weighted average number of common shares |  |                            | 78,540,571 |      |                          | 55,675,011 |      |  |   | 58,422,070 |   |  |   | 55,196,799 |  
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  
|                                                 |  |                            |            |     
|Diluted income (loss) per share                  |  | $                          | 0.34       |      | $                        | (1.62      | )    |  | $ | (0.56      | ) |  | $ | (2.93      | )
|                                                 |  |                            |            |      |                          |            |      |  |   |            |   |  |   |            |  

| | 
| | 

| | 1 | Preferred stock dividends not included in the dilutive calculation were $1, $2, and $2 for the three months ended June 30, 2008, and the six months ended
June 30, 2009 and 2008, respectively.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                |          |                    |          |                  |      |            |      |           
|------------------------------------------------------------------------------- | -------- | ------------------ | -------- | ---------------- | ---- | ---------- | ---- | ----------
|Potential common shares excluded from the calculation of diluted loss per share |          | Three Months Ended |          | Six Months Ended
|                                                                                | June 30, |                    | June 30,
|                                                                                | 2009     |                    | 2008     |                  | 2009 |            | 2008
|                                                                                |          |                    |          |                 
|Preferred stock                                                                 |          |                   |          | 18,000,000       |      | 18,000,000 |      | 18,000,000
|Share based awards                                                              |          |                   |          | 792,798          |      | 226,558    |      | 810,672   
|                                                                                |          |                    |          |                  |      |            |      |           
|Diluted weighted average number of common shares                                |          |                   |          | 18,792,798       |      | 18,226,558 |      | 18,810,672
|                                                                                |          |                    |          |                  |      |            |      |           

Employee stock awards to purchase approximately 1 million shares for $10.16 or $15.39 per
share were not included in the dilutive income per share calculation for the three and six months ended June 30, 2008 as the exercise price is greater than the average market price per share.

The 5% Convertible Notes which are convertible into approximately 6.3 million shares at a conversion price of $22.98 per share were not included in
the dilutive income per share calculation as the conversion price is greater than the average market price per share.



11



---

##### Table of Contents

|8. | CONTINGENCIES
|-- | -------------

Amounts accrued for contingent
liabilities are included in other current liabilities and other deferred liabilities at June 30, 2009 and December 31, 2008. In accordance with SFAS No. 5, Accounting for Contingencies, the Company makes a provision for a
liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In accordance with FASB Interpretation No. 14, Reasonable Estimation of the Amount of a Loss (an interpretation
of FASB Statement No. 5), where it is probable that a liability has been incurred and there is a range in the expected loss and no amount in the range is more likely than any other amount, the Company accrues the low end of the range.
These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Although the Company believes it
has adequate provisions for the following matters, litigation is inherently unpredictable and it is possible that cash flows or results of operations could be materially and adversely affected in any particular period by the unfavorable resolution
or disposition of one or more of these contingencies. The following is a description of the material legal proceedings involving the Company commenced or pending during the six months ended June 30, 2009.

AT&T Corp. (SBC Communications) Claim

On
November 17, 2004, AT&Ts LEC affiliates commenced an action against the Company and other defendants in the U.S. District Court for the Eastern District of Missouri. The complaint alleges that the Company, through certain unnamed
intermediaries, which are characterized as least cost routers, terminated long distance traffic to avoid the payment of interstate and intrastate access charges.

The complaint alleges five causes of action: (1) breach of federal tariffs; (2) breach of state tariffs; (3) unjust enrichment (in the
alternative to the tariff claims); (4) fraud; and (5) civil conspiracy. Although the complaint does not contain a specific claim for damages, plaintiffs allege that they have been damaged in the amount of approximately $20 for the time
period of February 2002 through August 2004. The complaint also seeks an injunction against the use of least cost routers and the avoidance of access charges. The Company filed a motion to dismiss the complaint on January 18, 2005,
which motion was mooted by the filing of a first amended complaint on February 4, 2005. The first amended complaint added as defendants five competitive local exchange carriers and certain of their affiliates (none of which is affiliated with
the Company) and re-alleged the same five causes of action. The Company filed a motion to dismiss the first amended complaint on March 4, 2005. On August 23, 2005, the Court referred a comparable case to the Federal Communications
Commission (FCC) and the FCC has sought comments on the issues referred by the Court. The Company filed comments in the two declaratory judgment proceedings occasioned by the Courts referral. On February 7, 2006, the Court
entered an order: (a) dismissing AT&Ts claims against Global Crossing to the extent that such claims arose prior to December 9, 2003 by virtue of the injunction contained in the joint plan of reorganization (the Plan of
Reorganization) of the Companys predecessor and a number of its subsidiaries (collectively, the GC Debtors) which became effective on that date; and (b) staying the remainder of the action pending the outcome of the
referral to the FCC described above. On February 22, 2006, AT&T moved the Court to reconsider its decision of February 7, 2006 to the extent that it dismissed claims that arose prior to December 9, 2003. The Company filed its
response to the motion on March 6, 2006, requesting that the Court deny the motion. On May 31, 2006, the Court entered an order denying plaintiffs motion for reconsideration without prejudice. On April 15, 2008, plaintiffs moved
to vacate the stay entered by the Court on the grounds of inaction by the FCC. The Court denied the motion to vacate and the plaintiffs have requested reconsideration. That request is presently pending before the Court. The plaintiffs have also
filed a motion for oral argument, but the Court has not yet acted on that request.

Claim by the U.S. Department of Commerce

A claim was filed in the Companys bankruptcy proceedings by the U.S. Department of Commerce (the Commerce Department) on
October 30, 2002 asserting that an undersea cable owned by Pacific Crossing Ltd., a former subsidiary of the Company (PCL) violates the terms of a Special Use permit issued by the National Oceanic and Atmospheric Administration
(NOAA). The Company believes responsibility for the asserted claim rests entirely with the Companys former subsidiary. On November 7, 2003, the Company and the Global Crossing Creditors Committee filed an objection to
this claim with the Bankruptcy Court. Subsequently, the Commerce Department agreed to limit the size of the pre-petition portion of its claim to $14. An identical claim that had been filed in the bankruptcy proceedings of PCL was settled in
principle in September 2005 and was subsequently approved by the court as part of the PCL plan of reorganization confirmed in an order dated November 10, 2005. The Company initiated preliminary discussions with the Commerce Department and its
Justice Department attorneys as to the impact that settlement has on the claim against the Company. The Commerce Department continues to consider its position on the matter.

Qwest Rights-of-Way Litigation

In May 2001, a purported class action was commenced against
three of the Companys subsidiaries in the U.S. District Court for the Southern District of Illinois. The complaint alleges that the Company had no right to install a fiber-optic cable in rights-of-way granted by the plaintiffs to certain
railroads. Pursuant to an agreement with Qwest Communications Corporation, the Company has an



12



---

##### Table of Contents

indefeasible right to use certain fiber-optic cables in a fiber-optic communications system constructed by Qwest within the rights-of-way. The complaint
alleges that the railroads had only limited rights-of-way granted to them that did not include permission to install fiber-optic cable for use by Qwest or any other entities. The action has been brought on behalf of a national class of landowners
whose property underlies or is adjacent to a railroad right-of-way within which the fiber-optic cables have been installed. The action seeks actual damages in an unstated amount and alleges that the wrongs done by the Company involve fraud, malice,
intentional wrongdoing, willful or wanton conduct and/or reckless disregard for the rights of the plaintiff landowners. As a result, plaintiffs also request an award of punitive damages. The Company made a demand of Qwest to defend and indemnify the
Company in the lawsuit. In response, Qwest has appointed defense counsel to protect the Companys interests.

The Companys North
American network includes capacity purchased from Qwest on an IRU basis. Although the amount of the claim is unstated, an adverse outcome could have an adverse impact on the Companys ability to utilize large portions of the Companys
North American network. This litigation was stayed against the Company pending the effective date of the Plan of Reorganization, and the plaintiffs pre-petition claims against the Company were discharged at that time in accordance with the
Plan of Reorganization. By agreement between the parties, the Plan of Reorganization preserved plaintiffs rights to pursue any post-confirmation claims of trespass or ejectment. If the plaintiffs were to prevail, the Company could lose its
ability to operate large portions of its North American network, although it believes that it would be entitled to indemnification from Qwest for any losses under the terms of the IRU agreement under which the Company originally purchased this
capacity. As part of a global resolution of all bankruptcy claims asserted against the Company by Qwest, Qwest agreed to reaffirm its obligations of defense and indemnity to the Company for the assertions made in this claim. In September 2002, Qwest
and certain of the other telecommunication carrier defendants filed a proposed settlement agreement in the U.S. District Court for the Northern District of Illinois. On July 25, 2003, the court granted preliminary approval of the settlement and
entered an order enjoining competing class action claims, except those in Louisiana. The settlement and the courts injunction were opposed by a number of parties who intervened and an appeal was taken to the U.S. Court of Appeals for the
Seventh Circuit (Court of Appeals). In a decision dated October 19, 2004, the Court of Appeals reversed the approval of the settlement and lifted the injunction. The case has been remanded to the District Court for further
proceedings.

Foreign Tax Audit

A tax authority in South America issued a preliminary notice of findings based on certain tax audits for calendar years 2001 and 2002. The examiners initial findings took the position that the Company incorrectly documented its
importations and incorrectly deducted its foreign exchange losses against its foreign exchange gains on loan balances. An official assessment of $26, including potential interest and penalties, was issued in 2005. Due to accrued interest and foreign
exchange effects the total exposure has increased to $53. The Company challenged the assessment and commenced litigation in September 2006 to resolve its dispute with the tax authority.

Claim by Pacific Crossing Limited (PCL)

This claim arises out of the management
of the PC-1 trans-Pacific fiber-optic cable, which was constructed, owned and operated by PCL. PCL asserts that the Company and Asia Global Crossing, another former subsidiary of the Company, breached their fiduciary duties to PCL, improperly
diverted revenue derived from sales of capacity on PC-1, and failed to account for the way revenue was allocated among the corporate entities involved with the ownership and operation of PC-1. The claim also asserts that revenues derived from
operation and maintenance fees were also improperly diverted and that PCLs expenses increased unjustifiably through agreements executed by the Company and Asia Global Crossing Limited on behalf of PCL. To the extent that PCL asserted the
foregoing claims were prepetition claims, PCL has settled and released such claims against the Company.

During the pendency of the
Companys Chapter 11 proceedings, on January 14, 2003, PCL filed an administrative expense claim in the GC Debtors bankruptcy court for approximately $8 in post-petition services plus unliquidated amounts arising from the
Companys alleged breaches of fiduciary duty and misallocation of PCLs revenues. The Company objected to the claim and asserted that the losses claimed were the result of operational decisions made by PCL management and its corporate
parent, Asia Global Crossing. On February 4, 2005, PCL filed an amended claim in the amount of approximately $79 claiming the Company failed to pay revenue for services and maintenance charges relating to PC-1 capacity and failed to pay PCL for
use of the related cable stations and seeking to recover a portion of the monies received by the Company under a settlement agreement entered into with Microsoft Corporation and an arbitration award against Softbank. The Company filed an objection
to the amended claim seeking to dismiss, expunge and/or reclassify the claim and PCL responded by filing a motion for partial summary judgment claiming approximately $22 for the capacity, operations and maintenance charges and co-location charges
and up to approximately $78 for the Microsoft and Softbank proceeds. PCLs claim for co-location charges (which comprised approximately $2 of the total claim) was settled.

Subsequently (and pursuant to a new scheduling order agreed to by the parties), the parties agreed to hold the Companys motion to dismiss in
abatement and PCL agreed not to proceed with its partial summary judgment motion and to file a new summary judgment motion. On June 5, 2006 PCL filed a new motion for partial summary judgment claiming not less than $2 for revenues for short
term leases on PC-1, not less than $6 in respect of operation and maintenance fees paid to the Company by its customers for



13



---

##### Table of Contents

capacity on PC-1 and an unspecified amount to be determined at trial in respect of the Microsoft/ Softbank Claim. The Company filed a response to that motion
on June 26, 2006, together with a cross motion for partial summary judgment on certain of PCLs administrative claims. On August 28, 2006, PCL replied to the Companys response to PCLs new motion for partial summary
judgment and responded to the Companys cross motion for partial summary judgment. On November 20, 2006, the Company filed its reply to PCLs response to the Companys cross motion for partial summary judgment.

The parties have agreed to non-binding mediation of their competing administrative claims (including the Companys claim filed against PCL in its
separate bankruptcy case). The parties have completed one day of mediation in early 2008 and have exchanged certain documents in connection with the mediation. There are no further mediation sessions currently scheduled and the litigation may again
become active.

Impsat Employee Severance Disputes

A number of former directors and executive officers of Impsat have asserted claims for separation pay, severance, commissions, pension benefits, unpaid vacation pay, breach of employment contracts and unpaid
performance bonuses as a result of their separation from Impsat shortly after the acquisition of Impsat by the Company. One such case, initiated by a former director and officer of Impsat in October 2007, was settled in July 2009. The asserted
claims of the remaining claimants (including accrued interest and attorneys fees) aggregate approximately $16.

The Company has been in
negotiations with the remaining claimants over the amount of their claims and other issues arising out of their departure. The status of the legal proceedings brought by these remaining claimants is as follows. In November 2007, a former officer
served the Company a complaint claiming damages. The case is now in the evidentiary stage. In July 2008, a former officer commenced formal judicial proceedings on his claim and the Company responded seeking dismissal of the claim based on lack of
jurisdiction. Such defense was rejected by the court and the case will now continue. In March 2009, this same former officer served the Company with an additional complaint for damages in another jurisdiction. The Company has replied in each case
and will continue to defend against these claims.

Buenos Aires Antenna Tax Liability

The Government of the City of Buenos Aires (GCBA) established a tax applicable to private companies owning antennas with supporting
structures, whether in service or not, in the amount set forth in the annual tariff law for the use of the public and private air space (the Antenna Fees).

Since September 2003, the GCBA has periodically notified Impsat of the Antenna Fees which aggregates approximately $56, including interest, and requested payment. Impsat has administratively disputed each of these
notifications and in the administrative proceeding questioned the legality and constitutionality of the tax on various grounds, including that: (1) air rights belong to the owner of the underlying private property and GCBAs charge for use
of privately owned air rights is confiscatory and incompatible with the constitutional right of property; (2) Argentine federal telecommunications law exempts the use and occupation of public air space for the purposes of providing public
telecommunications service from any charge; (3) the tax that GCBA is trying to impose is excessive and confiscatory; and (4) the GCBA has significantly overstated the number and height of the antennas owned by Impsat that are subject to
the tax. Impsat continues to dispute the Antenna Fees and, to date, no summary collection action has been commenced by GCBA on the unpaid Antenna Fees.

In July 2008, Impsat filed an action in the Argentine Federal Courts in Buenos Aires seeking a declaration that the Antenna Fees are unconstitutional and illegal. In December 2008, the GCBA amended its Fiscal Code and
passed a new Tariff Law for 2009 modifying, among other things, the criteria to determine the charges applicable to the antennas structures. Under the new municipal legislation, which took effect January 2009, the amounts charged for each of the
antennas have been significantly reduced with respect to the amounts that the GCBA sought to charge in accordance with the laws that were previously in effect. In addition, the new Tariff Law sets forth a temporary provision which states that, for a
limited period of time, the reduced charges may be applied retroactively to settle any existing debts for Antennas Fees that may be currently under dispute, as long as the taxpayer waives or desists from any administrative action or judicial claim
that it may be currently pursuing. The Company has made the payments under the new regulations for 2009. In June 2009, the Company contributed less than $1 to a settlement for the claim for the periods (2003 to 2008) as set forth under Tariff law
2009. A final release certificate covering that time period is expected to be issued by the GCBA.

Brazilian Tax Claims

In November 2002 and in October 2004, the Brazilian tax authorities of Parana and Sao Paulo, respectively, issued two tax infraction notices against
Impsat for the collection of the Import Duty and the Tax on Manufactured Products, plus fines and interest that amount to approximately $8. The notices informed Impsat Brazil that the taxes were levied because a specific document
(Declaração de NecessidadeStatement of Necessity) was not provided by Impsat Brazil at the time of importation, in breach of MERCOSUR rules. Oppositions were filed on behalf of Impsat Brazil arguing that the Argentine
exporter (Corning Cable Systems



14



---

##### Table of Contents

Argentina S.A.) complied with the MERCOSUR rules. In the case of the Sao Paulo infraction notice, a favorable first instance decision was granted. However,
due to the amount involved, the case was remitted to the official compulsory review by the Federal Taxpayers Council. In the case of the Parana infraction notice, an unfavorable administrative decision was granted, and the Company will take
available judicial measures to appeal such decision.

In December 2004 and in March 2009, the tax authorities of the State of São
Paulo, in Brazil, issued two infraction notices against Impsat Brazil for the collection of Tax on Distribution of Goods and Services (ICMS) supposedly due on the lease of movable properties by comparing such activity to communications
services, on which the ICMS state tax is actually levied. Both assessments amount to approximately $16. A defense against the December 2004 assessment was filed on behalf of Impsat Brazil, arguing that the lease of assets could not be treated as a
communication service subject to ICMS. The defense was rejected in the State Administrative Court; however, the Company will seek judicial action to remove the tax assessment. A defense against the March 2009 assessment was also filed on behalf of
Impsat Brazil, and the final administrative decision is still pending.

In addition, in April 2009, the tax authorities of the State of
São Paulo issued an infraction notice against Impsat Brazil for the collection of ICMS supposedly due on the sale of internet access services by comparing such activity to communications services, on which the ICMS state tax is actually
levied. This assessment amounts approximately to $6. Defenses were filed on behalf of Impsat Brazil, arguing that the provision of internet access services could not be treated as a communication service subject to ICMS. Final administrative
decision is still pending.

The Company believes that there are reasonable grounds to have all of the Brazilian tax assessments cancelled.

Paraguayan Government Contract Claim

The National Telecommunications Commission of Paraguay (CONATEL) has commenced separate administrative investigations against a joint venture between GC Impsats Argentine subsidiary and Electro Import S.A. (JV
1) and another joint venture between GC Impsats Argentine subsidiary and Loma Plata S.A. (JV 2), for breach of contract and breach of licensees obligations by each of such joint ventures.

The first investigation involves a contract awarded to JV 1 in December 2000 for the design, supply, installation, launch, operation and maintenance of a
telecommunications system for public telephones and/or phone booths in certain specified locations in Paraguay. In 2005, CONATEL initiated an administrative investigation due to an alleged breach of contract by JV 1. As a result of such
investigation, CONATEL is seeking to terminate the contract, revoke JV 1s license, impose a fine and take additional actions against JV 1. The case is currently pending in the Administrative Court.

The second investigation involves a contract awarded to JV 2 in 2001, after a public bidding process, for the installation and deployment of public
telephones and/or telephone booths in certain specified locations in Paraguay. JV 2 was required to install and start operating all the required equipment within twelve months of the execution of the contract. In January 2003, JV 2 requested an
extension of the twelve month term from CONATEL as a result of force majeure which prevented it from completing the installation of the committed number of remote terminals within the agreed time period. CONATEL denied the request and decided to
terminate the contract based on JV 2s default.

JV 2 then filed a claim before the Administrative Court requesting the annulment of
the termination and seeking a stay of the challenged administrative acts. The matter is in the evidentiary stage in the Administrative Court.

Customer Bankruptcy Claim

During 2007 the Company commenced default and disconnect procedures against a customer for
breach of a sales contract based on the nature of the customers traffic, which renders the contract highly unprofitable to the Company. After the process was begun, the customer filed for bankruptcy protection, thereby barring the Company from
taking further disconnection actions against the customer. The Company commenced an adversary proceeding in the bankruptcy court, asserting a claim for damages for the customers alleged breaches of the contract and for a declaration that, as a
result of these breaches, the customer may not assume the contract in its reorganization proceedings. The Company has been incurring significant legal expenses in connection with this matter.

The customer has filed several counterclaims against the Company alleging various breaches of contract for attempting improperly to terminate service,
for improperly blocking international traffic, for violations of the Communications Act of 1934 and related tort-based claims. The Company notified the customer that the Company would be raising its rates and the Company subsequently filed a motion
with the court seeking additional adequate assurance, or an order allowing the Company to terminate the customers service, based upon the rate change. The customer amended its counter claims to assert claims for breach of contract based upon
the rate increase.

After the filing of motions and responses, the Court issued an opinion on these matters
on July 3, 2008. The Court held that the agreement did not permit the Company to increase the rates in the manner it did and that the Company: (a) breached the sales contract in so doing; and (b) is therefore not entitled to
additional adequate assurance. The Court did, however, permit the Company to amend its complaint to plead a rescission claim, which the Company filed on July 14, 2008. The Company also filed notices of appeal of these rulings with the United
States District Court of the Southern District of New York, but those appeals were ultimately dismissed for untimeliness, without prejudice to later appeals on the merits.



15



---

##### Table of Contents

In the meantime, the case is continuing in the bankruptcy court with respect to the remaining liability
issues and damages in the adversary proceeding. While the customer has alleged damages in amounts that would be very material to the Company, the Company believes that it has valid defenses to limit the amount of these damages. The Company has also
moved to dismiss the customers bankruptcy case for failure to comply with the small business provisions of the Bankruptcy Code. The parties have agreed to submit the case to non-binding mediation. The Court has decided to hold the
case in abeyance pending the outcome of the mediation. Mediation was held in June 2009 and is ongoing. The Company cannot predict the outcome of these proceedings.

Universal Service Notice of Apparent Liability

On April 9, 2008, the FCC released a Notice of Apparent
Liability for Forfeiture finding that subsidiaries of Global Crossing North America, Inc. apparently violated the Communications Act of 1934, as amended, and the FCCs rules, by willfully and repeatedly failing to contribute fully and timely to
the federal Universal Service Fund and the Telecommunications Relay Service Fund. The FCC alleges that, since emergence from bankruptcy, the Company has had a history of making its contributions to the funds late or, in certain months, making only
partial contributions or not making any contributions. In June 2009, the Company agreed to a settlement of both this and another matter in a consent decree with the FCC that requires total payments of approximately $3 (in two equal installments, one
of which was paid in July 2009 and the other of which is payable in January 2010) and adherence to a compliance plan for a period of three years.



|9. | RELATED PARTY TRANSACTIONS
|-- | --------------------------

Commercial and other
relationships between the Company and ST Telemedia

During the three and six months ended June 30, 2009, the Company provided
approximately nil and $0.1, respectively, of telecommunications services to subsidiaries and affiliates of the Companys majority shareholder and parent company, Singapore Technologies Telemedia Pte. Ltd. (ST Telemedia). Further,
during the three and six months ended June 30, 2009, the Company received approximately $1.1 and $2.4, respectively, of collocation services from an affiliate of ST Telemedia. During the three and six months ended June 30, 2008, the
Company provided approximately nil and $0.1, respectively, of telecommunications services to subsidiaries and affiliates of ST Telemedia. Further, during the three and six months ended June 30, 2008, the Company received approximately $1.5 and
$2.9, respectively, of collocation services from an affiliate of ST Telemedia. Additionally, during the three and six months ended June 30, 2009, the Company accrued dividends of $0.9 and $1.8, respectively, related to preferred stock held by
affiliates of ST Telemedia. For the three and six months ended June 30, 2008, the Company accrued dividends of $0.9 and $1.8, respectively, related to preferred stock held by affiliates of ST Telemedia.

At June 30, 2009 and December 31, 2008, the Company had approximately $20.9 and $19.1, respectively, due to ST Telemedia and its subsidiaries
and affiliates, and in each case nothing due from ST Telemedia and its subsidiaries and affiliates. The amounts due to ST Telemedia and its subsidiaries and affiliates primarily relate to dividends accrued on the Companys 2% cumulative senior
convertible preferred stock, and are included in other deferred liabilities in the accompanying condensed consolidated balance sheets.



|10. | SEGMENT REPORTING
|--- | -----------------

SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information (SFAS No. 131) defines operating segments as components of an enterprise for which separate financial information is available and which is evaluated
regularly by the Companys chief operating decision makers (CODMs) in deciding how to assess performance and allocate resources. The Companys CODMs assess performance and allocate resources based on three separate operating
segments which management operates and manages as strategic business units: (i) the GCUK Segment; (ii) the GC Impsat Segment; and (iii) the ROW Segment.

The GCUK Segment is a provider of managed network communications services providing a wide range of telecommunications services, including data, IP and voice services to government and other public sector
organizations, major corporations and other communications companies in the United Kingdom (UK). The GC Impsat Segment is a provider of telecommunication services including IP, voice, data center and information technology services to
corporate and government clients in Latin America. The ROW Segment represents all the operations of Global Crossing Limited and its subsidiaries excluding the GCUK and GC Impsat segments and comprises operations primarily in North America, with
smaller operations in Europe, Asia and Latin America, serving many of the worlds largest corporations and many other telecommunications carriers with a full range of managed telecommunication services including data, IP and voice products. The
services provided by all the Companys segments support a migration path to a fully converged IP environment.

The CODMs measure and
evaluate the Companys reportable segments based on operating income (loss) before depreciation and amortization (OIBDA). OIBDA, as defined by the Company, is operating income (loss) before depreciation and amortization.



16



---

##### Table of Contents

OIBDA differs from operating income (loss), as calculated in accordance with U.S. GAAP and reflected in the Companys condensed consolidated financial
statements, in that it excludes depreciation and amortization. Such excluded expenses primarily reflect the non-cash impacts of historical capital investments, as opposed to the cash impacts of capital expenditures made in recent periods. In
addition, OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for reinvestment, distributions or other discretionary uses.

OIBDA is an important part of the Companys internal reporting and planning processes and a key measure to evaluate profitability and operating
performance, make comparisons between periods, and to make resource allocation decisions.

There are material limitations to using non-U.S.
GAAP financial measures. The Companys calculation of OIBDA may differ from similarly titled measures used by other companies, and may not be comparable to those other measures. Additionally, OIBDA does not include certain significant items
such as depreciation and amortization, interest income, interest expense, income taxes, other non-operating income or expense items, preferred stock dividends, and gains and losses on preconfirmation contingencies. OIBDA should be considered in
addition to, and not as a substitute for, other measures of financial performance reported in accordance with U.S. GAAP.

The Company
believes that OIBDA is a relevant indicator of operating performance, especially in a capital-intensive industry such as telecommunications. OIBDA provides the Company with an indication of the underlying performance of its everyday business
operations. It excludes the effect of items associated with the Companys capitalization and tax structures, such as interest income, interest expense and income taxes, and of other items not associated with the Companys everyday
operations.

During 2008, the Company transferred its legacy Chilean operation from the ROW Segment to the GC Impsat Segment. As this
transfer was between entities under common control, the Company has retroactively restated the GC Impsat Segment results to include the results of the Chilean operation and removed the results of the Chilean operation from the ROW Segment for all
applicable periods presented. The Company anticipates transferring its legacy Argentine operations from the ROW Segment to the GC Impsat Segment during 2009 in a continuing effort to streamline its operations.

The following tables provide operating financial information for the Companys three reportable segments and a reconciliation of segment results to
consolidated results. Prior period amounts are revised to reflect the change in reportable segments as discussed above.



|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|-------------------------------- |  | --------------------------- | --- | - | ------------------------- | - | --- | ---- |  | - | ------------------ | - |  | - | ----- | -
|                                 |  | Three months ended June 30, |     |   | Six months ended June 30, |  
|                                 |  | 2009                        |     |   | 2008 (as adjusted)        |   |     | 2009 |  |   | 2008 (as adjusted) |  
|                                 |  | (unaudited)                 |     |   | (unaudited)               |  
|Revenues from external customers |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|GCUK                             |  | $                           | 115 |   |                           | $ | 157 |      |  | $ | 225                |   |  | $ | 310   |  
|GC Impsat                        |  |                             | 123 |   |                           |   | 116 |      |  |   | 237                |   |  |   | 227   |  
|ROW                              |  |                             | 395 |   |                           |   | 381 |      |  |   | 780                |   |  |   | 749   |  
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|Total consolidated               |  | $                           | 633 |   |                           | $ | 654 |      |  | $ | 1,242              |   |  | $ | 1,286 |  
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|                                 |  |                             |     |  
|Intersegment revenues            |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|GCUK                             |  | $                           |    |   |                           | $ |    |      |  | $ |                   |   |  | $ |      |  
|GC Impsat                        |  |                             | 2   |   |                           |   | 3   |      |  |   | 4                  |   |  |   | 4     |  
|ROW                              |  |                             | 2   |   |                           |   | 1   |      |  |   | 4                  |   |  |   | 3     |  
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|Total                            |  | $                           | 4   |   |                           | $ | 4   |      |  | $ | 8                  |   |  | $ | 7     |  
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|                                 |  |                             |     |  
|Total segment operating revenues |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|GCUK                             |  | $                           | 115 |   |                           | $ | 157 |      |  | $ | 225                |   |  | $ | 310   |  
|GC Impsat                        |  |                             | 125 |   |                           |   | 119 |      |  |   | 241                |   |  |   | 231   |  
|ROW                              |  |                             | 397 |   |                           |   | 382 |      |  |   | 784                |   |  |   | 752   |  
|Less: intersegment revenues      |  |                             | (4  | ) |                           |   | (4  | )    |  |   | (8                 | ) |  |   | (7    | )
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|Total consolidated               |  | $                           | 633 |   |                           | $ | 654 |      |  | $ | 1,242              |   |  | $ | 1,286 |  
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|                                 |  |                            
|                                 |  | Three months ended June 30, |     |   | Six months ended June 30, |  
|                                 |  | 2009                        |     |   | 2008 (as adjusted)        |   |     | 2009 |  |   | 2008 (as adjusted) |  
|                                 |  | (unaudited)                 |     |   | (unaudited)               |  
|OIBDA                            |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|GCUK                             |  | $                           | 21  |   |                           | $ | 37  |      |  | $ | 44                 |   |  | $ | 72    |  
|GC Impsat                        |  |                             | 44  |   |                           |   | 31  |      |  |   | 83                 |   |  |   | 58    |  
|ROW                              |  |                             | 28  |   |                           |   | (12 | )    |  |   | 41                 |   |  |   | (29   | )
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  
|Total segments                   |  | $                           | 93  |   |                           | $ | 56  |      |  | $ | 168                |   |  | $ | 101   |  
|                                 |  |                             |     |   |                           |   |     |      |  |   |                    |   |  |   |       |  



17



---

##### Table of Contents

A reconciliation of OIBDA to income (loss) applicable to common shareholders follows:



|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|----------------------------------------------- |  | ---------------------------------------------- | --- | - | --------- | - | --- | ----------- |  | - | ------------ | - |  | ------------------ | -- | - |  | - | ---- | -
|                                                |  | Three Months Ended June 30, 2009               |    
|                                                |  | GCUK                                           |     |   | GC Impsat |   |     | ROW         |  |   | Eliminations |   |  | Total Consolidated |   
|                                                |  |                                                |     |   |           |   |     | (unaudited) |  |   |              |   |  |                    |   
|OIBDA                                           |  | $                                              | 21  |   |           | $ | 44  |             |  | $ | 28           |   |  | $                  |   |   |  | $ | 93   |  
|Depreciation and amortization                   |  |                                                | (16 | ) |           |   | (21 | )           |  |   | (45          | ) |  |                    |   |   |  |   | (82  | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|Operating income (loss)                         |  |                                                | 5   |   |           |   | 23  |             |  |   | (17          | ) |  |                    |   |   |  |   | 11   |  
|Interest income                                 |  |                                                | 1   |   |           |   | 2   |             |  |   | 4            |   |  |                    | (3 | ) |  |   | 4    |  
|Interest expense                                |  |                                                | (13 | ) |           |   | (9  | )           |  |   | (19          | ) |  |                    | 3  |   |  |   | (38  | )
|Other income, net                               |  |                                                | 28  |   |           |   | 7   |             |  |   | 23           |   |  |                    |   |   |  |   | 58   |  
|Provision for income taxes                      |  |                                                | (1  | ) |           |   | (5  | )           |  |   | (2           | ) |  |                    |   |   |  |   | (8   | )
|Preferred stock dividends                       |  |                                                |    |   |           |   |    |             |  |   | (1           | ) |  |                    |   |   |  |   | (1   | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|                                                |  |                                                |     |   |          
|Income (loss) applicable to common shareholders |  | $                                              | 20  |   |           | $ | 18  |             |  | $ | (12          | ) |  | $                  |   |   |  | $ | 26   |  
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|                                                | 
|                                                |  | Three Months Ended June 30, 2008 (as adjusted) |    
|                                                |  | GCUK                                           |     |   | GC Impsat |   |     | ROW         |  |   | Eliminations |   |  | Total Consolidated |   
|                                                |  |                                                |     |   |           |   |     | (unaudited) |  |   |              |   |  |                    |   
|OIBDA                                           |  | $                                              | 37  |   |           | $ | 31  |             |  | $ | (12          | ) |  | $                  |   |   |  | $ | 56   |  
|Depreciation and amortization                   |  |                                                | (21 | ) |           |   | (22 | )           |  |   | (41          | ) |  |                    |   |   |  |   | (84  | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|Operating income (loss)                         |  |                                                | 16  |   |           |   | 9   |             |  |   | (53          | ) |  |                    |   |   |  |   | (28  | )
|Interest income                                 |  |                                                | 2   |   |           |   |    |             |  |   | 2            |   |  |                    | (2 | ) |  |   | 2    |  
|Interest expense                                |  |                                                | (18 | ) |           |   | (10 | )           |  |   | (20          | ) |  |                    | 2  |   |  |   | (46  | )
|Other income, net                               |  |                                                | 1   |   |           |   | 4   |             |  |   | 3            |   |  |                    |   |   |  |   | 8    |  
|Gain on preconfirmation contingencies           |  |                                                |    |   |           |   |    |             |  |   | 4            |   |  |                    |   |   |  |   | 4    |  
|Provision for income taxes                      |  |                                                | (1  | ) |           |   | (12 | )           |  |   | (16          | ) |  |                    |   |   |  |   | (29  | )
|Preferred stock dividends                       |  |                                                |    |   |           |   |    |             |  |   | (1           | ) |  |                    |   |   |  |   | (1   | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|Loss applicable to common shareholders          |  | $                                              |    |   |           | $ | (9  | )           |  | $ | (81          | ) |  | $                  |   |   |  | $ | (90  | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|                                                | 
|                                                |  | Six Months Ended June 30, 2009                 |    
|                                                |  | GCUK                                           |     |   | GC Impsat |   |     | ROW         |  |   | Eliminations |   |  | Total Consolidated |   
|                                                |  |                                                |     |   |           |   |     | (unaudited) |  |   |              |   |  |                    |   
|OIBDA                                           |  | $                                              | 44  |   |           | $ | 83  |             |  | $ | 41           |   |  | $                  |   |   |  | $ | 168  |  
|Depreciation and amortization                   |  |                                                | (31 | ) |           |   | (41 | )           |  |   | (89          | ) |  |                    |   |   |  |   | (161 | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|Operating income (loss)                         |  |                                                | 13  |   |           |   | 42  |             |  |   | (48          | ) |  |                    |   |   |  |   | 7    |  
|Interest income                                 |  |                                                | 3   |   |           |   | 3   |             |  |   | 5            |   |  |                    | (6 | ) |  |   | 5    |  
|Interest expense                                |  |                                                | (25 | ) |           |   | (17 | )           |  |   | (38          | ) |  |                    | 6  |   |  |   | (74  | )
|Other income, net                               |  |                                                | 25  |   |           |   | 12  |             |  |   | 6            |   |  |                    |   |   |  |   | 43   |  
|Provision for income taxes                      |  |                                                | (1  | ) |           |   | (9  | )           |  |   | (2           | ) |  |                    |   |   |  |   | (12  | )
|Preferred stock dividends                       |  |                                                |    |   |           |   |    |             |  |   | (2           | ) |  |                    |   |   |  |   | (2   | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|                                                |  |                                                |     |   |          
|Income (loss) applicable to common shareholders |  | $                                              | 15  |   |           | $ | 31  |             |  | $ | (79          | ) |  | $                  |   |   |  | $ | (33  | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|                                                | 
|                                                |  | Six Months Ended June 30, 2008 (as adjusted)   |    
|                                                |  | GCUK                                           |     |   | GC Impsat |   |     | ROW         |  |   | Eliminations |   |  | Total Consolidated |   
|                                                |  |                                                |     |   |           |   |     | (unaudited) |  |   |              |   |  |                    |   
|OIBDA                                           |  | $                                              | 72  |   |           | $ | 58  |             |  | $ | (29          | ) |  | $                  |   |   |  | $ | 101  |  
|Depreciation and amortization                   |  |                                                | (43 | ) |           |   | (40 | )           |  |   | (77          | ) |  |                    |   |   |  |   | (160 | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|Operating income (loss)                         |  |                                                | 29  |   |           |   | 18  |             |  |   | (106         | ) |  |                    |   |   |  |   | (59  | )
|Interest income                                 |  |                                                | 4   |   |           |   | 1   |             |  |   | 5            |   |  |                    | (4 | ) |  |   | 6    |  
|Interest expense                                |  |                                                | (35 | ) |           |   | (18 | )           |  |   | (43          | ) |  |                    | 4  |   |  |   | (92  | )
|Other income, net                               |  |                                                | 1   |   |           |   | 3   |             |  |   | 24           |   |  |                    |   |   |  |   | 28   |  
|Gain on preconfirmation contingencies           |  |                                                |    |   |           |   |    |             |  |   | 4            |   |  |                    |   |   |  |   | 4    |  
|Provision for income taxes                      |  |                                                | (1  | ) |           |   | (17 | )           |  |   | (29          | ) |  |                    |   |   |  |   | (47  | )
|Preferred stock dividends                       |  |                                                |    |   |           |   |    |             |  |   | (2           | ) |  |                    |   |   |  |   | (2   | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  
|Loss applicable to common shareholders          |  | $                                              | (2  | ) |           | $ | (13 | )           |  | $ | (147         | ) |  | $                  |   |   |  | $ | (162 | )
|                                                |  |                                                |     |   |           |   |     |             |  |   |              |   |  |                    |    |   |  |   |      |  



|                                            |  |              |       |   |                  |   |       |  
|------------------------------------------- |  | ------------ | ----- | - | ---------------- | - | ----- | -
|                                            |  | June 30,2009 |       |   | December 31,2008 |  
|                                            |  | (unaudited)  |       |   | (as adjusted)    |  
|Total Assets                                |  |              |       |   |                  |   |       |  
|GCUK                                        |  | $            | 713   |   |                  | $ | 656   |  
|GC Impsat                                   |  |              | 759   |   |                  |   | 693   |  
|ROW                                         |  |              | 1,284 |   |                  |   | 1,369 |  
|                                            |  |              |       |   |                  |   |       |  
|Total segments                              |  |              | 2,756 |   |                  |   | 2,718 |  
|Less: Intercompany loans and trade accounts |  |              | (428  | ) |                  |   | (369  | )
|                                            |  |              |       |   |                  |   |       |  
|Total consolidated assets                   |  | $            | 2,328 |   |                  | $ | 2,349 |  
|                                            |  |              |       |   |                  |   |       |  



18



---

##### Table of Contents

|                                     |  |              |     |                  |   |    
|------------------------------------ |  | ------------ | --- | ---------------- | - | ---
|                                     |  | June 30,2009 |     | December 31,2008
|                                     |  | (unaudited)  |     |                 
|Unrestricted Cash                    |  |              |     |                  |   |    
|GCUK                                 |  | $            | 28  |                  | $ | 52 
|GC Impsat                            |  |              | 101 |                  |   | 92 
|ROW                                  |  |              | 139 |                  |   | 216
|                                     |  |              |     |                  |   |    
|Total consolidated unrestricted cash |  | $            | 268 |                  | $ | 360
|                                     |  |              |     |                  |   |    
|                                     |  |             
|                                     |  | June 30,2009 |     | December 31,2008
|                                     |  | (unaudited)  |     |                 
|Restricted Cash                      |  |              |     |                  |   |    
|GCUK                                 |  | $            |    |                  | $ |   
|GC Impsat                            |  |              |    |                  |   |   
|ROW                                  |  |              | 21  |                  |   | 18 
|                                     |  |              |     |                  |   |    
|Total consolidated restricted cash   |  | $            | 21  |                  | $ | 18 
|                                     |  |              |     |                  |   |    



|11. | FINANCIAL INSTRUMENTS
|--- | ---------------------

The carrying amounts for
cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accrued expenses and obligations under capital leases approximate their fair value. The fair values of the Companys debt and derivative instruments are based
on market quotes and management estimates except for other debt in which case management believes the carrying value approximates fair value.



|                                              |  |                |     |   |           |   |     |  
|--------------------------------------------- |  | -------------- | --- | - | --------- | - | --- | -
|                                              |  | June 30, 2009  |    
|                                              |  | CarryingAmount |     |   | FairValue |  
|                                              |  | (unaudited)    |    
|GCUK Notes                                    |  | $              | 449 |   |           | $ | 359 |  
|5% Convertible Notes1                         |  |                | 126 |   |           |   | 127 |  
|GC Impsat Notes                               |  |                | 225 |   |           |   | 191 |  
|Term Loan Agreement                           |  |                | 342 |   |           |   | 289 |  
|GCUK cross-currency interest rate swap, asset |  |                | (1  | ) |           |   | (1  | )
|Other debt                                    |  |                | 34  |   |           |   | 34  |  



|1 | Carrying amount of 5% Convertible Notes consists of $144 aggregate principal less $18 of unamortized discount.
|- | --------------------------------------------------------------------------------------------------------------



19



---

##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following is a discussion of our results of operations and current financial position. This discussion should be read in conjunction with our
unaudited condensed consolidated financial statements and related notes included elsewhere in this report and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended
December 31, 2008 as amended by our Form 8-K filed on May 7, 2009 which adjusted the historical financial statements to reflect the retrospective adoption of the Financial Accounting Standards Board Staff Position No. APB 14-1,
Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).

As used in this quarterly report on Form 10-Q, references to the Company, we, us, our or similar terms include Global Crossing Limited and its consolidated subsidiaries.

Cautionary Note Regarding Forward-Looking Statements

Our disclosure and analysis in this quarterly report on Form 10-Q contains certain forward-looking statements, as such term is defined in Section 21E of the Exchange Act of 1934. These statements set forth anticipated
results based on managements plans and assumptions. From time to time, we also provide forward looking statements in other materials we release to the public as well as oral forward-looking statements. Such statements give our current
expectations or forecasts of future events; they do not relate strictly to historical or current facts. We have attempted to identify such statements by using words such as anticipate, estimate, expect,
project, intend, plan, believe, will, could and similar expressions in connection with any discussion of future events or future operating or financial performance or
strategies. Such forward-looking statements include, but are not limited to, statements regarding:



| |  |  | our services, including the development and deployment of data products and services based on internet protocol (IP) and other technologies and
strategies to expand our targeted customer base and broaden our sales channels and the opening and expansion of our data center and collocation services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the operation of our network, including with respect to the development of IP-based services and data center and collocation services;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our liquidity and financial resources, including anticipated capital expenditures, funding of capital expenditures, anticipated levels of indebtedness, and the
ability to raise capital through financing activities, including capital leases and similar financings;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | trends related to and managements expectations regarding results of operations, required capital expenditures, integration of acquired businesses, revenues
from existing and new lines of business and sales channels, OIBDA, order volumes and cash flows, including but not limited to those statements set forth in this Item 2; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | sales efforts, expenses, interest rates, foreign exchange rates, and the outcome of contingencies, such as legal proceedings.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------

We cannot guarantee that any forward-looking statement will be realized. Achievement of future results is subject to risks, uncertainties and potentially
inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors
should bear this in mind as they consider forward-looking statements.

We undertake no obligation to update forward-looking statements,
whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. Also note that we provide the following cautionary discussion of risks and uncertainties related to our businesses. These are factors that we believe, individually or in the aggregate, could cause our actual results to differ materially
from expected and historical results. We note these factors for investors as permitted by Section 21E of the Exchange Act of 1934. You should understand that it is not possible to predict or identify all such factors. Consequently, you should
not consider the following to be a complete discussion of all potential risks or uncertainties.

Our forward-looking statements are subject
to a variety of factors that could cause actual results to differ significantly from current beliefs and expectations. In addition to the risk factors identified under the captions below, the operation and results of our business are subject to
risks and uncertainties identified elsewhere in this quarterly report on Form 10-Q as well as general risks and uncertainties such as those relating to general economic conditions and demand for telecommunications services.

Risks Related to Liquidity and Financial Resources



| |  | We face a number of risks related to current global economic conditions and the severe tightening in the global credit markets. Ongoing concerns about the systemic
impact of potential long-term and wide-spread recession, volatile energy costs, geopolitical issues, the availability, cost and terms of credit, consumer and business confidence, substantially increased unemployment and the crisis in the global
housing and mortgage markets have contributed to increased market volatility and diminished expectations for both established and emerging economies, including those in which we operate. In addition, continued turbulence in the U.S. and
international markets and economies and prolonged declines in business and consumer spending may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to refinance
maturing debt instruments, access capital markets or obtain capital lease financing to meet liquidity needs.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



20



---

##### Table of Contents

| |  | For most periods since inception, we have incurred substantial operating losses. Although we expect our operating results to improve over time, there is no
assurance that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us in an amount sufficient
to enable us to pay our indebtedness or to fund our other liquidity needs.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We expect that economies of scale will allow us to grow revenues while incurring incremental costs that are proportionately lower than those applicable to our
existing business. If the increased costs required to support our revenue growth turn out to be greater than anticipated, we may be unable to improve our profitability and/or cash flows even if revenue growth goals are achieved. The current downturn
in the world economy could temper our growth, although the value we offer prospective customers could attract business in a cost-saving environment. In addition, improvements in our cost structure in the short term become more difficult as the
amount of potential savings decreases due to the success of past savings initiatives.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The sale of IRUs and similar prepayments for services are an important source of cash flows for us, representing tens of millions of dollars of cash in most
quarters. If customers buying patterns were to change such that those traditionally buying IRUs were to switch to monthly payment plans, our liquidity would be adversely affected. The current downturn in the world economy and tightening of global
credit markets could cause customers to change their buying patterns away from prepaid services and IRUs in order to conserve cash. In addition, the large dollar amounts and long sales cycles typically associated with IRU sales increase the
volatility of our quarter-to-quarter cash flow results.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Cost of access represents our single largest expense and gives rise to material current liabilities. In the past, certain telecommunications carriers from which we
purchase access services demanded that we pay for access services on a timelier basis, which resulted in increased demands on our liquidity. If such demands were to continue to a greater degree than anticipated, or if access vendors were to insist
on significant deposits to secure our access payment obligations, we could be prevented from meeting our cash flow projections and our long-term liquidity requirements. The current downturn in the world economy and tightening of global credit
markets could cause access vendors to insist upon timelier payment or the provision of security deposits.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The covenants in our debt instruments limit our financial and operational flexibility. These covenants impose significant restrictions on the ability of entities in
any one of our operating segments from making intercompany funds transfers to entities in any other segment. We are also subject to financial maintenance covenants (including a minimum cash balance requirement that applies to our ROW Segment) and to
other covenants, the breach of which could result in our long term debt instruments or capital lease facilities becoming immediately due and payable. The restrictions on intercompany funds transfers adversely affect our ability to ensure that each
of our segments will be able to maintain sufficient liquidity to meet its operating requirements and its debt instrument covenants.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our international corporate structure limits the availability of our consolidated cash resources for intercompany funding purposes and reduces our financial
restructuring flexibility. Legal restrictions arising out of international corporate structure include prohibitions on paying dividends in excess of retained earnings (or similar concepts under applicable law), which prohibition applies to most of
our subsidiaries given their history of operating losses, as well as foreign exchange controls on the expatriation of funds that are particularly prevalent in Latin America.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We cannot predict our future tax liabilities. If we become subject to increased levels of taxation or if tax contingencies are resolved adversely, our results of
operations could be adversely affected.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risks Related to our Operations



| |  | Our revenue and operating results may vary significantly from quarter to quarter due to a number of factors, many of which are outside of our control. It is
possible that in some future quarters our results may be below analysts and investors expectations.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our rights to the use of the fiber that make up our network may be affected by the financial health of our fiber providers.
|- |  | ---------------------------------------------------------------------------------------------------------------------------



| |  | We may not be able to continue to connect our network to incumbent carriers networks or maintain Internet peering arrangements on favorable terms.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Network Security Agreement imposes significant requirements on us. A violation of the agreement could have severe consequences.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  | It is expensive and difficult to switch new customers to our network, and lack of cooperation of incumbent carriers can slow the new customer connection process.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The operation, administration, maintenance and repair of our systems require significant expenses and are subject to risks that could lead to disruptions in our
services and the failure of our systems to operate as intended for their full design life.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



21



---

##### Table of Contents

| |  | The failure of our operations support systems could adversely affect our ability to process orders and provision sales, and to bill for services efficiently and
accurately, all of which could cause us to suffer customer dissatisfaction, loss of business, loss of revenue or the inability to add customers on a timely basis, any of which would adversely affect our revenues.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | While capital expenditures have remained relatively stable at levels significantly below those prevailing prior to our bankruptcy reorganization, such levels may
not be sustainable in the future, particularly as our business continues to grow.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Intellectual property and proprietary rights of others could prevent us from using necessary technology.
|- |  | --------------------------------------------------------------------------------------------------------



| |  | We have substantial international operations and face political, legal, tax, regulatory and other risks from our operations in foreign jurisdictions. In addition,
we lease capacity and obtain services from carriers in those and other regions. These risks have increased significantly as a result of our acquisition of the Latin American operations of Impsat.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We are subject to the Foreign Corrupt Practices Act (FCPA), which generally prohibits companies and their intermediaries from making improper payments
to foreign officials for the purpose of obtaining or keeping business and/or other benefits. Although we have policies and procedures designed to ensure that the Company, its employees and agents comply with the FCPA, there is no assurance that such
policies or procedures will work effectively all of the time or protect us against liability under the FCPA for actions taken by our agents, employees and intermediaries with respect to our business or any businesses that we acquire. We operate in a
number of jurisdictions that pose a high risk of potential FCPA violations. In May 2007, we acquired Impsat, which was also subject to the FCPA prior to the acquisition. As described in Additional Information Regarding Impsat in
Item 4 below, the facts developed in our review of certain payments made by Impsat employees to government officials and foreign government proceedings concerning Impsat personnel show that: first, although Impsat had policies in place prior to
the May 9, 2007 acquisition relating to FCPA compliance and contracting with third-party agents, those policies were not implemented; second, Impsats documentation relating to third-party agents and certain government contracts was not
sufficient; and third, the corporate environment at Impsat did not reflect a sufficient focus by senior management on promotion of, and compliance by the Company with, these policies. We conducted a review of certain agents, government contracts,
and potential unauthorized payments in Latin American countries. That review is now substantially complete. We have also brought these matters to the attention of government authorities in the U.S, including the Securities and Exchange Commission,
which has commenced a preliminary inquiry into the matter. We are cooperating with that inquiry which may result in legal action. At this point we are unable to predict the duration, scope or result of that inquiry. Failure to comply with the FCPA,
other anticorruption laws and other laws governing the conduct of business with government entities (including local laws) could lead to criminal and civil penalties and other remedial measures (including further changes or enhancements to our
procedures, policies, and controls and potential personnel changes and/or disciplinary actions), any of which could have an adverse impact on our business, financial condition, results of operations and liquidity. Any investigation of any potential
violations of the FCPA or other anti-corruption laws by U.S. or foreign authorities could have an adverse impact on our business, financial condition and results of operations.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We are exposed to significant currency exchange rate risks and our net loss may suffer due to currency translations. Commencing in September 2008, the
U.S. Dollar appreciated considerably against certain foreign currencies in which we conduct a significant portion of our business, including the British Pound Sterling, the Euro and the Brazilian Real. This appreciation has adversely
impacted consolidated revenue. Since we tend to incur costs in the same currencies in which we realize revenue, the impact on operating income and operating cash flow is largely mitigated. The impact has also been mitigated by the depreciation of
the U.S. Dollar against most major currencies during the six months ended June 30, 2009. However, the U.S. Dollar remains at appreciated levels relative to September 2008, and future appreciation of the U.S. Dollar could
materially adversely affect future revenues, operating income and operating cash flows. In addition, the appreciation of the U.S. Dollar relative to foreign currencies reduces the U.S. Dollar value of cash balances held in those
currencies.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Certain Latin American economies have experienced shortages in foreign currency reserves and have adopted restrictions on the ability to expatriate local earnings
and convert local currencies into U.S. Dollars. Any such shortages or restrictions may limit or impede our ability to transfer or to convert such currencies into U.S. Dollars and to expatriate such funds for the purpose of making timely payments of
interest and principal on our indebtedness.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In Venezuela, the official bolivares -U.S. Dollar exchange rate established by the Venezuelan Central Bank and the Venezuelan Ministry of Finance attributes to
the bolivar a value that is significantly greater than the value prevailing on the parallel market. The official rate is the rate used for recording the assets, liabilities and transactions for our Venezuelan subsidiary. Moreover, the conversion of
bolivares into foreign currencies is limited by the current exchange control regime. Accordingly, the acquisition of foreign currency by Venezuelan companies to honor foreign debt, pay dividends or otherwise expatriate capital is subject to
registration and subject to a process of application and approval by the Comisión de Administración de Divisas and to the availability of foreign currency within the guidelines set forth by the National Executive Power for the
allocation of foreign currency. Such approvals have become less forthcoming over time, resulting in a significant buildup of excess cash in our Venezuelan subsidiary and a significant increase in our exchange rate and exchange control risks. We
cannot predict if we will obtain approval of the Comisión de Administración de Divisas to honor foreign debt, distribute dividends or otherwise expatriate capital using the official Venezuelan exchange rate, and therefore, we may have
to recognize losses in the future.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



---

##### Table of Contents

| |  | Many of our most important government customers have the right to terminate their contracts with us if a change of control occurs or to reduce the services they
purchase from us for any reason.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risks Related to Competition and our Industry



| |  | The prices that we charge for our services have been decreasing, and we expect that such decreases will continue over time.
|- |  | ---------------------------------------------------------------------------------------------------------------------------



| |  | Technological advances and regulatory changes are eroding traditional barriers between formerly distinct telecommunications markets, which could increase the
competition we face and put downward pressure on prices.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Many of our competitors have superior resources, which could place us at a cost and price disadvantage.
|- |  | -------------------------------------------------------------------------------------------------------



| |  | Our selection of technology could prove to be incorrect, ineffective or unacceptably costly, which would limit our ability to compete effectively.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our operations are subject to regulation in each of the countries in which we operate and require us to obtain and maintain a number of governmental licenses and
permits. If we fail to comply with those regulatory requirements or obtain and maintain those licenses and permits, including payment of related fees, if any, we may not be able to conduct our business. Moreover, those regulatory requirements could
change in a manner that significantly increases our costs or otherwise adversely affects our operations.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Terrorist attacks and other acts of violence or war may adversely affect the financial markets and our business and operations.
|- |  | -------------------------------------------------------------------------------------------------------------------------------

Risks Related to our Common Stock



| |  | We have a very substantial overhang of common stock and a majority shareholder that owns a substantial portion of our common stock and preferred stock convertible
into common stock. Future sales of our common stock could cause substantial dilution and future acquisitions by our majority shareholder will decrease the liquidity of our common stock, each of which may negatively affect the market price of our
shares and impact our ability to raise capital.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A subsidiary of Singapore Technologies Telemedia Pte. Ltd (ST Telemedia) is our majority stockholder and the voting rights of other stockholders are
therefore limited in practical effect.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Other than ownership by ST Telemedia and its affiliates, which cannot exceed 66.25% without prior Federal Communications Commission (FCC) approval,
federal law generally prohibits more than 25% of our capital stock from being owned by foreign persons.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A large number of freely tradable shares of our common stock have been paid to employees in 2009 in connection with incentive compensation arrangements, and sales
of such shares could significantly affect the market value of our common stock, particularly in the short term.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other Risks



| |  | We are exposed to significant contingent liabilities, including those related to Impsat and the unprofitable sales contract discussed above under the heading
Customer Bankruptcy Claim in Note 8 to our accompanying unaudited condensed consolidated financial statements, that could result in material losses above what we have reserved for and could entail significant expense to defend.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our real estate restructuring reserve represents a material liability, the calculation of which involves significant estimation.
|- |  | --------------------------------------------------------------------------------------------------------------------------------



| |  | Economic and political conditions in Latin America pose numerous risks to our operations.
|- |  | -----------------------------------------------------------------------------------------



| |  | Inflation and certain government measures to curb inflation in some Latin American countries may have adverse effects on their economies, our business and our
operations.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Ministry of Finance in Bermuda has granted tax assurance to GCL and its Bermuda incorporated subsidiaries exempting them from the imposition of tax under any
applicable Bermuda law. To date the Ministry of Finance has given no indication that the Ministry would extend the term of assurance beyond 2016 or would not change the tax treatment afforded to exempt companies either before or after 2016.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Current market conditions have had a negative impact on the return on plan assets for our pension plans, which may require additional funding and negatively impact
our cash flows.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For a more detailed description of many of these risks and important additional risk factors, see
Item 1A, BusinessCautionary Factors That May Affect Future Results, in our annual report on Form 10-K for the year ended December 31, 2008 as amended by our Form 8-K filed on May 7, 2009 which adjusted the historical
financial statements to reflect the retrospective adoption of the Financial Accounting Standards Board Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement).

Executive Summary

Overview

We are a global communications service provider, serving many of the worlds
largest corporations, government entities and many other telecommunications carriers, providing a full range of IP and managed data and voice products and services. Our network delivers services to nearly 700 cities in more than 60 countries and six
continents around the world. We operate as an integrated global services provider with operations in North America, Europe, Latin America and a portion of the Asia/Pacific region, providing services that support a migration path to a fully converged
IP environment. The vast majority of our revenue is generated from monthly services. We report our financial results based on three separate operating segments: (i) Global Crossing (UK)



23



---

##### Table of Contents

Telecommunications Ltd (GCUK) and its subsidiaries (collectively, the GCUK Segment) which provide services to customers primarily
based in the United Kingdom (UK); (ii) GC Impsat Holdings I Plc (GC Impsat) and its subsidiaries (collectively, the GC Impsat Segment) which provide services to customers in Latin America; and (iii) GCL
and its other subsidiaries (collectively, the Rest of World Segment or ROW Segment) which represents all our operations outside of the GCUK Segment and the GC Impsat Segment and operates primarily in North America, with
smaller operations in Europe, Latin America, and a portion of the Asia/Pacific region and includes our subsea fiber network.

Second Quarter 2009
Highlights

Revenue from our enterprise, carrier data and indirect sales channel, which is the primary focus of our business strategy,
decreased $8 million, or 1%, to $539 million in the second quarter of 2009 compared to $547 million in the same period in 2008. This decrease was primarily due to $57 million of adverse foreign currency movements in the three months ended
June 30, 2009 compared with the same period of 2008. This decrease was partially offset by additional enterprise, carrier data and indirect channel sales.

During the three months ended June 30, 2009, we posted net operating income of $11 million and had a net decrease in cash and cash equivalents of $38 million. Our cash flows included the following significant
items: (i) capital purchases of $54 million; (ii) net payments on capital lease and debt obligations of $26 million; and (iii) the receipt of $27 million of cash from the sale of IRUs and prepaid services.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon the accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles
generally accepted in the United States (U.S. GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Although these estimates are based on our knowledge of current events, our actual amounts and results could differ
from those estimates. The estimates made are based on historical factors, current circumstances, and the experience and judgment of our management, who continually evaluate the judgments, estimates and assumptions and may employ outside experts to
assist in the evaluations.

Certain of our accounting policies are deemed critical, as they are both most important to the
financial statement presentation and require managements most difficult, subjective or complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a discussion of our critical
accounting policies, see Managements Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2008, as amended by our Form 8-K filed on
May 7, 2009 which adjusted the historical financial statements to reflect the retrospective adoption of the Financial Accounting Standards Board Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled
in Cash upon Conversion (Including Partial Cash Settlement). Management believes that there have been no significant changes regarding our critical accounting policies since such time.

During the second quarter of 2009 we performed our annual impairment review of the goodwill acquired as part of the Impsat acquisition on May 9,
2007 in accordance with Statement of Financial Accounting Standards No 142, Goodwill and Other Intangible Assets. The impairment review compared the fair value of the reporting units, using a discounted cash flow analysis, to their
carrying values, including allocated goodwill. As the fair value of all reporting units exceeded the carrying values, including allocated goodwill, no impairment exists. Calculating future net cash flows expected to be generated by the reporting
units involves significant assumptions, estimation and judgment. The estimation involves, but is not limited to, industry trends, including pricing, estimated long term revenue, revenue growth, operating expenses, capital expenditures, discount
rates, and expected periods the assets will be utilized.

New Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB No. 14-1). FSP APB No. 14-1 clarifies the accounting for convertible debt instruments that may be
settled in cash upon either mandatory or optional conversion (including partial cash settlement). FSP APB No. 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that
will reflect the entitys nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB No. 14-1 must be applied on a retrospective basis and is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and interim periods within those fiscal years. On May 30, 2006, we completed a public offering of $144 million aggregate principal amount of 5% convertible senior notes due 2011 (the 5%
Convertible Notes) which are within the scope of FSP APB No. 14-1. Accordingly, our condensed consolidated financial statements as of December 31, 2008 and for the three and six months ended June 30, 2008 have been adjusted to
reflect the retrospective application of FSP APB No. 14-1.



24



---

##### Table of Contents

Upon adoption of FSP APB No. 14-1 on January 1, 2009, we reclassified $38 million of the
carrying value of the 5% Convertible Notes to additional paid-in capital. In addition, upon adoption the cumulative effect of the retrospective application of FSP APB No. 14-1 on our accumulated deficit was an increase of $17 million related to
prior period amortization of the debt discount and associated deferred financing fees.

As of June 30, 2009 the principal amount of
the liability component, its unamortized discount and its net carrying value were $144 million, $18 million and $126 million, respectively, while as of December 31, 2008 the principal amount of the liability component, its unamortized discount
and its net carrying value were $144 million, $22 million and $122 million, respectively. The remaining unamortized discount of $18 million as of June 30, 2009 will be amortized, using the effective interest rate method, through the maturity of
the 5% Convertible Notes on May 15, 2011. As of both June 30, 2009 and December 31, 2008, the carrying amount of the equity component was $38 million. At June 30, 2009 and December 31, 2008, if the 5% Convertible Notes were
converted into shares of our common stock at a conversion price of $22.98 per share, approximately 6.3 million shares of our common stock would be issued.

For each of the three and six months ended June 30, 2009 and 2008, the effective interest rate for the 5% Convertible Notes was 12.75%. For the three months ended June 30, 2009 and 2008, interest expense for
the 5% Convertible Notes related to the coupon and the amortization of the debt discount was $4 million ($4 million after-tax) and $3 million ($3 million after-tax), respectively, while for the six months ended June 30, 2009 and 2008, interest
expense for the 5% Convertible Notes related to the coupon and the amortization of the debt discount was $8 million ($8 million after-tax) and $7 million ($7 million after-tax), respectively.

For the three months ended June 30, 2009, the effect of the application of FSP APB No. 14-1 was a decrease in the Companys income
applicable to common shareholders of $2 million (or $.03 per basic and diluted share) while for the six months ended June 30, 2009, the effect of the application of FSP APB No. 14-1 was an increase in the Companys loss applicable to
common shareholders of $4 million (or $.07 per basic share). For the three and six months ended June 30, 2008, the effect of the application of FSP APB No. 14-1 was an increase in the Companys loss applicable to common shareholders
of $1 million (or $.02 per basic share) and $3 million (or $.05 per basic share), respectively.

See Note 2, Basis of
Presentation to our unaudited condensed consolidated financial statements for a full description of recently issued and recently adopted accounting pronouncements including the date of adoption and effects on our results of operations and
financial position, where applicable.



25



---

##### Table of Contents

Unaudited results of operations for the three and six months ended June 30, 2009 compared to the three and six
months ended June 30, 2008:

Consolidated Results



|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|---------------------------------------------------------------------------------- |  | -------------------------- | ---- | - | --------------------- | - | ---- | --------------------- |  | ---- | ------------------------ | - | ----------------- | --------------------- | -- |  | --------------------- | ------ | - |  | - | ------ | - |  | - | --- | - |  | ---- | --
|                                                                                   |  | Three Months EndedJune 30, |      |   | $ Increase/(Decrease) |   |      | % Increase/(Decrease) |  |      | Six Months EndedJune 30, |   |                   | $ Increase/(Decrease) |    |  | % Increase/(Decrease) |       
|                                                                                   |  | 2009                       |      |   | 2008(as adjusted)     |   |      |                       |  | 2009 |                          |   | 2008(as adjusted) |                       |    | 
|                                                                                   |  |                            |      |   | (in millions)         |   |      |                       |  |      |                          |   |                   |                       |    |  | (in millions)         |        |   |  |   |        |   | 
|Revenue                                                                            |  | $                          | 633  |   |                       | $ | 654  |                       |  | $    | (21                      | ) |                   | (3                    | )% |  | $                     | 1,242  |   |  | $ | 1,286  |   |  | $ | (44 | ) |  | (3   | )%
|Cost of revenue (excluding depreciation and amortization, shown separately below): |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Cost of access                                                                     |  |                            | (285 | ) |                       |   | (306 | )                     |  |      | (21                      | ) |                   | (7                    | )% |  |                       | (571   | ) |  |   | (605   | ) |  |   | (34 | ) |  | (6   | )%
|Real estate, network and operations                                                |  |                            | (98  | ) |                       |   | (112 | )                     |  |      | (14                      | ) |                   | (13                   | )% |  |                       | (195   | ) |  |   | (220   | ) |  |   | (25 | ) |  | (11  | )%
|Third party maintenance                                                            |  |                            | (27  | ) |                       |   | (28  | )                     |  |      | (1                       | ) |                   | (4                    | )% |  |                       | (51    | ) |  |   | (55    | ) |  |   | (4  | ) |  | (7   | )%
|Cost of equipment and other sales                                                  |  |                            | (22  | ) |                       |   | (23  | )                     |  |      | (1                       | ) |                   | (4                    | )% |  |                       | (45    | ) |  |   | (46    | ) |  |   | (1  | ) |  | (2   | )%
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Total cost of revenue                                                              |  |                            | (432 | ) |                       |   | (469 | )                     |  |      |                          |   |                   |                       |    |  |                       | (862   | ) |  |   | (926   | ) |  |   |     |   |  |      |   
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Gross margin                                                                       |  |                            | 201  |   |                       |   | 185  |                       |  |      |                          |   |                   |                       |    |  |                       | 380    |   |  |   | 360    |   |  |   |     |   |  |      |   
|Selling, general and administrative                                                |  |                            | (108 | ) |                       |   | (129 | )                     |  |      | (21                      | ) |                   | (16                   | )% |  |                       | (212   | ) |  |   | (259   | ) |  |   | (47 | ) |  | (18  | )%
|Depreciation and amortization                                                      |  |                            | (82  | ) |                       |   | (84  | )                     |  |      | (2                       | ) |                   | (2                    | )% |  |                       | (161   | ) |  |   | (160   | ) |  |   | 1   |   |  | 1    | % 
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Total operating expenses                                                           |  |                            | (622 | ) |                       |   | (682 | )                     |  |      |                          |   |                   |                       |    |  |                       | (1,235 | ) |  |   | (1,345 | ) |  |   |     |   |  |      |   
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Operating income (loss)                                                            |  |                            | 11   |   |                       |   | (28  | )                     |  |      |                          |   |                   |                       |    |  |                       | 7      |   |  |   | (59    | ) |  |   |     |   |  |      |   
|Other income (expense):                                                            |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Interest income                                                                    |  |                            | 4    |   |                       |   | 2    |                       |  |      | 2                        |   |                   | 100                   | %  |  |                       | 5      |   |  |   | 6      |   |  |   | (1  | ) |  | (17  | )%
|Interest expense                                                                   |  |                            | (38  | ) |                       |   | (46  | )                     |  |      | (8                       | ) |                   | (17                   | )% |  |                       | (74    | ) |  |   | (92    | ) |  |   | (18 | ) |  | (20  | )%
|Other income, net                                                                  |  |                            | 58   |   |                       |   | 8    |                       |  |      | 50                       |   |                   | NM                    |    |  |                       | 43     |   |  |   | 28     |   |  |   | 15  |   |  | 54   | % 
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Income (loss) before preconfirmation contingencies and provision for income taxes  |  |                            | 35   |   |                       |   | (64  | )                     |  |      |                          |   |                   |                       |    |  |                       | (19    | ) |  |   | (117   | ) |  |   |     |   |  |      |   
|Net gain on preconfirmation contingencies                                          |  |                            |     |   |                       |   | 4    |                       |  |      | (4                       | ) |                   | (100                  | )% |  |                       |       |   |  |   | 4      |   |  |   | (4  | ) |  | (100 | )%
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Income (loss) before provision for income taxes                                    |  |                            | 35   |   |                       |   | (60  | )                     |  |      |                          |   |                   |                       |    |  |                       | (19    | ) |  |   | (113   | ) |  |   |     |   |  |      |   
|Provision for income taxes                                                         |  |                            | (8   | ) |                       |   | (29  | )                     |  |      | (21                      | ) |                   | (72                   | )% |  |                       | (12    | ) |  |   | (47    | ) |  |   | (35 | ) |  | (74  | )%
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Net income (loss)                                                                  |  |                            | 27   |   |                       |   | (89  | )                     |  |      |                          |   |                   |                       |    |  |                       | (31    | ) |  |   | (160   | ) |  |   |     |   |  |      |   
|Preferred stock dividends                                                          |  |                            | (1   | ) |                       |   | (1   | )                     |  |      | 0                        |   |                   | NM                    |    |  |                       | (2     | ) |  |   | (2     | ) |  |   | 0   |   |  | NM   |   
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   
|Income (loss) applicable to common shareholders                                    |  | $                          | 26   |   |                       | $ | (90  | )                     |  |      |                          |   |                   |                       |    |  | $                     | (33    | ) |  | $ | (162   | ) |  |   |     |   |  |      |   
|                                                                                   |  |                            |      |   |                       |   |      |                       |  |      |                          |   |                   |                       |    |  |                       |        |   |  |   |        |   |  |   |     |   |  |      |   



NMzero balances and comparisons from positive to negative numbers are not meaningful.

Discussion of all significant
variances:

Revenue.



|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |       |  |   |       |  |   |     |   |  |     |   
|--------------------------------------------------- |  | -------------------------- | --- | --------------------- | - | --- | --------------------- | ---- | --- | ------------------------ |  | --------------------- | -- | ------------- | --------------------- | ----- |  | - | ----- |  | - | --- | - |  | --- | --
|                                                    |  | Three Months EndedJune 30, |     | $ Increase/(Decrease) |   |     | % Increase/(Decrease) |      |     | Six Months EndedJune 30, |  | $ Increase/(Decrease) |    |               | % Increase/(Decrease) |      
|                                                    |  | 2009                       |     | 2008(as adjusted)     |   |     |                       | 2009 |     | 2008(as adjusted)        |  |                      
|                                                    |  |                            |     | (in millions)         |   |     |                       |      |     |                          |  |                       |    | (in millions) |                       |       |  |   |       | 
|Enterprise, carrier data and indirect sales channel |  | $                          | 539 |                       | $ | 547 |                       | $    | (8  | )                        |  | (1                    | )% |               | $                     | 1,049 |  | $ | 1,066 |  | $ | (17 | ) |  | (2  | )%
|Carrier voice                                       |  |                            | 94  |                       |   | 106 |                       |      | (12 | )                        |  | (11                   | )% |               |                       | 192   |  |   | 218   |  |   | (26 | ) |  | (12 | )%
|Other                                               |  |                            |    |                       |   | 1   |                       |      | (1  | )                        |  | (100                  | )% |               |                       | 1     |  |   | 2     |  |   | (1  | ) |  | (50 | )%
|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |       |  |   |       |  |   |     |   |  |     |   
|Consolidated revenues                               |  | $                          | 633 |                       | $ | 654 |                       | $    | (21 | )                        |  | (3                    | )% |               | $                     | 1,242 |  | $ | 1,286 |  | $ | (44 | ) |  | (3  | )%
|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |       |  |   |       |  |   |     |   |  |     |   

Our consolidated revenues are separated into two businesses based on our target markets and sales
structure: (i) enterprise, carrier data and indirect sales channel and (ii) carrier voice.

The enterprise, carrier data and
indirect sales channel business consists of: (i) the provision of voice, data and collaboration services to all customers other than carriers and consumers; (ii) the provision of data products, including IP, transport and capacity
services, to carrier customers; and (iii) the provision of voice, data and managed services to or through business relationships with other carriers, sales agents and system integrators. The carrier voice business consists of the provision of
predominantly United States domestic and international long distance voice services to carrier customers.

Our consolidated revenue
decreased in the three and six months ended June 30, 2009 compared with the same periods in 2008 primarily due to: (i) adverse foreign currency movements; (ii) a decline in our carrier voice business; and (iii) the loss of the
Camelot network contract in the United Kingdom. Revenue in the three and six months ended June 30, 2009 compared with the same periods in 2008 included $8 million for a customer buyout of certain long term obligations under an existing
contract.

The appreciation of the U.S. Dollar against foreign currencies, primarily British Pound Sterling, the Euro and the
Brazilian Real, adversely impacted revenue in the three and six months ended June 30, 2009 compared with the same periods in 2008 by approximately $58 million and $121 million, respectively. Carrier voice revenue decreased in the three and six
months ended June 30, 2009 compared with the same periods in 2008, as we continue to manage the business to achieve specific margin targets. We expect carrier voice revenue to decline by 10% or more as compared to the prior year. The Camelot
network contract attrition negatively impacted revenue by approximately $13 million and $25 million, respectively, for the three and six months ended June 30, 2009 compared with the same periods in 2008.

Despite the reductions noted above, our revenue reflected strong demand for our IP Virtual Private Network (VPN), enterprise voice and data
center services. Our sales order levels are a key indicator of continuing strength in customer demand for our services. Average monthly estimated gross values for sales orders was $3.6 million in the three months ended June 30, 2009 compared
with $3.8 million in the three months ended March 31, 2009. This metric is used by management as a leading business indicator offering insight into near term revenue trends. The gross values of these monthly recurring orders are estimated based
on new business acquired, and they exclude the effects of attrition, the replacement of existing services with new services, and credits.



26



---

##### Table of Contents

See Segment Results in this Item 2 for further discussion of results by segment.

Cost of Revenue.

Cost of
revenue primarily includes the following: (i) cost of access, including usage-based voice charges paid to local exchange carriers and interexchange carriers to originate and/or terminate switched voice traffic and charges for leased lines for
dedicated facilities and local loop (last mile) charges from both domestic and international carriers; (ii) real estate, network and operations charges which include (a) employee-related costs such as salaries and benefits,
incentive compensation and stock-related expenses for employees directly attributable to the operation of our network, (b) real estate expenses for all non-restructured technical sites, and (c) other non-employee related costs incurred to
operate our network, such as license and permit fees and professional fees; (iii) third party maintenance costs incurred in connection with maintaining the network; and (iv) cost of equipment sales and other, which includes the software,
hardware and equipment and professional services sold to our customers.

Cost of Access.



|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |     |  |   |     |  |   |     |   |  |    |   
|--------------------------------------------------- |  | -------------------------- | --- | --------------------- | - | --- | --------------------- | ---- | --- | ------------------------ |  | --------------------- | -- | ------------- | --------------------- | --- |  | - | --- |  | - | --- | - |  | -- | --
|                                                    |  | Three Months EndedJune 30, |     | $ Increase/(Decrease) |   |     | % Increase/(Decrease) |      |     | Six Months EndedJune 30, |  | $ Increase/(Decrease) |    |               | % Increase/(Decrease) |    
|                                                    |  | 2009                       |     | 2008(as adjusted)     |   |     |                       | 2009 |     | 2008(as adjusted)        |  |                      
|                                                    |  |                            |     | (in millions)         |   |     |                       |      |     |                          |  |                       |    | (in millions) |                       |     |  |   |     | 
|Enterprise, carrier data and indirect sales channel |  | $                          | 199 |                       | $ | 212 |                       | $    | (13 | )                        |  | (6                    | )% |               | $                     | 395 |  | $ | 415 |  | $ | (20 | ) |  | (5 | )%
|Carrier voice                                       |  |                            | 86  |                       |   | 94  |                       |      | (8  | )                        |  | (9                    | )% |               |                       | 176 |  |   | 190 |  |   | (14 | ) |  | (7 | )%
|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |     |  |   |     |  |   |     |   |  |    |   
|Consolidated cost of access                         |  | $                          | 285 |                       | $ | 306 |                       | $    | (21 | )                        |  | (7                    | )% |               | $                     | 571 |  | $ | 605 |  | $ | (34 | ) |  | (6 | )%
|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |     |  |   |     |  |   |     |   |  |    |   

Cost of access decreased in the three and six months ended June 30, 2009 compared with the
same periods in 2008. The decreases in our consolidated cost of access were primarily driven by beneficial foreign currency movements in the three and six months ended June 30, 2009 compared with the same periods in 2008 which favorably
impacted our consolidated cost of access expense by $19 million and $38 million, respectively, with favorable currency impacts across all of our segments. In addition, our cost of access decreased due to lower carrier voice sales volumes and our
cost reduction initiatives to optimize access network costs and effectively lower unit prices. Lastly, we experienced declines in our cost of access as a result of the Camelot network attrition.

Real Estate, Network and Operations. Real estate, network and operations decreased in the three and six months ended June 30, 2009 compared
with the same periods in 2008 primarily due to: (i) $12 million and $25 million, respectively, of beneficial foreign currency movements and (ii) $6 million and $12 million, respectively, of lower employee incentive compensation costs
primarily due to accruing annual employee incentive compensation at a lower rate in 2009. These decreases were partially offset by: (i) higher employee-related costs due to higher average headcount in 2009 (although current headcount levels are
lower than headcount levels at the end of 2008), salary increases effective July 1, 2008 and severance charges related to workforce management actions in the three and six months ended June 30, 2009 and (ii) an increase in real estate
costs driven by higher rent and utilities.

Third Party Maintenance.Third party maintenance decreased in the three and six months
ended June 30, 2009 compared with the same periods in 2008 primarily due to beneficial foreign currency movements and the renegotiation of certain contracts, partially offset by an increase in non-recurring maintenance.

Cost of Equipment and Other Sales.Cost of equipment and other sales decreased in the three and six months ended June 30, 2009 compared with
the same periods in 2008 primarily due to $5 million and $12 million, respectively, of beneficial foreign currency movements, partially offset by higher equipment sales and professional services costs.

Selling, general and administrative expenses (SG&A).SG&A consist of: (i) employee-related costs such as salaries and benefits,
incentive compensation and stock-related expenses for employees not directly attributable to the operation of our network; (ii) real estate expenses for all non-restructured administrative sites; (iii) bad debt expense;
(iv) non-income taxes, including property taxes on owned real estate and trust fund related taxes such as gross receipts taxes, franchise taxes and capital taxes; (v) restructuring costs; and (vi) regulatory costs, insurance,
telecommunications costs, professional fees and license and maintenance fees for internal software and hardware.

The decreases in SG&A
in the three and six months ended June 30, 2009 compared with the same periods in 2008 were primarily due to: (i) $12 million and $25 million, respectively, of beneficial foreign currency movements; (ii) $4 million and $8 million,
respectively, of lower employee incentive compensation costs primarily due to accruing annual employee incentive compensation at a lower rate in 2009; and (iii) decreases in other expenses of $4 million and $7 million, respectively, primarily
due to lower travel, advertising and other costs.



27



---

##### Table of Contents

Depreciation and amortization.Depreciation and amortization consists of depreciation of property and
equipment, including assets recorded under capital leases, amortization of cost of access installation costs and amortization of identifiable intangibles. Depreciation and amortization decreased in the three months ended June 30, 2009 compared
with the same period in 2008 primarily due to beneficial foreign currency movements, partially offset by an increased asset base as a result of fixed asset additions, including assets recorded under capital leases. Depreciation and amortization
increased in the six months ended June 30, 2009 primarily due to an increased asset base as a result of fixed asset additions, including assets recorded under capital leases, partially offset by beneficial foreign exchange movements.

Interest expense. Interest expense includes interest related to indebtedness for money borrowed, capital lease obligations,
certain tax liabilities, amortization of deferred finance costs and interest on late payments to vendors. The decreases in interest expense in the three and six months ended June 30, 2009 compared with the same periods in 2008 were primarily
results of: (i) lower interest related to our pound sterling denominated GCUK Notes due to beneficial foreign currency movements; (ii) lower interest on our Senior Secured Term Loans due to lower LIBOR rates; and (iii) lower interest
related to other miscellaneous debt and late payments to vendors.

Other income, net.Other income, net consists of foreign currency
impacts on transactions, gains and losses on the sale of assets including property and equipment, marketable securities and other assets and other non-operating items. Other income, net increased in the three and six months ended June 30, 2009
compared with the same periods in 2008 primarily as a result of recording higher foreign exchange gains in the three and six months ended June 30, 2009 compared with the same periods of the prior year.

Provision for income taxes.The decreases in the provision for income taxes in the three and six months ended June 30, 2009 compared with the
same periods in 2008 were primarily due to the adoption of SFAS No. 141R on January 1, 2009 which changes the accounting for the reversal of valuation allowances associated with pre-emergence and pre-acquisition deferred tax assets. Prior
to the adoption, the benefit for the reversal of valuation allowances on pre-emergence and pre-acquisition deferred tax assets were recorded as additional paid in capital and a reduction of goodwill, respectively. Subsequent to the adoption, these
benefits are now recorded as a reduction in the tax provision. During the three and six months ended June 30, 2008, we recorded $12 million and $27 million, respectively, of non-cash taxes related to these benefits. In addition, in the three
and six months ended June 30, 2008 there were unfavorable return to provision adjustments.

Segment Results

Our chief operating decision makers (CODMs) assess performance and allocate resources based on three separate operating segments which we
operate and manage as strategic business units: (i) the GCUK Segment; (ii) the GC Impsat Segment; and (iii) the ROW Segment.

The GCUK Segment is a provider of managed network communications services providing a wide range of telecommunications services, including data, IP and voice services to government and other public sector organizations, major corporations
and other communications companies in the UK. The GC Impsat Segment is a provider of telecommunication services including IP, voice, data center and information technology services to corporate and government clients in Latin America. The ROW
Segment represents all our operations outside the GCUK and GC Impsat Segments and operates primarily in North America, with smaller operations in Europe, Latin America and Asia, serving many of the worlds largest corporations and many other
telecommunications carriers with a full range of managed telecommunication services, including data, IP and voice products. The services provided by all our segments support a migration path to a fully converged IP environment.

The CODMs measure and evaluate our reportable segments based on operating income (loss) before depreciation and amortization (OIBDA). OIBDA,
as defined by us, is operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with U.S. GAAP and reflected on our condensed consolidated financial statements, in that it
excludes depreciation and amortization. Such excluded expenses primarily reflect the non-cash impacts of historical capital investments, as opposed to the cash impacts of capital expenditures made in recent periods. In addition, OIBDA does not give
effect to cash used for debt service requirements and thus does not reflect available funds for reinvestment, distributions or other discretionary uses.

OIBDA is an important part of our internal reporting and planning processes and a key measure to evaluate profitability and operating performance, make comparisons between periods, and to make resource allocation
decisions.

There are material limitations to using non-U.S. GAAP financial measures. Our calculation of OIBDA may differ from similarly
titled measures used by other companies, and may not be comparable to those other measures. Additionally, OIBDA does not include certain significant items such as depreciation and amortization, interest income, interest expense, income taxes, other
non-operating income or expense items, preferred stock dividends, and gains and losses on preconfirmation contingencies. OIBDA should be considered in addition to, and not as a substitute for, other measures of financial performance reported in
accordance with U.S. GAAP.



28



---

##### Table of Contents

We believe that OIBDA is a relevant indicator of operating performance, especially in a capital-intensive
industry such as telecommunications. OIBDA provides us with an indication of the underlying performance of our everyday business operations. It excludes the effect of items associated with our capitalization and tax structures, such as interest
income, interest expense and income taxes, and of other items not associated with our everyday operations.

During 2008, we transferred our
legacy Chilean operation from the ROW Segment to the GC Impsat Segment. As this transfer was between entities under common control, we have retroactively restated the GC Impsat Segment results to include the results of the Chilean operation and
removed the results of the Chilean operation from the ROW Segment for all applicable periods presented. We anticipate transferring our legacy Argentine operations from the ROW Segment to the GC Impsat Segment during 2009 in a continuing effort to
streamline our operations.

GCUK Segment

Revenue



|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |     |  |   |     |  |   |     |   |  |     |   
|--------------------------------------------------- |  | -------------------------- | --- | --------------------- | - | --- | --------------------- | ---- | --- | ------------------------ |  | --------------------- | -- | ------------- | --------------------- | --- |  | - | --- |  | - | --- | - |  | --- | --
|                                                    |  | Three MonthsEnded June 30, |     | $ Increase/(Decrease) |   |     | % Increase/(Decrease) |      |     | Six Months EndedJune 30, |  | $ Increase/(Decrease) |    |               | % Increase/(Decrease) |    
|                                                    |  | 2009                       |     | 2008                  |   |     |                       | 2009 |     | 2008                     |  |                      
|                                                    |  |                            |     | (in millions)         |   |     |                       |      |     |                          |  |                       |    | (in millions) |                       |     |  |   |     | 
|GCUK                                                |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |     |  |   |     |  |   |     |   |  |     |   
|Enterprise, carrier data and indirect sales channel |  | $                          | 113 |                       | $ | 154 |                       | $    | (41 | )                        |  | (27                   | )% |               | $                     | 220 |  | $ | 304 |  | $ | (84 | ) |  | (28 | )%
|Carrier voice                                       |  |                            | 2   |                       |   | 3   |                       |      | (1  | )                        |  | (33                   | )% |               |                       | 5   |  |   | 6   |  |   | (1  | ) |  | (17 | )%
|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |     |  |   |     |  |   |     |   |  |     |   
|                                                    |  | $                          | 115 |                       | $ | 157 |                       | $    | (42 | )                        |  | (27                   | )% |               | $                     | 225 |  | $ | 310 |  | $ | (85 | ) |  | (27 | )%
|                                                    |  |                            |     |                       |   |     |                       |      |     |                          |  |                       |    |               |                       |     |  |   |     |  |   |     |   |  |     |   

Revenue for our GCUK Segment decreased in the three and six months ended June 30, 2009
compared with the same periods of 2008 primarily as a result of currency movements which adversely affected GCUK Segment revenue by $35 million and $77 million, respectively. In addition, we experienced declines in the three and six months ended
June 30, 2009 compared with the same periods of 2008 of $13 million and $25 million, respectively, in our GCUK Segment revenue as a result of the loss of the Camelot network contract. The decreases in our GCUK Segment revenue were moderated by
strong demand for IP VPN data products.

Despite current economic conditions, GCUK continues to see strong demand for its IP services and
as a result continues to win new business. Many government agencies and enterprises continue to refresh their more traditional technologies and take advantage of converged IP services. However, the telecommunications market in the UK remains highly
competitive. One of GCUKs principal customer relationships in the period to December 31, 2008 was with Camelot, the current holder of the license to operate the UK National Lottery. Camelot had deployed a landline-based ISDN network
provided by us in relation to the operation of the UK National Lottery. On October 9, 2007, Camelot announced its intention to replace its existing landline-based ISDN network with a broadband satellite communications network to be supplied by
another service provider. Camelot has completed the migration of the network. Revenue from our relationship with Camelot was nil million and $1 million for the three and six months ended June 30, 2009, respectively, and $13 million and $26
million for the three and six months ended June 30, 2008, respectively.



29



---

##### Table of Contents

OIBDA



|      |          |                    |               |  |            |             |                  |            |          |   |             |     |               |             |            |    |  |            |    |  |   |     |   |  |     |   
|----- | -------- | ------------------ | ------------- |  | ---------- | ----------- | ---------------- | ---------- | -------- | - | ----------- | --- | ------------- | ----------- | ---------- | -- |  | ---------- | -- |  | - | --- | - |  | --- | --
|      |          | Three Months Ended |               |  |            |             | Six Months Ended |            |          |  
|      | June 30, |                    | $ Increase/   |  |            | % Increase/ |                  |            | June 30, |   | $ Increase/ |     |               | % Increase/ |           
|      | 2009     |                    | 2008          |  | (Decrease) |             |                  | (Decrease) |          |   | 2009        |     | 2008          |             | (Decrease) |    |  | (Decrease) |   
|      |          |                    | (in millions) |  |            |             |                  |            |          |   |             |     | (in millions) |             |            |    |  |            |   
|GCUK  |          |                    |               |  |            |             |                  |            |          |   |             |     |               |             |            |    |  |            |    |  |   |     |   |  |     |   
|OIBDA |          | $                  | 21            |  | $          | 37          |                  | $          | (16      | ) |             | (43 | )%            |             | $          | 44 |  | $          | 72 |  | $ | (28 | ) |  | (39 | )%

OIBDA in the GCUK Segment decreased in the three and six months ended June 30, 2009 compared
with the same periods of 2008 primarily as a result of: (i) $7 million and $16 million, respectively, of adverse foreign currency movements; (ii) the revenue declines in the three and six months ended June 30, 2009 compared with the
same periods of 2008 of $13 million and $25 million, respectively, as a result of the loss of the Camelot network contract; and (iii) higher cost of equipment and other sales. These decreases in GCUK Segment OIBDA were moderated by increased
demand for IP VPN data products and lower third party maintenance resulting from the re-negotiation of certain contracts.

GC Impsat Segment

Revenue



|                                                    |               |                    |                    |  |            |             |                  |            |          |   |             |     |                    |  |            |     |            |   |     |  |   |    |  |    |  
|--------------------------------------------------- | ------------- | ------------------ | ------------------ |  | ---------- | ----------- | ---------------- | ---------- | -------- | - | ----------- | --- | ------------------ |  | ---------- | --- | ---------- | - | --- |  | - | -- |  | -- | -
|                                                    |               | Three Months Ended |                    |  |            |             | Six Months Ended |            |          |  
|                                                    | June 30,      |                    | $ Increase/        |  |            | % Increase/ |                  |            | June 30, |   | $ Increase/ |     | % Increase/        | 
|                                                    | 2009          |                    | 2008 (as adjusted) |  | (Decrease) |             |                  | (Decrease) |          |   | 2009        |     | 2008 (as adjusted) |  | (Decrease) |     | (Decrease) |  
|                                                    | (in millions) |                    |                    |  |            |             | (in millions)    |            |          |  
|GC Impsat                                           |               |                    |                    |  |            |             |                  |            |          |   |             |     |                    |  |            |     |            |   |     |  |   |    |  |    |  
|Enterprise, carrier data and indirect sales channel |               | $                  | 119                |  | $          | 114         |                  | $          | 5        |   |             | 4   | %                  |  | $          | 230 |            | $ | 223 |  | $ | 7  |  | 3  | %
|Carrier voice                                       |               |                    | 4                  |  |            | 2           |                  |            | 2        |   |             | 100 | %                  |  |            | 7   |            |   | 4   |  |   | 3  |  | 75 | %
|Intersegment revenues                               |               |                    | 2                  |  |            | 3           |                  |            | (1       | ) |             | (33 | )%                 |  |            | 4   |            |   | 4   |  |   |   |  | NM |  
|                                                    |               |                    |                    |  |            |             |                  |            |          |   |             |     |                    |  |            |     |            |   |     |  |   |    |  |    |  
|                                                    |               | $                  | 125                |  | $          | 119         |                  | $          | 6        |   |             | 5   | %                  |  | $          | 241 |            | $ | 231 |  | $ | 10 |  | 4  | %
|                                                    |               |                    |                    |  |            |             |                  |            |          |   |             |     |                    |  |            |     |            |   |     |  |   |    |  |    |  

Revenue for our GC Impsat Segment increased in the three and six months ended in June 30,
2009 compared to the same periods of 2008 primarily due to strong demand for broadband lease, data center and IP VPN data products. These increases in our GC Impsat Segment revenue were partially offset by adverse foreign currency movements which
reduced GC Impsat Segment revenue in the three and six months ended in June 30, 2009 compared to the same periods of 2008 by $15 million and $31 million, respectively.

OIBDA



|          |               |                    |                    |  |             |               |                  |          |    |             |    |                    |  |            |    |            |   |    |  |   |    |  |    |  
|--------- | ------------- | ------------------ | ------------------ |  | ----------- | ------------- | ---------------- | -------- | -- | ----------- | -- | ------------------ |  | ---------- | -- | ---------- | - | -- |  | - | -- |  | -- | -
|          |               | Three Months Ended |                    |  |             |               | Six Months Ended |          |    |            
|          | June 30,      |                    | $ Increase/        |  | % Increase/ |               |                  | June 30, |    | $ Increase/ |    | % Increase/        | 
|          | 2009          |                    | 2008 (as adjusted) |  | (Decrease)  |               | (Decrease)       |          |    | 2009        |    | 2008 (as adjusted) |  | (Decrease) |    | (Decrease) |  
|          | (in millions) |                    |                    |  |             | (in millions) |                  |          |   
|GC Impsat |               |                    |                    |  |             |               |                  |          |    |             |    |                    |  |            |    |            |   |    |  |   |    |  |    |  
|OIBDA     |               | $                  | 44                 |  | $           | 31            |                  | $        | 13 |             | 42 | %                  |  | $          | 83 |            | $ | 58 |  | $ | 25 |  | 43 | %

OIBDA in the GC Impsat Segment increased in the three and six months ended June 30, 2009
compared with the same periods of 2008 primarily as a result of strong demand for broadband lease, data center and IP VPN data products. This increase was partially offset by: (i) higher access charges resulting from increased sales and
(ii) higher third party maintenance. Real estate, network and operations costs and SG&A expenses were comparable between periods but employee related costs were greater due to higher average headcount while professional fees and non-income
taxes were lower. In addition, adverse foreign currency movements decreased OIBDA by $4 million and $9 million, respectively, in the three and six months ended June 30, 2009 compared with the same periods of 2008.

ROW Segment

Revenue



|                                                    |               |                    |                    |  |            |             |                  |            |          |   |             |      |                    |             |            |     |  |            |     |  |   |     |   |  |     |   
|--------------------------------------------------- | ------------- | ------------------ | ------------------ |  | ---------- | ----------- | ---------------- | ---------- | -------- | - | ----------- | ---- | ------------------ | ----------- | ---------- | --- |  | ---------- | --- |  | - | --- | - |  | --- | --
|                                                    |               | Three Months Ended |                    |  |            |             | Six Months Ended |            |          |  
|                                                    | June 30,      |                    | $ Increase/        |  |            | % Increase/ |                  |            | June 30, |   | $ Increase/ |      |                    | % Increase/ |           
|                                                    | 2009          |                    | 2008 (as adjusted) |  | (Decrease) |             |                  | (Decrease) |          |   | 2009        |      | 2008 (as adjusted) |             | (Decrease) |     |  | (Decrease) |    
|                                                    | (in millions) |                    |                    |  |            |             | (in millions)    |            |          |   |            
|ROW                                                 |               |                    |                    |  |            |             |                  |            |          |   |             |      |                    |             |            |     |  |            |     |  |   |     |   |  |     |   
|Enterprise, carrier data and indirect sales channel |               | $                  | 307                |  | $          | 279         |                  | $          | 28       |   |             | 10   | %                  |             | $          | 599 |  | $          | 539 |  | $ | 60  |   |  | 11  | % 
|Carrier voice                                       |               |                    | 88                 |  |            | 101         |                  |            | (13      | ) |             | (13  | )%                 |             |            | 180 |  |            | 208 |  |   | (28 | ) |  | (13 | )%
|Other                                               |               |                    |                   |  |            | 1           |                  |            | (1       | ) |             | (100 | )%                 |             |            | 1   |  |            | 2   |  |   | (1  | ) |  | (50 | )%
|Intersegment revenues                               |               |                    | 2                  |  |            | 1           |                  |            | 1        |   |             | 100  | %                  |             |            | 4   |  |            | 3   |  |   | 1   |   |  | 33  | % 
|                                                    |               |                    |                    |  |            |             |                  |            |          |   |             |      |                    |             |            |     |  |            |     |  |   |     |   |  |     |   
|                                                    |               | $                  | 397                |  | $          | 382         |                  | $          | 15       |   |             | 4    | %                  |             | $          | 784 |  | $          | 752 |  | $ | 32  |   |  | 4   | % 
|                                                    |               |                    |                    |  |            |             |                  |            |          |   |             |      |                    |             |            |     |  |            |     |  |   |     |   |  |     |   

Revenue for our ROW Segment increased in the three and six months ended June 30, 2009
compared with the same periods of 2008 primarily as a result of strong demand for our higher margin enterprise voice services, collaboration services and IP VPN data products in our enterprise, carrier data and indirect sales channel. The increases
in ROW Segment revenue were partially offset by: (i) adverse currency movements in the three and six months ended June 30, 2009 compared with the same periods of 2008 which reduced ROW Segment revenue by $8 million and $13 million,
respectively; and (ii) a decline in carrier voice revenue. Carrier voice



30



---

##### Table of Contents

revenue decreased in the three and six months ended June 30, 2009 compared with the same periods in 2008, as we continue to manage the business to
achieve specific margin targets. We expect carrier voice revenue to decline by 10% or more as compared to the prior year. Revenue in the three and six months ended June 30, 2009 compared with the same periods in 2008 included $8 million for a
customer buyout of certain long term obligations under an existing contract.

OIBDA



|      |               |                    |                    |             |   |               |   |                  |          |    |      |             |                    |             |   |            |  |            |     |   |  |   |    |  |     |  
|----- | ------------- | ------------------ | ------------------ | ----------- | - | ------------- | - | ---------------- | -------- | -- | ---- | ----------- | ------------------ | ----------- | - | ---------- |  | ---------- | --- | - |  | - | -- |  | --- | -
|      |               | Three Months Ended |                    |             |   |               |   | Six Months Ended |          |    |      |            
|      | June 30,      |                    |                    | $ Increase/ |   | % Increase/   |   |                  | June 30, |    |      | $ Increase/ |                    | % Increase/ |  
|      | 2009          |                    | 2008 (as adjusted) |             |   | (Decrease)    |   | (Decrease)       |          |    | 2009 |             | 2008 (as adjusted) |             |   | (Decrease) |  | (Decrease) |    
|      | (in millions) |                    |                    |             |   | (in millions) |   |                  |         
|ROW   |               |                    |                    |             |   |               |   |                  |          |    |      |             |                    |             |   |            |  |            |     |   |  |   |    |  |     |  
|OIBDA |               | $                  | 28                 |             | $ | (12           | ) |                  | $        | 40 |      | 333         | %                  |             | $ | 41         |  | $          | (29 | ) |  | $ | 70 |  | 241 | %

OIBDA in our ROW Segment improved in the three and six months ended June 30, 2009 compared
with the same periods of 2008 primarily as a result of: (i) $4 million and $10 million, respectively, of beneficial foreign currency movements; (ii) increased revenue due to strong demand for our higher margin enterprise voice services,
collaboration services and IP VPN data products in our enterprise, carrier data and indirect sales channel; and (iii) lower costs for our real estate, network and operations and SG&A expenses. The lower real estate, network and operations
costs and SG&A expenses resulted primarily from lower employee-related expenses and other costs, including advertising and travel. The lower employee-related expenses were driven by: (a) lower sales commissions and (b) lower annual
employee incentive compensation. The improvements in ROW Segment OIBDA in the three and six months ended June 30, 2009 compared with the same periods of 2008 were partially offset by higher third party maintenance resulting from an increase in
non-recurring maintenance.

Liquidity and Capital Resources

Financial Condition and State of Liquidity

Our ability to make payments on and to refinance our indebtedness and to
fund planned capital expenditures will depend on our ability to generate cash in the future. This depends to a degree on general economic, financial, competitive, legislative, regulatory and other factors (such as satisfactory resolution of
contingent liabilities) that are beyond our control.

Based on our current level of operations, expected revenue growth trends and
anticipated cost management and operating improvements, we believe our future cash flow from operations, available cash and cash available from financing activities will be adequate to meet our future liquidity needs for at least the next twelve
months.

There can be no assurance, however, that our business will generate sufficient cash flow from operations, that currently
anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to
refinance all or a portion of our indebtedness on or before maturity. We cannot provide assurances that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. Furthermore, we cannot provide any assurances
that ongoing adverse conditions in global capital markets and adverse general economic conditions will not have a material adverse impact on our future operations and cash flows.

We monitor our capital structure on an ongoing basis and from time to time we consider financing and refinancing options to improve our capital structure
and to enhance our financial flexibility. Our ability to enter into new financing arrangements is subject to restrictions in our outstanding debt instruments (as described below under Indebtedness) and to the rights of ST Telemedia under
our outstanding preferred shares. At any given time we may pursue a variety of financing opportunities, and our decision to proceed with any financing will depend, among other things, on prevailing market conditions, near term maturities and
available terms.

At June 30, 2009, our available liquidity consisted of $268 million of unrestricted cash and cash equivalents. In
addition, at June 30, 2009, we also held $21 million in restricted cash and cash equivalents. Our restricted cash and cash equivalents comprise cash collateral for letters of credit or performance bonds issued in favor of certain of our vendors
and deposits securing real estate obligations.

During the six months ended June 30, 2009, we posted net operating income of $7 million
and had a net decrease in cash and cash equivalents of $92 million. Our cash flows included the following significant items: (i) capital purchases of $92 million; (ii) net payments on capital lease and debt obligations of $44 million;
(iii) $59 million cash use due to the change in accounts payable primarily due to a reduction in amounts outstanding with key access vendors; and (iv) the receipt of $59 million of cash from the sale of IRUs and prepaid services.

In the long term, we expect our operating results and cash flows to continue to improve as a result of the continued growth of our higher
margin enterprise, carrier data and indirect sales channel business, including the economies of scale expected to result from



31



---

##### Table of Contents

such growth, and from ongoing cost reduction initiatives, including initiatives to optimize the access network and effectively lower unit prices. Thus, in
the long term, we expect to generate positive cash flow from operating activities in an amount sufficient to fund all investing and financing requirements, subject to the possible need to refinance our existing major debt instruments as described
below. However, our ability to improve cash flows is subject to the risks and uncertainties described above under Cautionary Note Regarding Forward-Looking Statements as well as the variability of quarterly liquidity discussed below.

In the short-term, we expect cash provided by operating activities (including IRUs and other prepaid sales) to exceed purchases of
property and equipment. In particular, even though the first half of 2009 incurred negative cash flows, we expect cash provided by operating activities to exceed purchases of property and equipment for the full year 2009. This expectation is based
in part on raising financing for such property and equipment from vendors and others in amounts comparable to those arranged in 2008. Our ability to arrange such financings is subject to negotiating acceptable terms from equipment vendors and
financing parties. This could prove difficult given current adverse conditions in the credit markets. In addition, our short-term liquidity and more specifically our quarterly liquidity expectations are subject to considerable variability as a
result of the timing of interest payments as well as the following factors:



| |  |  | Working capital variability significantly impacts our cash flows and causes our intra-quarter cash balances to drop to levels significantly lower than those
prevailing at the end of a quarter.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We rely on the sale of IRUs and prepaid services, which often involve large dollar amounts and are difficult to predict. During the three and six months ended
June 30, 2009, we received $27 and $59 million, respectively, of cash receipts from the sale of IRUs and prepaid services compared to $31 million and $62 million, respectively, in the same periods in 2008.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The continuing adverse conditions in global credit markets and general economic conditions could cause customer buying patterns with us to change as a result of
their cash conservation efforts, which could have an adverse impact on our cash flows. These adverse conditions could also adversely impact our working capital to the extent suppliers seek more timely payment from us or customers pay us on a less
timely basis.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have exposure to significant currency exchange rate risks. Commencing in September 2008, the U.S. Dollar appreciated considerably against certain foreign
currencies in which we conduct a significant portion of our business, including the British Pound Sterling, the Euro and the Brazilian Real. This appreciation has adversely impacted consolidated revenue. Since we tend to incur costs in the same
currencies in which we realize revenue, the impact on operating income and operating cash flow is largely mitigated. The impact has also been mitigated by the depreciation of the U.S. Dollar against most major currencies during the six months
ended June 30, 2009. However, the U.S. Dollar remains at appreciated levels relative to September 2008, and future appreciation of the U.S. Dollar could materially adversely affect future revenues, operating income and operating cash
flows. In addition, the appreciation of the U.S. Dollar relative to foreign currencies reduces the U.S. Dollar value of cash balances held in those currencies.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our liquidity may also be adversely affected if we settle or are found liable in respect of contingent legal, tax and other liabilities, and the amount and timing
of the resolution of these contingencies remain uncertain.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cash outlays for purchases of property and equipment vary significantly from quarter to quarter. Such outlays in the first half of 2009 significantly exceeded
expected outlays in the second half of the year due primarily to the timing of major network upgrades. Although we have the flexibility to reduce expected capital expenditures in future periods to conserve cash, the majority of our capital
expenditures are directly related to customer requirements and therefore ultimately generate long-term cash flows.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
vast majority of our long-term debt matures after 2010. However, we have approximately $78 million related to various debt agreements that is due and payable in the next twelve months. With regard to our major debt instruments, (i) the $144
million original principal amount of our 5% Convertible Notes matures in 2011 (subject to earlier conversion into GCL common stock at the conversion price of approximately $22.98 per share); (ii) $332 million of our Term Loan Agreement is due
at final maturity in 2012; (iii) the $446 million original principal amount of the GCUK Notes matures in 2014; and (iv) the $225 million original principal amount of the GC Impsat Notes matures in 2017. We also have approximately $10
million of bonds issued by GC Impsats Colombian subsidiary which mature in December 2010. If cash on hand at the time any of these debt instruments mature is insufficient to satisfy these and our other debt repayment obligations, we would need
to access the capital markets to meet our liquidity requirements. Such access would depend on market conditions and our credit profile at the time. The ongoing adverse conditions in global capital markets could make it more difficult for us to
obtain debt financing.

As a holding company, all of our revenue is generated by our subsidiaries and substantially all of our assets are
owned by our subsidiaries. As a result, we are dependent upon intercompany transfers of funds from our subsidiaries to meet our debt service and other payment obligations. Our subsidiaries are incorporated and operate in various jurisdictions
throughout the world and are subject to legal and contractual restrictions affecting their ability to make intercompany funds transfers. Such legal restrictions include prohibitions on paying dividends in excess of retained earnings (or similar
concepts under applicable law), which prohibition applies to most of our subsidiaries given their history of operating losses, as well as foreign exchange controls on the conversion and expatriation of funds that are particularly prevalent in Latin
America. Contractual restrictions on intercompany funds transfers include limitations in our major debt instruments on the ability of our subsidiaries to make dividend and other payments on equity securities, as well as limitations on our
subsidiaries ability to make intercompany loans or to upstream funds in any other manner. These contractual restrictions arise under our major debt instruments, each of which is generally limited in application to one of our



32



---

##### Table of Contents

segments (e.g., the restrictions in the Term Loan Agreement apply to the ROW Segment, the restrictions in the GCUK Notes indenture apply to the GCUK Segment,
and the restrictions in the GC Impsat Notes indenture apply to the GC Impsat Segment). These contractual restrictions generally do not restrict intercompany funds transfers within a given segment, but rather significantly restrict intercompany funds
transfers from subsidiaries in one segment to those in another. Each such debt instrument includes exceptions which allow a limited amount of intercompany loans to subsidiaries in other segments, subject to certain restrictions.

At June 30, 2009, unrestricted cash and cash equivalents were $28 million, $101 million, and $139 million at our GCUK, GC Impsat and ROW Segments,
respectively. Although operational constraints require us to maintain significant minimum cash balances in each of our segments, we believe that our GCUK and GC Impsat Segments existing unrestricted cash balances are sufficient for their
operating and investing activities for the foreseeable future. Our GCUK Segment borrowed $15 million during the second quarter of 2009 payable September 2010 from the GC Impsat Segment to ensure cash balances were at prudent levels upon completion
of the annual Excess Cash Offer for the GCUK Notes. We believe that this loan during the second quarter of 2009 and likely future inter-segment funds transfers to the ROW Segment in amounts permitted by our debt instruments will be sufficient to
enable each segment to comply with its debt covenants and to reach the point of sustained recurring positive cash flow from operating and investing activities. Most of our assets other than the assets of our GC Impsat Segment have been pledged to
secure our indebtedness, and the GC Impsat Notes indenture contains an equal and ratable provision which generally requires GC Impsat to provide the holders of the GC Impsat Notes with an equal and ratable lien if GC Impsat pledges its
assets to secure other indebtedness. Failure to comply with the covenants in any of our loan instruments could result in an event of default, which, if not cured or waived, could result in an acceleration of all such debts. Such acceleration would
adversely affect our rights under certain commercial agreements and have a material adverse effect on our business, results of operations, financial condition and liquidity. If the indebtedness under any of our loan instruments were to be
accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. In such event, we would have to raise funds from alternative sources, which may not be available on favorable terms, on a timely basis or
at all. Moreover, a default by any of our subsidiaries under a capital lease obligation or debt obligation totaling more than $2.5 million, as well as the bankruptcy or insolvency of any of our subsidiaries, could trigger cross-default provisions
under certain debt instruments.

Indebtedness

At June 30, 2009, we had $1.323 billion of indebtedness outstanding (including long and short term debt and capital lease obligations), consisting of $449 million of GCUK Notes, $126 million of 5% Convertible
Notes ($144 million aggregate principal less $18 million of unamortized discount), $225 million of GC Impsat Notes, $342 million under the Term Loan Agreement, $147 million of capital lease obligations and $34 million of other debt.

See Item 7, Managements Discussion and Analysis of Financial Condition and Results of OperationsIndebtedness, of our 2008
annual report on Form 10-K as amended by our Form 8-K filed on May 7, 2009 which adjusted the historical financial statements to reflect the retrospective adoption of the Financial Accounting Standards Board Staff Position No. APB 14-1,
Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), for a description of the GCUK Notes, 5% Convertible Notes, GC Impsat Notes and Term Loan Agreement.

Financing Activities

During the six months
ended June 30, 2009, the Company entered into various capital leasing arrangements that aggregated $25 million in total leased amount. These agreements have terms that range from 36 to 48 months and implicit interest rates that range from
3.4% to 20.2%, with a weighted average effective interest rate of 10.4%.

During the six months ended June 30, 2009, the Company also
entered into debt agreements having aggregate principal amount of $6 million. These agreements have terms that range from 6 to 12 months, $4 million of which have variable interest rate based on a spread over the Colombian Fixed Term Deposit Rate
and $2 million based on a spread over the Brazilian Inter-bank Lending Rate.

GCUK Notes Tender Offer

As required by the indenture governing the senior secured notes due 2014 (the GCUK Notes), within 120 days after the end of each twelve month
period ending December 31, GCUK must offer (the Excess Cash Offer) to purchase a portion of the GCUK Notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, to the purchase date,
with 50% of Designated GCUK Cash Flow from that period. Designated GCUK Cash Flow means GCUKs consolidated net income plus non-cash charges minus capital expenditures, calculated in accordance with the terms of the
indenture governing the GCUK Notes. With respect to the 2008 Excess Cash Offer, we have made an offer for and purchased approximately $11 million in principal amount of the GCUK Notes, plus accrued interest through the purchase date.



33



---

##### Table of Contents

Cash Management Impacts

Condensed Consolidated Statements of Cash Flows



|                                                             |  |                  |     |   |                    |   |     |            |  |   |     |  
|------------------------------------------------------------ |  | ---------------- | --- | - | ------------------ | - | --- | ---------- |  | - | --- | -
|                                                             |  | Six Months Ended |     |   |                    |  
|                                                             |  | June 30,         |     |   | $ Increase/        |  
|                                                             |  | 2009             |     |   | 2008 (as adjusted) |   |     | (Decrease) | 
|                                                             |  |                  |     |   | (in millions)      |   |     |            | 
|Net cash flows provided by operating activities              |  | $                | 50  |   |                    | $ | 40  |            |  | $ | 10  |  
|Net cash flows used in investing activities                  |  |                  | (90 | ) |                    |   | (93 | )          |  |   | 3   |  
|Net cash flows used in financing activities                  |  |                  | (56 | ) |                    |   | (30 | )          |  |   | (26 | )
|Effect of exchange rate changes on cash and cash equivalents |  |                  | 4   |   |                    |   | 4   |            |  |   |    |  
|                                                             |  |                  |     |   |                    |   |     |            |  |   |     |  
|                                                             |  |                  |    
|Net decrease in cash and cash equivalents                    |  | $                | (92 | ) |                    | $ | (79 | )          |  | $ | (13 | )
|                                                             |  |                  |     |   |                    |   |     |            |  |   |     |  

Cash Flows from Operating Activities

Cash flows provided by operating activities increased in the six months ended June 30, 2009 compared with the same period in 2008 primarily as a
result of improved operating results, partially offset by greater cash use for working capital. In the six months ended June 30, 2009, there was a $59 million cash use due to the change in accounts payable primarily due to a reduction in
amounts outstanding with key access vendors. During the six months ended June 30, 2009 we received $59 million of cash receipts from the sale of IRUs and prepaid services, including $10 million related to termination of a previously sold IRU
agreement, compared with $62 million in the same period of 2008.

Cash Flows from Investing Activities

Cash flows used in investing activities decreased in the six months ended June 30, 2009 compared with the same period in 2008 primarily as a result
of lower use of cash and cash equivalents to fund restricted cash accounts. In 2008, the primary funding of restricted cash accounts was related to the debt service account for the Colombia Bonds principal repayment in the fourth quarter of 2008.

Cash Flows from Financing Activities

Cash flows used in financing activities increased in the six months ended June 30, 2009 compared with 2008 primarily as a result of: (i) $13 million higher net repayment of debt and capital lease obligations principally due to the
$11 million Excess Cash Offer; and (ii) $12 million paid for employee taxes on certain share-based compensation in 2009.

Contractual Cash
Commitments

During the six months ended June 30, 2009, we entered into the following significant contractual cash commitments:
(i) amendments to extend our leases for office and technical space increasing our net obligation by $28 million over the next 11 years; (ii) a maintenance and service agreement that requires payment of $19 million over the next five years;
(iii) an amendment to a contract for access services that requires payment of $60 million over the next two years; and (iv) an amendment to an equipment and service agreement that requires payment of $16 million through 2010.

Credit Risk

We are subject to concentrations of
credit risk in our trade receivables. Although our receivables are geographically dispersed, and include customers both large and small in numerous industries, our receivables from our carrier sales channels are generated from sales of services to
other carriers in the telecommunications industry. As of June 30, 2009 and December 31, 2008, our receivables related to our carrier sales channels represented approximately 42% and 46%, respectively, of our consolidated receivables. Also
as of June 30, 2009 and December 31, 2008, our receivables due from various agencies of the U.K. Government together represented approximately 6% and 6%, respectively, of our consolidated receivables.

Currency Risk

Certain of our current and prospective
customers derive their revenue in currencies other than U.S. Dollars but are invoiced by us in U.S. Dollars. The obligations of customers with revenue in foreign currencies may be subject to unpredictable and indeterminate increases in the event
that such currencies depreciate in value relative to the U.S. Dollar. Furthermore, such customers may become subject to exchange control regulations restricting the conversion of their revenue currencies into U.S. Dollars. In either event, the
affected customers may not be able to pay us in U.S. Dollars. In addition, where we issue invoices for our services in currencies other than U.S. Dollars, our operating results may suffer due to currency translations in the event that such
currencies depreciate relative to



34



---

##### Table of Contents

the U.S. Dollar and we cannot or do not elect to enter into currency hedging arrangements in respect of those payment obligations. Declines in the value
of foreign currencies relative to the U.S. Dollar could adversely affect our ability to market our services to customers whose revenue is denominated in those currencies.

Certain Latin American economies have experienced shortages in foreign currency reserves and have adopted restrictions on the ability to expatriate local
earnings and convert local currencies into U.S. Dollars. Any such shortages or restrictions may limit or impede our ability to transfer or to convert such currencies into U.S. Dollars and to expatriate such funds for the purpose of making timely
payments of interest and principal on our indebtedness. These restrictions have a significantly greater impact on us and on our ability to service our debt as a result of the Impsat acquisition. In addition, currency devaluations in one country may
have adverse effects in another country. For example, in 2001 and 2002, Argentina imposed exchange controls and transfer restrictions substantially limiting the ability of companies to make payments abroad. While these restrictions have been
substantially eased, Argentina may tighten exchange controls or transfer restrictions in the future to prevent capital flight, counter a significant depreciation of the peso or address other unforeseen circumstances.

In Venezuela, the official bolivares -U.S. Dollar exchange rate established by the Venezuelan Central Bank and the Venezuelan Ministry of Finance
attributes to the bolivar a value that is significantly greater than the value prevailing on the parallel market. The official rate is the rate used for recording the assets, liabilities and transactions for our Venezuelan subsidiary. Moreover, the
conversion of bolivares into foreign currencies is limited by the current exchange control regime. Accordingly, the acquisition of foreign currency by Venezuelan companies to honor foreign debt, pay dividends or otherwise expatriate capital is
subject to registration and subject to a process of application and approval by the Comisión de Administración de Divisas and to the availability of foreign currency within the guidelines set forth by the National Executive Power for
the allocation of foreign currency. Such approvals have become less forthcoming over time, resulting in a significant buildup of excess cash in our Venezuelan subsidiary and a significant increase in our exchange rate and exchange control risks. As
of June 30, 2009, approximately $47 million (valued at the fixed exchange rate) of our cash and cash equivalents were held in Venezuelan bolivars.

Commencing in September 2008, the U.S. Dollar appreciated considerably against certain foreign currencies in which we conduct a significant portion of our business, including the British Pound Sterling, the
Euro and the Brazilian Real. This appreciation has adversely impacted consolidated revenue. Since we tend to incur costs in the same currencies in which we realize revenue, the impact on operating income and operating cash flow is largely mitigated.
The impact has also been mitigated by the depreciation of the U.S. Dollar against most major currencies during the six months ended June 30, 2009. However, the U.S. Dollar remains at appreciated levels relative to September 2008, and
future appreciation of the U.S. Dollar could materially adversely affect future revenues, operating income and operating cash flows. In addition, the appreciation of the U.S. Dollar relative to foreign currencies reduces the
U.S. Dollar value of cash balances held in those currencies.

Off-Balance Sheet Arrangements

As of June 30, 2009 we did not have any off-balance sheet arrangements outstanding.



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

See Item 7A in the Companys 2008 annual report on Form 10-K as amended by our Form 8-K filed on May 7, 2009 which adjusted the historical financial statements to reflect the retrospective adoption of the Financial Accounting
Standards Board Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) for information regarding quantitative and qualitative disclosures
about market risk. No material change regarding this information has occurred since that filing.



|Item 4. | Controls and Procedures
|------- | -----------------------

Evaluation of Disclosure Controls and
Procedures

Disclosure controls and procedures (as defined in Rule 13(a) -15(e)) are controls and other procedures that are designed to
ensure that information required to be disclosed by a public company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a public company in the reports that it files or submits under the Exchange Act is accumulated
and communicated to the companys management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Disclosure
controls and procedures include many aspects of internal control over financial reporting (as defined later in this Item 4).

In
connection with the preparation of this quarterly report on Form 10-Q, management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, pursuant
to Rule 13a-15 under the Exchange Act. Based upon managements evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of
June 30, 2009.



35



---

##### Table of Contents

Additional Information Regarding Impsat

In October 2006, two Impsat employees were indicted by the Paraguayan Prosecutors Office in connection with an investigation relating to the
contracting and bidding process at CONATEL, a public entity in Paraguay, which contracted with joint-venture entities in 2000 and 2001 in which Impsat was a participant. In conjunction with an agreement with the Prosecutor, the indictments against
the Impsat employees were conditionally dismissed in November 2007 for a one year term. In a decision dated February 3, 2009, the conditional suspension of criminal charges was finalized and all criminal charges against the individual employees
have now been dismissed.

Since the May 9, 2007 acquisition, we have been engaged in the process of integrating the Impsat business
into our consolidated operations. As part of this process, management is conducting a review of the controls and procedures intended to ensure compliance with applicable laws in the United States and certain foreign countries in which Impsat
operates, including the U.S. Foreign Corrupt Practices Act (FCPA). As part of this effort, we became aware of certain issues with respect to Impsats use of third-party agents, including the existence of two other government
investigations (described below) related to Impsat, that were not known to us at the time of the May 9, 2007 acquisition.



| |  |  | In February 2003, as part of an investigation into contract procurement procedures at the Argentine Border Patrol (Gendarmería Nacional), an Argentine
government agency with which Impsat had a longstanding contractual relationship, the Argentine Anti-Corruption Office (Oficina Anticorrupción) filed a complaint that resulted in the criminal indictment of four Impsat employees. The charges
against all defendants were dismissed for lack of sufficient evidence in August 2007, and the dismissal became final and unappealable in September 2007.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Colombian National Attorney General (Procuraduría General de la Nación (NAG)) published a decision in November 2007 (the
NAG Decision) finding (as part of broader allegations unrelated to Impsat) that funds originated with Impsat had been used by a contractor retained by Impsat to bribe an official within Colombias homeland security agency
(Departamento Administrativo de Seguridad (DAS)). Impsat retained the contractor in question in 2003 and paid him approximately $44,000 in 2004; we have not been able to determine whether any of these funds went to DAS officials.
The NAG Decision included a referral of the report and its findings to the criminal prosecutor, and the referral included specific reference to Impsat. One DAS official has been criminally convicted in connection with a related investigation, and
criminal proceedings are pending against two other individuals (including a former senior official at DAS).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

After
learning of these investigations, we conducted an internal review of certain agent relationships and government contracts and potential unauthorized payments in Latin American countries, and have engaged outside counsel and accounting advisors to
assist in the review. The review is now substantially complete. Additionally, in connection with a post-acquisition deployment of Global Crossings ethics policy that included employee certifications of compliance, we were informed by two
Impsat employees that, in 2005 and 2006, Impsat made payments of approximately $19,000 to a government official to allow performance of construction work notwithstanding the fact that required permits were not obtained.

The facts developed in our review show that: first, although Impsat had policies in place prior to our May 9, 2007 acquisition relating to FCPA
compliance and contracting with third-party agents, those policies were not implemented; second, Impsats documentation relating to third-party agents and certain government contracts was not sufficient; and third, the corporate environment at
Impsat did not reflect a sufficient focus by senior management on the promotion of, and compliance by the Company with, these policies.

Since the May 9, 2007 acquisition of Impsat, to enhance Global Crossings internal controls relating to the FCPA and other laws applicable to our business in Latin America and as part of a remediation plan adopted in connection
with our internal review described above, management has implemented the following changes:



| |  |  | We have revised the Companys Ethics Policy and adopted a new Anti-Corruption Policy consolidating in one place our existing policies relating to the FCPA and
similar laws, and emphasizing the Companys commitment to anti-corruption compliance; and we extended both policies to all former Impsat employees who are employees of the Company and have provided additional training in respect of these
policies to all Company employees;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have appointed a Corporate Ethics Officer who is responsible for implementation of, and the establishment of procedures for compliance with, our Ethics Policy,
our Anti-Corruption Policy and our remedial measures; the Corporate Ethics Officer is a member of senior management reporting to the CEO, and will regularly update the Audit Committee of the Board of Directors on his activities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have established an Ethics Oversight Team, comprised of members of senior management, to advise and support the Corporate Ethics Officer;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



36



---

##### Table of Contents

| |  |  | We have requested all employees, including all former Impsat employees who now work for the Company to review and certify compliance with the Companys ethics
and anti-corruption policies;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We hired an experienced director of external reporting and technical accounting within Impsat;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | We have established and staffed and are training a legal department and an internal audit department within Impsat separate from its other operational support
groups;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have adopted and are implementing new policies and procedures for our Latin American operations covering the retention of third-party agents in connection with
government contracts, which are intended to enhance FCPA compliance substantially and to ensure that any employees involved in any of the Companys relationships with these third-party agents, as well as the agents themselves, understand and
agree to abide by the Companys commitment to FCPA compliance; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have taken remedial action concerning certain employees, and continue to monitor the effectiveness and implementation of our remediation plan and related
policies, procedures and controls, and will take additional action in this regard as warranted.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in Internal Control over
Financial Reporting

On May 9, 2007, we acquired Impsat. We are currently in the process of incorporating Impsats internal
controls into our control structure and migrating overlapping processes and systems to legacy Global Crossing processes and systems. We consider the ongoing integration of Impsat a material change in our internal control over financial reporting.

Except for the item noted above, there were no other material changes in our internal control over financial reporting during the second
quarter of 2009.

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

See Note 8,
Contingencies, to the accompanying unaudited condensed consolidated financial statements for a discussion of certain legal proceedings affecting the Company.



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes
in the most significant factors that make an investment in the Company speculative or risky from those set forth in Item 1A., Risk Factors, to the Companys annual report on Form 10-K) for the year ended December 31,
2008 as amended by our Form 8-K filed on May 7, 2009 which adjusted the historical financial statements to reflect the retrospective adoption of the Financial Accounting Standards Board Staff Position No. APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

The 2009
Annual General Meeting of Shareholders of the Company was held on June 4, 2009. Each of the proposals submitted for Shareholder approval at the Annual General Meeting was approved. The results of the voting were as follows:



|                                                                                                                                                                                                          |  |            |  |                            |  |             |  |                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | -------------------------- |  | ----------- |  | ---------------
|Proposal Number and Description                                                                                                                                                                           |  | SharesFor  |  | SharesAgainst (orWithheld) |  | Abstentions |  | BrokerNon-Votes
|1. Proposal to re-elect the following directors for terms expiring at the 2010 Annual General
Meeting:                                                                                                    |  |            |  |                            |  |             |  |                
|     Charles Macaluso                                                                                                                                                                                    |  | 72,630,779 |  | 158,343                    |  | N/A         |  | N/A            
|     Michael Rescoe                                                                                                                                                                                      |  | 72,635,488 |  | 153,634                    |  | N/A         |  | N/A            
|                                                                                                                                                                                                          |  |            |  |                           
|2. Proposal to appoint Ernst & Young LLP as the independent registered public accounting firm for the year ending December 31,
2009 and to authorize the Audit Committee to determine their remuneration. |  | 72,692,518 |  | 85,256                     |  | 11,348      |  | N/A            



37



---

##### Table of Contents

|Item 5. | Other Information
|------- | -----------------

On July 30, 2009, the Board
of Directors (the Board) and the Compensation Committee of the Board (the Compensation Committee) of the Company approved the Amended and Restated Global Crossing Limited Key Management Protection Plan (the Amended and
Restated KMPP). The Amended and Restated KMPP is an enhanced severance plan offered by the Company to help attract key talent and retain leaders by mitigating their concerns about financial hardship in the event of termination. The
Amended and Restated KMPP contains terms and conditions substantially the same as those of the previous Key Management Protection Plan, except that the plan was effectively extended from December 31, 2009 to December 31, 2011. All
executive officers for whom disclosure was required in the Companys proxy statement for its 2009 Annual General Meeting of Shareholders pursuant to Item

402(c) of Regulation S-K are participants in the Amended and Restated KMPP.



|Item 6. | Exhibits
|------- | --------

Exhibits filed as part of this report are
listed below.



|     |  |                                                                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Global Crossing 2009 Discretionary Incentive Bonus Program (filed herewith).                                                                                               
|     | 
|10.2 |  | Amended and Restated Global Crossing Limited Key Management Protection Plan (filed herewith).                                                                              
|     | 
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                   
|     | 
|31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                   
|     | 
|32.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
|     | 
|32.2 |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).



38



---

##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf on August 4, 2009 by the undersigned thereunto duly authorized.



|                        |  |                               
|----------------------- |  | ------------------------------
|GLOBAL CROSSING LIMITED
|                        | 
|By:                     |  | /S/ JOHN A. KRITZMACHER       
|                        |  | John A. Kritzmacher           
|                        |  | Chief Financial Officer       
|                        |  | (Principal Financial Officer) 
|                        | 
|By:                     |  | /S/ ROBERT A. KLUG            
|                        |  | Robert A. Klug                
|                        |  | Chief Accounting Officer      
|                        |  | (Principal Accounting Officer)



39